Chapter 16 Income, Welfare, and Education Policy: Providing for Personal Security Learning Objectives Having read the chapter, the students should be able to do each of the following: Differentiate between poverty thresholds and poverty guidelines. Describe the major income security programs. Analyze education policy and the principle of education as equality of opportunity. Describe the major national health care programs. Summarize U.S. domestic policy. Chapter Outline I. Income Politics and Policies A. The Shifting Income Distribution B. Parallel Changes 1. Tax Policy and Income Inequality 2. Economic Change and Wage Stagnation C. The Partisan Divide II. Welfare Politics and Policies A. Public Assistance Programs 1. Expanding the Feederal Role 2. Eligibility for Public Assistance B. Social Insurance Programs C. The Politics of Welfare Policy III. Education Politics and Policies A. Public Education: Leveling through the Schools B. The Federal Government’s Role in Education Policy 1. Federal Grants-in-Aid for Education 2. Partisan Conflict Over Education Policy IV. The American Way of Promoting Economic Security V. Summary Focus and Main Points At the writing of the Constitution, James Madison noted that no issue is more salient and likely to provoke conflict than the question of how society’s resources are distributed. And indeed, a IM – 16 | 1 © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. host of government policies touch directly or indirectly on the distribution of resources and have rarely been resolved without a fight. This chapter will examine three such policy areas: income policy, which centers on the question of how taxes will be distributed; welfare policy, which addresses how those who are economically disadvantaged will be helped; and education policy, which includes the issue of how to prepare individuals for economically productive lives. The main points of the chapter are: Tax policy and market changes have contributed to America’s widening income gap. Democrats and Republicans differ sharply in their tax policies and philosophies. Welfare policy has been a partisan issue, with Democrats taking the lead on government programs to alleviate economic insecurity and Republicans acting to slow down or limit these initiatives. Social welfare programs are designed to reward and foster self-reliance or, when this is not possible, to provide benefits only to those individuals who are truly in need. A prevailing principle in the United States is equality of opportunity, which in terms of policy is most evident in the area of public education. The United States invests heavily in its public schools and colleges. Chapter Summary The United States has several areas of policy that affect Americans’ economic wellbeing. Tax policy is one of these policy areas. In recent decades, taxes on higher incomes and capital gains have been lowered substantially, which has contributed to a dramatic increase in income inequality. At an earlier time, a range of government policies, everything from a high tax rate on upper incomes to the GI Bill, had the opposite effect, reducing the gap between the wealthy and the rest of America. Wage stagnation has been a persistent problem for a half century. In terms of real income, America’s lower- and middle-income workers are getting roughly the same pay today as they did in 1970. Although government policy has played a part in this development, it is mainly a consequence of changes in the U.S. economy. In the period after World War II, America’s manufacturing sector was booming, providing millions of well-paying jobs, particularly for union workers. Since 1970, the manufacturing sector has shrunk dramatically, giving way to the service sector, where jobs on average pay less and have a lower economic multiplier. The United States has a complex social welfare system of multiple programs addressing specific welfare needs. Many social welfare problems are targeted for the poor. Roughly one in seven Americans falls below the government-defined poverty line, including a disproportionate number of children, female-headed families, minority- group members, and rural and inner-city dwellers. Public assistance programs, as antipoverty programs are called, are available only to individuals who qualify for benefits by meeting the specific eligibility criteria. IM – 16 | 2 © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Not all welfare programs are in the public assistance category. There are also social insurance programs, including social security and Medicare, which are funded by payroll taxes paid by potential recipients, who, in this sense, earn the benefits they later receive. Because of this arrangement, social insurance programs have broad public support. In contrast, public assistance programs are funded with general tax revenues and are targeted at individuals and families in financial need. Because of a widespread belief that many welfare recipients could get along without assistance if they tried, these programs do not have broad public support, receive only modest funding, and sharply divide the two parties. Democrats have taken the lead on government programs to alleviate economic insecurity while Republicans have sought to cut back or decentralize these initiatives. Compared to other democracies, the United States spends more heavily on public education, a policy consistent with its cultural emphasis on equality of opportunity. That policy is evident, for example, in standardized school curricula and the nation’s extensive system of public colleges and universities. Like social welfare, however, education is a partisan issue involving disputes over school choice, spending levels, and mandatory high-stakes testing. IM – 16 | 3 © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.