Poverty, Welfare, Work Final
According to Rehm, Hacker, and Schlesinger, there are two natural political constituencies for the welfare state...identify and define them.
1. Social policy has two natural constituencies - Low-income people, who benefit from redistribution - High-risk people, who may lose their means of material support due to economic dislocation
Describe the eligibility conditions for the EITC. (See the IRS reading on the EITC, there is a long list).
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Which tax expenditures are currently the most costly (in terms of government revenue sacrificed)?
(CBO Report Table 1): Employer-sponsored health insurance, Preferential Tax Rates on Capital Gains and Dividends, Net pension contributions and earnings, State and local tax deductions, and HMID
What role did high marginal income tax rates play in the development of healthcare policy in the U.S.? (Hacker)
(pgs. 112-114) 1. As marginal tax rates continued to increase during the New Deal and WWII, the concessions for private pension plans created in the early years of the revenue code became dramatically more valuable. The plans became a means of tax avoidance, especially by high-income earners.
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?
- 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
What possible explanations for white opposition to welfare did Gilens consider?
- Economic self-interest - Individualist beliefs - Party identification - Ideology - Attitudes toward the poor - Racial attitudes
What is a "group centric" policy evaluation (according to Lawrence, Stoker, and Wolman)?
- Group centric evaluation: Republicans and conservatives are more likely to adopt group centric evaluations - Refers to when people evaluate a policy based off who that policy is targeting, can include poignant surveying of groups in order to economize on information.
What is negativity bias and how does it affect welfare state retrenchment?
- Losses will be tangible for concentrated groups and benefits will be diffuse - People are more sensitive to having things taken away - People are more likely to punish politicians for losses of benefits than to reward them for cost savings -- High political price to be paid for retrenchment -- Makes politicians reluctant to take the lead
What were the three explanations for non-participation among welfare recipients that Soss considered and rejected?
- Personal traits - Culture of dependency - Satisfaction with welfare
What state tax policies tend to make state tax burdens more progressive?
- The least regressive are refundable tax credits. A broad-based personal income tax is also more progressive. To make income taxes more progressive: --- State Earned Income Tax Credits -- in all but 3 out of the 24 states, the state's' EITC is fully refundable --- Income tax credits of their own designed to ensure that low-income families aren't subject to the personal income tax --- Income tax credits to help offset the sales and excise taxes that low-income families pay To make property taxes less regressive: --- "Homestead exemption" : flat dollar amount of flat percentage of home value is exempted from property tax
What is risk privatization (Hacker)?
- 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
Under what circumstances is welfare state retrenchment more likely?
- When a party enjoys electoral slack- wide popularity and safe electoral margins - Budgetary crisis- moment in which critical decisions must be made - When policy visibility can be lowered (when policy can be designed in a confusing way) - Framing is critical- advocates of retrenchment more likely to succeed when they can restructure how people think of benefits
What is "community rating" and why is it significant to health insurance? (Hacker)
- where risk is allocated evenly across a community - A community rating system helps mitigate the problem of adverse selection that is inherent to the health insurance industry - The Great Depression devastated hospital revenues, in response Hospitals introduced prepayment plans (Blue Cross plans) that introduced the "community rating" in which every in a given area was charged the same rate. - With the enactment of ERISA in 1974 and the cost of healthcare rising, businesses employed cost-control measures, one of which was to replace community ratings with experience (individual) ratings.
What is a "qualifying child" and how does this relate to EITC eligibility?
1. A qualifying child must satisfy rules 8 through 10 in the IRS report. 2. Rule 8: Child must meet the relationship, age, residency, and joint return tests -- Relationship: son, daughter, stepchildren or foster child, brother or sister, step brother or sister, niece or nephew, half brother or half sister, or descendants of any of them. --- Age: Under age 19 at the end of 2015 and younger than taxpayer (or your spouse, if filing jointly); Under age 24 at the end of 2015, if the dependent is a student, and younger than you (or your spouse, if filing jointly), or permanently and totally disabled at any time during 2015, regardless of age. --- Residency: Must have lived with you in the U.S. for more than half of 2015 --- Joint return test: child cannot file a joint return for the year --- Rule 9: Cannot be used by more than one person to claim the EITC -- unmarried parents --- Rule 10: You cannot be a qualifying child of another taxpayer ------ This relates to EITC eligibility because if an individual has more children, the benefits will be higher.
