Welfare Final
What factors did Gilens argue are most important in explaining white opposition to welfare?
Most important factor was a negative perception of African-Americans Negative attitudes about poor people also were important Individualist beliefs (limited government) also mattered Party ID and ideology were less important
What is negativity bias and how does it affect welfare state retrenchment?
- the tendency for people to be more sensitive to losses than gains People react more when benefits they now enjoy are taken away vs. when new benefits are offered to them Losses will be tangible for concentrated groups with the benefits being diffuse
Name and explain three cost-control strategies that firms adopted in the face of rising health care costs? (Hacker)
1) Shifting insurance costs to workers o Co-pays and deductibles 2) Excluding preconditions 3) Shift from "community rating" to "experience rating" Under "community rating," an insurer charges all people covered by the same type of health insurance policy the same premium without regard to age, gender, health status, occupation, or other factors. "experience rating" when it predicts a group's future medical costs based on its past experience (i.e., the actual cost of providing health care coverage to the group during a given period of time; the group's claim history). Thus, the insurer calculates the group's insurance premium based on its own, not the overall community's, experience.
How are the politics of welfare state retrenchment different from the politics of welfare state expansion?
1) goals are different -Negativity bias - Blame avoidance rather than credit claiming 2) Context is different -Policy feedback- Recipients and employees have a vital stake in continuing the programs - changes the configuration of interest groups- interest groups mobilize to keep programs going 3) Different strategies • Advocates of retrenchment will try to play one group off against another - Reforms will be low visibility 4) concentrated vs. diffused -expansion helps a lot of people broadly, but retrenchment takes away from specific groups
Howard says the welfare state in America has three components; name and briefly describe them.
1) tax expenditures 2) upper tier- social insurance programs 3) lower tier- means-tested welfare
What are the sources of "market failure" in healthcare? (Hacker)
1)Agency, refers to a problem in the relationship between patients and physicians. -The patient delegates authority to physicians to make decisions in their best interests regarding medical treatment. o This is describing the principal-agent problem because physician may have different motives than the patient o Based on information asymmetry 2) Moral hazard, a problem with insurance markets o Purchasing insurance lowers an individual's price constraint when seeking medical treatment o People may engage in more risky behavior o People may consume excessive services 3) Adverse selection, a problem with insurance markets o People who purchase medical insurance are those most likely to have need of medical care o The premium is low relative to the risk for the insurance company
What were the three explanations for non-participation among welfare recipients that Soss considered and rejected?
1)Personal traits Low levels of education, not much social experience, etc 2) Culture of dependency People learn to be passive as a result of receiving government assistance 3) Satisfaction with welfare as it exists
Under what circumstances is welfare state retrenchment more likely?
1)When a party enjoys "electoral slack" 2) Budget crisis 3) Retrenchment is more likely when policy visibility can be lowered, but there is a dilemma 4) Advocates of retrenchment are more likely to succeed when they can change the nature of institutions
What role did high marginal income tax rates play in the development of healthcare policy in the U.S.? (Hacker)
1. Historically, marginal income tax rates were very high and paid by very few high income individuals 2. These taxes were raised to support the war efforts - WWI and WWII 3. During WWII, the tax based was expanded to generate more revenue -First time that the income tax reached the middle class -Marginal rates were still at historic highs -These high taxes created demand for fringe benefits from employers -As people were paying high taxes and couldn't afford/didn't want to have to pay for yet another benefit -Wanted to have health care for "free"
What methods did Gilens use to investigate white opposition to welfare?
2 types of Survey analysis • First: Examined welfare spending and welfare attitudes • Second: Asked respondents whether or not a welfare mother is likely to try to get a job or likely to have more children to get a larger welfare check • Experiment randomly varied racial identification of the mother as black or white • The identification of the welfare mother as a black woman triggered negative views of welfare recipients and was positively associated with opposition to welfare spending and negative attitudes about welfare o Among subset of whites, there's people who have a negative view of blacks. When this view of blacks is triggered, it triggers a negative review of welfare
What specific reforms does Mettler propose? Briefly list and explain the specific reforms that Mettler proposes.
3 "during legislative process" reforms: 1) reconfigure the role of vested interests At least negotiate with them to change their role in the political process 2) Reveal through political communication what is actually happening in the submerged state 3) Reveal through policy design what it is that government actually does 2 "after policy enactment" 4) After policy enacted, use statements and procedures that make government's role as visible as possible 5) Use public info campaigns to make effects of policy apparent and widely known
What is the difference between an income tax credit and an income tax deduction? What is the significance of whether or not a tax credit is refundable? Name a refundable federal income tax credit.
