Karger and stoesz policy model

Eighth Edition

American Social Welfare Policy A Pluralist Approach

Howard Jacob Karger Hawai’i Pacific University, School of Social Work

David Stoesz Flinders University/Carnegie Mellon University-Australia

330 Hudson Street, NY, NY 10013

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Library of Congress Cataloging-in-Publication Data

Names: Karger, Howard Jacob, author. | Stoesz, David, author. Title: American social welfare policy : a pluralist approach / Howard Jacob Karger, Hawai’i Pacific University, School of Social Work, David Stoesz. Description: Eighth Edition. | New York : Pearson, [2018] | Revised edition of American social welfare policy, [2014] | Includes bibliographical references and index. Identifiers: LCCN 2016040802 | ISBN 9780134303192 (alk. paper) | ISBN 0134303199 (alk. paper) Subjects: LCSH: Public welfare—United States. | United States—Social policy. | Welfare state—United States. Classification: LCC HV95 .K354 2018 | DDC 361.973—dc23 LC record available at https://lccn.loc.gov/2016040802

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iii

The years since the publication of the last full edi- tion have been marked by dramatic events on the domestic and international fronts. Although the U.S. economy bounced back from the global finan- cial crisis (GFC) of 2007 to 2008, the post- recession gains were largely realized by the top 1 percent of U.S. wage earners who accounted for 85 percent of total income growth from 2009 to 2013. By 2013, the 1.6 million families in the top 1 percent earned 25 times more than the 161 million families in the bottom 99 percent. It is little wonder that this egregious income inequality led to large numbers of angry people, which in turn, fueled the rise of presi- dential candidate Donald Trump.

The international front was especially turbulent as the Arab Spring toppled or destabilized govern- ments in Tunisia, Egypt, Yemen, Libya, and Syria. By 2016, at the same time, the war in Iraq and Afghanistan continued to drag on. By mid-2016, an increasingly bloody civil war in Syria claimed more than 400,000 lives and was largely responsible for the 1 million immigrants that entered Europe in 2015.

The instability in the Middle East led to the creation of ISIL (Islamic State), a militant group di- rectly or indirectly responsible for numerous mas- sacres, including the 2015 attack on the Bataclan Theatre near Paris (130 dead and 368 injured); the 2015 Ankara, Turkey, bombing (102 dead and 400 injured); the 2015 San Bernardino attack (14 dead and 24 injured); and the 2016 Orlando nightclub attack (49 dead and 53 injured). Western nations continue the struggle to find a balance between pro- tecting privacy, civil liberties, and public safety.

Despite the domestic and international chal- lenges, the way forward was stymied as the federal government was virtually paralyzed by the Repub- lican Party’s control of the Senate and the House of Representatives. With the death of Antonin Scalia, even the Supreme Court was divided between lib- erals and conservatives. A divided government re- sulted in a virtual standstill of policy options.

In the midst of this virtual paralysis, several important policy developments emerged in the first term of the Obama administration. Some of these achievements include the Dodd–Frank Wall Street Reform and Consumer Protection Act, one of the

most significant financial reform acts since the Great Depression; the Patient Protection and Affordable Care Act of 2010 (known as Obamacare); repeal of the military’s Don’t Ask Don’t Tell (DADT) rule; the Credit Card Accountability, Responsibility, and Disclosure Act; and the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPS).

The presidential election of 2012 proved to be one of the most acrimonious in recent memory. Ex- treme Republican Party ideologues drove the party far to the right in areas such as contraception, abor- tion, health care, voter’s rights, and immigration. In the end, President Obama’s moderate approach tri- umphed as he won 303 electoral votes compared to Mitt Romney’s 206 votes. The election illustrated the sharp divisions in American society between the more liberal Northeast, West Coast, some West- ern and Midwestern states, and the more conser- vative South and rural areas. These patterns reflect differing perceptions of where America should be heading.

The acrimony of the 2012 presidential election was far eclipsed by the 2016 presidential election, as Republican candidates vied to outdo each other in appealing to the white and increasingly conservative base of the party. Extremist candidates like Ted Cruz and Donald Trump handily defeated more moderate candidates such as Jeb Bush and John Kasich.

On the Democratic side, Vermont Senator Bernie Sanders introduced a European-style democratic socialist vision to mainstream American politics. Defying all odds, Sanders won several primaries against favored Democratic nominee Hillary Clinton, including Oregon, North Dakota, Minnesota, New Hampshire, Michigan, Indiana, and Vermont. In the raw primary vote count, Sanders received 12 million votes compared to Clinton’s 15.8 million.

In one of the most shocking upsets in recent po- litical history, Donald Trump beat Hillary Clinton for the presidency, despite some polls showed her chances for victory at between 70 and 99 percent. Progressives of all ilk and Democrats were in shock, disbelief, and fear.

Several changes will be required if human ser- vice professionals are to reclaim a prominent role in social policy that they had at the turn of the century through luminaries such as Jane Addams, Lillian

P r e fac e

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iv Preface

Wald, Grace and Edith Abbott, Mary Simkhovitch, and others. Markets have been a primary means of distributing goods and services to the non-poor, and the application of market dynamics to low- income families should be evaluated on merit, not discarded solely on ideological grounds. State and local politics have been important arenas for intro- ducing innovations in social welfare and for pro- viding social workers a first step on the ladder of public service. Such opportunities should be cele- brated, not dismissed.

Public policy involves the kind of power that oc- curs in three basic forms: money, votes, and networks. Although these resources have been the staple of pol- itics, the information age requires players to possess a higher level of sophistication. To be competitive, one must have command of information systems, large data sets, and complex decision menus.

If social work can educate students about these methods and begin to insert itself into the policy environment, the profession will again become an influential force in social policy. On the other hand, if the profession rests on its historic laurels, it will remain tangential in the policy arena. Such an eventuality would essentially waste the substantial assets that social work brings to social affairs: a dis- tinguished legacy, the altruism of the young, and a unique moral imperative.

This edition of American Social Welfare Policy attempts to provide the information necessary for understanding social welfare policy nationally and internationally. In addition to discussing the basic concepts, policies, and programs that comprise

American welfare state, the text includes infor- mation on the voluntary nonprofit sector, the for- profit corporate sector, and the new strategy in social policy (i.e., tax policy and expenditures). The penultimate chapter examines food policy, and environmental and sustainability issues. The final chapter examines the influence of global capital- ism, a development that not only weds the devel- oped nations to the undeveloped nations but also in the process shifts capital and jobs in unprece- dented numbers. In recognition of our increasingly interconnected global environment, this edition has put more emphasis on international social welfare policy.

Acknowledgments The reviewers of this and previous editions have provided an invaluable service in identifying de- ficiencies. Earlier editions were aided by Dr. Stephen Thornton, Deanna Machin, Dr. Peter Kindle, and Crystal Joyce. In addition, the follow- ing reviewers contributed useful suggestions for this edition: Karen Tabb Dina, University of Illi- nois at Urbana-Champaign; Savvas Georgiades, University of North Carolina at Pembroke; Justine McGovern, Lehman College CUNY; and Clarence Williams, Grambling State University. This edition owes a debt to Elisa Arrington. In anticipation of the next edition, comments by students and faculty are welcome. The authors can be reached via email: Howard Karger at Hkarger@gmail.com and David Stoesz at Davestoesz@aol.com.

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Howard Karger (right) is professor, Hawai’i Pacific University, School of Social Work. David Stoesz (left) is professor, Flinders University/Carnegie Mellon University-Australia. Howard and David have been friends and colleagues for more than three decades. In addition to eight editions of

American Social Welfare Policy, they have coauthored three other books: The Politics of Child Abuse in America (with Lela Costin) (Ox- ford University Press, 1996); Reconstructing the American Welfare State (Rowman and Little- field, 1992); and (with Terry Carrillo), A Dream Deferred ( Aldine, 2010). Howard’s book, Short- changed: Life and Debt in the Fringe Economy (Berret-Koehler, 2005) examines the financial practices and products that exploit millions of American families. The book won the 2006 Inde- pendent Publishers Award in Finance/Investment/ Economics. David’s book, Quixote’s Ghost: The Right, the Liberati, and the Future of Social Policy (Oxford University Press, 2005), explains how con- servatives have assumed control of domestic policy and proposes a new framework for social policy. Quixote’s Ghost won the 2006 Pro- Humanitate Literary Award.

a b o u t t H e au t H o r S

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PArt ONE American Social Welfare Policy

cHaPter 1 Social Policy and the American Welfare State 1

cHaPter 2 A Brief History of the American Social Welfare State 25

cHaPter 3 Social Welfare Policy Research 47

cHaPter 4 Discrimination in American Society 59

cHaPter 5 Poverty in America 101

PArt tWO the Voluntary and For-Profit Social Sectors

cHaPter 6 The Voluntary Sector Today 131

cHaPter 7 Privatization and Human Service Corporations 145

PArt tHrEE the Government Sector

cHaPter 8 The Making of Governmental Policy 167

cHaPter 9 Tax Policy and Income Distribution 187

cHaPter 10 Social Insurance Programs 205

cHaPter 11 Public Assistance Programs 227

cHaPter 12 The American Health Care System 247

cHaPter 13 Mental Health and Substance Abuse Policy 281

cHaPter 14 Criminal Justice 299

cHaPter 15 Child Welfare Policy 317

cHaPter 16 Housing Policies 333

cHaPter 17 The Politics of Food Policy and Rural Life 359

PArt FOUr the American Welfare State in Perspective

cHaPter 18 The American Welfare State in International Perspective 389

b r i e f co n t e n t S

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PArt ONE American Social Welfare Policy

cHaPter 1 Social Policy and the American Welfare State 1

Definitions of Social Welfare Policy 4

Social Problems and Social Welfare Policy 4

Social Work and Social Policy 5

Values, ideology, and Social Welfare Policy 5

the Political economy of american Social Welfare 6

the u.S. economic continuum 7 Keynesian Economics 7 • Conservative or Free Market Economics 8 • The Global Financial Crisis (GFC) 11 • Democratic Socialism 11

the u.S. Political continuum 12 Liberalism and Left-of-Center Movements 13 • classical conservatives and the far right 15

the Welfare Philosophers and the neoconservative think tanks 17

conclusion 18 Discussion Questions 22 • Notes 22

cHaPter 2 A Brief History of the American Social Welfare State 25

early antecedents of Welfare Statism 26 Judeo-christian Doctrine and Social Welfare 26

the english Poor Laws 27

the Poor in colonial america 28

Social Welfare in the civil War era 29

industrialization and the Voluntary Sector 29 Social Darwinism 31 • Religion and Social Welfare 31 • Charity Organization Societies 32 • Settlement Houses 33 • African American Associations 35 • The Social Casework Agency 36 • The Progressive Movement 37

The Great Depression and the Modern Welfare State 37

the Post-World War ii Welfare State 39

the Languishing Social Welfare State 41

conclusion 43 Discussion Questions 44 • Notes 45

cHaPter 3 Social Welfare Policy Research 47

a Proposed Model for Policy analysis 50 Historical Background of the Policy 51 • Problems That Necessitate the Policy 52 • Policy Description 52 • Policy Analysis 52

researching and analyzing a Social Policy assignment 54

Social Policy research and the internet 55

conclusion 56 Discussion Questions 56 • Notes 56

cHaPter 4 Discrimination in American Society 59

Discrimination 60

racism 61

the Minority Middle class 61

african americans 63 The Demography of African Americans 63 • African Americans in Poverty 63 • The “Diswelfare” of african americans 63

Hispanic americans 66 Hispanic Poverty and Income 67 • Diversity in the Hispanic Population 67

american indians 67

asian americans 68

immigrants and immigration 69 immigration-based Discrimination in europe 71

Women and Society 73 Violence and Sexism 73 • The Feminization of Poverty 73 • Myths around Women and Work 75 • Income and Job Disparities between Men and Women 76 • Day Care: A Barrier to Female Employment 76 • Other Obstacles Faced by Working Women 78 • Abortion and Women’s Rights 79 • Gender Discrimination and Violence in an international context 80

Gays and Lesbians: Two Populations at Risk 82 Gay Rights 84 • Gays and Lesbians in the Military 84 • Gay and Lesbian Family Life 85 • AIDS and the Gay community 86

co n t e n t S

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ageism 87 Elderly Poverty and Social Programs 87 • Health care and the elderly 88

People with Disabilities 88

Legal attempts to remedy Discrimination 91 Desegregation and the civil rights Movement 91 • Affirmative Action 91

conclusion 92 Discussion Questions 93 • Notes 93

cHaPter 5 Poverty in America 101

theories on Poverty 102 Culture of Poverty 102 • Eugenics and Poverty 103 • The Progressive understanding of Poverty 103

Who Makes up the Poor? 104

Measuring Poverty 106 Measuring the Depth of Poverty 109

families and Poverty 109 Child Support Enforcement 109 • Children in Poverty 110 • Poverty and the elderly 110

the rural Poor 110

Work and Poverty 111 A Profile of the Working Poor 111 • Why Are There Working Poor? 111 • Underemployment and Unemployment 112 • Dual Labor Markets 113 • Wages and Poverty 114

Strategies Developed to combat Poverty 116 IDAs 116 • Three Approaches to Combat Poverty 116

america’s fringe economy 118 the unbanked and the functionally Poor 119 • Credit and the Poor 119 • Transportation in the Fringe economy 122

World Poverty 123

conclusion 125 Discussion Questions 126 • Notes 126

PArt tWO the Voluntary and For-Profit Social Sectors

cHaPter 6 The Voluntary Sector Today 131

traditional Providers 132

the independent Sector 133

advancing Social Justice 135 The United Way 136 • Elite Philanthropy 136

the future of the Voluntary Sector 138 Commercialization 138 • Faith-Based Social Services 139 • Social Entrepreneurship 140 • issues facing the Voluntary Sector 141

conclusion 141 Discussion Questions 142 • Notes 142

cHaPter 7 Privatization and Human Service Corporations 145

Privatization issues 147 Commercialization 148 • Preferential Selection 148 • Dual Levels of Care 149 • Cost-Effectiveness 149 • Oligopolization 150

the challenge of Privatization 150

unions and the Private Sector 151

Social contributions of business 153

corporate influence on Social Welfare Policy 154

the future of corporate involvement in Social Welfare 155

Human Service corporations 155

Consolidation and Growth in New Human Service Markets 157

Nursing Homes 157 • Hospital Management 157 • Health Maintenance Organizations 157 • Child Care 159 • Home Health Care 159 • Corrections 159 • Public Welfare 159

Private Practice 160 the future of Private Practice 162

conclusion 162 Discussion Questions 163 • Notes 163

PArt tHrEE the Government Sector

cHaPter 8 The Making of Governmental Policy 167

technical aspects of the Policy Process 168

a critical analysis of the Policy Process 170

the Policy Process 171 Social Stratification 171 • Formulation 172 • Legislation 173 • The Fiscal Cliff and Sequestration 177 • Implementation 178 • Evaluation 178 • Marginalization 179

Social Work and advocacy organizations 181 advocacy organizations and the new Policy institutes 182