In what ways is U.S. social policy exceptional according to Hacker? (pgs. 13-16)
1. According the Hacker, the U.S. is exceptional for the role that the private sector plays in social policy making as well as how much it contributes to social welfare. What's more, the divergent paths that both pension and healthcare followed in the US both involve path dependent and political feedback behaviors. Pensions have a public foundation (social security) with a private system on the fringes, while healthcare has a primarily private foundation through the employment relationship, with a public system on the fringes. 2. "The United States, we have seen, ranks last according to the traditional measure of social welfare effort. But once we adjust for relative tax burdens, tax expenditures, and publicly subsidized private benefits, the United States rises to the middle of the pack. In fact, its net public spending and private spending is above the average for all eleven nations measured." (Pg. 13) 3. "Just as striking is how exceptional the American sphere of private social benefits looks in comparative perspective...." (pg. 16) 4. "Properly measured, the United States does not devote a markedly small production of national resources to social services and transfers than do other affluent democracies." (16) 5. So then, what is exceptional about U.S. social policy is not the proportion of resources it devotes to social services/transfers, but the amount of private sector resources that are devoted as a % of gdp, relative to other countries. 6. Private spending is growing a lot faster than public spending
How does the social construction of targets influence policy messages?
1. Advantaged: agency outreach, "you are important"/"you are a good citizen" - There are benefits from mobilization and government generally does what is right. - Formal active participation like voting/campaigning. 2. Contenders: subvert implementation, "your concerns are controversial" - Raw use of power for self-interest, government is corrupt - Informal participation such as connections/campaign $$ 3. Dependents: client-initiated contact, "problems are your own fault"/"only by submitting to government can your problems be solved" - Demobilized, disinterested, passive - Participation is conventional but low 4. Deviants: avoidance, "you are a bad person who creates problems for others" - Government is arbitrary/unpredictable/corrupt - Participation is irrelevant except in disruptive forms such as protest/riots
How does the social construction of targets influence policy rationales? (Why?)
1. Advantaged: benefits are explained by forging an instrumental link between the group's interest to the public interest 2. Contenders: The extent of burdens is exaggerated ("regulating wall street") while giving them hidden benefits (capital gains tax exemption) 3. Dependents: benefits emphasize a justice-oriented rationale. Burdens are protections from harm. 4. Deviants: Benefits/burdens are an efficient means to achieve some national purpose: social control over this group
Briefly list and explain Schneider and Ingram's typology of target groups.
1. Advantaged: have a lot of political power and are viewed positively. Politicians claim credit for rewarding this group/they are given clear benefits. Ex: Veterans, Elderly, Scientists 2. Contenders: have a lot of political power and are viewed negatively by the public. Politicians avoid blame for rewarding this group/they are typically given hidden benefits. Ex: the rich, unions, minorities 3. Dependents: weak amount of political power and are viewed positively by the public. Politicians avoid blame for punishing this group/they are given symbolic rewards. Ex: Disabled, mothers, children. 4. Deviants: weak amount of political power and are viewed negatively by the public., Politicians claim credit for punishing this group/they are given clear punishments. Ex: criminals, drug addicts, gangs
What are the sources of "market failure" in healthcare? (Hacker)
1. Agency: problem in the relationship between patients and physicians. The patient delegates responsibility to the physician to make decisions in their best interest, but the physician is conflicted with their own self-interest. "Doctor vs. Small-Business Owner" Ex: blood test scenario from class. 2. Moral Hazard: the act of purchasing insurance lowers an individual's price constraint when seeking medical treatment. People may engage in more risky behavior and/or consume excessive services. **people are not price-sensitive 3. Adverse Selection: those who buy medical insurance are most likely to need it: the sick/unhealthy, so the average cost to treat someone increases, which means premiums increase.
What according to Lawrence, Stoker, and Wolman distinguishes how liberal/democrats and conservative/republicans think about social policy?
1. Conservative/republicans: practice "weak universalism" that is consistent with existing theory -- They favor universal designs over designs that target unpopular groups 2. Liberal/democrats: practice "strong universalism" that goes beyond the claims of established theory -- They favor universal policy designs over designs that target even some popular groups
Identify and explain the four modes of policy change included in Hacker's article.
1. Drift: changes in the operation or effect of policies that occur without significant changes in those policies' structure 2. Layering: proponents of change work around institutions that have fostered vested interests and long-term expectations "by adding new institutions rather than dismantling the old" 3. Conversion: policies are adapted over time rather than replaced or eliminated 4. Revision: formal reform, replacement, or elimination of existing policy, ex. 1996 Welfare Reform
What effects did ERISA have on pension policies in the private sector? (Hacker) pg. 147
1. Encouraged employers to self-insure 2. Shift from defined benefits, to defined contributions --- Defined contribution plans ------Advantages: less likely to exclude (due to vesting requirements), less likely to default (pre-funded), more portable 3. Disadvantages: risk of retirement income is shifted from corporations to workers, inequality in income distribution is likely to persist into retirement See Tables 3.4 and 3.5 (p. 156) 4. ERISA contributed to the shift from defined benefit to defined contribution plans by regulating defined benefit plans (p. 153) 5. By shifting to defined contributions, employers avoided federal taxation and regulation -- Pg 256
How are the politics of welfare state retrenchment different from the politics of welfare state expansion?