A credit is a straight reduction of your taxes owed A deduction is a reduction of your taxable income A refundable tax credit means you can actually reduce the amount of tax owed to less than 0, where the IRS will pay you back ex: The Earned Income Tax Credit (EITC) is a fully refundable tax credit that creates a "negative tax liability" ACTC-have to earn more than $3,000 in income for it to be refundable
How does policy feedback influence the development and actions of interest groups?
AARP- benefitted from policy feedback after medicare and there were gaps in coverage- endorsed medigap plans as a way of promoting membership in AARP
How does the social construction of targets influence policy rationales?
Advantaged: o Benefits are explained by forging an instrumental link between the group's interest to the public interest o Costs to support advantaged groups are unavoidable Contenders: o Extent of burdens is exaggerated o Benefits are hidden (by designing policy to limit visibility and traceability) Dependents: o Benefits emphasize justice-oriented rationale (rather than instrumental) o Unrelated to the public interest o Burdens are protection from harm Deviants: o Benefits and burdens are efficient means to achieve some important national purpose o Rationale is harder to sustain for benefits
How does the social construction of targets influence policy messages?
Advantaged: agency outreach o Your concerns are important o Attitudes about politics • Benefits from mobilization • Government generally does what is right • Formal active participation, vote, campaign, join interest groups Contenders: subvert implementation o They have to actively seek help from government o Your concerns are controversial o Attitudes about politics • Raw use of power is necessary in pursuit of self-interest • Government cannot be trusted, must be vigilant • Politics is corrupt • Informal participation (connections, campaign $) Dependents: client-initiated contact o Problems are your own fault o Only by surrendering your autonomy to government can your problems be solved o Labeling and stigma o Attitudes about government • Demobilization...disinterest and passivity • Participation is conventional but low Deviants: avoidance o You are a bad person who creates problems for others o Attitudes about government • Government is arbitrary and unpredictable • Government is corrupt • Participation is irrelevant (disruptive forms such as protest and riots)
Briefly list and explain Schneider and Ingram's typology of target groups.
Advantaged: strong power, positive construction Claim credit for rewards Clear benefits Contenders: strong power, negative construction Avoid blame for rewards Hidden benefits Dependents: weak power, positive construction Avoid blame for punishment Symbolic rewards Deviants: weak power, negative construction Claim credit for punishment Clear punishment
How, if at all, is the submerged state (Mettler) different from the hidden welfare state (Howard)?
Although the hidden-welfare state and the submerged state represent many of the same policies, the submerged state as a concept expands the definition to its implications to democracy. Both acknowledge that some social policies are indirect, non-visible but the submerged state also argues that these policies and the practice of creating them out of governmental activity sight undermines democracy.
What is "community rating" and why is it significant to health insurance? (Hacker)
An insurer charges all people covered by the same type of health insurance policy the same premium without regard to age, gender, health status, occupation, or other factors
Briefly explain Hacker's critique of Pierson's work on welfare state retrenchment (from the Hacker article, not the book). How and why does Hacker think Pierson's analysis was limited?
Basically, he only looked at revision but that's not where the action is o By looking at affirmative choices, retrenchment analyses downplayed the ways in which actors may shape and restrict the agenda of debate and prevent some kinds of collective decisions altogether • Most critical in this regard are deliberate attempts to prevent updating of existing policies to reflect changing social circumstances The "defensive" nature of U.S. policymaking process makes playing defense easier
How did President Obama's strategy to develop healthcare reform differ from President Clinton's? What does this tell us about the submerged state?
Clinton's plan failed because interest groups mobilized support against it, even though it was popular with the public. Obama planned deliberately to bring these groups to the bargaining table, which worked. Shows the power of interest groups in submerged state politics
What distinguishes the Earned Income Tax Credit (EITC) from the other means-tested programs we have described?
EITC is the only means-tested benefit that increases as income increases (during the phase-in)
What is the "destructive competitive logic of private insurance"? (Hacker)
ERISA caused companies to self-insure, which makes them sensitive to costs. In response, they would limit coverage, shift risk to employees, don't offer insurance at all, etc. Firms starts to pay attention to whether or not they're hiring people who smoke cigarettes, who are obese, etc. This means the people who are at the highest health risk are not part of the private insurance market.
What attributes of submerged state policies help them to overcome partisan differences and institutional gridlock (according to Mettler)?