Political Practice 183

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conclusion 184 Discussion Questions 185 • Notes 185

cHaPter 9 Tax Policy and Income Distribution 187

History of u.S. tax Policy 188

federal taxes 189

taxes, Spending, and the Debt 190

tax Policy and Special interests 192

income Distribution 193

State tax Policy and the Poor 194

the efficiency of tax Policy in reducing Poverty 195 tax expenditures as antiPoverty Policy 196

the anti-tax Movement 197

the Debate over economic inequality 198

conclusion 201 Discussion Questions 201 • Notes 202

cHaPter 10 Social Insurance Programs 205

Definition of Social insurance 206

the background of Social insurance 207

the financial organization of Social insurance 207

Key Social insurance Programs 208 OASDI 208 • Unemployment Compensation 210 • Workers’ compensation 212

the Social Security Dilemma 212 arguments against the current Social Security System 213 • Arguments for the Current Social Security System 213 • Social Security in Trouble 214 • The Long-Term Prospects for Social Security 214

Medicare (Hospital insurance and Supplementary Medical Insurance) 216

Lingering Problems in the Social Security System 216

reforming Social Security 217 Privatizing Social Security 217

Pension Systems in Selected industrialized countries 218

Canada’s Retirement Income System 218 • Retirement in the United Kingdom 219 • The chilean experiment in Privatizing Social Security 220 • Germany’s Social Security System 220 • The Greek Pension System 221 • The Australian Retirement System 221

conclusion 222 Discussion Questions 222 • Notes 222

cHaPter 11 Public Assistance Programs 227

assumptions and Myths about Public assistance 228

aid to families with Dependent children 231 the Personal responsibility and Work opportunity Reconciliation Act of 1996 232 • Has the PRWORA Worked? 235 • Teenage Pregnancy 236

Supplemental Security Income (SSI) 237 Problems in SSi 238

General Assistance 239

trends and issues in Public assistance 239 the transformation of Welfare Policy into Labor Policy 239 • Welfare to Work (Workfare) 241 • Welfare Behaviorism 241

conclusion 242 Discussion Questions 243 • Notes 243

cHaPter 12 The American Health Care System 247

the uninsured 248

the organization of Medical Services 248

Major Public Health Programs: Medicare, Medicaid, and S-cHiP 250

Medicare 250 • Medicaid 254 • the children’s Health insurance Program (CHIP) 256

the Health care crisis 256 overview of u.S. Health care expenditures 256

explaining the High cost of u.S. Health care 258 Hospital Costs 259 • Physicians’ Salaries 259 • The Pharmaceutical industry 260

cutting Health care costs 261 Managed Care 261 • The Underinsured 263

Gun Violence and Health Care Policy 263 The Debate around Gun Control 264 • What can be Done 266

u.S. Health care in international Perspective 266 Comparative Analysis: Health Care in Canada, the united Kingdom, and australia 267

reforming u.S. Health care 271 National Health Service 271 • National Health Insurance 271 • Incremental Reform 272 • The Patient Protection and Affordable Care Act (P.L. 111-148) 273

conclusion 274 Discussion Questions 275 • Notes 275

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cHaPter 13 Mental Health and Substance Abuse Policy 281

Mental Health reform 282

the community Mental Health centers acts 283

Deinstitutionalization 283

the advent of Psychotropic Medication 285

the Psychopharmacological Scandal 286

children’s Mental Health 288

Mental Health and Substance abuse funding 289

Parity for Mental Health care 290

Post-traumatic Stress Disorder 291

Substance abuse 292 Alcohol Abuse 292 • Drug Abuse 293

conclusion 294 Discussion Questions 294 • Notes 295

cHaPter 14 Criminal Justice 299

History of u.S. criminal Justice 300

the criminal Justice System 301

Juvenile Justice 303

the new Jim crow 306

the War on Drugs 308

the underclass and “Moral Poverty” 309

the Prison industrial complex 310

Legalization of Drugs 312

Police Violence 313

conclusion 313 Discussion Questions 314 • Notes 314

cHaPter 15 Child Welfare Policy 317

History of u.S. child Welfare Policy 318

Protective Services for children 320

foster care for children 323

adoption 325

Head Start 326

emerging issues in child Welfare 326 Day Care 327 • Maternal and Child Health 327 • Teen Pregnancy 327

conclusion 328 Discussion Questions 329 • Notes 329

cHaPter 16 Housing Policies 333

overview of Housing Legislation 334

The Federal Government and Low-Income Housing Programs 336

issues in Housing Policy 340 Trends in U.S. Housing 340 • Problems in Homeownership 341 • Homeownership and the Subprime Mortgage Crisis 341 • The Downside of Homeownership 342 • Problems in Finding Affordable Rental Housing 343 • Gentrification 344 • Overcrowded and Deficient Housing 345 • Other Factors affecting Housing 345

Homelessness 346 characteristics of the Homeless Population 346 • Trends in Homelessness 348 • Attempts to Address Homelessness 349

Housing reform 350

Housing in an international context 351 comparison of u.S. and european Housing 351 • Public Housing 352

conclusion 352 Discussion Questions 353 • Notes 353

cHaPter 17 The Politics of Food Policy and Rural Life 359

the contradictions of american food Policy 360

Hunger in the united States 361

Governmental Food Programs 362 SNAP (Formerly Called Food Stamps): A Description of the Program 362 • SNAP: Who is in the Program, and What Does it Cost? 364 • Special Supplemental nutrition Program for Women, infants, and Children (WIC) 364 • Other Food Programs 366 • Have the Food Programs Worked? 367

farming in the united States 370 Governmental Farm Policies 370 • Biofuels, Fracking, and Farming 371 • The Face of u.S. farming 372

farmworkers 374

issues in american farming 376 The Corporatization of American Farming 377 • Genetic Engineering 377 • Global Trade 378 • Food Safety 378 • Local Selling 379 • Organic Farming 379 • Sustainable Development 379 • Climate change 379

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conclusion 382 Discussion Questions 382 • Notes 383

PArt FOUr the American Welfare State in Perspective

cHaPter 18 The American Welfare State in International Perspective 389

typologies of Welfare States 390

american exceptionalism 391

the Welfare State in transition 393

ranking national Development 394

the fourth World 395

capability Poverty 397

international aid 399

Global Capital 399

the future 401

conclusion 402 Discussion Questions 403 • Notes 403

Glossary 407

index 415

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Social Policy and the American Welfare State

C h a p t e r 1

Source: Jeff Greenberg/the Image Works

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2 part 1 american Social Welfare policy

Social welfare policy is arguably best viewed through the lens of political economy (i.e., the interaction of economic, political, and ideological forces). This chapter provides an overview of the American welfare state through that lens. In par- ticular, it examines various definitions of social welfare policy, the relationship between social pol- icy and social problems, and the values and ideol- ogies that drive social welfare in the United States. In addition, the chapter examines the effects of ideology on the U.S. welfare state, including the important roles played by conservatism and lib- eralism (and their variations) in shaping welfare policy. An understanding of social welfare policy requires the ability to grasp the economic justi- fications and consequences that underlie policy decisions. As such, this chapter contains a brief introduction to Keynesianism, free market eco- nomics, socialism, and communitarianism, among others.

American social welfare is in transition. Start- ing with the Social Security Act of 1935, liberals argued that federal social programs were the best way to help the disadvantaged. Now, after 70 years of experimenting with the welfare state, a discern- ible shift has occurred. The conservatism of U.S. culture—so evident in the Reagan, Bush (both Bushes), and even Clinton and Obama presiden- cies—has left private institutions to shoulder more of the welfare burden. For proponents of social jus- tice, the suggestion that the private sector should assume more responsibility for welfare represents a retreat from the hard-won governmental, social leg- islation that provided essential benefits to millions of Americans. Justifiably, social advocates fear the loss of basic goods and services during the transition in social welfare.

The election of Barack Obama as the 44th President of the United States in 2008 not only broke a racial barrier but also promised to sweep away the strident conservatism that had defined the presidency of George W. Bush. The Obama victory, with 52 percent of the vote and increased Demo- cratic majorities in both chambers of Congress, heartened liberals who had anticipated an expan- sion of government social programs. However, the euphoria among liberals soon gave way to despair as the Democratic Party lost control of the House of Representatives and barely held on to the Senate in the midterm elections of 2010. Although Obama won the presidency for a second term in 2012, the

midterm election of 2014 saw the Democratic Party also losing control of the Senate.

While liberal pundits hailed the resurgence of “a vast new progressive movement,”1 struc- tural limits and the emergence of a strong reac- tive element would restrain Obama’s ambitions. Massive deficits left by the Bush administration, compounded by a severe global financial crisis and two unfunded wars, meant that economic issues would trump other priorities. Reduced tax revenues would impede the ability of the govern- ment to meet existing obligations, let alone expand social programs. Obama’s centrist inclinations to build bipartisan support for his legislative agenda failed as newly elected extremist Tea Party legisla- tors squashed most of his attempts at compromise. Instead, ideologically driven legislators focused on social issues such as abortion, and even resuscitated previously long-dead issues like contraception. Parts of the nation had not just turned right, but hard right. The fires were further stoked by allega- tions around Obama’s birth certificate, whether he was a Muslim and a socialist, and so forth.

The 2012 presidential election was marked by the often extreme positions taken by Republican presidential contenders. Long-dormant issues resur- faced as Republican candidates vied for the support of the religious right and Tea Partiers. This politi- cal climate led to an anti-science orientation, often reflected in wildly unsubstantiated claims like birth control pills can cause prostate cancer. Former Mis- souri Republican congressperson Todd Akin stated that doctors had told him it is extremely rare for “legitimate” rape victim to become pregnant: “If it’s a ‘legitimate’ rape, the female body has ways to try to shut that whole thing down.”2 Despite the lack of any medical evidence, former Republican presidential candidate Michelle Bachmann warned that mental retardation could occur from the HPV (human papilloma virus) vaccine.

The 2016 presidential race continued the Republican Party’s anti-science orientation. U.S. Senator and presidential candidate Ted Cruz compared himself to Galileo when he stated that “Today, the global warming alarmists are the equivalent of the flat-Earthers. It used to be [that] it is accepted scientific wisdom the Earth is flat, and this heretic named Galileo was branded a denier.” For one, Galileo never argued against flat-Earthers; instead he argued that the Earth revolved around the sun. Second, he never disputed the scientific data

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Chapter 1 Social policy and the american Welfare State 3

of his time. On the contrary, Galileo imposed sci- entific data where there was none.3 Presidential candidates like former Texas Governor Rick Perry and Rick Santorum believe that evolution is still an open question. Virtually all 2016 Republican presidential contenders argued that climate change is either a hoax or unrelated to human activity.4 The same denial of climate change is also true for Donald Trump who was elected in one of the most contentious political races in modern history.

Nowhere is the power of conservatives more evi- dent than in gun control. Despite the spate of mass shootings—no gun legislation has been passed. The response by the National Rifle Association (NRA) is to have more—not less—guns. The response of many politicians was to pray for the families of the dead.

The harsh rhetoric illustrates the nation’s regional fissures. For instance, a 2012 Public Policy poll of registered Republican voters found that 45 percent of Alabamians and 52 percent of Mississippians believed that Obama is a Muslim (the other 40 percent were not sure). Only about 25 percent of those voters believed in evolution.5 These fissures were the most apparent in the surprise victory of Donald Trump over Hillary Clinton in the 2016 presidential race.

All told, the 2016 presidential campaigns cost billions, much of that coming from super Political Action committees (PACs). However, the final list of 2016 expenditures might never be known since some of the biggest spending groups were non- profit organizations that were permitted to hide their spending from public scrutiny.6 This spending spree was spurred on by the U.S. Supreme Court decision in Citizens United v. Federal Election Com- mission. The Court ruled that the First Amendment prohibited government from restricting independent political expenditures by corporations and unions.7 This decision overturned a century-old precedent allowing the government to regulate such spending.

Structural features of the American welfare state militate against a major expansion of govern- ment, per se. A pluralistic mix of private and pub- lic services is an overriding feature of U.S. social welfare. As in other realms, such as education, in social welfare, private institutions coexist alongside those of the public sector. U.S. social welfare has a noble tradition of voluntary citizen groups taking the initiative to solve local problems. Today, pri- vate voluntary groups provide valuable services to AIDS patients, the homeless, immigrants, victims of domestic violence, and refugees.

Social welfare has become big business. During the last 30 years, the number of human service cor- porations—for-profit firms providing social welfare through the marketplace—has increased dramati- cally. Human service corporations are prominent in long-term nursing care, health maintenance, child day care, psychiatric and substance abuse services, and even corrections. For many welfare profession- als, the privatizing of social services is troubling, occurring as it does at a time when government has reduced its commitment to social programs. Yet, human service corporations will likely continue to be prominent players in shaping the nation’s social wel- fare policies. As long as U.S. culture is democratic and capitalistic, entrepreneurs will be free to estab- lish social welfare services in the private sector, both as nonprofit agencies and as for-profit corporations.

The mixed welfare economy of the United States, in which the voluntary, governmental, and corporate sectors coexist, poses serious questions for social wel- fare policy. To what extent can voluntary groups be held responsible for public welfare, given their lim- ited fiscal resources? For which groups of people, if any, should government divest itself of responsibil- ity? Can human service corporations care for poor and multiproblem clients while continuing to gen- erate profits? Equally important, how can welfare professionals shape coherent social welfare policies, given the fragmentation inherent in such pluralism? Clearly, the answers to these questions have much to say about how social welfare programs are perceived by human service professionals, their clients, and the taxpayers who continue to subsidize social programs.

The multitude of questions posed by the transi- tion of social welfare is daunting. Temporarily satis- fied by the 1996 welfare reform bill, conservatives have shifted their attention to advocating privat- ization of social insurance programs such as Social Security and Medicare. Past advocates of social jus- tice such as Jane Addams, Whitney Young Jr., and Wilbur Cohen, to name a few, interpreted the inad- equacy of social welfare provision as an opportu- nity to further social justice. It remains for another generation of welfare professionals to demonstrate the same imagination, perseverance, and courage to advance social welfare in the years ahead. Those accepting this challenge will need to be familiar with the various meanings of social welfare policy, dif- fering political and economic explanations of social welfare, and the multiple interest groups that have emerged within the U.S. social welfare system.

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Definitions of Social Welfare Policy The English social scientist Richard Titmuss defined social services as “a series of collective interventions that contribute to the general welfare by assigning claims from one set of people who are said to pro- duce or earn the national income to another set of people who may merit compassion and charity.”8 Welfare policy, whether it is the product of gov- ernmental, voluntary, or corporate institutions, is concerned with allocating goods, services, and opportunities to enhance social functioning.

William Epstein defined social policy as “social action sanctioned by society.”9 Social policy can also be defined as the formal and consistent order- ing of human affairs. Social welfare policy, a subset of social policy, regulates the provision of benefits to people to meet basic life needs, such as employment, income, food, housing, health care, and relationships.