1. Goals are different - Taking benefits away is likely to trigger "negativity bias," the tendency for people to be more sensitive to losses than gains - Losses will be tangible for concentrated groups with the benefits being diffuse - Consequently, retrenchment is likely to be a process of blame avoidance rather than credit claiming - In blame avoidance politicians are motivated to evade responsibility for painful choices 2. Context is different - Policy feedback - Recipients and employees have a vital stake in continuing the programs - This is true of direct government programs and of tax expenditure benefits - Changes the configuration of interest groups - AARP is an example in the U.S. related to direct government programs (OASDI and Medicare) - Interest groups also mobilize to support tax expenditures - Finance (banking and mortgage), insurance, real estate, and construction industries support mortgage interest deduction 3. New Strategies - Advocates of retrenchment will try to play one group off against another - Politically crucial groups will be protected and marginal groups will be sacrificed - Schneider and Ingram are relevant here - Positively regarded, powerful groups are likely to be protected - Reforms will be low visibility - Harder for voters to detect changes and trace responsibility back to specific decisions
List and explain four tax provisions that are part of the "hidden" welfare state.
1. Home Mortgage Interest Deduction -- reduction in taxable income if paid mortgage interest 2. Earned Income Tax Credit -- a fully refundable tax credit that creates a "negative tax liability" Means-tested benefit that increases as income increases (during the phase-in) 3. Employee Healthcare Exclusion -- if you receive healthcare from an employer, you do not include this in taxable income 4. Additional Child Tax Credit -- received if have qualifying children and the Child Tax Credit is greater than tax liability
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?
1. Internal efficacy: the belief that they understand and can navigate the political system effectively 2. External efficacy: the feeling the government is responsive to your concerns 3. In Soss' study, AFDC clients have low levels of external efficacy in spite of high internal efficacy
What is the "revisionist" school? (in Rehm, Hacker, and Schlesinger)?
1. One of two schools of thought regarding popular support for the welfare state, both of which are rooted in self-interest - 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
What is the "power-resources" school? (in Rehm, Hacker, and Schlesinger)?
1. One of two schools of thought regarding popular support for the welfare state, both of which are rooted in self-interest --- political power of the working class...less affluent citizens are thought to favor a more generous welfare state, redistribution through taxes and transfers
What specific reforms does Mettler propose? Briefly list and explain the specific reforms that Mettler proposes.
1. Policymakers must reconfigure the role of vested interests that have benefited from existing arrangements. Reformers must find an ingenious way to gain interest groups' support while still managing to curtail their power in critical aspects. 2. Reveal to the public what is at stake in reform through political communication. They must expose existing policies of the submerged state, making it clear how they operate and who benefits from them. 3. Redesign policies to make governance more visible to citizens. Social benefits are most clearly visible to citizens when they are set up to be administered directly by the gov rather than channeled through the tax system. What reforms does Mettler suggest following the legislative process? - Policy delivery- after policies are enacted, public officials and organizations can also reveal the submerged state to citizens through policy delivery and communication that make its operations clearer and more transparent - Campaigns by state and local governments, encouraging their residents to claim federal benefits for which they are eligible - Civic associations and other organizations can play a role in making Americans aware of benefits within the submerged state
What are the four models of government Soss considers to characterize clients' political beliefs?
1. Preexisting characteristics explanation: welfare recipients tend to come from segments of the population with less abundant political resources and skills 2. Passivity explanation: suggested by conservative critics, who argue that welfare benefits discourage political involvement by cultivating personal traits of dependence. 3. Cooptation explanation: benefit provision itself produces demobilizing effects by diverting or tempering political demand-making. 4. Political learning explanation: derived from social control arguments asserting that welfare programs are designed to shape poor people's behaviors both inside and outside the welfare agency.
