Lecture 11: US Safety Net Flashcards
Earned Income Tax Credit (EITC)
Means-tested cash benefit
Delivered through the tax code and it easier to think about when we cover some of that material
Considerable bi-partisan support
Tied to work
Welfare under AFDC
State powers
- Set their own benefit levels
- Established (within federal limitations) income and resource limits
- Administered the program or supervised its administration
States were entitled to unlimited federal funds for reimbursement of benefit payments, at matching rates
States were required to provide aid to all persons who were eligible
- Entitlement
Matching rates: $$ to states
The federal government reimburses the states for operating an AFDC program with matching funds
Federal financial participation is provided to the states at different rates for various activities
Administrative and training costs are matched at a 50% rate
AFDC benefit payment costs are matched under a formula which takes into account a state’s per capita income relative to national per capita income
The federal matching rate for AFDC benefits may range from 50% for states with the highest per capita income to 83% for the state with the lowest per capita income
Welfare under TANF
State variation in policies
- Lifetime limits on welfare
- Federal limit is 60 months (5 years)
- 9 states opted for shorter time limits: Florida (48 months), Utah (36 months), Arkansas (24 months)
Exemptions for hardship cases
- 17 states provide an exemption to “verifiable” victims of domestic violence
- 7 states provide an exemption if caring for an infant under a few months old
More state variation in policies
- Family cap policies
- 21 states imposed a family cap that limit or deny additional benefits to families who have a child while on TANF
- Added based on the theory that families have additional children to increase the size of their welfare check
- Research has not revealed any significant, robust relationships between AFDC/TANF payment amounts and fertility
Benefit levels under AFDC and TANF
After adjusting for inflation
- Only 3 states benefits were higher in 2008 than 1996, after adjusting for inflation
SNAP: Review: Magnitude, administration
SNAP is the largest domestic food and nutrition assistance programs administered by the Food and Nutrition Service (FNS) of the US Department of Agriculture (USDA)
SNAP is available to all individuals who meet the federal eligibility guidelines set by Congress and serves a broad demographic spectrum of the needy population
It provides benefits electronically via an electronic benefit transfer (EBT) card the benefits may be redeemed for eligible food items
- As of September 30, 2013, 248,666 stores across the nation were authorized to accept SNAP benefits
Program administration (for SNAP)
Federal, State, and local governments share the costs and administration of SNAP
Congress authorizes the program and appropriates necessary funds
FNS administers SNAP nationally
Programs Administration: Who pays for what
State and local welfare agencies operate the program locally
The federal government fully funds SNAP benefits
The cooperating agencies share administrative costs, with FNS paying about 50% of such costs
Unemployment Insurance: Type
Type of benefit
- Cash
- Partial wage replacement for those who have lost their jobs
- Social insurance
- Event conditioned (loss of covered employment)
- Not means-tested
Structure of UI
Created by the Social Security Act of 1935
Federal-state unemployment compensation
- Based on federal law
- Administered by state employees under state law
Cash benefits for those out of work
- No fault loss of job
- Workforce attachment (amount of wages/weeks worked)
- Available and seeking work
Funded
- Employer taxes (either federal or states)
Each state designs its own UI program within federal requirements
Length of UI benefit
Most states currently pay a maximum of 26 weeks
During high unemployment periods in states
- Benefits can be extended for up to 13 (in some cases 20) additional weeks up to a maximum of 39 (in some cases 46)
Extended benefits are funded
- 1/2 state funds and 1/2 federal funds
Federal government paid 100% of extended benefits for weeks of unemployment beginning after Feb. 9, 2009 through Dec. 31, 2012
UI during recessions
Structured to be counter-cyclical
- Pay benefits during recessions
- Collect revenues during recovery
