Democrats Lose 50 Year War on Poverty Start 100 Year War on Work: Millennial Moocher Mania — Grow The Government Shrink The Economy and Employment! — Progressive Permanent Poverty People — Videos Videos

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The Pronk Pops Show Podcasts

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Story 1: Democrats Lose 50 Year War on Poverty Start 100 Year War on Work: Millennial Moocher Mania — Grow The Government Shrink The Economy and Employment! — Progressive Permanent Poverty People — Videos   Videos










n0nh6p-ramirez.jobsdeathpanelobamacare_web_designercreating part time jobs


Appendix C: Labor Market Effect of Affordable Care Act: Updated Estimates

Insurance Coverage Provisions of the Affordable Care Act— CBO’s February 2014 Baseline

Table 1. CBO’s May 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage

Obamacare and jobs reports: Health care law could cost more than 2 million jobs

Casey Mulligan: Eroding incentives is damaging

W.H. defends Obamacare amid CBO findings

Obamacare ACA Impact On Workforce Why Work? Special Report All Star Panel

CBO Director to Congress: Obamacare Will Reduce Unemployment Rate

Hayes Admits CBO Obamacare Report ‘Not Some Right Wing Attack’

Obama Admin On CBO Report: You’re Now Free To “Work Or Not Work”, Thanks Obamacare – Stuart Varney

CBO Director: Obamacare creates ‘disincentive’ to work

Casey Mulligan – Affordable Care and the Labor Market

Casey Mulligan, PhD, Professor of Economics, University of Chicago
“Affordable Care and the Labor Market”
October 16, 2013
MacLean Center Seminar Series 2013-2014, Ethical Issues in Health Care Reform

15 Poverty and Welfare Programs

Public Economics and Finance – Social Insurance Programs

Public Economics and Finance – Social Insurance Programs Continued and Welfare Programs

Charles Murray: Why America is Coming Apart Along Class Lines

Uncommon Knowledge: White America Is ‘Coming Apart’

In Depth with Charles Murray

Appendix C: Labor Market Effect of Affordable Care Act: Updated Estimates

Insurance Coverage Provisions of the Affordable Care Act— CBO’s February 2014 Baseline

Table 1. CBO’s May 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage

The Economist Who Exposed ObamaCare

The Chicago professor examined the law’s incentives for the poor not to get a job or work harder, and this week Beltway budgeteers agreed.


In September, two weeks before the Affordable Care Act was due to launch, President Obama declared that “there’s no serious evidence that the law . . . is holding back economic growth.” As for repealing ObamaCare, he added, “That’s not an agenda for economic growth. You’re not going to meet an economist who says that that’s a number-one priority in terms of boosting growth and jobs in this country—at least not a serious economist.”

In a way, Mr. Obama had a point: “Never met him,” says economist Casey Mulligan. If the unfamiliarity is mutual, the confusion is all presidential. Mr. Mulligan studies how government choices influence the incentives and rewards for work—and many more people may recognize the University of Chicago professor as a serious economist after this week. That’s because, more than anyone, Mr. Mulligan is responsible for the still-raging furor over the Congressional Budget Office’s conclusion that ObamaCare will, in fact, harm growth and jobs.


Rarely are political tempers so raw over an 11-page appendix to a dense budget projection for the next decade. But then the CBO—Congress’s official fiscal scorekeeper, widely revered by Democrats and Republicans alike as the gold standard of economic analysis—reported that by 2024 the equivalent of 2.5 million Americans who were otherwise willing and able to work before ObamaCare will work less or not at all as a result of ObamaCare.

As the CBO admits, that’s a “substantially larger” and “considerably higher” subtraction to the labor force than the mere 800,000 the budget office estimated in 2010. The overall level of labor will fall by 1.5% to 2% over the decade, the CBO figures.

Mr. Mulligan’s empirical research puts the best estimate of the contraction at 3%. The CBO still has some of the economics wrong, he said in a phone interview Thursday, “but, boy, it’s a lot better to be off by a factor of two than a factor of six.”

The CBO’s intellectual conversion is all the more notable for accepting Mr. Mulligan’s premise, which is that what economists call “implicit marginal tax rates” in ObamaCare make work less financially valuable for lower-income Americans. Because the insurance subsidies are tied to income and phase out as cash wages rise, some people will have the incentive to remain poorer in order to continue capturing higher benefits. Another way of putting it is that taking away benefits has the same effect as a direct tax, so lower-income workers are discouraged from climbing the income ladder by working harder, logging extra hours, taking a promotion or investing in their future earnings through job training or education.