Name and explain three cost-control strategies that firms adopted in the face of rising health care costs? (Hacker, pg. 260)
1. Require that workers share a greater portion of the costs of their insurance or eliminate coverage for worker's dependents. 2. Shift from "community rating," where risk is allocated evenly across a community, to an "experience (individual) rating, where premiums are decided based off an individual's health history. 3. Many new/small firms chose not to offer health insurance at all. List from ppt: - Shift from community rating to experience rating (ACA combats this) - Shifting insurance costs to workers (co pays and deductibles) - Excluding preconditions (ACA disallows this) - Employee selection based on experience, expectations - Dropping coverage altogether
What is pension "integration" and how did it influence the development of pension policy in the U.S.? (Hacker)
1. Revenue Act of 1942: cleared up the uncertainty surrounding the relationship between private pensions and social security, but corporations used this create integrated plans that implied they (the corporations) paid the entirety of a worker's social security benefit, as well as their beneficiaries' benefit. Private pension plans became assumed as a public obligation and made low-income elderly people more dependent on social security. (see question 24) 2. In effect, this created a two-track system in the US. From 1942-1986: dollar for dollar offset from private pension liability for OASDI benefits. In other word every dollar you get in OA benefits would cancel a dollar you get in private pension benefits. But since private pensions have regressive tax benefits, rich people make more, separating the rich and poor more. Thus Social security became a massive corporate subsidy. 3. Integration assumes worker's entire social security benefits had been paid for by the employer even though workers contribute to the program and employers, in reality contribute very little. Thus, private pension liabilities were assumed as a public obligation. Even the family concept bonus of 150% is offset from private pension plans. Consequently, low-income elderly people became dependent on social security. Corporations love SS because the greater the benefit the more of subsidy they get 4. Example of privatization of risk ---- 1986 Tax Reform Act: shift from dollar for dollar to 50cents for dollar
What are the characteristics of a path dependent process? (Hacker)
1. Self-reinforcing process 2. Early choices become more important over time because they shape and constrain subsequent choices --- "Timing matters" 3. Inertia is crucial: what exists is likely to persist 4. "Non-decisions" are important
What are the forces that constrain welfare state retrenchment?
1. Social Policy retrenchment: - crisis of the welfare state began in the 1970s with the end of the post-war economic boom - expansion of the welfare state was popular, resulting in a politics of credit claiming - policy design delivers visible benefits - by contrast, retrenchment is generally unpopular - concentrated losses for diffuse gains - pierson expects retrenchment to have a distinctive form of politics 2. goals are different - taking benefits away is likely to trigger a "negativity bias"-the tendency for people to be more sensitive to losses than gains - losses will be tangible for concentrated groups with the benefits being diffuse - consequently, retrenchment is likely to be a process of blame avoidance rather than credit claiming - in blame avoidance politicians are motivated to evade responsibility for painful choices 2. Context is different - Policy feedback- recipients and employees have a vital stake in continuing the programs; this is true of direct government programs of tax expenditure benefits - Changes in the configuration of interest groups- AARP is an example in the US related to direct govt programs (OASDI and MEdicare), interest groups also mobilize to support tax expenditures 3. Politics of retrenchment: New strategies - advocates of retrenchment will try to play one group off against another - politically crucial groups will be sacrificed - Schneider and Ingram - positively regarded, powerful groups are likely to be protected Reforms will be low visibility- harder for voters to detect changes and trace responsibility back to specific decisions
Why does Soss think that AFDC clients are unlikely to participate in politics?
1. The AFDC teaches that the agency is a threat: - Agents have significant discretion - People are powerless when confronting the government - Agency power is used to control people, not to help them - AFDC clients think that speaking out is ineffective and risky: the government is all powerful and arbitrary 2. AFDC clients have low levels of external efficacy in spite of high levels of internal efficacy
What characteristics distinguish the Earned Income Tax Credit (EITC) from the other means-tested programs we have described?
1. The EITC is distinctive because it is the only means-tested benefit that increases as income increases (during the phase-in). All other more visible means-tested programs have an inverse relationship between income and benefit generosity. EITC is part of the hidden welfare state, so this means you can receive the EITC just by filing your tax returns and not have to go through welfare hassle. -- EITC is refundable -- EITC is received by the head of household, other means-test programs allow for targeted benefits to children -- EITC is annual, other means-test programs provide support throughout the year -- EITC is popular, other means-tested programs are stigmatized
Briefly explain the development and evolution of the student loan marketplace for higher education? (main dates/points)
1. The Higher Education Act of 1965 - established the Guaranteed Student Loan Program; gave banks incentives to lend to students at lower rates of interest. The federal government would pay half the interest on such loans and would guarantee them, promising to repay them entirely if a borrower defaulted. 2. 1972 - policymakers created Sallie Mae, a "government sponsored enterprise" that enjoyed special privileges unavailable to its competitors in the student loan market. Student lending became a lucrative business and attracted many banks. 3. 1993 - Clinton attempted to reform this market by beginning "direct lending", in which government itself made loans using federal capital rather than subsidies, however, the bank-based system continued to be predominate until 2008 (all from page 10). 4. Obama placed student aid policy as one of his top priorities and wanted to replace the bank-based system entirely with direct lending. 5. SAFRA (2009) mandated the end of FFEL, no longer permitting lenders to originate loans, though it did allow them to compete to service them. Pell Grant funding was prioritized and only the annual increase at the rate of inflation was passed in the additional provisions Obama hoped to pass (84) -------This legislation was only passed because of the credit crisis that devastated lenders, the help of deficit reduction, and the Democratic majority in both chambers. - Ultimately, the private sector continued to perform several roles, such as through disbursement, servicing and collection of loans. From the consumer standpoint, the student loan market doesn't seem very different.