Social welfare policy is influenced by the con- text in which benefits are provided. For example, social welfare is often associated with legislatively mandated programs of the governmental sector, such as Temporary Assistance for Needy Families (TANF). In the TANF program, social welfare pol- icy consists of the rules by which the federal and state governments apportion cash benefits to an economically disadvantaged population. TANF benefits are derived from general revenue taxes (often paid by citizens who are better-off). But this is a simplification of benefits provided to those deemed needy. Benefits provided through govern- mental social welfare policy include cash, along with noncash or in-kind benefits, including per- sonal social services.10 Cash benefits can be further divided into social insurance and public assistance grants (discussed in depth in Chapters 10 and 11).

In-kind benefits (provided as proxies for cash) include benefits such as food stamps; Medicaid; housing vouchers; Women, Infants, and Children (WIC) coupons; and low-income energy assistance. Personal social services are designed to enhance relationships between people as well as institutions, such as individual, family, and mental health treat- ment; child welfare services; rehabilitation coun- seling; and so forth. Although complicated, this classification reflects a common theme—the redis- tribution of resources from the better-off to the more disadvantaged. This redistributive aspect of social welfare policy is generally accepted by those who view social welfare as a legitimate function

of the state. Governmental social welfare policy is often referred to as “public” policy because it is the result of decisions reached through a legislative process intended to represent the entire population.

But social welfare is also provided by nongov- ernmental entities, in which case social welfare policy is a manifestation of “private” policy. For example, a nonprofit agency with a high demand for its services and limited resources may establish a waiting list as agency policy. As other agencies adopt the same strategy for rationing services, clients begin to pile up on waiting lists, and some are eventually denied services. Or consider the practice of “dump- ing,” a policy that has been used by some private health care providers to abruptly transfer uninsured patients to public hospitals while they are suffering from traumatic injuries. Rescission refers to termi- nating an insurance policy due to concealment, mis- representation, or fraud. In health insurance, it refers to terminating a policy following the diagnosis of an expensive illness, with the insurance company claim- ing the policyholder withheld relevant information about a pre-existing medical condition. Although partially limited by the Patient Protection and Affordable Care Act of 2010, it continues in some form by some insurance companies. Patients some- times die as a result of private social welfare policy.

Because U.S. social welfare has been shaped by policies of governmental and nonprofit agencies, confusion exists about the role of for-profit social service firms. The distinction between the public and private sectors was traditionally marked by the boundary between governmental and nonprofit agencies. Profit-making firms are “private” nongov- ernmental entities that differ from the traditional private voluntary agencies because they operate on a for-profit basis. Within private social welfare, it is therefore necessary to distinguish between policies of for-profit and nonprofit organizations. A logical way to redraw the social welfare map is to adopt the following definitions: Governmental social welfare policy refers to decisions made by the state, volun- tary social welfare policy refers to decisions reached by nonprofit agencies, and corporate social welfare policy refers to decisions made by for-profit firms.

Social Problems and Social Welfare Policy Social welfare policy often develops in response to social problems. The relationship between social problems and social welfare policy is not linear, and

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not all social problems result in social welfare pol- icies. Or, social welfare policies are funded at such low levels that they are ineffectual. For example, the Child Abuse Prevention and Treatment Act of 1974 was designed to ameliorate the problem of child abuse, yet underbudgeting left Child Protective Service (CPS) workers unable to promptly investi- gate the increase in child abuse reports, resulting in many children dying or undergoing serious injury.

Social welfare is an expression of social altruism that contributes to the maintenance and survival of society by helping to hold together a society that can fracture along social, political, and economic stress lines. Social welfare policy is also useful in enforcing social control, especially as a proxy for more coercive law-based measures.11 Simply put, the poor are less likely to revolt against the unequal distribution of wealth and privilege when their basic needs are met. Social welfare benefits also subsidize employers by supplementing low and non-livable wages, thereby maintaining a work incentive. With- out social welfare benefits like earned income tax credit (EITC), employers would have to raise wages and therefore consumer prices. Social welfare bene- fits also support key industries, such as agriculture (food stamps), housing (e.g., Section 8), and health care (e.g., Medicaid and Medicare). If welfare ben- efits were suddenly eliminated, several U.S. busi- nesses would collapse, and prices for many goods and services would rise. Social welfare benefits help stabilize prices and maintain economic growth.

Social welfare policies also relieve the social and economic dislocations caused by the uneven nature of economic development under capitalism. For example, one of the main features of capitalism is a constantly changing economy where jobs are cre- ated in one sector and lost (or exported) in another, thereby resulting in large islands of unemployed workers. Examples of this include closing Block- buster, Borders, Radio Shack, Circuit City, and other retail store outlets. The increased use of scan- ners in supermarkets will result in fewer cashiers. Myriad social welfare programs, such as unem- ployment insurance and food stamps, help soften the transition. Finally, social welfare policies are a means for rectifying past and present injustices. For example, affirmative action policies were designed to remedy the historical discrimination that denied large numbers of Americans access to economic opportunities and power. Teacher incentive pay and other educational policies are designed to help ameliorate the unequal distribution of resources

between underfunded urban and better-funded suburban school systems.

Social Work and Social Policy Social work practice is driven by social policies that dictate how the work is done, with whom, for how much, and toward what ends. For example, a social worker in a public mental health center may have a caseload in excess of 200 clients. The size of that caseload makes it unlikely that the worker will be able to engage in any kind of sustained therapeutic intervention beyond case management. Or consider the case worker who—in the midst of high unem- ployment—must find employment for recipient mothers about to lose benefits due to mandatory time limits. In these and other instances, economic and political factors structure the work of agencies and impede the ability of workers to succeed in their job.

An ideological preference among policymak- ers for private sector social services has resulted in less funding for public agencies. In response to diminishing revenues, public agencies adjust in pre- dictable ways, such as cutting staff (or replacing them with lower paid and less qualified workers) and expecting existing staff to do more with less. In addition, they promote short-term (or drug-based) interventions to more cheaply process clients. Cuts are made by freezing or reducing the salaries and benefits of professional staff. In large part, the accomplishments of social workers depend on available agency resources.

Social workers in private practice that depend on managed care experience similar constraints. For instance, managed care plans dictate how much a social worker will be paid and how many times they will be permitted to see a client. Accordingly, these plans structure the kinds of interventions that can be realistically implemented in the allotted time. Governmental and agency policies structure the day-to-day work of social work.

Values, Ideology, and Social Welfare Policy Social welfare policies are shaped by a set of social and personal values that reflect the preferences of those in decision-making capacities. According to David Gil, “choices in social welfare policy are

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heavily influenced by the dominant beliefs, values, ideologies, customs, and traditions of the cultural and political elites recruited mainly from among the more powerful and privileged strata.”12 How these values are played out in the realm of social welfare is the domain of the policy analyst. As Chapter 3 illustrates, social welfare policy is rarely based on a rational set of assumptions backed up by valid research.

The Pareto Optimality is a state whereby mak- ing one person or group better-off through the allocation of resources is impossible without mak- ing another person or group worse off. A Pareto Improvement occurs when a person or group is made better-off through the allocation of resources without making another person or group worse off. In the real world of social policy, the Pareto Opti- mality is typically the dominant mode.

Social policy is typically a zero-sum game whereby some people are advantaged at the expense of others. Or, at least they perceive themselves as being treated unfairly. For example, the upper 1 percent of Americans bring home nearly a quarter of the U.S. income every year and control 40 percent of the nation’s wealth.13 Despite their privilege, many see increased taxes and regulation as an unfair infringement and an attack on the most productive members of society.14 Although not directly affected, some groups see the recent U.S. Supreme Court ruling legalizing gay marriage as an assault on their religious freedom and principles.

Recent U.S. social welfare policy has been largely shaped by values around self-sufficiency, work, and the omniscience of the marketplace. As policymakers expected disadvantaged people to be more independent, support for government social programs was cut to presumably discourage dependency. Although these cuts saved money in the short run, most of them fell squarely on the shoulders of children. Eventually, cuts in social programs can lead to greater expenditures as the generation of children who have gone without essential services begins to require programs to remedy problems associated with poor maternal and infant health care, poverty, illiteracy, and family disorganization. In 2011, the International Monetary Fund (IMF) ranked the United States 32nd in public spending on family benefits, just above Lithuania, Latvia, Greece, Malta, Mexico, Chile, and Korea.15

Social values are organized through the lens of ideology. Simply put, an ideology is the framework

of commonly held beliefs through which we view the world. It is a set of assumptions about how the world works: what has value, what is worth living and dying for, what is good and true, and what is right. For the most part, these beliefs are rarely examined and are simply assumed to be true. Hence, the ideological tenets around which society is organized exist as a collective social con- sciousness that defines the world for its members. All societies reproduce themselves partly by repro- ducing their ideology; in this way, each generation accepts the basic ideological suppositions of the preceding one. When widely held ideological beliefs are questioned, society often reacts with strong sanctions. Ideological trends influence social wel- fare when adherents of one orientation hold sway in decision-making bodies.

The hold of ideology on social policy is espe- cially strong in times of threat, such as the “War on Terror.” In this instance, social welfare policy fades into the background as the perceived need for national security takes center stage. The social history of the United States has seen periods where oppressed groups assert their rights in the face of mainstream norms. Sometimes social unrest is met with force, such as in the labor strikes of 1877, while at other times, such as the Great Depres- sion, it is met with the expansion of social welfare programs.

The Political Economy of American Social Welfare The term political economy refers to the interaction of political and economic theories in understanding society. The political economy of the United States has been labeled democratic capitalism—a repre- sentative form of government that coexists with a market economy. Social welfare policy plays an important role in stabilizing society by modifying the play of market forces and softening the social and economic inequalities generated by the market- place.16 To that end, two sets of activities are nec- essary: state provision of social services (benefits of cash, in-kind benefits, and personal social services) and state regulation of private activities to alter (and sometimes improve) the lives of citizens. Social welfare bolsters social stability by helping to miti- gate the problems associated with economic dislo- cation, thereby allowing society to remain in a state of more or less controlled balance.

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Chapter 1 Social policy and the american Welfare State 7

Ideally, the political economy of the welfare state should be an integrated fabric of politics and economics; but in reality, some schools of thought contain more political than economic content, and vice versa. For example, most economic theories contain sufficient political implications to qualify them as both economic and political. Conversely, most political schools of thought contain significant economic content. It is therefore difficult to sepa- rate political from economic schools of thought. For the purposes of this chapter, we will organize the political economy of U.S. welfare into two separate categories: (1) predominantly economic schools of thought and (2) predominantly political schools of thought. Nevertheless, the reader will find a significant overlap among and between these categories.

The U.S. Economic Continuum In large measure, economics forms the backbone of the political system. For example, the modern welfare state would not exist without the contri- bution of economist John Maynard Keynes. Con- versely, the conservative movement would be

weaker without the contribution of classical or free market economists such as Adam Smith and Milton Friedman. Virtually every political movement is somehow grounded in economic thought. The three major schools that have traditionally dominated American thought are Keynesian economics; classi- cal or free market economics (and its variants); and to a lesser degree, democratic socialism.

Keynesian Economics Keynesian economics drives liberalism and most welfare state ideologies. John Maynard Keynes’ economic theories formed the substructure and foundation of the modern welfare state, and virtu- ally all welfare societies are built along his princi- ples. Sometimes called demand or consumer-side economics, this model emerged from Keynes’s 1936 book, The General Theory of Employment, Inter- est and Money.

An Englishman, Keynes took the classical model of economic analysis (self-regulating mar- kets, perfect competition, the laws of supply and demand, etc.) and added the insight that macro- economic stabilization by government is necessary to keep the economic clock ticking smoothly.17 He rejected the idea that a perfectly competitive econ- omy tended automatically toward full employment and that the government should not interfere in the process. Keynes argued that instead of being self-correcting and readily able to pull themselves out of recessions, modern economies were recession prone and had difficulty providing full employment.

According to Keynes, periodic and volatile eco- nomic situations that cause high unemployment are primarily caused by the instability in invest- ment expenditures. The government can stabilize and correct recessionary or inflationary trends by increasing or decreasing total spending on output. Governments can accomplish this by increasing or decreasing taxes (thereby increasing or decreasing consumption) and by the transfer of public goods or services. For Keynes, a “good” government is an activist government in economic matters, espe- cially when the economy gets out of full employ- ment mode. Keynesians believe that social welfare expenditures are investments in human capital that eventually increase the national wealth (e.g., by increasing productivity) and thereby boost every- one’s net income.

Keynes’s doctrine emerged from his attempt to understand the nature of recessions and depressions.

John Maynard Keynes is best known as the economic architect of the modern welfare state.

Source: pictorial press Ltd/alamy Stock photo

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Specifically, he saw recessions and depressions as emerging from businesses’ loss of confidence in investments (e.g., focusing on risk rather than gain), which in turn causes the hoarding of cash. This loss of confidence eventually leads to a shortage of money as everyone tries to hoard cash simultane- ously. Keynes’s answer to this problem was that gov- ernment should make it possible for people to satisfy their economic needs without cutting their spending, which prevents the spiral of shrinking incomes and shrinking spending. Simply put, in a depression the government should print more money and get it into circulation.18

Keynes also understood that this monetary pol- icy alone would not suffice if a recession spiraled out of control, as in the Great Depression of the 1930s. He pointed to a liquidity trap whereby peo- ple hoard cash because they expect deflation (a decrease—extreme in a depression—in the price of goods or services), insufficient consumer or indus- try demand, or some catastrophe such as war. In a depression, businesses and households fail to increase spending regardless of how much cash they have. To help an economy exit this trap, govern- ment must do what the private sector will not— namely, spend. This spending can take the form of public works projects (financed by borrowing) or direct governmental subsidization of demand (welfare entitlements). To be fair, Keynes saw pub- lic spending only as a last resort to be employed if monetary expansion failed. Moreover, he sought an economic balance: Print money and spend in a recession; stop printing and stop spending once it is over. Keynes understood that too much money in circulation, especially in times of high production and full employment, leads to inflation. Although relatively simple, Keynes’s theories represent one of the great insights of twentieth-century economic thought.19 These ideas also formed the economic basis for the modern welfare state.

Conservative or Free Market Economics Whereas liberalism is guided by Keynesian econom- ics, the conservative view of social welfare is guided by free market economics.