The CBO works in mysterious ways, but its commentary and a footnote suggest that two National Bureau of Economic Research papers Mr. Mulligan published last August were “roughly” the most important drivers of this revision to its model. In short, the CBO has pulled this economist’s arguments and analysis from the fringes to center of the health-care debate.

For his part, Mr. Mulligan declines to take too much credit. “I’m not an expert in that town, Washington,” he says, “but I showed them my work and I know they listened, carefully.”

At a February 2013 hearing he pointed out several discrepancies between the CBO’s marginal-tax-rate work and its health-care work, and, he says, “That couldn’t persist forever. There would have to be a time where they would reconcile those two approaches somehow.” More to the point, “I knew eventually it would be acknowledged that when you pay people for being low income you are going to have more low-income people.”

Mr. Mulligan thinks the CBO deserves particular credit for learning and then revising the old 800,000 number, not least because so many liberals cited it to dispute the claims of ObamaCare’s critics. The new finding might have prompted a debate about the marginal tax rates confronting the poor, but—well, it didn’t.

Instead, liberals have turned to claiming that ObamaCare’s missing workers will be a gift to society. Since employers aren’t cutting jobs per se through layoffs or hourly take-backs, people are merely choosing rationally to supply less labor. Thanks to ObamaCare, we’re told, Americans can finally quit the salt mines and blacking factories and retire early, or spend more time with the children, or become artists.

Mr. Mulligan reserves particular scorn for the economists making this “eliminated from the drudgery of labor market” argument, which he views as a form of trahison des clercs. “I don’t know what their intentions are,” he says, choosing his words carefully, “but it looks like they’re trying to leverage the lack of economic education in their audience by making these sorts of points.”

A job, Mr. Mulligan explains, “is a transaction between buyers and sellers. When a transaction doesn’t happen, it doesn’t happen. We know that it doesn’t matter on which side of the market you put the disincentives, the results are the same. . . . In this case you’re putting an implicit tax on work for households, and employers aren’t willing to compensate the households enough so they’ll still work.” Jobs can be destroyed by sellers (workers) as much as buyers (businesses).

He adds: “I can understand something like cigarettes and people believe that there’s too much smoking, so we put a tax on cigarettes, so people smoke less, and we say that’s a good thing. OK. But are we saying we were working too much before? Is that the new argument? I mean make up your mind. We’ve been complaining for six years now that there’s not enough work being done. . . . Even before the recession there was too little work in the economy. Now all of a sudden we wake up and say we’re glad that people are working less? We’re pursuing our dreams?”

The larger betrayal, Mr. Mulligan argues, is that the same economists now praising the great shrinking workforce used to claim that ObamaCare would expand the labor market.

He points to a 2011 letter organized by Harvard’s David Cutler and the University of Chicago’s Harold Pollack, signed by dozens of left-leaning economists including Nobel laureates, stating “our strong conclusion” that ObamaCare will strengthen the economy and create 250,000 to 400,000 jobs annually. (Mr. Cutler has since qualified and walked back some of his claims.)

“Why didn’t they say, no, we didn’t mean the labor market’s going to get bigger. We mean it’s going to get smaller in a good way,” Mr. Mulligan wonders. “I’m unhappy with that, to be honest, as an American, as an economist. Those kind of conclusions are tarnishing the field of economics, which is a great, maybe the greatest, field. They’re sure not making it look good by doing stuff like that.”

Mr. Mulligan’s investigation into the Affordable Care Act builds on his earlier work studying the 2009 Recovery and Reinvestment Act, aka the stimulus.

The Keynesian economists who dominate Mr. Obama’s Washington are preoccupied by demand, and their explanation for persistently high post-recession unemployment is weak demand for goods and thus demand for labor. Mr. Mulligan, by contrast, studies the supply of labor and attributes the state of the economy in large part to the expansion of the entitlement and welfare state, such as the surge in food stamps, unemployment benefits, Medicaid and other safety-net programs. As these benefits were enriched and extended to more people by the stimulus, he argues in his 2012 book “The Redistribution Recession,” they were responsible for about half the drop in work hours since 2007, and possibly more.