What factors did Gilens argue are most important in explaining white opposition to welfare?
1. The most important factor was a negative perception of African-Americans -- Negative attitudes about poor people were also important -- Individualist beliefs (limited government) also mattered
What is the "privatization of risk" in pension policy? (Hacker, pg. 163-169) article
1. The shift of risk from public and private institutions to individuals and families. An effect of ERISA. ****Not a shift from the public to the private sector.**** 2. More generous social security benefits (In late 1960s and early 1970s) increased the transfer of private pension liabilities to the public. Because of pension integration, companies could offset more of their employers private plans due to the higher benefits so employees had to bear more of this liability shifting the risk onto individuals. 3. IRA, 401(k), increased employee contribution (after ERISA+Pension integration) --- Comes as a consequence of Republican attempts to work around direct reform of pension/SS system. "Parallel Growth" --- Idea is to eventually make privatized direct reform more politically viable 4. Fragments and undermines collective insurance pools that offer reduced cost protection to higher-risk and lower-income citizens in favor of arrangement that leave individuals and families responsible for coping wit1h social risks largely on their own
Howard's three components of the welfare state
1. The upper tier - social insurance that is characterized as universal, financed by special taxes, earned benefits, and no stigma. 2. The lower tier - welfare that is characterized as means-tested, financed by general revenues, and has a stigma. 3. The hidden welfare state is benefits distributed through tax policy. These benefits are hard to detect because they are non-events and result in revenue loss because the government is sacrificing taxes that they could be collecting. The hidden welfare state is composed of means-tested benefits from general revenues that do not have a stigma. The affluent benefit most from the hidden welfare state.
How did the fact that ERISA preempted state regulation of self-insured health plans influence the development of private health care benefits? (Hacker) Pg. 256-257
1. There was a small provision in ERISA that exempted self-insured health plans. This meant that companies could step out of the state-taxed/regulatory system. --- Saved companies money, cost govt bc sick people were pushed out of private sector health benefits, went to medicaid 2. Employers became "cost-sensitive" by controlling who was in their risk polls: those who smoked, were obese, hereditary markers could be discriminated against. 3. Smaller firms decided to avoid coverage altogether. 4. Private health care benefits became cheaper for companies 5. Private sector is free riding off public sector to keep their costs down. Average private health insurance plans are lower. Costly and most sick people shuffled to
What is the "destructive competitive logic of private insurance"? (Hacker: pgs. 260-261)
1. This refers to the rise in medical costs leading business firms to try minimize the expense of health benefits. They did this in a number of ways: move employees into HMOs and other "managed care" plans, require workers share a greater portion of the costs of their insurance or eliminate coverage for worker's dependents. Some chose to not offer health insurance at all. This led to a rise in uninsured Americans in 1980s. (this is why it's destructive). The strongest effects, however, occurred on the margins of the employment based system. Page 260 2. The most risky people are weeded out, who then forgo health care and then go to the emergency room when pain becomes unbearable. 3. Thus firms "free-ride" off of the public sector 4. Because high-risk people are driven out of the market pool: our premiums/rates are lower. Medicaid takes these people, so we benefit from Medicaid. (Form of welfare)
What methods did Gilens use to investigate white opposition to welfare?
1. Used a survey experiment 2. 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 3. Experiment randomly varied racial identification of the mother as black or white 4. 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
Hacker's three components of the welfare state
1. the network of direct-spending social programs, including Medicare, Medicaid, Social Security, that are typically identified as the core of U.S. social policy. 2. the constellation of more indirect or "hidden" government interventions -- tax breaks, regulations, credit subsidies -- that are designed to provide similar social benefits or shape their private provisions. 3. private social protections themselves, which are a product both of government policy and of the distinctive organizational and economic imperatives of the institutions that provide them. Hacker draws attention the public-private welfare regime. (Page 11-12 in The Divided Welfare State)
What is the significance of whether or not a tax credit is refundable? Name two refundable federal income tax credits.
A nonrefundable credit (i.e. Child Tax Credit=d$1000 max per child) may reduce tax to zero but any credit beyond that is lost. A refundable tax credit (i.e. Additional Child Tax Credit, Earned Income Tax Credit) from the IRS allows an individual to receive a refund in excess of his or her tax liability. - Refundable - you can go below 0 - non refundable - any credit BEYOND 0 is LOST ex. The ACTC allows her (Margie) to receive a refund from the IRS in excess of her tax liability of as much as $1,000 per child as long as it's less than 15% of earnings above $3000
List and explain the four reasons why affluent people are more likely to receive more benefits from the hidden welfare state.