Adam Smith is known as the father of mod- ern capitalism, and conservative economics was arguably born in The Wealth of Nations. Smith believed in the “invisible hand” of the marketplace, or in other words, the view that the economic sys- tem was automatic, and when left undisturbed by

government or other forces, it would self-regulate, thereby ensuring maximum economic efficiency. This self-regulation, however, would be threatened by monopolies, preferential tax structures, or other treatment that favors one group over another. To ensure efficiency, markets had to be left alone. Smith believed the main measure of a nation’s wealth was in the goods and services it produced and traded (the forerunner of gross domestic prod- uct), which would lead to further economic growth. Within Smith’s economic paradigm, the proper role of government was defense, the creation and maintenance of public infrastructure, public safety and education. In turn, these activities would be financed by a fair system of taxation. 20

Although friends with John Maynard Keynes, Friedrich Hayek was his intellectual adversary. Representing the Austrian economic school, Hayek focused on the business cycle. He believed that mar- kets were organic, and any interference with their spontaneous order would hamper their efficient operation. Hayek argued that the major problem for an economy is how people’s actions are coor- dinated. He observed that free markets effectively and spontaneously (i.e., not part of anyone’s plan) coordinated people’s actions. Hayek believed that the market evolved as the result of human actions in the context of economic exchanges.21

Hayek was also a realist who understood that markets are not necessarily perfect. One problem he observed was based on the increase in the money supply by central banks. In particular, the increased money supply drives down interest rates thereby making credit artificially cheap. This leads to “ malinvestments” (i.e., bad business invest- ments) that would not occur without a distorted price signal from the market. For instance, driven by cheap credit, investors may build what turns out to be half-filled shopping malls or new commercial buildings in an already saturated market. The dot .com and housing bubbles are examples of malin- vestments. Hayek saw recessions and depressions as part of a necessary readjustment. For him, the best way to avoid busts was to avoid the booms that cause them. In contrast to the economic activism of Keynesianism, Hayek’s strategy for the Great Depression was to allow only minimal regulation of market funct ions since the market is too

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Chapter 1 Social policy and the american Welfare State 9

complex to engage in any serious forecasting. Moreover, government interference not only wors- ens the situation, but leads to further economic chaos.22

Free market economics is predicated on a belief in the existence of many small buyers and sellers who exchange homogeneous products with per- fect information in a setting in which each can freely enter and exit the marketplace at will.23 As an ideal type, none of these assumptions hold in the real world of economics. For instance, the free market model does not address the dominance of distribution networks by a single retailer like Walmart. There is nothing in the free market model that addresses the lack of equitable distribution of knowledge, experience, opportunity, and access to resources enjoyed by buyers and sellers. The free market model ignores theft, fraud, and deception in cases like Enron, and it ignores the competi- tive advantages that accrue through lobbying and special interest negotiations like Halliburton’s no competition bids for Iraq reconstruction projects. It also ignores the power of large retailers to con- trol the market by instituting late shopping hours or 24/7 businesses that make it impossible for small family-owned businesses to compete. In short, an unregulated market economy becomes monopolis- tic as more of the market is taken over by fewer enterprises.

The ascendance of the conservative economic (and social) argument accelerated after 1973, when the rise in living standards began to slow for most Americans. Conservatives blamed this economic slowdown on governmental policies—specifically, deficit spending, high taxes, and excessive regu- lations.24 In a clever sleight of hand, government went from having the responsibility to address eco- nomic problems (à la Keynes) to being the cause of them.

Milton Friedman, considered by some to be the father of modern conservative economics, was one of Keynes’s more ardent critics. In opposition to Keynes, Friedman argued that using fiscal and monetary policy to smooth out the business cycle is harmful to the economy and worsens economic instability.25 He contended that the Depression did not occur because people were hoarding money; rather, there was a fall in the quantity of money in circulation. Friedman argued that Keynesian eco- nomic policies must be replaced by simple mone- tary rules (hence the term monetarism). In effect, he believed that the role of government was to keep

the money supply growing steadily at a rate con- sistent with stable prices and long-term economic growth.26

Friedman counseled against active efforts to sta- bilize the economy. Instead of pumping money into the economy, government should simply make sure enough cash is in circulation. He called for a rela- tively inactive government in economic affairs that did not try to manage or intervene in the business cycle. For Friedman, welfare spending existed only for altruistic rather than economic reasons.27 To the right of Milton Friedman was Robert Lucas, 1994 Nobel Prize winner and developer of the “theory of rational expectations.” Lucas argued that Fried- man’s monetary policy was still too interventionist and would invariably do more harm than good.28

Developing outside of conventional econom- ics, supply-side economics enjoyed considerable popularity during the early 1980s. Led by Robert Barth, editorial page head of the Wall Street Jour- nal, supply-siders were journalists, policymakers, and maverick economists who argued that demand- side policies and monetary policies were ineffec- tive.29 They maintained that the incentive effects of reduced taxation would be so large that tax cuts would dramatically increase economic activity to the point where tax revenues would rise rather than fall. (Former President George H. W. Bush referred to this as voodoo economics in 1980.30) Specifi- cally, supply-siders argued that tax cuts would lead to a large increase in labor supply and investment and therefore to a large expansion in economic out- put. The budget deficit would evaporate because taxes, increased savings, and higher economic out- put would offset the deficit. In the early 1980s, supply-siders seized power from the Keynesians and mainstream conservative economists, many of whom believed in the same things but wanted to move more slowly.31

Although some supporters preferred to think of supply-side economics as pure economics, the theory contained enough political implications to qualify as a political as well as an economic the- ory. Popularized by supporters such as Jack Kemp, Arthur Laffer, and Ronald Reagan, supply-side economics provided the rationale for the dramatic cuts in social programs executed under the Reagan administration.

Despite their popularity in the early years of the Reagan administration, the term supply-side eco- nomics fell out of favor when it became evident that massive tax cuts for the wealthy and corporations

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did not result in increased productivity. Instead, the wealthy spent their tax savings on luxury items, and corporations used tax savings to purchase other companies in a merger mania that took Wall Street by surprise. Some corporations took advantage of temporary tax savings to transfer their operations abroad, further reducing the supply of high-paying industrial jobs in the United States. For these and other reasons, the budget deficit grew from about $50 billion a year in the Carter term to $352 billion a year in 1992.32

Although the term supply-side economics fell out of favor by the late 1980s, its basic tenets, such as the belief that massive tax cuts for the rich would increase productivity (and the necessity of social welfare spending cuts), were adopted enthu- siastically by the G.W. Bush administration in the form of the Economic Growth and Tax Relief Rec- onciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). Citizens for Tax Justice estimated that more than $1 trillion has been lost to the U.S. Treasury as a result of the Bush tax cuts (later con- tinued by the Obama administration).33 The result of these policies mirrored the effects of the earlier supply-side doctrine: huge federal and state budget shortfalls, corporate hoarding, greater economic inequality, and stagnant wages.34 The federal bud- get deficit rose to $1.4 trillion in 2009. It stayed above the $1 trillion mark until 2012, after which it fell to $583 billion in 2015.35

Conservative economists argue that large social welfare programs–including unemployment bene- fits and public service jobs—are detrimental to the society in two ways. First, government social pro- grams erode the work ethic by supporting those not in the labor force. Second, because they are funded by taxes, public sector social welfare programs divert money that could otherwise be invested in the private sector. Conservative economists believe that economic growth helps everyone because over- all prosperity creates more jobs, income, and goods, and these eventually filter down to the poor. For conservative economists, investment is the key to prosperity and the engine that drives the economic machine. Accordingly, many conservative econ- omists favor tax breaks for the wealthy based on the premise that such breaks will result in more dis- posable after-tax income freed up for investment. In turn, high taxes are an impediment to economic progress because they channel money into “public” investments and away from “private” investments.

For conservatives, opportunity is based on one’s relationship to the marketplace and legitimate rewards can only occur only through that participa- tion. In contrast to liberals who emphasize mutual self-interest, interdependence, and social equity, conservative economists argue that the highest form of social good is realized by the maximiza- tion of self-interest. In the conservative view (as epitomized by author Ayn Rand36), the best society is one in which everyone actively—and selfishly— pursues their own good. Through a leap of faith, the maximization of self-interest is somehow trans- formed into a mutual good.

Conservative economists maintain not only that high taxation and government regulation of business serve as disincentives to investment but also that individual claims on social insurance and public welfare grants discourage work. Together these factors lead to a decline in economic growth and an increase in the expectations of beneficiaries of welfare programs. The only way to correct the irrationality of governmental social programs is to eliminate them. Charles Murray has suggested that the entire federal assistance and income support structure for working-aged persons (Medicaid, the former Aid to Families with Dependent Children [AFDC], food stamps, etc.) be scrapped. This would leave working-aged persons no recourse except to actively engage in the job market or turn to family, friends, or privately funded services.37

Some conservative economists argue that economic insecurity is an important part of the entrepreneurial spirit. Unless people are com- pelled to work, they will choose leisure over work. Conversely, providing economic security for large numbers of people through welfare programs leads to diminished ambition and fosters an unhealthy dependence on the state. Social programs thereby harm rather than help the most vulnerable mem- bers of society. The belief in economic insecurity formed the basis for the 1996 welfare reform bill that included a maximum time limit on welfare benefits (see Chapter 11).

The public choice school gained traction among conservatives as faith ebbed in supply-side theories. This theory was not widely known outside academic circles until James Buchanan was awarded the Nobel Prize for economics in 1986. In effect, the public choice is predicted on the belief that public sector bureaucrats are self- interested utility-maximizers and that strong incentives exist for interest groups to make demands on

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government. The resulting concessions flow directly to the interest group as their costs are spread among all taxpayers. Initial concessions lead to demands for further concessions, which are likely to be forthcoming so long as interest groups are vociferous in their demands. Under such an incen- tive system, different interests are also encouraged to band together to make demands since there is no reason for one interest group to oppose the demands of others. As demands for goods and services increase, revenues tend to decrease. This happens because interest groups resist paying taxes directed specifically toward them and because no interest group has much incentive to support gen- eral taxes. The result of this scenario is predictable: Strong demands for government benefits accom- panied by declining revenues lead to government borrowing, which in turn, results in large budget deficits.38 Adherents of public choice theory view social welfare as a series of endless concessions to disadvantaged groups that will eventually bankrupt the government. On the other hand, it would be logical also to apply public choice theory to defense industry interest groups who make similar demands on government while not paying a fair share of taxes.

The Global Financial Crisis (GFC) Alan Greenspan, the former head of the Federal Reserve, admitted that he “made a mistake” in trusting free markets to regulate themselves with- out governmental oversight. Greenspan further admitted that “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were . . . capable of protecting their own shareholders and their equity in the firms.”39 This was an amazing series of admissions from the man known as the “oracle” in economic matters. More importantly, he questioned the belief that unregulated free markets inevitably yield superior economic gain.

The initial event triggering the 2008 GFC was the collapse of the U.S. housing market and the realization that domestic and foreign banks, invest- ment houses, and institutions were holding hun- dreds of billions of dollars of subprime mortgages (i.e., nonviable mortgages held by problematic borrowers) that were little more than toxic debt offering little hope for repayment. However, multi- ple factors converged to create the crisis, including the largely unregulated derivatives market and the

reliance on various forms of dodgy financial instru- ments. Derivatives are used by banks and corpora- tions to hedge risk or engage in speculation. They are financial instruments whose value depends on an underlying commodity, bond, equity, or cur- rency. Investors purchase derivatives to bet on the future (or as a hedge against the potential adverse impacts of an investment), to mitigate a risk associ- ated with an underlying security, to protect against interest rate or stock market changes, and so forth.

Derivatives are used in several financial areas. For example, credit derivatives can involve a con- tract between two parties that allows one of them to transfer their credit risk to the other. The party trans- ferring the risk pays a fee to the party that assumes it. These derivatives are risky investments because they are basically bets made in large amounts, often in the billions. Like all forms of gambling, derivatives only work if the casino has the money to meet their obli- gation to bettors. If the casino lacks the cash to pay winners (i.e., it has a liquidity problem), the entire system collapses. The 2008 GFC was partly based on the failure of the derivatives market.

Various government bailouts—including $25 billion to the U.S. auto industry—helped ease the financial crisis. Much of the money to pay for the bailouts came from foreign investors who pur- chased U.S. Treasury bills.40 One unexpected out- come of the GFC and the collapse of Wall Street was that it temporarily chilled the debate on privat- izing Social Security (see Chapter 10).

Democratic Socialism Democratic socialism (as opposed to Soviet-style com- munism) is based on the belief that radical economic change is necessary and can be achieved within a dem- ocratic context. They question the fundamental pre- cepts of capitalism and its ability to meet the needs of people. This view is at odds with both Keynesianism and conservative economics. Specifically, Keynesians basically believe in the market economy but want to make it more responsive to human needs by smooth- ing out the rough edges. Conservatives maintain that the economy should be left alone except for a few minor tweaks, such as regulating the money supply. Others argue that the market should be left totally alone. On balance, both Keynesians and economic conservatives believe that capitalism is compatible with the public good. Keynesians and economic con- servatives have more in common with each other than Keynesians have with socialists.

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Proponents of socialism argue that the funda- mental nature of capitalism is anathema to advancing the public good. They contend that a system predi- cated on pursuing profit and individual self-interest can only lead to greater inequality. The creation of a just society requires a fundamental transformation of the economic system, and the pursuit of profit and self-interest must be replaced by the collective pursuit of the common good. Not surprisingly, they repudiate Keynes’s belief that economic problems can be fixed by technicalities instead of sweeping institutional change. In short, socialists criticize con- servatives for the primary importance they place on markets and their belief in subordinating social wel- fare initiatives to market needs.

Left-wing theorists maintain that the failure of capitalism has led to political movements that have pressured institutions to respond with increased social welfare services. They believe that real social welfare must be structural and can only be accom- plished by redistributing resources. In a just soci- ety where goods, resources, and opportunities are available to everyone, only the most basic forms of social welfare (health care, rehabilitation, coun- seling, etc.) would be necessary. In this worldview, poverty is directly linked to structural inequality: People need welfare because they are exploited and denied access to resources. In an unjust society, welfare functions as a substitute, albeit a puny one, for social justice.41

Some socialists argue that social welfare is an ingenious arrangement to have the public assume the costs associated with the social and economic dislocations inherent in capitalism. According to these theorists, social welfare expenditures “social- ize” the costs of capitalist production by making public the costs of private enterprise. Thus, social welfare serves both the needs of people and the needs of capitalism. For other socialists, social wel- fare programs support an unjust economic system that continues to generate problems requiring yet more programs. These radicals argue that social welfare programs function like junk food for the impoverished: They provide just enough sustenance to discourage revolution but not enough to make a real difference in anyone’s life. Social welfare is simply viewed as a form of social control. Frances Fox Piven and the late Richard Cloward summarize the argument:

Relief arrangements are ancillary to eco- nomic arrangements. Their chief function is to

regulate labor, and they do that in two general ways. First, when mass unemployment leads to outbreaks of turmoil, relief programs are ordi- narily initiated or expanded to absorb or con- trol enough of the unemployed to restore order; then, as turbulence subsides, the relief system contracts, expelling those who are needed to populate the labor markets.42

For radicals, real social welfare can occur only in a socialist economic system.

The U.S. Political Continuum Differing views on political economy produce dif- fering conceptions of the public good. Competition among ideas about the public good and the welfare state has long been a knotty issue in the political economy of the United States. Since governmental policy is driven largely by an ideologically deter- mined view of the public good, it will vary depend- ing which political party is in power.

The major American ideologies, (neo)liber- alism and (neo)conservatism, hold vastly differ- ent views of social welfare and the public good. Since conservatives believe that the public good is best served through marketplace participation, they prefer private sector approaches over govern- mental welfare programs. Conservatives believe that government should have a minimal role (via a safety net) in ensuring the social welfare of citi- zens. Traditional liberals, on the other hand, view government as the primary institution capable of bringing a measure of social justice to millions of Americans who cannot fully participate because of obstacles such as racism, poverty, and sexism. Traditional liberals view government social welfare programs as a key component in promoting the public good. One of the major differences between these orientations lies in their differing perceptions of how the public good is enhanced or hurt by wel- fare state programs.