Gained favor for 4 reasons: 1) Republicans and Conservative Democrats find them attractive 2) other Democrats have proven willing to go along 3) institutional features of congress make them easier to enact than new direct spending programs ex: student loans vs. pell grants 4) over time they have cultivated the support of interest groups that defend them vigorously
List and explain four tax provisions that are part of the "hidden" welfare state.
Housing (mortgage interest deduction) Pension income (deferred taxation) Health insurance (exemption from taxation) Charitable contributions (deductions)
How do Rehm, Hacker, and Schlesinger explain the extent to which support for welfare programs is broad or narrow?
Interrelationship between risk and income influences public opinion regarding welfare programs. Negative relationship in all countries, but the extent that it's negative changes. The higher the correlation, the more people will oppose social policies, opinions about social policy will be more polarized, and there will be lower levels of aggregate support for social policy.
What is the difference between a "marginal tax rate" and an "average tax rate"?
Marginal rate- tax rate you paid on last dollar you earned Average tax- amount of tax you pay divided by total income
What state tax policies tend to make state tax burdens more progressive?
Policy in these states have several consistent features All have a progressive income tax In most cases, income tax revenue is a large source of total state revenue • Lesser reliance on other taxes In most cases, refundable tax credits (that parallel the federal EITC) are available
Compare and contrast President Obama's tax cuts (in the stimulus) with the President (George W.) Bush's tax cuts. How does Mettler suggest they differed in design? What was the significance of this difference?
Primary beneficiaries of Bush- top of income distribution- biggest share of money that wasn't taxed were at the top- marginal tax rates reduced to 35% for the top Obama- extended all of Bush tax cuts and add some of his own tax cuts on top of that (ARRA) 2% reduction in share individauls paid in FICA tax (2010 and 2011) Obama added on a cut in regressive tax on top of Bush's progressive tax cuts When Obama was reelected- all of Bush tax cuts would be continued except return top marginal tax rate back to 39.6% from 35%
What is a "group centric" policy evaluation (according to Lawrence, Stoker, and Wolman)?
Republicans and conservatives are more likely to adopt group centric evaluations • More likely to evaluate a policy based on the group it would help, not the policy itself
What is the "privatization of risk" in pension policy? (Hacker)
Risk of poverty in retirement was shifted to individuals from corporations and government
What is Hacker's "second face" of conservative influence? How does it influence the evolution of the welfare state in the U.S.?
Second face is about keeping things off the agenda. Hacker talking about policy retrenchment so he linked it to conservatives who were trying to stop changes in welfare system.
What are the four models of government Soss considers to characterize clients' political beliefs?
Talks about this when discussing external efficacy 1) Democratic- Government is open and responsive to the preferences of citizens, who are in meaningful respects politically equal 2) Capitalist- Government exists to serve rich people and corporations. While it may not literally be the "Executive Committee of the Ruling Class," government is primarily influenced by economic inequalities. The political process is governed by money and the people who have it. 3) Complicated- Government is too large and has too many complicated systems and laws. As a result, one public official does not know what another is doing. Officials cannot pay attention to citizens' real needs, do not respond in a timely manner, and are difficult to influence. 4) Autonomous: Government officials do whatever they want, whenever they want. They can evade or change laws if their goals require it. They have to confront one another when they disagree, but important decisions are not swayed by popular actions
What are tax expenditures? (Note: there are several different forms). Provide several examples. Which tax expenditures are currently the most costly (in terms of government revenue sacrificed)? (Check the CBO report for the latest figures.)
Tax expenditures are revenue losses attributable to tax provisions that often result from the use of the tax system to promote social goals without incurring direct expenditures They are hard to detect (non-events...things that don't happen) Revenue losses (taxes the government sacrifices because it does not collect them) Include exclusions, deductions, deferred taxation, and credits Currently most expensive: o Housing (mortgage interest deduction) o State and local property taxes (deduction) o Pension income (deferred taxation) o Health insurance (exemption from taxation) o Charitable contributions (deductions) • All these things are things charitable people have, not poor people
Tax rate vs. tax base
Tax rate: How much (normally expressed as a proportion) of taxable income is owed in tax? Tax base: How much of total income is subject to taxation? Exclusions and deductions reduce the amount of income subjected to taxation 3 circles: total income, taxable income, taxed income
In what ways is U.S. social policy exceptional according to Hacker?
The private sector plays a greater role in U.S. welfare policy
How does the social construction of targets influence policy design?