The nearby chart tracks marginal tax rates over time for nonelderly household heads and spouses with median earnings. This index is a population-weighted average over various ages, jobs, employment decisions like full-time versus part-time. Basically, the chart shows the extra taxes paid and government benefits foregone as a result of earning an extra dollar of income.

The stimulus caused a spike in marginal rates, but at least it was temporary. ObamaCare will bring them permanently into the 47% range, or seven percentage points higher than in early 2007. Mr. Mulligan says the main response to his calculations is that people “didn’t realize the cumulative effect of these things together as a package to discourage work.”

Mr. Mulligan is uncomfortable speculating about whether the benefits of this shift outweigh the costs. Perhaps the public was willing to trade market efficiency for more income security after the 2008 crisis. “As an economist I can’t argue with that,” he says. “The thing that I argue with is the denial that there is a trade-off. I argue with the denial that if you pay unemployed people you’re going to get more unemployed people. There are consequences of that. That doesn’t mean the consequences aren’t worth paying. But you can’t deny the consequences for the labor market.”

One major risk is slower economic growth over time as people leave the workforce and contribute less to national prosperity. Another is that social programs with high marginal rates end up perpetuating the problems they’re supposed to be alleviating.

So amid the current wave of liberal ObamaCare denial about these realities, how did Mr. Mulligan end up conducting such “unconventional” research?

“Unconventional?” he asks with more than a little disbelief. “It’s not unconventional at all. The critique I get is that it’s not complicated enough.”

Well, then how come the CBO’s adoption of his insights is causing such a ruckus?

“I would phrase the question a little differently,” Mr. Mulligan responds, “which is: Why didn’t conventional economic analysis make its way to Washington? Why was I the only delivery boy? Why wasn’t there a laundry list?” The charitable explanation, he says, is that there was “a general lack of awareness” and economists simply didn’t realize everything that government was doing to undermine incentives for work. “You have to dig into it and see it,” he explains. “The Affordable Care Act’s not going to come and shake you out of your bed and say, ‘Look what’s in me.’ ”

Judging by their reaction to the CBO report, the less charitable explanation is that liberals would have preferred that the public never found out.

Mr. Rago is a member of the Journal’s editorial board.

Lawmakers Spar Over CBO’s U.S. Health-Law Findings

Questions Over Impact on Workforce Create ‘Hysteria’ on Capitol Hill

A new report outlining the effect of the Affordable Care Act on the labor market continued to reverberate on Capitol Hill Wednesday, with lawmakers in both parties saying the findings bolstered their view of how the law would play out.

Republicans at a House Budget Committee hearing said the report, released Tuesday, shows the health law will drive people out of the work force. Democrats countered that the report shows the law will give workers flexibility to leave jobs they are locked into because of health-care benefits.

The sparring came in response to a Congressional Budget Office analysis concluding that subsidies in the law, combined with easier access to health care, would create incentives for many Americans to cut their work hours, leading to a net reduction of 1.5% to 2% from 2017 through 2024. This would be the equivalent of reducing the labor force by 2.5 million workers in 2024, the CBO found.

“The effects we estimated are almost entirely choices by people,” CBO Director Douglas Elmendorf said at the hearing. He said, for example, that the labor changes wouldn’t be driven by employers cutting jobs, but rather workers deciding to cut back on their hours to take care of their children, parents, or to pursue other interests.

The report struck a chord in Washington. Rep. Hakeem Jeffries (D., N.Y.) said at the hearing that the analysis by CBO, a nonpartisan agency that advises Congress, had caused “hysteria.”

Many Republicans said the CBO confirmed their long-held belief that the law would have a direct impact on the labor market and harm economic growth. They said it would expedite the decline in labor-force participation, which is expected to worsen in coming years as more aging Americans drop out of the work force.

“These changes—they disproportionately affect low-wage workers,” House Budget Committee Chairman Paul Ryan (R., Wis.) said. “Translation: Washington is making the poverty trap worse.”

Democrats on Wednesday said the study confirmed their belief that the law would free many Americans from a phenomenon known as “job lock,” or the idea that people don’t change their jobs for fear of losing their health benefits.

“More Americans will be able to voluntarily, choose—choose—to work fewer hours or not take a job because they don’t depend on that job any more for the provision of health insurance,” Rep. Chris Van Hollen (D., Md.) said. “Before the Affordable Care Act, if you lost your job, you lost your health insurance.”