The understanding of “the public good” is lodged in the political and ideological continuum that makes up the U.S. political economy. An appreciation of this requires an understanding of the interaction of schools of political thought and how they evolved. These ideological tenets also shape the platforms of the major political parties and can be divided into two categories: (1) liberalism and left-of-center movements and (2) traditional conservatives and the far right.

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Liberalism and Left-of-Center Movements Liberalism Since Franklin Delano Roosevelt’s New Deal, liberal advocates have argued for advancing the public good by promoting an expand- ing economy coupled with the growth of universal, non-means–tested social welfare and health care programs. Traditional liberals used Keynesianism as the economic justification for expanding the wel- fare state, and as such, the general direction of pol- icy from the 1930s to the early 1970s was for the federal government to assume greater amounts of responsibility for the public good.

American liberals established the welfare state with the passage of the Social Security Act of 1935. Harry Hopkins—a social worker, the head of the Federal Emergency Relief Administration, a confi- dant of President Roosevelt, a co-architect of the New Deal, and a consummate political operative— developed the calculus for American liberalism: “tax, tax; spend, spend; elect, elect.”43 This approach was elegant in its simplicity: The government taxes the wealthy, thereby securing the necessary reve- nues to fund social programs for workers and the poor. This approach dominated social policy for almost 50 years. In fact, it was so successful that by 1980 the social welfare accounted for 57 percent of all federal expenditures.44

By the mid-1960s, the welfare state had become a central fixture in America, and politicians sought to expand its benefits to more constituents. Focus- ing on the expansion of middle-class programs such as Federal Housing Administration (FHA) home mortgages, federally insured student loans, Medi- care, and veterans’ pensions, liberal policymakers secured the political loyalty of the middle class. Even conservative politicians respected voter sup- port for the welfare state, and not surprisingly, the largest growth in social welfare spending occurred under Republican president, Richard M. Nixon.

Despite such support, the promise of the U.S. welfare state to provide social protection similar to Western Europe never materialized. By the mid- 1970s, the hope of traditional liberals to build a welfare state mirroring those of northern Europe had been replaced by an incremental approach that focused narrowly on consolidating and fine-tuning the programs of the Social Security Act. One rea- son for this failure was the ambivalence of many Americans toward centralized government. “The emphasis consistently has been on the local, the

pluralistic, the voluntary, and the business-like over the national, the universal, the legally entitled, and the gov- ernmental,” observed policy analyst Marc Bendick.45

Liberalism lost ground for another reason. The Social Security Act of 1935—the hallmark of American liberalism—was primarily a self- financing social insurance program that rewarded working people. Public assistance programs that contained less political capital were therefore a bet- ter measure of public compassion, were rigorously means-tested, sparse in their benefits, and oper- ated by the less than generous states. For example, although Social Security benefits were indexed to the cost of living in the mid-1970s, AFDC benefits deteriorated so badly that about half its value was lost between 1975 and 1992. At the same time that Social Security reforms reduced the elderly poverty rate by 50 percent, the plight of poor non-working families worsened.

Neoliberalism By the late 1970s, the liberal belief that the welfare state was the best mechanism to advance the public good was in retreat. What remained of traditional liberalism was replaced by a neoliberalism that was more cautious of government, less antagonistic toward big business, and more skep- tical about the value of universal entitlements.

The defeat of Jimmy Carter and the election of a Republican Senate in 1980 forced many liberal Democrats to reevaluate their party’s traditional position on domestic policy. This reexamination, which Charles Peters christened “neoliberalism” to differentiate it from old-style liberalism, attracted only a small following in the early 1980s.46 By the mid-1990s, however, most leading Democrats could be classified as neoliberal. Randall Rothen- berg charted signs of the influence of neoliberal- ism on the Democratic domestic policy platform as early as 1982, when he observed that the party’s midterm convention did not endorse a large-scale federal jobs program, did not endorse a national health insurance plan, and did not submit a plan for a guaranteed annual income.47

In the late 1980s, a cadre of prominent main- stream Democrats established the Democratic Leadership Council (DLC). In part, their goal was to wrest control of the Democratic Party from tradi- tional liberals and to create a new Democratic Party that was more attuned to the beliefs of traditional core voters. In 1989, the DLC released The New Orleans Declaration: A Democratic Agenda for the

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1990s, which promised that Democratic Party poli- tics would shift toward a middle ground combining a corporatist economic analysis with Democratic compassion. Two of the founders of the DLC were Al Gore and Bill Clinton, who chaired the DLC just before announcing his candidacy.48

Compared to traditional liberals, neoliberals were more forgiving of the behavior of large cor- porations and were opposed to economic protec- tionism. They were also opposed to strong financial regulation, which helps explain why the repeal of the 1933 Glass-Steagall Act (the act curbed spec- ulation in commercial banking) was passed under the neoliberal Clinton administration. Some commentators partly attribute the 2007 global financial crisis to the repeal of Glass-Steagall.49 (Clinton later apologized for supporting the repeal of Glass-Steagall.)

Grounded in realpolitik, neoliberals viewed the New Deal approach as too expensive and antiquated to address the mood of voters. They distanced themselves from the large-scale govern- mental welfare programs associated with Demo- crats since the New Deal. Like their neoconservative counterparts, they called for reliance on personal responsibility, work, and thrift as an alternative to governmental programs. Accordingly, their wel- fare proposals mirrored conservative proposals by emphasizing labor market participation (workfare), personal responsibility (time-limited welfare ben- efits), family obligations (child support enforce- ment), and frugality in governmental spending.

Former Secretary of Labor Robert Reich advo- cated a postliberal formulation that replaced social welfare entitlements with investments in human capital. Public spending was divided into “good” and “bad” categories. Bad was unproductive expenditures on welfare and price supports; good was investments in human capital, such as educa- tion, research, and job training.50

Neoliberalism altered the traditional liberal concept of the public good. Instead of viewing the interests of large corporations as antithetical to the best interests of society, they argued for free trade, less regulation, and a laissez-faire approach to social problems. They also viewed labor unions with caution. The new shapers of the public good had systematically excluded key actors of the old liberal coalition.

The neoliberal view of the public good reflects a kind of postmodern perspective. For neoliberals, the public good is elusive, and its form is fluid.

Definitions of the public good change as new power relationships emerge. Hence, neoliberals view the public good in the context of a postindustrial soci- ety composed of new opportunities and new insti- tutional forms.

Neoliberalism is largely a political strategy and pragmatic mode of operation rather than a politi- cal philosophy with a firm position on the public good. That is both its strength and weakness. The strength of neoliberalism is its ability to compro- mise and change to accomplish goals. Its weakness is that when faced with an ideological critique, it is incapable of formulating a cogent ideological response. President Obama fits squarely within the pragmatic neoliberal orientation, which partly explains his refusal to enact strong banking regula- tions in the aftermath of the global financial crisis and his support for the Trans-Pacific Partnership trade deal.

The Self-Reliance School A perspective gaining influence in economically distressed areas and in developing countries is the self-reliance school.51 This school maintains that industrial economic models are irrelevant to the economic needs of poor communities and are often damaging to the spiri- tual life of people.52 Adherents of self-reliance reject the emphasis of Western economies on economic growth and the belief that the quality of life can be measured by material acquisitions. These econ- omists stress a balanced economy based on the real needs of people, production designed for internal consumption rather than export, productive tech- nologies that are congruent with the culture and background of the population, the use of appropriate

Obama presidential Campaign 2008

Source: John Beam/alamy Stock photo

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and manageable technologies, and a small-scale and decentralized form of economic organization.53 Simply put, proponents of self-reliance postulate that more is less, and less is more. The objective of self-reliance is the creation of a no-poverty soci- ety where economic life is organized around issues of subsistence rather than trade and economic expansion. Accepting a world of finite resources and inherent limitations to economic growth, pro- ponents argue that the true question of social and economic development is not what people think they want or need but what they require for sur- vival. The self-reliance school accepts the need for social welfare programs that ameliorate the disloca- tions caused by industrialization, but it prefers low- technology and local solutions to social problems. This contradicts the conventional wisdom of the welfare state, which is predicated on a prescribed set of programs on a national scale, administered by large bureaucracies and sophisticated manage- ment systems.

Classical Conservatives and the Far Right Classic Conservatism Former politicians, such as Nelson Rockefeller, Richard Nixon, and Barry Goldwater represented traditional conservatism, a perspective that is now all but extinct. Replaced by cultural conservatives, few traditional conservatives currently occupy important leadership positions in the Republican Party.

On one level, most conservatives agree on important social policy issues. They are anti-union, oppose governmental regulations, demand lower taxes and less social spending, want local control of public education, oppose extending civil rights leg- islation, are pro-gun and opposed to gun control, and strongly believe in states’ rights. Beneath this agreement, fundamental differences exist among various conservative factions.

Traditional conservatives were at odds with cultural conservatives on a range of social issues. First, traditional conservatives were strict constitu- tionalists and believed strongly in the separation of church and state. They viewed prayer and religion as personal choices in which government has no constitutional right to promote. Second, while tra- ditional and cultural conservatives want a weaker federal government, cultural conservatives demand that government promote a religious-based agenda in areas such as abortion, contraception, and gay

marriage. U.S. presidential candidate Mike Huck- abee said that as president he would use federal troops to stop abortions. Presidential candidate Rick Santorum decries the separation of church and state. “I don’t believe in an America where the sep- aration of church and state is absolute.” In fact, he stated that it makes him want to throw up.54

Third, classical conservatives were more socially liberal than their cultural counterparts. For example, the late Barry Goldwater, a conservative icon and former U.S. Senator, stated that, “I have been, and am still, a traditional conservative, focus- ing on three general freedoms—economic, social, and political. . . . The conservative movement is founded on the simple tenet that people have the right to live life as they please, as long as they don’t hurt anyone else in the process.”55 Following that line of reason, Goldwater’s outspoken support of gays in the military was directly opposed to the tenets of cultural conservatives. Regarding repro- ductive freedom, classical conservatives might chal- lenge cultural conservatives on various measures that limit or ban abortions.

From the late 1970s onward, old-style conser- vatives such as Nelson Rockefeller, Barry Goldwa- ter, and William Cohen—who were more concerned with foreign policy than with domestic issues— were replaced by a new breed of cultural conserva- tives. These cultural conservatives were committed to reversing 50 years of liberal influence in social policy. How the cultural conservatives came to shape social policy warrants elaboration, although it is first important to examine neoconservatives, the forerunners of cultural conservatism.

Neoconservatism Before the 1970s, conservatives were content to merely snipe at welfare programs, reserving their attention for areas more consistent with their traditional concerns such as the econ- omy, defense spending, and foreign affairs. How- ever, by the mid-1970s, conservative intellectuals recognized that their former stance toward social welfare was myopic as welfare was too important to be lightly dismissed. Consequently, neoconserva- tives sought to arrest the growth in governmental welfare programs while simultaneously transferring as much welfare responsibility as possible from gov- ernment to the private sector.56 They faulted gov- ernment programs for a breakdown in the mutual obligation between groups; the lack of attention to how programs were operated and benefits awarded; the dependency of recipients; and the growth of the

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welfare industry and its special interest groups, par- ticularly professional associations.57 To counter the liberal goals of full employment, national health care, and a guaranteed annual income, neoconser- vatives maintained that high unemployment was good for the economy, that health care should remain in the private marketplace, and that com- petitive income structures were critical to produc- tivity. They argued that income inequality was socially desirable because social policies that pro- mote equality encourage coercion, limit individual freedom, and damage the economy.58 By the late 1970s, the neoconservative position began to be usurped by the emerging cultural conservatives.

Cultural and Social Conservatism The neoconser- vative assault on liberal social policy was soon taken over by a coalition of cultural and social conserva- tives who raged against governmental intrusion in the marketplace while simultaneously attempting to use the authority of government to advance their objectives in the areas of sexual abstinence, school prayer, abortion, birth control, evolution (i.e., cre- ationism), gun rights, and antigay rights proposals. These conservatives cleverly promoted a dual atti- tude toward the role of government. Mimicking tra- ditional conservatives, they demanded a laissez-faire approach to economics but steadfastly refused to apply that orientation to social affairs. Instead, they argued for social conformity and a level of govern- mental intrusion into private affairs that most tra- ditional conservatives would have found appalling. In contrast to the traditional conservative position on the separation of church and state, social conser- vatives opportunistically embraced the rising tide of fundamentalist religion, even to the point of rewrit- ing history by arguing that the Founding Fathers were opposed to a secular state and were guided by Christian principles.59

By the late 1980s, this coalition of economic conservatives, right-wing Christians, and oppor- tunistic politicians had virtually decimated what remained of Republican liberalism, whose adher- ents had become an endangered species like liberal Democrats.

For liberals, the state represents the best vehi- cle for promoting the public good. Cultural conser- vatives view the state as the cause rather than the solution to social problems. With the exception of protecting people (police and defense) and prop- erty, cultural conservatives argue that the very exis- tence of the state is antithetical to the public good

since government interferes with the maximization of individual self-interest. Their posture toward government is adversarial, except when the state is used to further their social agenda. In tandem with this agenda, conservative presidents, such as Reagan and the two Bushes, prohibited the future growth of the welfare state by using tax policy and federal budget deficits to thwart increased public spending.

After hammering away at social programs, con- servatives had accomplished relatively little regard- ing social insurance and health programs—costs for entitlement programs such as Social Security and Medicare continued to soar. Conservatives under- estimated three key factors: (1) the resiliency of the welfare state, (2) the continued support (however tenuous) of the middle class, and (3) the difficulty of translating rhetoric into viable reform proposals. Nevertheless, conservatives learned from past mis- takes, and instead of toying with incremental poli- cies, they proposed bold new social initiatives that were incorporated into the Contract with America (designed to alter most of the safety net programs within a two-year period), a document signed by more than 300 House Republicans in 1994.60 The crowning victory occurred with the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in 1996.

Social and cultural conservativism flourished in the 2014 Congressional midterm elections and in the 2016 presidential run. By 2015, the conserva- tive coalition pushed most Republican presidential candidates into adopting hard-right positions on gay rights, abortion, health care, and even long-re- solved issues like contraception. Heated rhetoric followed on the pressure to solidify a conservative “street cred.” In 2015, 2016 presidential contender Donald Trump claimed that Mexican immigrants were criminals and rapists; Senator Tom Cotton (R-Ark) likened Obama Secretary of State John Kerry to Pontius Pilate; Senator Ted Cruz’s (R-TX) oft-repeated line was that the president was “the leading state sponsor of terrorism”; and former New York City Mayor Rudy Giuliani’s comment about Obama “I do not believe . . . that the pres- ident loves America . . . He doesn’t love you. And he doesn’t love me. He wasn’t brought up the way you were brought up and I was brought up through love of this country.”61

Libertarianism Libertarians reflect another per- spective. Specifically, this school of thought believes

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in little or no government regulation. Libertarians basically want the government to stay out of peo- ple’s pocketbooks and their bedrooms.