This is by diagonals on the chart. For advantaged and deviants, very clear and coherent policy design. People want credit for delivering benefits for advantaged people and punishing deviants For contenders and dependents, more confusing and unclear design. Contenders- want to give them rewards but don't want to be seen giving them to them- give them hidden, complex benefits so they can claim the benefits but the legislature doesn't have their fingerprints on the benefits Dependents- symbolic benefits- create programs for them but significantly underfund them
Mettler argues that the submerged state undermines democracy. Please briefly describe and explain the argument that leads Mettler to this conclusion
When we develop and implement policies through submerged state we are obscuring what government actually does, we are misleading people about boundaries of private/public sector, this is detrimental and has thwarted democracy in the United States Leads to passivity and resentment and promotes inequality in economics and between who has influence (based on how much info they know)
What is the "revisionist" school? (in Rehm, Hacker, and Schlesinger)?
demand for social protection crosses class lines...not only low-income people, but also people with substantial risk of unemployment favor a generous welfare state
Why does Soss think that AFDC clients are unlikely to participate in politics?
o Agency is a threat • Agents have significant discretion that can really affect their material wellbeing • People are powerless when confronting government • Agency power is used to control people, not to help them o AFDC clients think that speaking out is ineffective and risky...government is all powerful and arbitrary
What are the forces that constrain welfare state retrenchment?
o Conservative nature of democratic policymaking (a status quo orientation) o High political price to be paid for retrenchment makes politicians reluctant to take the lead o Path dependency • People adjust their expectations and lives to reflect the expectation that they will receive social policy benefits
Hacker says that the welfare state has three components; name and briefly describe them (Hacker and Howard are not the same).
o Direct government programs such as OASDI, TANF, Medicare, and Medicaid o The "hidden welfare state" of tax expenditures o The "private" benefits that are subsidized and regulated by government
Identify and explain the four modes of policy change included in Hacker's article.
o Drift- transformation of stable policy due to changing circumstances o Conversion- internal adaptation of existing policies o Layering- creation of new policy without elimination of old o Revision- formal reform, replacement, or elimination of existing policy
Describe the eligibility conditions for the EITC.
o EITC is part of the hidden welfare state • To receive the EITC, you must only file your tax return ... the IRS will calculate the credit No welfare hassle Must meet certain requirements, such as having earned income below certain levels depending on if you are married filing jointly, single, have kids, etc The amount of EITC benefit depends on a recipient's income and number of children.
What possible explanations for white opposition to welfare did Gilens consider?
o Economic self-interest o Individualist beliefs o Party identification o Ideology o Attitudes toward the poor o Racial attitudes
What is the submerged state? (Mettler)
o Policy is not only a matter of direct government programs like OASDI and TANF • Tax and spend o Taxes and regulation also matter • Government shapes the behavior of private individuals and organizations through oversight, subsidies, and incentives that influence them to take action deemed to be in the public's interest o Submerged state policies lay beneath the surface of market institutions, within federal tax and regulatory systems • Submerged state policies o Indirect: often to such an extent they are effectively invisible o Obscure role of government while exaggerating the role of the market o Mostly benefit affluent people
What according to Lawrence, Stoker, and Wolman distinguishes how liberal/democrats and conservative/republicans think about social policy?
o Regardless of the issue under consideration, conservatives (and especially more conservative Republicans) tend to behave in a manner consistent with established theory • Self-identified conservatives' responses vary by target groups and their preferences about social policies are consistent with theoretical predictions Policies that target groups held in low esteem are at the bottom, universal policy designs in the middle, and highly regarded groups at the top Weak universalists o By contrast, liberals, and particularly liberal Democrats, are less likely to adopt a group-centric heuristic to evaluate policy • Consequently, their policy preferences are less influenced by target group specification Self-identified liberals and Democrats often prefer universal policy designs even to designs that target popular groups Tended to be strong universalists
What state tax policies tend to make state tax burdens more regressive?
o States that rely on sales and excise taxes for revenue rather than a broad-based progressive income tax tend to be the most regressive • Sales and excise taxes are the most regressive forms of taxation, followed by property taxes, followed by income taxes The decision to apply sales taxes to food is especially important in determining how the tax burden is distributed...when food is taxed, the tax burden is especially regressive
What is the difference between "strong universalism" and "weak universalism" in Lawrence, Stoker, and Wolman's research?
o Strong universalism: Universal policy designs are favored over targeted policy designs • U > A > C > Dep. > Dev. o Weak universalism: Universal policy designs are favored over policies that target groups with negative social constructions • A > C > U > Dep. > Dev.