Mr. Elmendorf stressed that the law’s impact on the labor market could be difficult to predict. He agreed, for example, with one Republican lawmaker who said that by reducing the number of hours worked by many Americans, it would reduce overall wages and lower the amount of money people paid in taxes from 2017 through 2024.

But he also agreed with a Democratic lawmaker who said the law could—in the short-term—create some new jobs by freeing up disposable income from workers who previously had to set aside money for health coverage.

The law’s impact on the labor market has drawn the focus of researchers since it was passed, in part because the law makes so many changes to health-care delivery that its broader economic impacts have proved difficult to predict.

A 2013 study by researchers at Northwestern University, Columbia University and the University of Chicago estimated the Affordable Care Act’s impact could be particularly acute, including among Americans who are near retirement and hang on to jobs to retain health care before they qualify for Medicare at age 65.

The study found the new law “creates a nonemployer option for health insurance that is going to be fairly priced for a large number of Americans, and that hasn’t been available,” said Craig Garthwaite, an assistant professor at Northwestern’s Kellogg School of Management, and one of the study’s co-authors.

But he said there is a trade-off to the broader access to health care, and said “there should be some pause for concern here about any policies that actually weaken labor-force attachment.”

Health Law To Cut Into Labor Force

CBO Report Forecasts More People Will Opt to Work Less as They Seek Coverage Through Affordable Care Act


The new health law is projected to reduce the total number of hours Americans work by the equivalent of 2.3 million full-time jobs in 2021, a bigger impact on the workforce than previously expected, according to a nonpartisan congressional report.

The analysis, by the Congressional Budget Office, says a key factor is people scaling back how much they work and instead getting health coverage through the Affordable Care Act. The agency had earlier forecast the labor-force impact would be the equivalent of 800,000 workers in 2021.

Because the CBO estimated that the changes would be a result of workers’ choices, it said the law, President Barack Obama‘s signature initiative, wouldn’t lead to a rise in the unemployment rate. But the labor-force impact could slow growth in future years, though the precise impact is uncertain.

Social programs in the United States

From Wikipedia, the free encyclopedia

The Social Security Administration, created in 1935, was the first major federal welfare agency and continues to be the most prominent.[1]

Social programs in the United States are welfare subsidies designed to aid the needs of the U.S. population. Proposals for federal programs began with Theodore Roosevelt‘s New Nationalism and expanded with Woodrow Wilson‘s New FreedomFranklin D. Roosevelt‘sNew DealJohn F. Kennedy‘s New Frontier, and Lyndon B. Johnson‘s Great Society.

The programs vary in eligibility requirements and are provided by various organizations on a federal, state, local and private level. They help to provide food, shelter, education, healthcare and money to U.S. citizens through primary and secondary education, subsidies of college education, unemployment disability insurance, subsidies for eligible low-wage workers, subsidies for housing, Supplemental Nutrition Assistance Program benefits, pensions for eligible persons and health insurance programs that cover public employees. The Social Security system is the largest and most prominent social aid program.[1][2] Medicare is another prominent program.

Not including Social Security and Medicare, Congress allocated almost $717 billion in Federal funds in 2010 plus $210 billion was allocated in state funds ($927 billion total) for means tested welfare programs in the United States–later (after 2010) expenditures are unknown but higher.[3] As of 2011, the public social spending-to-GDP ratio in the United States was below the OECD average.[4]

Total Social Security and Medicare expenditures in 2013 were $1.3 trillion, 8.4% of the $16.3 trillion GNP (2013) and 37% of the total Federal expenditure budget of $3.684 trillion.[5][6]

In addition to government expenditures private welfare spending in the United States is thought to be about 10% of the U.S. GDP or another $1.6 trillion.[7]


Household Characteristics

[hide]Characteristics of Households by Quintile 2010[8]