A. Can hire agents to assist them B. Have more disposable income to purchase homes and education C. Have jobs with benefits such as health insurance and pensions (tax-preferred benefits) D. Higher marginal tax rate (shield larger amounts from taxes via tax expenditures)
What is the difference between an income tax credit and an income tax deduction?
An income tax deduction is the reduction of income that is able to be taxed, while an income tax credit reduces taxes directly and does not depend on tax rates. A tax credit depends on the taxpayer's' basic tax liability.
How does policy feedback influence the development and actions of interest groups?
Formal policies create new contexts for interest groups. For example, the creation of Medicare led to a market environment for AARP to educate and fill in the gaps for health insurance for the elderly. They then were able to leverage political capital as an interest group.
What is Hacker's "second face" of conservative influence? How does it influence the evolution of the welfare state in the U.S.?
Hacker asserts that while the formal structures of most welfare policies have not changed, the "second face" of social policy has, aka alterations to policy have changed within existing bounds through decentralized and semi autonomous (taking place in the submerged state they are subterranean politics) changes (See above question for examples and hidden welfare state). Conservatives are able to achieve partial retrenchment without using formal policies. The result of the changing second face is a reluctance to provide new policies that help those who are losing due to the drift of existing policies, and the policy feedback to promote the privatization of risk through the layering of tax policies onto existing policy.
What is policy feedback? (several authors use this concept, but there are foundational definitions in Hacker and Pierson)
Hacker: 1. policy "causes" politics, as opposed to what we learned in middle school and high school civics classes (politics---->policy) 2. The development of interests and institutions shape behavior and expectations 3. Policy feedback creates a resistance to change and can endure even when they do not "make sense." Policy feedback creates a "path dependent" process 4. Hacker extends the notion of policy feedback from the public to the private sector, opening up a very broad conception of what the welfare state is composed of. Pierson: 1. explains policy feedback in the context of "retrenchment" of the welfare state as opposed to the "expansion" of the welfare state. He sees retrenchment politics as distinctly different from expansion politics. ---- "the maturation of the welfare state fundamentally transforms the nature of interest-group politics. In short, the emergence of powerful groups surrounding social programs may make the welfare state less dependent on the political parties, social movements, and labor organizations that expanded social programs in the first place." ---- Even though expansion and retrenchment politics are distinct, "earlier rounds" of welfare state development will likely play a prominent role in retrenchment politics. Why? Recipients and employees have a vital stake in continuing programs (direct programs/tax expenditures) 2. AARP and medigap insurance. Makes them a powerful lobbying force which makes it incredibly hard to remove the medigap policies
What role did economic regulation during the Second World War play in the development of healthcare policy in the U.S.? (Hacker)
Hacker: (pgs. 112-121) 1. High marginal tax rates made tax-preferred benefits more attractive during the 1940s and 1950s and subsequently increased the value of the pension exemption. 2. Labor market regulation during WW2 limited the options available to attract and retain employees during the labor shortage caused by the war. This meant that employers could offer healthcare benefits as a substitute for wage increases. Pensions also promoted loyalty amongst long-term workers and were given as rewards to avoid unionization. 3. Revenue Act of 1942: cleared up the uncertainty surrounding the relationship between private pensions and social security, but corporations used this create integrated plans that implied they (the corporations) paid the entirety of a worker's social security benefit, as well as their beneficiaries' benefit. Private pension plans became assumed as a public obligation and made low-income elderly people more dependent on social security.
How does the social construction of targets influence policy design?
How a target group is viewed by the public (their social construction) will influence the benefits/punishments they receive. If the motives between the public and government conflict, then contenders will receive hidden benefits and dependents will receive symbolic rewards. (see previous question)
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?
How many: 8 Phase-in: the income range that as income increases, the individual gets better benefits. Phase-out: the income range where as income increases, the benefits decrease until the benefits reach an income level in where benefits are exhausted Plateau: the income range in which benefits remain the same Children and generosity: The more children you have = the higher both the phase in and phase out rates are; the more children = the higher the thresholds for the break points and for when the benefits are exhausted; the maximum benefit is also higher.
What state tax policies tend to make state tax burdens more regressive?