Briefly explain the development and evolution of the student loan marketplace for higher education?
o Students are a high risk for banks to give loans to o Before federal government intervened and invented the student loan marketplace, banks didn't really give students loans o Guaranteed student loan program created in 1965 • People who got student loans were subsidies by taxpayers using general revenues • Although banks were the instrument used give out loans, federal government backed the banks if students couldn't repay loans o 1972- Student Loan Marketing Association (Sallie Mae) • Privately owned and operated but government created and subsidized • Congress gave Sallie Mae special exemptions, including seed money to start out and tax exemption o P.72-73 • Clinton wanted to get rid of bank step- federal government would give people loans directly Profits banks making are huge- need direct lending to reduce amount of money it costs federal government • Sallie Mae spent 2nd most on lobbying behind Visa • In 2004 Sallie Mae was fully privatized • In 2006, malpractices of Sallie Mae exposed • The Great Recession: Sallie Mae needed bailout Department of Education bought all this bad paper to continue access to educational opportunity • Obama's budget had student loans towards very top of agenda- wanted to do direct lending like Clinton Expected to save federal government $87 billion over 10 years SAFRA didn't let private lenders originate loans, only to service them • Passed the House b/c Democrats controlled it • When it got to the Senate, it had to get past the filibuster- got passed in Senate too • Demise of bank-based student loans shows only under extreme circumstances can submerged state be changed (p.85) • Change to direct student lending was biggest shift in submerged state made to date- only possible b/c credit crisis Few people aware this happened
How did the fact that ERISA preempted state regulation of self-insured health plans influence the development of private health care benefits? (Hacker)
o This provision encouraged employers to self-insure- you are acting as your own insurance company o This meant that the risk pools for many health plans were limited and specific to employers o As costs began to rise significantly, businesses were highly sensitive to increases o Limit coverage, shift risk to employees, don't offer insurance at all, etc o Firms start to pay attention to whether or not they're hiring people who smoke cigarettes, who are obese, etc • They start not to hire these people because they don't want to be in their risk pool • This mean the people who are at the highest health risk are not part of the private insurance market • Insurance companies are getting even better at weeding out who is high risk and who isn't
What is risk privatization (Hacker)?
o To "privatize" risk is to fragment and undermine collective insurance pools that offer reduced cost protection to higher-risk and lower-income citizens in favor of arrangements that leave individuals and families responsible for coping with social risks largely on their own • Shift risk from public and private institutions onto individuals and families Increasingly policy provides incomplete protection against the key social risks that Americans confront
What is the "power-resources" school? (in Rehm, Hacker, and Schlesinger)?
political power of the working class is most important...less affluent citizens are thought to favor a more generous welfare state, redistribution through taxes and transfers Therefore, how much power working class has will determine the extent of the welfare state
What role did economic regulation during the Second World War play in the development of healthcare policy in the U.S.? (Mettler and Hacker)
• During WW II the private system of health insurance became institutionalized • Federal government regulated wages and prices during the war o Fringe benefits were not regulated o High tax rates made tax preferred benefits attractive • There was a severe labor shortage during the war o Employers expanded fringe benefits (especially health care) to attract and retain workers 80-90% tax on war profiteering- we are the only society where health insurance got treated as a business expense
What effects did ERISA have on pension policies in the private sector? (Hacker)
• ERISA contributed to the shift from defined benefit to defined contribution plans by regulating defined benefit plans (p. 153) • By shifting to defined contributions, employers avoided federal taxation and regulation
What is internal political efficacy? What is external political efficacy? In Soss' study, did AFDC clients have similar views about their internal and external political efficacy?
• External efficacy: the feeling the government is responsive to your concerns • Internal efficacy: the belief that they understand and can navigate the political system effectively AFDC clients have low levels of external efficacy in spite of high internal efficacy
List and explain the four reasons why affluent people are more likely to receive more benefits from the hidden welfare state.