Household Income
0-20% 21-40% 41-60% 61-80% 81-100%
Earners Per Household 0.42 0.90 1.29 1.70 1.97
Marital Status
Married couples (%) 17.0 35.9 48.8 64.3 78.4
Single Parents or Single (%) 83.0 64.1 51.2 35.7 21.6
Ages of Householders
Under 35 23.3 24 24.5 21.8 14.6
36-64 years 43.6 46.6 55.4 64.3 74.7
65 years + 33.1 29.4 20.1 13.9 10.7
Work Status householders (%)
Worked Full Time (%) 17.4 44.7 61.1 71.5 77.2
Worked Part Time (%) 14.3 13.3 11.1 9.8 9.5
Did Not Work (%) 68.2 42.1 27.8 17.7 13.3
Education of Householders (%)
Less than High School 26.7 16.6 8.8 5.4 2.2
High School or some College 61.2 65.4 62.9 58.5 37.6
Bachelor’s degree or Higher 12.1 18.0 28.3 36.1 60.3
Source: U.S. Census Bureau

Social programs have been implemented to promote a variety of societal goals, including alleviating the effects of poverty on those earning or receiving low income or encountering serious medical problems, and ensuring retired people have a basic standard of living.

Unlike in Europe, Christian democratic and social democratic theories have not played a major role in shaping welfare policy in the United States.[9] Entitlement programs in the U.S. were virtually non-existent until the administration of Franklin Delano Roosevelt and the implementation of the New Deal programs in response to the Great Depression. Between 1932 and 1981, modern American liberalism dominated U.S. economic policy and the entitlements grew along with American middle class wealth.[10]

Eligibility for welfare benefits depends on a variety of factors, including gross and net income, family size, pregnancy, homelessness, unemployment, and serious medical conditions like blindness, kidney failure or AIDS.

Drug Testing for applicants

Drug testing in order for potential recipients to receive welfare has become an increasingly controversial topic. Richard Hudson, a Republican from North Carolina claims he pushes for drug screening as a matter of “moral obligation” and that testing should be enforced as a way for the United States government to discourage drug usage. [11] Others claim that ordering the needy to drug test “stereotypes, stigmatizes, and criminalizes” them without need. [12] States that currently require drug tests to be performed in order to receive public assistance include ArizonaFloridaGeorgiaMissouriOklahomaTennessee, and Utah.[13]

Demographics of TANF Recipients

A chart showing the overall decline of average monthly welfare benefits (AFDC then TANF) per recipient 1962–2006 (in 2006 dollars).[14]

Some have argued that welfare has come to be associated with poverty. Martin Gilens, assistant professor of Political Science at Yale University, argues that blacks have overwhelmingly dominated images of poverty over the last few decades and states that “white Americans with the most exaggerated misunderstandings of the racial composition of the poor are the most likely to oppose welfare”.[15][16] This perception possibly perpetuates negative racial stereotypes and could increase Americans’ opposition and racialization of welfare policies.[15]

In FY 2010, African-American families comprised 31.9% of TANF families, white families comprised 31.8%, and 30.0% were Hispanic.[17] Since the implementation of TANF, the percentage of Hispanic families has increased, while the percentages of white and black families have decreased. In FY 1997, African-American families represented 37.3% of TANF recipient families, white families 34.5%, and Hispanic families 22.5%.[18] The population as a whole is composed of 63.7% whites, 16.3% Hispanic, 12.5% African-American, 4.8% Asian and 2.9% other races.[19] TANF programs at a cost of about $20.0 billion (2013) have decreased in use as Earned Income Tax CreditsMedicaid grants, food stamps (SNAP),Supplemental Security Income (SSI), child nutrition programs (CHIP), housing assistance, Feeding Programs (WIC & CSFP) along with about 70 more programs have increase to over $700.0 billion more in 2013.[20]


In 2002, total U.S. social welfare expenditure constitutes over 35% of GDP, with purely public expenditure constituting 21%, publicly supported but privately provided welfare services constituting 10% of GDP and purely private services constituting 4% of GDP. This compared to the “welfare” states of France and Sweden where welfare spending ranges from 30% to 35% of GDP.[21][22]

The Great Recession made a large impact on welfare spending. In a 2011 article, Forbes reported, “The best estimate of the cost of the 185 federal means tested welfare programs for 2010 for the federal government alone is $717 billion, up a third since 2008, according to the Heritage Foundation. Counting state spending of about $210 million, total welfare spending for 2010 reached over $920 billion, up nearly one-fourth since 2008 (24.3%)”–and increasing fast.[23] The previous decade had seen a 60% decrease in the number of people receiving welfare benefits,[24] beginning with the passage of the Personal Responsibility and Work Opportunity Act, but spending did not decrease proportionally during that time period.

