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Providing a Safety Net

Providing a Safety Net. The Poverty Problem. The wealth has spread unevenly throughout society as the free market has generated wealth. Some people are below the poverty threshold - an income level below that which is needed to support families or households.

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Providing a Safety Net

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  1. Providing a Safety Net

  2. The Poverty Problem • The wealth has spread unevenly throughout society as the free market has generated wealth. • Some people are below the poverty threshold- an income level below that which is needed to support families or households. • In 2002—single parent under 65, with one child was $12,120. For a 4 person family (with 2 children) the level was $18,400.

  3. The Governments Role • As a society we recognize some responsibilities to the very young, the very old, the sick, the poor, and the disabled. • The government tries to provide a safety net to these individuals • Since the 1930’s, the main government effort to easy poverty has been to collect taxes from individuals and redistribute some of those funds in the form of welfare. • refers to the government aid for the poor • Began under Roosevelt following Great Depression, increased in 1960’s under Johnson’s “War on Poverty”, soared in 70’s and 80’s, in 1996 drastic changes occurred.

  4. Redistribution Programs • Income data gathered by U.S. Bureau of the Census (in Labor Department). • State and federal governments provide cash transfers (direct payments of money to the poor, disabled, and retired). • Temporary Assistance for Needy Families (TANF) • Replaced earlier welfare program (Aid to Families with Dependent Children or AFDC) • Launched in 1996 as part of welfare reform. • Federal money goes to the states, which design and run their own welfare programs. States must adhere to federal rules that create work incentives and establish a lifetime limit for benefits.

  5. Cont. • Social Security • Created in 1935, during the Great Depression. • Provides cash transfers of retirement income to the elderly and living expenses to disabled Americans. • Collects payroll taxes from current workers and then redistributes that money to current recipients. • Unemployment insurance • Funded jointly by federal and state governments. • Provide $$ to eligible workers who lost their jobs. • Must show that they made efforts to get work. • Worker’s Compensation • State funds to workers injured on the job. • Most employers pay worker’s comp insurance to cover future claims of employees.

  6. In-kind benefits- goods and services provided for free or at greatly reduced prices. • Food giveaways, food stamps, subsidized housing, and legal aid • Medical Benefits- administered under Social Security Program • Medicare covers Americans over 65 as well as the disabled. • Medicaid covers some poor people who are unemployed or not covered by their employer’s insurance plan

  7. Education- fed, state and local governments all provide educational opportunities to the poor • Add to the nation’s human capital and labor productivity. • Faith-Based Initiatives • 2001- George W. Bush announced an initiative to rely on non-governmental support for people in need. • In 2003- both houses of congress passed bills enacting some of Bush’s proposals.

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