• Higher marginal tax rates increase the value of tax expenditures • Affluent people are more likely to have jobs that provide benefits through the hidden welfare state (health care and pensions) • Affluent people have money to purchase goods favored by the hidden welfare state (education and homes) • Affluent people can hire agents to assure they receive their benefits (accountants and tax attorneys)
What is pension "integration" and how did it influence the development of pension policy in the U.S.? (Hacker)
• How did pension integration help to create a two-track system in the U.S.? o From 1942 through 1986, dollar for dollar offset from private pension liability for OASDI benefits o If SS benefits are greater than private pension, worker will only get what their SS benefit is o If private pension is $100, SS benefit is $65, he will get $65 from SS and $35 from private for total of $100 o Taxpayers took on a substantial amount of corporate debt and just pay it • Every dollar you received in SS benefits was a dollar that was deducted from your corporate pension Current rate is 50 cents on each dollar • The financial advantage of pension integration to corporations was that private pension liabilities were assumed as a public obligation (p. 120) • Pension integration made low-income elderly people "dependent" on Social Security
Explain how and why the hidden welfare state defies the standard narrative about social policy in the U.S., a narrative that focuses on comparing and contrasting social insurance and means-tested transfer programs. (Howard discusses this in the required reading.)
• Howard says the standard narrative about the welfare state in the US thinks in terms of two tiers o Upper tier is social insurance...universal, financed by special taxes, earned benefits, no stigma • Though we know this is partly mythology o Lower tier is welfare.. means-tested, general revenues, stigma • Hidden welfare state doesn't fit o Tax expenditures are essentially means-tested entitlements from general revenue but no stigma o But, the means-test is turned on its head
According to Rehm, Hacker, and Schlesinger, there are two natural political constituencies for the welfare state...identify and define them.
• Low-income people, who benefit from redistribution • High-risk people, who may lose their means of material support due to economic dislocation
Please briefly explain the experiments Mettler conducted and presents in required class reading. What did the results of the experiments suggest about the submerged state?
• Mettler's experiments- change amount of info shared about programs to see what they say about it o Control group o Basic info o Basic info + info on distribution of programs among income groups o Now that they understand home mortgage interest deduction, go from about 5% to over 40% oppose o Retirement savings: 7.5% → 35% oppose o Earned income tax credit: not the same • It's different because it targets its benefits to low income people • 11% → 15% oppose • 58% favor → 75% favor o People generally oppose policies that give benefits to affluent people when they have more info o Policies that are more redistributive are more favorable the more people know about them o The only way Americans oppose welfare spending is when you ask "how would you like to have more welfare spending" • They want to help poor people, they just don't like "welfare"
What is a "qualifying child" and how does this relate to EITC eligibility?
• Must be son, daughter, stepchild or foster child or brother, sister, stepbrother or sister, or niece or nephew • Must live with you majority of the year in the US In divorce, only one parent can claim qualifying children It increases the breakpoints and generosity of the EITC credit, so some people qualify if they have one or more "qualifying child"
What is policy feedback? (several authors use this concept, but there are foundational definitions in Hacker and Pierson)
• Policy "causes" politics o We've always been taught that changes in politics lead to changes in policy, but it's backwards • The development of interests and institutions that shape behavior and expectations • Policy feedback creates resistance to change • Policies can endure even when they no longer "make sense" • Policy feedback creates a "path dependent" process
Compare and contrast public and private welfare benefits. How are they different? How are they similar? (Hacker) (4)
• Public benefits tend to have lesser role for intermediaries • Public benefits are more likely to be compulsory- private more likely to be voluntary • Public are more visible and traceable, private are less visible and traceable (people unlikely to realize they're being affected by policy) • Public likely to have more progressive distribution (likely to redistribute from the top downward), private more likely to redistribute upwards • We shouldn't think about private benefits as being a mere substitute for public benefits, they are substantially different and therefore the fact that private play much greater role in US that in other democracies, our welfare system is substantially different More intermediaries, harder for people to see and understand, distributive consequences
What are the characteristics of a path dependent process? (Hacker)
• Self-reinforcing process- tendency to grow stronger over time • Critical decisions made early in time o Are more important because they shape and constrain subsequent choices • Inertia is crucial...what exists is likely to persist • "Non-decisions" are important • Even dysfunctional policies may persist o Policy is not a rational, functional response to current conditions
Describe the Earned Income Tax Credit benefit structures. How many benefit structures are there? What is the phase-in? The phase-out? The plateau? How do children affect the generosity of EITC benefits?
• The Earned Income Tax Credit (EITC) is a fully refundable tax credit that creates a "negative tax liability" Phase in → plateau → phase out Break point 1 (between phase in and plateau) Break point 2 (between plateau and phase out) Benefit exhausted (after phase out where it becomes 0) • 8 EITC benefit structures (only thing that really changes are where the 2 breakpoints are) Children increase the generosity of the benefits. One or fewer children has a certain amount of benefits, and more than one child has more Income on X axis, credit amount on Y axis