Impact of social programs

[hide]Average Incomes and Taxes
CBO Study 2009*[25]

by Income
Transfers 2
Income +
Avg Federal
Tax rate %3
Taxes $4
% Federal
Taxes Pd. 5
#W6 % Net
0-20% 7,600 22,900 30,500 1.0 200 0.3 0.42 6.2
21-40% 30,100 14,800 45,000 6.8 2,900 3.8 0.90 11.1
41-60% 54,200 10,400 64,600 11.1 7,200 9.4 1.29 15.8
61-80% 86,400 7,100 93,500 15.1 14,100 18.3 1.70 21.6
80-100 218,800 6,000 224,800 23.2 51,900 67.9 1.97 47.2
Source: Congressional Budget Office Study[25]
1. Market Income = All wages, tips, incomes etc. as listed on Income tax form
2. Federal Transfers = all EITC, CTC, medicaid, food stamps (SNAP), Social Security, SSI etc. received
3. Average tax rate includes all Social Security, Medicare, income, business income, excise, etc. taxes.
4. Net Federal taxes paid in dollars
5. Percent of all federal taxes paid
6. #W = Average number of workers per household in this quintile
7. % Net Income = percentage of all national income each quintile receives after taxes and transfers.

According to the Congressional Budget Office, social programs significantly raise the standard of living for low-income Americans, particularly the elderly. The poorest 20% of American households earn a before-tax average of only $7,600 – less than half of the federal poverty line. Social programs increase those households’ before-tax income to $30,500. Social Security and Medicare are responsible for two-thirds of that increase.[25]


Public Health nursing made available through child welfare services, 1935.

Federal Social Welfare programs

Colonial legislatures and later State governments adopted legislation patterned after the English “poor” laws. Aid to veterans, often free grants of land, and pensions for widows and handicapped veterans, have been offered in all U.S. wars. Following World War I, provisions were made for a full-scale system of hospital and medical care benefits for veterans. By 1929, workers’ compensation laws were in effect in all but four States. These state laws made industry and businesses responsible for the costs of compensating workers or their survivors when the worker was injured or killed in connection with his or her job. Retirement programs for mainly State and local government paid teachers, police officers, and fire fighters—date back to the 19th century. All these social programs were far from universal and varied considerably from one state to another.

Prior to the Great Depression the United States had social programs that mostly centered around individual efforts, family efforts, church charities, business workers compensation, life insurance and sick leave programs along with some state tax supported social programs. The misery and poverty of the great depression threatened to overwhelm all these programs. The severe Depression of the 1930s made Federal action almost a necessity, as neither the States and the local communities, businesses and industries, nor private charities had the financial resources to cope with the growing need among the American people. Beginning in 1932, the Federal Government first made loans, then grants, to States to pay for direct relief and work relief. After that, special Federal emergency relief like the Civilian Conservation Corps and other public works programs were started. In 1935, President Franklin D. Roosevelt‘s administration proposed to Congress federal social relief programs and a federally sponsored retirement program. Congress followed by the passage of the 37 page Social Security Act, signed into law August 14, 1935 and “effective” by 1939–just as World War II began. This program was expanded several times over the years.

War on Poverty and Great Society programs (1960s)

Further information: War on Poverty and Great Society

After the Great Society legislation of the 1960s, for the first time a person who was not elderly or disabled could receive need-based aid from the federal government.[26][dubious – discuss] Aid could include general welfare payments, health care through Medicaidfood stamps, special payments for pregnant women and young mothers, and federal and state housing benefits.[26]

In 1968, 4.1% of families were headed by a woman receiving welfare assistance; by 1980, the percentage increased to 10%.[26] In the 1970s, California was the U.S. state with the most generous welfare system.[27] Virtually all food stamp costs are paid by the federal government.[28] In 2008, 28.7 percent of the households headed by single women were considered poor.[29]

Welfare reform (1990s)

Before the Welfare Reform Act of 1996, welfare assistance was “once considered an open-ended right,” but welfare reform converted it “into a finite program built to provide short-term cash assistance and steer people quickly into jobs.”[30] Prior to reform, states were given “limitless”[30] money by the federal government, increasing per family on welfare, under the 60-year-old Aid to Families with Dependent Children (AFDC) program.[31] This gave states no incentive to direct welfare funds to the neediest recipients or to encourage individuals to go off welfare benefits (the state lost federal money when someone left the system).[32] Nationwide, one child in seven received AFDC funds,[31] which mostly went to single mothers.[28]

