Thought Leadership
Social Welfare
Social programs in the United States are institutions that are supported and managed by the U.S. government. The objective is to ensure economic security, universal access to the resources for self-development and the reduction of social suffering, such as poverty and illness.
The main
reason for the creation of the U.S. welfare state has been modern American
liberalism, which holds that positive rights, such as health care and
education, are requirements for individual liberty. The Social Security
Administration was created in 1935 and was the first major federal welfare
state agency. As of today it is still the most prominent federal welfare state
agency in America.
Welfare Programs
Currently
total social welfare expenditure constitutes roughly 35% of GDP (Gross National
Product), with public expenditure constituting 21 percent. There are publicly
supported but privately provided welfare services constituting 10 percent of
GDP and purely private services constituting 4 percent of GDP.
The main
programs are mandatory and universal primary and secondary education,
subsidized college education, unemployment and disability insurance, income
subsidies for low wage workers, housing subsidies, food stamps, pensions and
health insurance programs that cover public employees. The Social Security
system is the largest and most prominent entitlement program.
All American
citizens are enrolled in the Social Security system and thus access public
Medicare health insurance once they reach the age of 65. Twenty percent receive
health coverage through Medicaid and about 25% receive wage subsidies through
the Earned Income Tax Credit (EITC). Current evidence indicates that the
American welfare is successful in reducing poverty, inequality and mortality
considerably. For example 40 percent of American seniors are above poverty line
thanks to Public pension programs
The American Welfare State
The American
welfare state was designed to address market shortcomings and do what private
enterprises cannot do. Unlike welfare states built on social democracy
foundations it was not designed to promote a redistribution of political power
from capital to labor; nor was it designed to mediate class struggle.
Income
redistribution, through programs such as the EITC, has been defended on the
grounds that the market cannot provide goods and services universally. Interventions
going beyond transfers are justified by the presence of imperfect information,
imperfect competition, incomplete markets, externalities, and the presence of
public goods. The welfare state, whether through charitable redistribution or
regulation that favors smaller players, is motivated by reciprocal altruism.
The U.S.
government generally refrains from intervention beyond the provision of
transfers if markets can produce a given good or service efficiently. However, considerable
debate remains on whether the U.S. government is intervening sufficiently to
address market shortcomings. Some argue that an expansion of the welfare state
is desirable because the market cannot or will not satisfactorily improve unjust
economic and social inequality. Others argue that the welfare state has grown
too large.