In contrast to federal taxation (which is overall mildly progressive), state and local taxes tend to be regressive 1. State and local taxes tend to be more regressive than federal taxation 2. States that rely on sales and excise taxes for revenue rather than a broad-based progressive income tax tend to be the most regressive 3. Sales and excise taxes most regressive, followed by property taxes, followed by income taxes 4. When sales taxes are applied to food, the tax burden is especially regressive
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 seeked to explore how providing citizens with basic information about submerged policies would influence their likelihood of forming opinions about them and their levels of support for them. She designed a randomized general population experiment to test how the provisions of information about tax expenditures influences individuals' opinions. The experiment was set up to expose information at different degrees: 1) no information; 2) a basic description of policy goals and mechanisms; 3) the basic description plus information on the distribution of policy benefits by income group, details that are rarely ever provided. The results of the experiments suggest that policy information does enable people to form opinions. In addition, the results show that the provision of information prompted people to develop different positions depending on the type and amount of the information conveyed. The basic information treatment forster, on net, greater support for all three policies (HMID, EITC, Retirement Savings Contribution Tax Credit). The full information group had different results in that the two policies that favor the affluent saw a decline in support and opposition grew dramatically. In the case of the EITC, once people realized it helps low income people, support grew and the opposition that grew in the basic information was curtailed with the information about distribution. This shows that if people were more informed of who actually benefits from government policies, that opposition to those favoring the affluent would grow and support for those abiding the less well-off would increase.
Compare and contrast public and private welfare benefits. How are they different? How are they similar? (Hacker, pg. 135)
Private benefits: - Flow to the affluent+organized - Hard to trace - Voluntary - Regressive Public benefits: - Visible - Compulsory - Progressive ---- Similar: both create policy feedback, both have costs as well as benefits, both a part of what Hacker calls the "welfare regime"
What is the difference between "strong universalism" and "weak universalism" in Lawrence, Stoker, and Wolman's research?
Strong universalism: Universal policy designs are favored over targeted policy designs Weak universalism: Universal policy designs are favored over policies that target groups with negative social constructions
How are subterranean politics different from the submerged state? (Essentially, a comparison of Mettler and Hacker).
Submerged state: - Mettler argues that public policy is not just a matter of direct government programs like OASDI and TANF. Taxation and regulation also matter and shape not just behavior but lay the foundation for market institutions. She argued that the extremely indirect and obscure role of the government in the submerged state exaggerates the role of the market. - The submerged state mainly benefits affluent people. Most importantly, the submerged state is "hidden" even from those who benefit from it. - subterranean - private sector having influence over govt policies - Submerged - govt involvement in the private sector
What are subterranean politics?
Subterranean - private sector having influence over govt policies; their involvement --- the politics that arise from the privatized approaches of benefits. 1. Characterized by both low visibility and low traceability 2. Public awareness is low and information about policy effects is both scarce and unevenly distributed. 3. The political actors who are most involved in the formulation of policy are the ones who are most interested in/aware of its effects: labor groups, business orgs, or third-party providers. 4. Incentives to collect information for most citizens is "meager." 5. Breeds depoliticization: or the shift of responsibility from legislative bodies to courts/administrations -- negotiating within the corporation instead of getting government involved 6. Individualizes policies: No mortgage or a private pensions? "It's your fault." Becomes an individual instead of a collective issue. ---- This is what private benefits do. They activate a constellation of interests and actors at odds with social policy, and they push towards a "subterranean" form of politics that has favored the demands of these groups and individuals (pg. 24)
What are tax expenditures? (Note: there are several different forms). Provide at least one example of each type.
Tax expenditures are government spending through the tax code resulting in revenue loss. This is hard to detect since it is a non-event. Exclusions -- Employee healthcare benefits, Deferred tax on pension benefits Deductions -- Home Income Mortgage Deduction, State and Local taxes, Payment of student loans Exemptions -- child, spouse, elderly, disabled Credits -- Child Tax Credit, Earned Income Tax Credit, Additional Child Tax Credit Preferential rates -- Capital Gains Tax Rate of 20%
How did President Obama's strategy to develop healthcare reform differ from President Clinton's? What does this tell us about the submerged state?
The Obama administration sought to avoid the difficulties the Clinton administration encountered by: - letting Congress take the primary role in designing health care legislation, - the president refrained from strongly promoting the financing plan he favored. - Officials in Obama administration vowed to avoid mobilizing stakeholder opposition, planning deliberately to bring such groups to the bargaining table and to keep them engaged, hoping to prevent them from turning against plans too early on, if at all. --------This tells us that in order for legislation to pass, politicians must pay close attention to the powerful interest groups that could easily garner public support against legislation if that legislation does not accommodate their needs. Although healthcare is something polls had proven people desperately wanted, interests groups can manipulate the public and rallying the public against legislation.
What attributes of submerged state policies help them to overcome partisan differences and institutional gridlock (according to Mettler)? -- why they are successful
The design of the submerged states' policies have become a template of choice for new policy initiatives in a time of conservative dominance and political polarization. They have gained favor for four reasons: 1. Republicans and conservative Democrats find them attractive as they fit well with conservatives' political values and priorities including restraining government spending; 2. other Democrats have proven willing to go along by using the submerged state to aid low and middle income people; 3. institutional features of Congress make them easier to enact than new direct spending programs (direct new spending programs must overcome multiple hurdles in the budget process, gaining the approval of two separate committees in each chamber for authorization and appropriation); 4. over time they have cultivated the support of interest groups that defend them vigorously (lobbying and mobilizing their constituencies. (Page 16-19)
What is the difference between a "marginal tax rate" and an "average tax rate"?