In 1996, under the Bill Clinton administrationCongress passed the Personal Responsibility and Work Opportunity Reconciliation Act, which gave more control of the welfare system to the states though there are basic requirements the states need to meet with regards to welfare services. Still, most states offer basic assistance, such as health care, food assistance, child care assistance, unemployment, cash aid, and housing assistance. After reforms, which President Clinton said would “end welfare as we know it,”[28]amounts from the federal government were given out in a flat rate per state based on population.[32]

Each state must meet certain criteria to ensure recipients are being encouraged to work themselves out of welfare. The new program is called Temporary Assistance for Needy Families (TANF).[31] It encourages states to require some sort of employment search in exchange for providing funds to individuals, and imposes a five-year lifetime limit on cash assistance.[28][24][31] The bill restricts welfare from most legal immigrants and increased financial assistance for child care.[24] The federal government also maintains an emergency $2 billion TANF fund to assist states that may have rising unemployment.[31]

President Bill Clinton signing welfare reform legislation.

Following these changes, millions of people left the welfare rolls (a 60% drop overall),[24] employment rose, and the child poverty rate was reduced.[28] A 2007 Congressional Budget Office study found that incomes in affected families rose by 35%.[24] The reforms were “widely applauded”[33] after “bitter protest.”[28] The Times called the reform “one of the few undisputed triumphs of American government in the past 20 years.”[34]

Critics of the reforms sometimes point out that the massive decrease of people on the welfare rolls during the 1990s wasn’t due to a rise in actual gainful employment in this population, but rather, was due almost exclusively to their offloading into workfare, giving them a different classification than classic welfare recipient. The late 1990s were also considered an unusually strong economic time, and critics voiced their concern about what would happen in an economic downturn.[28]

National Review editorialized that the Economic Stimulus Act of 2009 will reverse the welfare-to-work provisions that Bill Clinton signed in the 1990s, and will again base federal grants to states on the number of people signed up for welfare rather than at a flat rate.[32] One of the experts who worked on the 1996 bill said that the provisions would lead to the largest one-year increase in welfare spending in American history.[34] The House bill provides $4 billion to pay 80% of states’ welfare caseloads.[31] Although each state received $16.5 billion annually from the federal government as welfare rolls dropped, they spent the rest of the block grant on other types of assistance rather than saving it for worse economic times.[30]

[hide]Spending on largest Welfare Programs
Federal Spending 2003-2013*[35]

Medicaid Grants to States $201,389 $266,565
Food Stamps (SNAP) 61,717 82,603
Earned Income Tax Credit (EITC) 40,027 55,123
Supplemental Security Income (SSI) 38,315 50,544
Housing assistance 37,205 49,739
Child Nutrition Program (CHIP) 13,558 20,842
Support Payments to States, TANF 28,980 20,842
Feeding Programs (WIC & CSFP) 5,695 6,671
Low Income Home Energy Assistance 2,542 3,704
* Spending in millions of dollars


The following is a short timeline of welfare in the United States:[36]

1880s–1890s: Attempts were made to move poor people from work yards to poor houses if they were in search of relief funds.

1893–1894: Attempts were made at the first unemployment payments, but were unsuccessful due to the 1893–1894recession.

1932: The Great Depression had gotten worse and the first attempts to fund relief failed. The “Emergency Relief Act”, which gave local governments $300 million, was passed into law.

1933: In March 1933, President Franklin D. Roosevelt pushed Congress to establish the Civilian Conservation Corps.

1935: The Social Security Act was passed on June 17, 1935. The bill included direct relief (cash, food stamps, etc.) and changes for unemployment insurance.

1940: Aid to Families With Dependent Children (AFDC) was established.

1964: Johnson’s War on Poverty is underway, and the Economic Opportunity Act was passed. Commonly known as “the Great Society

1996: Passed under Clinton, the “Personal Responsibility and Work Opportunity Reconciliation Act of 1996″ becomes law.

2013: Affordable Care Act goes into effect with large increases in Medicaid and subsidized medical insurance premiums go into effect.