We, the members of the Libertarian Party, challenge the cult of the omnipotent state and defend the rights of the individual. We hold that all individuals . . . have the right to live in what- ever manner they choose, so long as they do not forcibly interfere with the equal right of others to live in whatever manner they choose. We . . . hold that governments . . . must not violate the rights of any individual: namely, (1) the right to life—accordingly we support the prohibition of the initiation of physical force against others; (2) the right to liberty of speech and action– accordingly we oppose all attempts . . . [at] . . . government censorship in any form; and (3) . . . we oppose all government interference with pri- vate property. . . .62

Libertarians argue that governmental growth occurs at the expense of individual freedom. They also believe that the proper role for a government is to provide a police force and a military that pos- sesses only defensive weapons. Libertarians are highly critical of taxation because it fuels govern- mental growth. Apart from advocating minimal taxation earmarked for defense and police activi- ties, they oppose the income tax. Because libertar- ians emphasize individual freedom and personal responsibility, they advocate the decriminalization of narcotics and believe that government should intercede in social affairs only when an individual’s behavior threatens the safety of another. In 2015, Senator Rand Paul (R-KY) was a Republican con- tender for president running under a libertarian ori- entation. True libertarians had a problem with Paul who was against abortion rights, gay marriage, open borders, and for strong defense spending.

Cultural conservatives, populists, and libertari- ans of various ilk banded together in 2009 to form the loosely-knit Tea Party. This political move- ment advocated a rigid interpretation of the U.S. Constitution, especially on issues like gun control. The movement also focused on reducing govern- ment spending, eliminating the national debt, cut- ting social programs, and dramatically reducing taxes. Although not initially a religiously inspired movement, it soon allied itself with social and reli- gious conservatives such as former Alaska gover- nor Sarah Palin and former U.S. Congressperson Michele Bachman.

According to a 2010 Pew study, in addition to strong economic view, a 2010 Pew Research Center study found that Tea Party supporters also have conservative opinions on abortion and same- sex marriage. With considerable representation by white evangelical Protestants, they are more likely than average voters to say that their religion is the most important variable in shaping their opinion on social issues.63

The Welfare Philosophers and the Neoconservative Think Tanks Many early welfare thinkers envisioned a U.S. wel- fare state based on a European model.64 This vision was shared by virtually every social welfare scholar writing in the late 1960s and early 1970s.65 In turn, most social workers supported a liberal welfare philosophy grounded in a system of national social programs that would be deployed as more citizens demanded greater services and benefits. This frame- work was informed by European welfare states, especially the Scandinavian variant that spread health care, housing, income benefits, and employ- ment opportunities equitably across the popu- lation.66 It also led Richard Titmuss to hope that the welfare state, as an instrument of government, would eventually lead to a “welfare world.”67

Despite the widespread acceptance of this lib- eral vision, an alternative vision arose that ques- tioned the fundamental nature of welfare and social services. Throughout the 1970s and 1980s, conser- vatives (especially right-wing think tanks, or con- servative policy institutes) busily made proposals for welfare reform. In fact, no conservative policy institute could prove its mettle until it produced a plan to clean up “the welfare mess.” The Hoover Institution at Stanford University helped shape the early conservative position on welfare. “There is no inherent reason that Americans should look to government for those goods and services that can be individually acquired,” argued Hoover’s Alvin Rabushka.68 Martin Anderson, a Hoover senior fellow and domestic policy adviser to the Reagan administration, elaborated the conservative posi- tion on welfare in terms of the need to (1) reaffirm the need-only philosophical approach to welfare and state it as explicit national policy; (2) increase efforts to eliminate fraud; (3) establish and enforce a fair, clear work requirement; (4) remove inap- propriate beneficiaries from the welfare rolls;

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(5) enforce support of dependents by those who have the responsibility and are shirking it; (6) improve the efficiency and effectiveness of welfare adminis- tration; and (7) shift more responsibility from the federal government to state and local governments and private institutions.69 These recommendations formed the backbone of the 1996 PRWORA.

In turn, the Heritage Foundation featured Out of the Poverty Trap: A Conservative Strategy for Welfare Reform by Stuart Butler and Anna Kon- dratas.70 Following along the same lines, the Free Congress Research and Education Foundation pro- posed reforming welfare through “cultural conser- vatism”—that is, by reinforcing “traditional values such as delayed gratification, work and saving, commitment to family and to the next generation, education and training, self-improvement, and rejection of crime, drugs, and casual sex.”71

A handful of other works also served as beach- heads for the conservative assault on the liberal welfare state. George Gilder’s Wealth and Pov- erty argued that beneficent welfare programs rep- resented a “moral hazard” that insulated people against risks essential to capitalism and thus con- tributed to dependency.72 Martin Anderson con- cluded that income calculations should include the cash equivalent of in-kind benefits, such as food stamps, Medicaid, and housing vouch- ers, thus effectively lowering the poverty rate by 40 percent.73 Taken together, these ideas and rec- ommendations provided a potent critique of wel- fare programs.

Perhaps the most enduring change engineered by the conservative movement is what Jacob Hacker calls the “Great Risk Shift.”74 Private own- ership of property and the acceptance of personal responsibility have long been core American values, which partly explains why opposition to former President Bush’s “ownership society” had not mate- rialized. In The Great Risk Shift, Hacker examines Bush’s ownership society and the Republican Par- ty’s emphasis on personal responsibility as the code for shifting economic risk away from government and corporations and onto the back of the Ameri- can family.

Hacker argues that private and public support mechanisms have fallen behind the pace of change in contemporary society. Almost half of marriages end in divorce. Over a third of employed Ameri- cans are frequently worried about losing their jobs. Structural changes in the nature of employment, primarily seen in a shift away from manufacturing

to the lower-paying service sector, have left many without the skills needed for new jobs or the resources to retrain. The likelihood of family income dropping 50 percent has almost tripled since the 1970s; personal bankruptcies and home foreclosures have increased by a factor of five.75 Hacker maintains that during a 30-year period in which middle-class incomes have remained stag- nant, the need for economic security has been neglected by public and private institutions.76

The risk shift is occurring in almost all sectors. Corporate retirement programs are transitioning from defined benefit plans (i.e., retirees are guar- anteed a set retirement income) to defined contri- bution plans whereby retirement income depends upon the savvy of the employees’ investment man- agers. Whether these changes will help or hurt the individual depends on many factors, but it is clear that it is a shift in risk to the individual worker.

Despite Obamacare, the absence of real univer- sal health care has underscored the importance of employer-provided health insurance. However, the increasing instability of employment often means that job transitions are accompanied by the fail- ure to acquire health coverage. Conservatives have proposed Health Savings Accounts as a means of activating market forces to control health costs, but they reflect another risk shift from the corporation to the individual worker. The former Bush admin- istration suggested the elimination of employer-pro- vided health insurance in favor of tax deductions for health insurance premiums, yet another risk shift from corporations to the individual or fam- ily.77 An important implication of Hacker’s argu- ment is that good social welfare policy analysis can no longer be restricted to a focus on income; it must also attend to the shifting dynamics of risk. As such, progressive social welfare policies must work to mitigate the degree of risk the individual family must bear.

Conclusion John Judis and Michael Lind argue that, “Ulti- mately American economic policy must meet a single test: Does it tend to raise or depress the incomes of most Americans? A policy that impov- erishes the ordinary American is a failure, regard- less of its alleged benefits for U.S. corporations or for humanity as a whole.”78 We would add: “What are the effects of an economic policy on the social health of the nation?” Researchers at Fordham

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University’s Institute for Innovation in Social Policy have argued that the nation’s quality of life has become unhinged from its economic growth. “We really have to begin to reassess this notion that the gross domestic product—the overall growth of the society— necessarily is going to produce improve- ments in the quality of life.”79 Constructing an Index for Social Health that encompassed govern- mental data from 1970 to 1993, researchers found that in six categories—children in poverty, child abuse, health insurance coverage, average weekly earnings adjusted for inflation, out-of-pocket health costs for senior citizens, and the gap between rich and poor—“social health” hit its lowest point in 1993. As current poverty data suggest, these indicators have worsened since 1993.

A corollary question is, “What’s the econ- omy for, anyway?” In other words, do we exist to serve the economy or should the economy serve us? Economists often discuss the gross national product (GNP) or gross domestic product (GDP), productivity, and overall economic growth as if they were true indications of an economic quality of life. This approach avoids examining the bene- ficiaries of economic growth in the midst of grow- ing income inequality. While discussions typically revolve around how to best grow the economy, too little of the economic discourse involves envi- ronmental sustainability or quality of life issues. John de Graaf has addressed these issues in Afflu- enza (the film and the book) as have other authors in various forms (see Spotlight Box 1.1).

Spotlight 1.1 What’S the eCOnOMy FOr, anyWay?

by John de Graaf

In the global economy, it seems everyone is dissatis- fied and looking for different models. One by one, Latin American countries are moving from Right to Left. On the other hand, in Europe, the parties of social democracy have been losing ground to the Center (Europe’s “right-wing” parties would be Cen- trist or Left in the United States), one after another.

All of this frenetic searching begs the funda- mental question: What’s the Economy for, Any- way? How much stock can we take in the Dow Jones? Is the Gross Domestic Product the measure (the grosser the better), and stuff the stuff, of hap- piness? Is the good life the goods life?

If so, then there’s little doubt that the freer- market regimes win big. U.S. per capita GDP is still 30 percent higher than the average in Western Europe, just as it was a generation ago. We’ve got bigger homes, bigger cars, and more high-definition televisions. On the other hand, if we measure success by the happiness, health, fairness, and sustainability of economies, the picture looks very different.

I’ve been doing a little number-crunching lately, comparing data from sources such as the

2007 OECD [Organization for Economic Coop- eration and Development] Fact Book, the World Health Organization, and the UN [United Nations] Human Development Index, trying to see how countries are doing in real, empirical terms when it comes to health, quality of life, justice, and sustain- ability. The results, I’m afraid, would come as a shock to those who look to the United States as the model of economic success.

Let me do a few of the numbers: Compared, for example, to the western European nations, the United States ranks worst or next-to-worst when it comes to child welfare, health care, poverty, income equality, pollution, CO2 emissions, ecologi- cal footprint, personal savings, income and pension security, balance of payments, municipal waste, development assistance, longevity, infant mortality, child abuse, depression, anxiety, obesity, murder, incarceration, motor vehicle fatalities, and leisure time. We do slightly better in education. Our unem- ployment rate looks pretty low, unless you count those 2.3 million people we’ve got behind bars, an incarceration rate 7 to 10 times as high as Europe’s.

Since 1970, Europeans have traded a portion of their productivity gains for free time instead of

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20 part 1 american Social Welfare policy

stuff, a trade that pays off in many ways. New stud- ies show that long working hours, the norm in the United States, contribute to poor health, weakened family and community bonds, and environmental damage. Americans, who are far less healthy than Europeans, spend twice as much for health care per person. In fact, we spend nearly half the world’s total health care budget, an amount that will reach 20 percent of our GDP by 2010—with the worst outcomes. Yet, all of that spending counts as a plus when it comes to GDP. The leisure that Europeans enjoy, the long meals and café conversations, and the long walks and bike rides count only as wasted time, adding not a single point to GDP. La dolce vita, by that measure, is for losers.

But which countries come out on top in mea- sures of quality of life? It’s the northern European nations, those that combine a strong social safety net with shorter working hours, high but progres- sive tax rates, and strong environmental regula- tions. The pattern is as clear as can be.

I have found no one who refutes these figures. They simply explain them away by saying that the United States can’t be like Europe. Why not?

One argument for why the United States can’t even have things such as paid maternity leave—a reality in every country on the globe except the United States, Swaziland, Lesotho, Liberia, and Papua New Guinea—is that we’re so affected by globalization. But with its massive domestic mar- ket, the United States is just about the least affected by globalization of all industrial countries.

American conservatives argue that Europeans can’t continue to compete in the global economy. But according to the World Economic Forum, over the past few years, four of the six most globally competitive countries have been in Europe. Even American businesses invest five times as much each year in Germany as they do in China and more in Belgium than in India. And they make money doing it.

When all else fails, there’s the final appeal: The United States may not be very healthy, fair, or sus- tainable, but it’s “the land of opportunity,” where

anyone can make it big if they’re willing to work hard enough. Yet a recent study finds that Ameri- cans actually have only about one-half to one-third as much chance as Europeans of escaping low-in- come lives and rising to the top.

The steady drone from some European busi- ness leaders about the American economic miracle masks what should be obvious—they’d like to join our CEOs in making 400 times as much as their average workers, instead of the miserable 30 to 40 times as much they now make. Their voices speak louder than those of the average European citizen, who enjoys his or her six weeks of vacation, restful meals, family leave, health care, sick pay, free col- lege education, and secure pension plan.

Since Ronald Reagan declared that “govern- ment cannot be the solution because government is the problem,” indices of American quality of life, fairness, economic security, and environmental sustainability have all fallen sharply in comparison with those in Europe. The conservative economic revolution has produced a gush-up instead of a “trickle-down.” For most of us, the “ownership society,” emphasizing privatization, deregulation and massive tax cuts for the wealthy, is really a “you’re on your owner ship” society.

To make America better, our President tells us, we must do even more of these things, making tax cuts for the wealthy permanent, for example. But the working definition of insanity is to keep doing the same things hoping for a different result.

If we want to build societies that really work for people, we need to ask, “What’s the Economy for, anyway?” And then we need to separate the real results from the myths, shed a little of our American hubris and start looking at how other countries are actually edging us out by providing policies that succeed. That way lies a happier, healthier, more just, and sustainable world.

John De Graaf is a documentary filmmaker and co-author (with David Wann, Thomas Naylor, and Vicki Robin) of Affluenza: The All-Consuming Epidemic (San Francisco, CA: Berrett-Koehler, 2005). Reprinted with permission from John De Graaf.

As this chapter has demonstrated, social wel- fare in the United States is characterized by a high degree of diversity rather than a monolithic, highly centralized, or well-coordinated system of programs. Rather, a great variety of organizations

provide a wide range of benefits and services to dif- ferent client populations. The vast array of social welfare organizations contributes to what is com- monly called “the welfare mess.” Consequently, different programs serving different groups through

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Chapter 1 Social policy and the american Welfare State 21

different procedures have created an impenetrable tangle of institutional red tape that is problematic for administrators, human service professionals, and clients.

The complexity of U.S. social welfare policy can be attributed to several influences, some of which are peculiar to the American experience. For instance, the U.S. Constitution outlines a federal system whereby states vest certain functions in the national government. Although the states have assumed pri- mary responsibility for social welfare through much of U.S. history, this changed with Franklin Delano Roosevelt’s New Deal that ushered in a raft of fed- eral programs. Over subsequent decades, federal social welfare initiatives played a dominant role in the nation’s welfare effort. Still, states continued to manage important social welfare programs, such as mental health, corrections, and social services. Over time, the relationship between the federal govern- ment and the states changed. From the New Deal of the 1930s through the Great Society of the 1960s, federal welfare programs expanded, forming the American version of the “welfare state.” Beginning in the 1980s, the Reagan administration sought to return more of the responsibility for welfare to the states, a process called devolution.80 This process was furthered by the Clinton administration with the signing of the PRWORA.