The marginal tax rate is the rate paid on the last dollar of taxable income. The average tax rate is the total tax/ total income.
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.)
The standard narrative about the welfare state is that the U.S. has the upper tier and lower tier. The hidden welfare state doesn't fit this narrative because tax expenditures provide benefits that are means-tested entitlements from general revenues and have no stigma. Thus, you cannot fit tax expenditures into one of the tiers. Additionally, the means-test is turned on its head, meaning that the wealthy are the ones benefiting the most from the hidden welfare state. (Page 418)
What is the submerged state? (Mettler)
The submerged state contains policies that lay beneath the surface of market institutions, within federal tax and regulatory systems that, through policies, insurance and subsidies, provide social policy benefits. They are indirect to the extent that they are effectively invisible. They obscure the role of government, while exaggerating the role of the market. The government is able to shape the behavior of private institutions by creating policies that encourage and discourage certain behavior. It is similar to the hidden welfare state in that it mostly benefits affluent people.
How, if at all, is the submerged state (Mettler) different from the hidden welfare state (Howard)?
The submerged state is different from the hidden welfare state in that it is so indirect and so well hidden, that even the people who are benefiting from them may not realize they are benefitting from social policy. For example, a person doesn't see how government creates markets for loans when they receive loans from Wells Fargo or Bank of America. In the hidden welfare state people get tax expenditures which are at least visibly from the government, in the submerged state the benefits people get are so well disguised in the private sector that they do not even realize it's a benefit. 1. HOWARD - emphasizes low visibility through tax system - public has hard time understanding consequences 2. METTLER - emphasizes policies are so indirect and well hidden - public who benefits may not even realize they are benefitting from social policy
Mettler argues that the submerged state undermines democracy. Please briefly describe and explain the argument that leads Mettler to this conclusion.
These experiments imply that, in the case of the submerged state, many citizens lack basic information and public officials fail to provide it. This leaves the public unable to express its preferences in a meaningful way, and the idea that public policies reflect the will of the majority of its citizens is a basic principle of representative democracy. Because policies of the submerged state have grown rapidly but largely out of public view, many Americans tend to be unaware of how their basic features operate and who benefits from them. The submerged state functions largely without citizens' knowledge or consent. As such, the submerged state threatens to undermine the basic principles encapsulated in the idea of "government of the people, by the people, for the people." When government is invisible, it is no surprise that people feel they cannot trust it and that it is ineffective. Democracy stems from citizens having the means and capability to form meaningful opinions about acts of governance, however, the submerged state interferes with this because citizens cannot form good opinions if they don't have all of the correct information needed to make these opinions. In the submerged state, governance is done behind "smoke and mirrors". These policies may seem to be genuine reductions in government spending and to embrace market principles, but in fact both impressions misconstrue reality. Citizens are likely to assume that markets are more autonomous and effective than they are in actuality, and fail to give government credit for addressing problems. The submerged state is also hindering citizens' ability to take action and exercise their political voice since they are unaware of how they are benefiting from government aid unlike other more direct spending programs like Social Security or the G.I. Bill. While low and middle income individuals are lacking this voice, the rich and powerful do have a political voice through campaign contributions and interest groups. (Page 26-28).
How do Rehm, Hacker, and Schlesinger explain the extent to which support for welfare programs is broad or narrow?
When talking about support for welfare R, H and S explain that the majority of analysts of support for the welfare state fix their attention at the individual level, but understanding the structure of public support is just as important. This is because in democratic societies, policies with greater overall support should be expected to have a greater likelihood of adoption and continuation. They say that it makes a substantial difference whether individual level opinion adds up to broad majorities or narrow minorities in support for 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)
pg. 99 1. 1942, Congress passed a Revenue Act that prohibited profiteering by companies during the war by imposing a 80-90% tax on any profits accrued that were higher than pre-war levels. It also exempted employers' contributions to employee benefits, both healthcare and pensions. Companies would then divert profits into employee benefits in order to avoid the high tax rates. 2. 1943, the National War Labor Board ruled that employee "fringe" benefits should not count as wages. Because of a "no-strike" pledge made by unions during the war prevented them from demanding higher wages, this new rule allowed them to channel their efforts toward stronger benefits instead through collective bargaining. 3. These actions helped inadvertently establish for health insurance companies as government-subsidized status, revolving around tax exemption. (because not considered as a part of wages)