A second factor is attributed to the relatively open character of U.S. society. Often referred to as a melting pot, the national culture is a protean brew of immigrant groups that become an estab- lished part of national life.81 A staggering influx of Europeans in the late nineteenth century gave way to waves of Hispanics and Asians a century later.82 Historically, social welfare programs have played a prominent role in the acculturation of these groups. At the same time, many ethnic groups brought with them their own fraternal and community associa- tions, which not only provide welfare benefits to members of the community but also serve to main- tain its norms. Other groups that have exerted important influences on U.S. social welfare are African Americans, the aged, women, and Native Americans. The very pluralism of U.S. society—a diverse collection of peoples, each with somewhat different needs—contributes to the complexity of social welfare.

The economic system exacerbates the complex- ity of social welfare. With important exceptions, the U.S. economy is predominantly capitalist, with most goods and services being owned, produced,

and distributed through the marketplace. In a cap- italist economy, people are expected to meet their basic needs in the marketplace through labor force participation. When people are unable to partic- ipate fully in the labor market, like the aged or the handicapped, social programs are deployed to support these groups. These programs take various forms. Many are governmental programs. Private sector programs often complement those of the public sector. Within the private sector, two orga- nizational forms are common—nonprofit organi- zations and for-profit corporations. Often these private sector organizations coexist, proximate to one another.83 For instance, in many communities, family planning services are provided by the public health departments; Planned Parenthoods (a private nonprofit); and by for-profit health maintenance organizations.

Finally, various religious or faith-based organi- zations strongly influence American social welfare. This is seen most clearly in the range of faith-based agencies that offer social services, such as Jewish Family Services, Lutheran Social Services, Catholic Charities, and the Salvation Army. In many cases, religious-based agencies provide services to groups that would not otherwise receive them. Today, many faith-based agencies receive federal funds for various services they provide to the public. It is likely that this trend will grow.

The pluralism of national culture is of increas- ing interest to social welfare policy analysts as the influence of the federal government in social policy diminishes. In light of reductions in many federal social programs and calls for the private sector to assume more responsibility for welfare, the pros- pect of molding the diverse entities involved in American social welfare into one unified whole under the auspices of a central federal authority seems remote. This vision of a unified social welfare system is implicit in the proposals of advocates for nationalized programs that ensure basic goods and services such as food, housing, education, health, and income as a right of citizenship. Although pro- grams of this nature have been integral to the wel- fare states of northern Europe for decades, there is a serious question as to their plausibility for the United States given the complexity built into its social welfare system.84 Given these developments, welfare professionals face a formidable challenge: How can basic goods and services be brought to vulnerable populations within a context of such complexity and uncertainty?

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22 part 1 american Social Welfare policy

DISCUSSIoN QUESTIoNS 1. According to the authors, American social welfare is

undergoing a transition. Which ideologies, schools of political economy, and interest groups within social welfare stand to gain most from this transition?

2. Ideology tends to parallel schools of political economy. How would classical conservatives and liberals address current social welfare issues such as health care, long-term care for the aged, and substance abuse? How would neoconservatives and neoliberals diverge from traditional conservatives and liberals on these issues?

3. Which schools of political, social, and economic thought discussed in this chapter would come closest to being classified as moderate? Why?

4. The chapter argues that in large measure social policy dictates social work practice. Do you agree with that premise? Explain your position. Can you think of any instances (historic or otherwise) in which social work practice has led to changes in social welfare policy?

5. In your opinion, which schools of economic and political thought are the most compatible with social work practice? What are the incompatibilities in the various schools of thought with macro- and micro-level social work and practice?

6. Chapter 1 describes the U.S. political continuum ranging from Liberalism to Libertarianism. Access the website of the National Association of Social Workers (www.naswdc.org) and read through the Advocacy and Legislative Issues links. Where would you place the NASW along the U.S. political continuum? Why?

7. The Heritage Foundation (www.heritage.org) and The Urban Institute (www.urban.org) are think tanks that deal with research on a variety of issues related to social policy. Scan the topics and a few of the titles easily accessible from the home page of each website. Does either adopt a specific point of view that tends to dominate? If you were looking for a progressive position on an issue, which one would you access?

NoTES 1. E. J. Dionne Jr., “The Opening Obama Saw,” Washington

Post, November 3, 2008, p. A21. 2. Chris Gentilviso, Todd Akin, “On Abortion: ‘Legitimate

Rape’ Victims Have ‘Ways to Try to Shut That Whole Thing Down,’” The Huffington Post, August 19, 2012. Retrieved September 2012 from http://www. huffingtonpost.com/2012/08/19/todd-akin-abortion- legitimate-rape_n_1807381.html.

3. Steven Salzberg, “Ted Cruz Uses the Galileo Gambit to Deny Global Warming,” Forbes, March 30, 2015, p. 25.

4. Paul Waldman, “Where the 2016 GOP Contenders Stand on Climate Change,” The Washington Post, May 12, 2014, p. 8.

5. Public Policy Polling, Other Notes from Alabama and Mississippi, March 12, 2012. Retrieved September 2012 from http://www.publicpolicypolling.com/main/2012/03 /other-notes-from-alabama-and-mississippi.html.

6. Kenneth P. Vogel, “The Billion-Dollar Bust?,” Politico, November 7, 2012. Retrieved November 8, 2012, from http://www.politico.com/news/stories/1112/83534.html.

7. Deborah Tedford, “Supreme Court Rips Up Campaign Finance Laws,” National Public Radio, January 21, 2010. Retrieved November 8, 2012, from http://www.npr.org /templates/story/story.php?storyId=122805666.

8. Richard Titmuss, Essays on the Welfare State (Boston: Beacon Press, 1963), p. 16.

9. Contained in personal correspondence between David Stoesz and William Epstein, April 2000.

10. See Alfred Kahn, Social Policy and Social Services (New York: Random House, 1979).

11. Frances Fox Piven and Richard Cloward, Regulating the Poor: The Functions of Public Welfare, Knopf Doubleday Publishing Group, 2012.

12. David Gil, Unraveling Social Policy (Boston: Shenkman, 1981), p. 32.

13. Joseph Stiglitz, “Of the 1%, by the 1%, for the 1%,” Vanity Fair, May 2011. Retrieved February 2012 from http://www.vanityfair.com/society/features/2011/05/top- one-percent-2011.

14. Max Abelson, “Bankers Join Billionaires to Debunk ‘Imbecile’ Attack on Top 1%,” Bloomberg News, December 20, 2011. Retrieved February 2012 from http:// www.bloomberg.com/news/2011-12-20/bankers-join- billionaires-to-debunk-imbecile-attack-on-top-1-.html.

15. International Monetary Fund, World Economic Outlook Database, September 2011, New York, NY; OECD, Public Policies for Families and Children, June 14, 2011. Retrieved February 2012 from http://www.oecd.org/ document/4/0, 3746,en_2649_34819_37836996_1_1_1_1,00.html.

16. Claus Offe, Contradictions of the Welfare State (Cambridge, MA: MIT Press, 1984).

17. John Maynard Keynes, The General Theory of Employ- ment, Interest and Money (London: Macmillan, 1936).

18. Paul R. Krugman, Peddling Prosperity: Economic Sense and Nonsense in the Age of Diminished Expectations (New York: W.W. Norton, 1994).

19. Ibid. 20. Adam Smith, The Wealth of Nations (New York: Bantam,

2003). 21. Friedrich A. Hayek, The Road to Serfdom (Chicago:

University of Chicago Press, 2007). 22. Ibid. 23. In their book Economics for Social Workers: The Applica-

tion of Economic Theory to Social Policy and the Human Services (New York: Columbia University Press, 2001), Michael Anthony Lewis and Karl Widerquist identify four conditions that must hold for a free market to exist.

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http://www.naswdc.org
http://www.heritage.org
http://www.urban.org
http://www.huffingtonpost.com/2012/08/19/todd-akin-abortion-legitimate-rape_n_1807381.html
http://www.huffingtonpost.com/2012/08/19/todd-akin-abortion-legitimate-rape_n_1807381.html
http://www.huffingtonpost.com/2012/08/19/todd-akin-abortion-legitimate-rape_n_1807381.html
http://www.publicpolicypolling.com/main/2012/03/other-notes-from-alabama-and-mississippi.html
http://www.publicpolicypolling.com/main/2012/03/other-notes-from-alabama-and-mississippi.html
http://www.politico.com/news/stories/1112/83534.html
http://www.npr.org/templates/story/story.php?storyId=122805666
http://www.npr.org/templates/story/story.php?storyId=122805666
http://www.vanityfair.com/society/features/2011/05/top-one-percent-2011
http://www.vanityfair.com/society/features/2011/05/top-one-percent-2011
http://www.bloomberg.com/news/2011-12-20/bankers-join-billionaires-to-debunk-imbecile-attack-on-top-1-.html
http://www.bloomberg.com/news/2011-12-20/bankers-join-billionaires-to-debunk-imbecile-attack-on-top-1-.html
http://www.bloomberg.com/news/2011-12-20/bankers-join-billionaires-to-debunk-imbecile-attack-on-top-1-.html
http://www.oecd.org/document/4/0,3746,en_2649_34819_37836996_1_1_1_1,00.html
http://www.oecd.org/document/4/0,3746,en_2649_34819_37836996_1_1_1_1,00.html
Chapter 1 Social policy and the american Welfare State 23

24. Ibid. 25. Milton Friedman, Money Mischief: Episodes in Monetary

History (New York: Harcourt Brace, 1992). 26. Milton Friedman, Capitalism and Freedom (Chicago, IL:

University of Chicago Press, 1962). 27. Ibid. 28. Robert E. Lucas, Studies in Business Cycle Theory

(Cambridge, MA: MIT Press, 1981). 29. Krugman, Peddling Prosperity. 30. Ibid. 31. Ibid. 32. Congressional Budget Office, The Economic and Budget

Outlook: Fiscal Years 1993–1997 (Washington, DC: Congressional Budget Office, 1992), p. 28.

33. Citizens for Tax Justice, Cost of Tax Cuts for the Wealthiest Americans, 2012. Retrieved February 2012 from http://costoftaxcuts.com.

34. See Beth Shulman, The Betrayal of Work: How Low Wage Jobs Fail 35 Million Americans (New York: The New Press, 2003); Lawrence Mishel, Jared Bernstein, and John Schmitt, The State of Working America 2000/2001 (Ithaca, NY: Cornell University Press, 2001); and Jared Bernstein, “Economic Growth Not Reaching Middle- and Lower Wage Earners,” January 28, 2004. Retrieved 2004 from www.epinet.org/content.cfm/webfeatures_ snapshots.

35. Office of Management and Budget, “The Nation’s Fiscal Outlook Fiscal Year 2008.” Retrieved 2008 from www .whitehouse.gov/omb/budget/fy2008/outlook.html.

36. See Ayn Rand, The Fountainhead (New York: New American Library, 50th Anniversary Edition, 1996); Atlas Shrugged (New York: Signet Book; 35th Anniversary Edi- tion, 1996).

37. Charles Murray, Losing Ground (New York: Basic Books, 1984), pp. 227–228.

38. Privatization: Toward More Effective Government (Washington, DC: U.S. Government Printing Office, 1988), pp. 233–234.

39. Michael Grynbaum, “Greenspan Concedes Error on Regulation,” The New York Times, October 23, 2008, p. 1.

40. Associated Press, “2008 U.S. Budget Deficit Bleeding Red Ink First 4 Months of Budget Year at Nearly $88B, Dou- ble Amount Recorded for Same 2007 Period,” CBS News, February 12, 2008. Retrieved October 24, 2008, from http://www.cbsnews.com/stories/2008/02/12/national /main3822385.shtml.

41. Jeffry Galper, “Introduction of Radical Theory and Practice in Social Work Education: Social Policy.” Mimeographed paper, Michigan State University School of Social Work, ca. 1978.

42. Piven and Cloward, Regulating the Poor: The Functions of Public Welfare, Knopf Doubleday Publishing Group, 2012, pp. 3–4.

43. Harry Hopkins, Spending to Save: The Complete Story of Relief (Seattle: University of Washington Press, 1936).

44. Neil Gilbert, Harry Specht, and Paul Terrell, Dimensions of Social Welfare Policy (Englewood Cliffs, NJ: Prentice Hall, 1993).

45. Marc Bendick, Privatizing the Delivery of Social Welfare Service (Washington, DC: National Conference on Social Welfare, 1985), p. 1.

46. Charles Peters, “A New Politics,” Public Welfare 41, no. 2 (Spring 1983), pp. 34, 36.

47. Randall Rothenberg, The Neoliberals (New York: Simon & Schuster, 1984), pp. 244–245.

48. David Stoesz, Small Change (New York: Longman, 1995).

49. Robert Kuttner, The Alarming Parallels between 1929 and 2007, The American Prospect (October 2, 2007).

50. Robert Reich, The Next American Frontier (New York: Times Books, 1983).

51. Bruce Stokes, Helping Ourselves: Local Solutions to Global Problems (New York: W.W. Norton, 1981).

52. Sugata Dasgupta, “Towards a No-Poverty Society,” Social Development Issues 12 (Winter 1983), pp. 85–93.

53. Some of these economic principles were addressed by E. F. Schumacher in Small Is Beautiful (New York: Harper & Row, 1973).

54. Cathy Lynn Grossman, “5 Faith Facts about Rick San- torum: Church-State Separation Makes Him Want to ‘Throw Up,’” Religious News Service, May 28, 2015. Retrieved August 2015 from http://www.religionnews. com/2015/05/28/5-faith-facts-rick-santorum-church- state-separation-makes-want-throw/.

55. Barry M. Goldwater, The Conscience of a Conservative (New York: Putnam, 1960), pp. 109–110.

56. See Peter Steinfels, The Neoconservatives (New York: Simon & Schuster, 1979).

57. Interview with Stuart Butler, Director of Domestic Policy at the Heritage Foundation, October 4, 1984.

58. Alan Walker, “The Strategy of Inequality: Poverty and Income Distribution in Britain 1979–89,” in I. Taylor (ed.), The Social Effects of Free Market Policies (Sussex, England: Harvester-Wheatsheaf, 1990), pp. 43–66.

59. James C. Mckinley Jr, “Texas Conservatives Win Curriculum Change,” The New York Times, March 13, 2010, p. A10.

60. Kristen Geiss-Curran, Sha’ari Garfinkle, Fred Knocke, Terri Lively, and Sue McCullough, “The Contract with America and the Budget Battle,” unpublished manuscript, University of Houston, Spring 1996.

61. Darren Samuelsohn, “Rudy Giuliani: President Obama Doesn’t Love America: The Former New York Mayor Makes His Remarks at a Scott Walker Event,” Politico, February 18, 2015. Retrieved August 2015 from http:// www.politico.com/story/2015/02/rudy-giuliani-president- obama-doesnt-love-america-115309.html; and Rebecca Nelson, “Obama Skewers GOP Presidential Candidates’ ‘Outrageous Attacks’,” National Journal, July 28, 2015. Retrieved August 2015 from http://www.nationaljournal. com/white-house/obama-skewers-gop-presidential- candidates-outrageous-attacks-20150727.

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http://costoftaxcuts.com
http://www.epinet.org/content.cfm/webfeatures_snapshots
http://www.epinet.org/content.cfm/webfeatures_snapshots
http://www.whitehouse.gov/omb/budget/fy2008/outlook.html
http://www.whitehouse.gov/omb/budget/fy2008/outlook.html
http://www.cbsnews.com/stories/2008/02/12/national/main3822385.shtml
http://www.cbsnews.com/stories/2008/02/12/national/main3822385.shtml
http://www.religionnews.com/2015/05/28/5-faith-facts-rick-santorum-church-state-separation-makes-want-throw/
http://www.religionnews.com/2015/05/28/5-faith-facts-rick-santorum-church-state-separation-makes-want-throw/
http://www.religionnews.com/2015/05/28/5-faith-facts-rick-santorum-church-state-separation-makes-want-throw/
http://www.politico.com/story/2015/02/rudy-giuliani-president-obama-doesnt-love-america-115309.html
http://www.politico.com/story/2015/02/rudy-giuliani-president-obama-doesnt-love-america-115309.html
http://www.politico.com/story/2015/02/rudy-giuliani-president-obama-doesnt-love-america-115309.html
http://www.nationaljournal.com/white-house/obama-skewers-gop-presidential-candidates-outrageous-attacks-20150727
24 part 1 american Social Welfare policy

62. Libertarian Party, “Statement of Principles,” Washington, DC, 1996.

63. Pew Research Center, The Tea Party and Religion, February 23, 2011. Retrieved August 2015 from http:// www.pewforum.org/2011/02/23/tea-party-and-religion/.

64. Daniel Patrick Moynihan, Came the Revolution (New York: Harcourt Brace Jovanovich, 1988), p. 291.

65. See Harold Wilensky and Charles Lebeaux, Industrial Society and Social Welfare (New York: Free Press, 1965); and Mimi Abramovitz, “The Privatization of the Welfare State,” Social Work 31 (July–August 1986), pp. 257–264.

66. R. Erikson, E. Hansen, S. Ringen, and H. Uusitalo, The Scandinavian Model (Armonk, NY: M.E. Sharpe, 1987).

67. Richard Titmuss, Commitment to Welfare (New York: Pantheon, 1968), p. 127.

68. Alvin Rabushka, “Tax and Spending Limits,” in Peter Duignan and Alvin Rabushka (eds.), The United States in the 1980s (Stanford, CA: Hoover Institution, 1980), pp. 104–106.

69. Martin Anderson, “Welfare Reform,” in Peter Duignan and Alvin Rabushka (eds.), The United States in the 1980s, pp. 171–176, Hoover Institution.

70. Stuart Butler and Anna Kondratas, Out of the Poverty Trap: A Conservative Strategy for Welfare Reform (New York: Free Press, 1987).

71. William Lind and William Marshner, Cultural Conser- vatism: Toward a New National Agenda (Washington, DC: Free Congress Research and Education Foundation, 1987), p. 83.

72. George Gilder, Wealth and Poverty (New York: Basic Books, 1981), p. 118.

73. Anderson, “Welfare Reform,” p. 145. 74. Jacob. S. Hacker, The Great Risk Shift: The Assault on

American Jobs, Families, Health Care, and Retirement (New York: Oxford University Press, 2006).

75. Ibid. 76. Lawrence Mischel, Jared Bernstein, and Sylkvia

Allegretto, The State of Working America 2004/2005 (Ithaca, NY: IRL Press, 2005).

77. Julie Appleby, “Bush Unveils Health Plan Tied to Tax Deduction,” USA Today, January 24, 2007. Retrieved March 17, 2007 from www.usatoday.com/money /industries/health/2007-01-24-bush-health-usat_x.htm.

78. John Judis and Michael Lind, “For a New Nationalism,” The New Republic (March 27, 1995), p. 26.

79. Mitchell Landsberg, “Nation’s Social Health Declined in ’93,” Houston Chronicle (October 16, 1995), p. 1C.

80. Domestic Policy Council, Up from Dependency (Washington, DC: White House Domestic Policy Council, December 1986).

81. For a classic description of the assimilation phenomenon, see Nathan Glazer and Daniel Patrick Moynihan, Beyond the Melting Pot (Cambridge, MA: MIT Press, 1970).

82. Thomas Muller et al., The Fourth Wave (Washington, DC: Urban Institute, 1985).

83. The three auspices of social welfare in the United States have been termed the “mixed economy of welfare.” See Sheila Kamerman, “The New Mixed Economy of Welfare,” Social Work 28 (January–February 1983), pp. 43–50.

84. Marc Bendick, Privatizing the Delivery of Social Welfare Service (Washington, DC: National Conference on Social Welfare, 1985).

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http://www.nationaljournal.com/white-house/obama-skewers-gop-presidential-candidates-outrageous-attacks-20150727
http://www.nationaljournal.com/white-house/obama-skewers-gop-presidential-candidates-outrageous-attacks-20150727
http://www.nationaljournal.com/white-house/obama-skewers-gop-presidential-candidates-outrageous-attacks-20150727
http://www.pewforum.org/2011/02/23/tea-party-and-religion/
http://www.pewforum.org/2011/02/23/tea-party-and-religion/
http://www.usatoday.com/money/industries/health/2007-01-24-bush-health-usat_x.htm
http://www.usatoday.com/money/industries/health/2007-01-24-bush-health-usat_x.htm
25

A Brief History of the American Social Welfare State

C h a p t e r 2

Source: Library of Congress prints and photographs Division Washington, D.C. 20540 USa [LC-USZ62-63966]

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26 part 1 american Social Welfare policy

Understanding the American social welfare state requires knowing the historical foundations upon which it was built. This chapter examines the historical antecedents of the American social wel- fare state, taking the reader from its distant roots to the more recent developments that have shaped and defined it.

Early Antecedents of Welfare Statism Virtually all societies have developed some form of welfare-related activities. These governmental, soci- etal, familial, or cultural institutions may address several human needs: (1) they help ameliorate the individual suffering of those judged worthy of help, (2) they promote the common good by distributing economic and other resources from a higher social group or class to a lower one, (3) they extend the rights of citizenship to groups outside of the soci- etal mainstream, and (4) they promote social sta- bility by managing lower social or economic class grievances. Different developed economies high- light different parts of these welfare functions.

Judeo-Christian Doctrine and Social Welfare Social welfare functions are found in early his- tory, and Walter Trattner notes that Hammurabi, the Babylonian ruler who died in 1750 BC, made the protection of women and children part of his famous code. The Greeks and Romans also devel- oped welfare-related policies that included daily allowances for the handicapped, the public distri- bution of grain for the needy, and institutions for the custodial care of various vulnerable groups.1

From its early beginnings, Judaism contained strict laws for dealing with the poor and for giving tzedakah (Hebrew for charity). These laws helped in forming the basis of the modern welfare state in many ways. For instance, the Jewish law required farmers to leave a minimum of one-sixtieth of their field crops unharvested, which was left for the poor. To discourage dependence, the poor were encour- aged to be competitive in gathering the peah (the standing allotment). Each was allowed to take as much as he or she could gather.

Jewish Rabbinic law also established one of the earliest means tests. Anyone who had 200 Zuz or

above (established by the Rabbis as sufficient to purchase food for one year) was considered above the poverty line and ineligible for assistance. Like modern means tests, complex exemptions were employed in calculating the poverty level. For example, the residence, household utensils, reli- gious articles, and certain of the wife’s property were exempt. The poor were not forced to give up the essential elements of their lifestyle to be eligible for assistance.

The process of Jewish charity was highly orga- nized in biblical times, and it was common for each community to have two types of charity organi- zations: one for poor travelers and the other for poor residents. The organization of the charity was administered by a tax committee, and each family was assessed a tax, which was then distributed to the resident poor on Fridays. In addition, plates of prepared food were collected for the traveling poor. The law also prescribed what was to be given. If a person was hungry, he or she must be given food; if a person is without adequate clothing, he or she must be supplied with clothing.

Jewish law was complicated in terms of char- ity, mirroring the ambivalence and contradictions of the modern welfare state. On the one hand, the poor who were entitled to alms but who worked hard and were self-supporting instead of burdening the public were worthy of high praise. Instead of needing others for help, people came to them for assistance. On the other hand, those who were old, sick, or otherwise incapable of eking out the barest of existence yet refused help were depriving them- selves of essentials and therefore endangering their lives. These people were viewed as unworthy of pity. False pride was scorned upon.

It was forbidden in Jewish law to turn away a poor person empty-handed. Of the degrees of Jew- ish charity, the highest forms were assisting the poor with a gift or a loan, accepting them into a business partnership, or helping them find employ- ment. In other words, the highest form of charity was helping the poor become self-sufficient. Con- versely, the lowest kind of charity was giving it reluctantly, as in involuntary tithing. Charity was expected to be given with an open heart: “Whoever gives charity to a poor man ill-mannerdly and with downcast looks has lost all the merit of his action even though he should give him a thousand gold pieces.”2 The next level of charity was when the giver did not know who received the gift and the recipient did not know who gave it. The provision

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Chapter 2 a Brief history of the american Social Welfare State 27

of anonymous charity to strangers also forms the backbone of the modern welfare state. Taxpayers pay taxes that provides assistance to strangers who cannot reciprocate, nor even recognize or acknowl- edge the individual whose tax money went to them.

Since most of the early Christians including Jesus, Paul, Peter, and other early founders of the Christian church were Jews, it is not surprising that Jewish charity customs were embedded in Chris- tian doctrine. Beginning in the sixth century, mon- asteries became important sources of relief for the poor, and some religious orders specifically focused on aiding the needy. The funds to run charitable endeavors came from rents received on church lands, donations, endowments, collections, and tithing. Some of this money was used to help the needy by providing food, provisions, and medical services.

The English Poor Laws In some cases, the feudal system that dominated Europe throughout the Middle Ages helped the poor mitigate the hardship and distress of the period. Many, if not most, people in the medieval period were serfs who lived on a manor consisting of a castle, church, small village, and the surround- ing farm land. Serfs worked as tenant farmers for the feudal lords. If the feudal lord was generous, the basic needs of the serfs such as employment, food, clothing, and aid in sickness were met. Con- versely, life on the manor could be miserable if the lord of the manor was cruel and vindictive. Serfs were generally forbidden to leave the feudal estate without the permission of their lord.

Others in the medieval period lived in towns, which began as religious centers and later became commercial centers. People living in towns were “free men” compared to serfs. Social welfare needs were met by service, craft, or merchant guilds. Although the primary responsibility of guilds was to protect its members and meet the social and eco- nomic needs, it sometimes helped others, which might include feeding the needy or providing free lodging to travelers. In addition to the guilds, medi- eval hospitals (usually connected to monasteries) provided an important service by offering free med- ical care for weary travelers, the old, orphans, and the destitute. Many of the early hospitals, especially those in the burgeoning industrial cities, were later taken over by municipal authorities. The growth of

industrial cities combined with the increased power of the state and the collapse of feudalism led to the creation of the English Poor Laws, the first modern codification of laws and responsibilities relating to the poor.

The English Poor Laws functioned as an early model for much of American social welfare. Early social welfare relief in England was considered a private and church matter. Individual benefactors took responsibility for building almshouses, hos- pitals, and even bridges and roads. Despite this, the major responsibility for meeting the needs of the poor rested with the church. Most European governments, including the English government, assumed little responsibility for the care of the poor. This situation would change with industrialization and its attendant social and economic problems.

Rapid industrialization and the growth of manufacturing led to the conversion of farmland into more profitable sheep pastures, a transforma- tion that was necessary to feed England’s growing woolen mills. As newly released serfs followed economic opportunities, the urban migration of displaced and impoverished peasants led to untow- ard social consequences, including begging and vagrancy.

The Black Death (bubonic plague) of 1349 drastically reduced England’s population, leading King Edward III to create a Statute of Labourers that fixed maximum wages, placed travel restric- tions on the unemployed, forced the jobless to work for any employer willing to hire them, and outlawed alms for the able-bodied.3 In 1531, the English Parliament outlawed begging for the able-bodied. Although repressive, the act also instructed local officials to seek out the worthy poor and assign them areas where they could beg.4

The passage of the Act for the Punishment of Sturdy Vagabonds and Beggars in 1536 (one of the series of Poor Laws) further mandated the English government to assume limited responsibility for the poor. Although this act increased the punish- ment for begging, it also ordered officials to obtain resources through voluntary church donations to care for the poor, the sick, the handicapped, and the aged. The statute required local officials to find work for the able-bodied and to arrange for the apprenticeship of poor children aged 5 to 14. In 1572, the English Parliament enacted yet another poor law, this time requiring local officials to implement a mandatory tax for the provision of economic relief to the poor.5

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28 part 1 american Social Welfare policy

In 1601, the English government established the Elizabethan Poor Laws. These laws were meant to control the poor who were unable to obtain employment in the new industrial sector and who, because of that, might become disruptive. Taxes were levied to finance a law that by modern stan- dards was harsh. The law continued the separa- tion of the “deserving” from the “undeserving” poor. The worthy poor were the lame, the blind, orphaned children, and those unemployed through no fault of their own; the unworthy poor were vagrants, drunkards, and the slothful. The core of the Elizabethan Poor Laws would stand for 250 years.

The Elizabethan Poor Laws contained both positive and repressive features. For example, parents with means were legally responsible for supporting their children and grandchildren, and children were responsible for supporting their parents and grandparents. On the repressive side, the unworthy poor were sent to workhouses and forced to do menial work for the minimum neces- sities of life. Poor people who refused to work could be sent to jail, or in some cases, even exe- cuted. The English Poor Laws established the principle of “less eligibility,” the idea that any form of public assistance should be less than the lowest prevailing wage.

These laws institutionalized the responsibility of the English government to provide relief to the needy and provided the needy with a legal right to receive that assistance. To clarify the boundar- ies of government help, the law recognized three classes of dependents and proposed remedial measures: Needy children were given apprentice- ships, the able-bodied were given work, and the worthy poor were provided either indoor (insti- tutional) or outdoor (home) relief. The law also required local governments to assume responsi- bility for the needy.6 These Poor Laws formed the basis for statutes enacted in both colonial and postcolonial America.7

The Poor in Colonial America Key aspects of the Elizabethan welfare system were adopted by the American colonies. Like its English corollary, the parish or colonial town was respon- sible for its residents. Until the 1700s when alms- houses began to appear, cases of pauperism were handled on an individual basis in town meetings.

When the number of poverty cases increased due to indentured servants and abandoned children, the English system of overseers—an official who administered poor relief—was introduced.

Most settlers in colonial America were poor, but unlike their European ancestors, they were not destitute and so abject pauperism was not wide- spread. 8 According to Robert Morris, less than 1 percent of American colonists received help from outside sources.9

In small towns unable to support an alms- house, it was not uncommon for the town coun- cil to auction the poor off to neighboring farmers, apprentice out children, place the poor in private homes at public expense, or send them to privately operated almshouses. Settlers believed that children should be part of a family unit and the practice of indentured child servitude was widespread. By the end of the colonial period, the locus of responsibil- ity for the poor began to shift from the town to the state or colony.10