Types of social programs

Means tested Social Programs

[hide]79 Means Tested Programs in U.S. (2011)[37]

Programs Federal
TOTAL cost in (billions) (2011) $717 $210 $927
Social Security OASDI (2013) $785
Medicare(2013) $574
TOTAL all programs (billions) $2,287
============================ ======= ====== ======
SSI/Old Age Assistance 56,462.00 4,673.00 61,135.00
Earned Income Tax Credit
(refundable portion)
55,652.00 55,652.00
Refundable Child Credit 22,691.00 22,691.00
Make Work Pay Tax Credit
(Refundable Portion)
13,905.00 13,905.00
Temporary Assistance for Needy Families
(TANF, old AFDC)
6,882.89 6,876.86 13,759.74
Foster Care Title IVE 4,456.00 3,921.28 8,377.28
Adoption Assistance Title IVE 2,362.00 1,316 3,678.00
General Assistance Cash 2,625.00 2,625.00
Refugee Assistance 167.86 167.86
General Assistance to Indians 115.00 115.00
Assets for Independence 24.00 24.00
CASH TOTAL 162,717.75 19,412.14 182,129.88
Medicaid 274,964.00 157,600.00 432,564.00
SCHIP State Supplemental
Health Insurance Program
8,629.00 3,796.76 12,425.76
Medical General Assistance 6,965.90 6,965.90
Consolidated Health Center
/Community Health Centers
1,481.00 1,481.00
Maternal & Child Health 656.00 492.00 1,148.00
Medical Assistance to Refugees 167.86 167.86
Healthy Start 104.00 104.00
MEDICAL TOTAL 289,816.86 168,854.66 458,671.52
Food Stamps, SNAP 77,637.00 6,987.33 84,624.33
School Lunch Program 10,321.00 10,321.00
WIC Women, Infant and
Children Food Program
6,787.00 6,787.00
School Breakfast 3,076.00 3,076.00
Child Care Food Program 2,732.00 2,732.00
Nutrition Program for the
Elderly, Nutrition Service Incentives
820.00 139.40 959.40
Summer Program 376.00 376.00
Commodity Supplemental Food Program 196.00 196.00
TEFAP Temporary
Emergency Food Program
247.00 247.00
Needy Families 60.00 60.00
Farmers’ Market Nutrition Program 23.00 23.00
Special Milk Program 13.00 13.00
FOOD TOTAL 102,288.00 7,126.73 109,414.73
Section 8 Housing (HUD) 28,435.00 28,435.00
Public Housing (HUD) 8,973.00 8,973.00
Low Income Housing
Tax Credit for Developers
6,150.00 6,150.00
Home Investment
Partnership Program (HUD)
2,853.00 2,853.00
Homeless Assistance
Grants (HUD)
2,280.00 2,280.00
State Housing Expenditures (from SWE) 2,085.00 2,085.00
Rural Housing Insurance
Fund (Agriculture)
1,689.00 1,689.00
Rural Housing
Service (Agriculture)
1,085.00 1,085.00
Housing for the Elderly (HUD) 934.00 934.00
Native American
Housing Block Grants (HUD)
854.00 854.00
Other Assisted Housing
Programs (HUD)
496.00 496.00
Housing for Persons
with Disabilities (HUD)
309.00 309.00
HOUSING TOTAL 54,058.00 2,085.00 56,143.00
LIHEAP Low Income Home
Energy Assistance
4,419.00 4,419.00
Universal Service Fund
Subsidized Low Income Phone Service
1,750.00 1,750.00
Weatherization 234.00 234.00
Pell Grants 41,458.00 41,458.00
Title One Grants to
Local Education Authorities
14,472.00 14,472.00
21st Century Learning Centers 1,157.00 1,157.00
Special Programs for
Disadvantaged (TRIO)
883.00 883.00
Supplemental Education
Opportunity Grants
740.00 740.00
Adult Basic Education Grants 607.00 607.00
Migrant Education 444.00 444.00
Gear-Up 303.00 303.00
LEAP Formerly State Student
Incentive Grant Program (SSIG)
1.00 1.00
Education for Homeless
Children and Youth
65.00 65.00
Even Start 4.00 4.00
Aid for Graduate and Professional
Study for Disadvantaged and Minorities
41.00 41.00
EDUCATION TOTAL 60,175.00 60,175.00
TANF Work Activities and Training 2,504.90 831.93 3,336.83
Job Corps 1,659.00 1,659.00
WIA Youth Opportunity Grants
Formerly Summer Youth Employment
946.00 946.00
Senior Community Service Employment 705.00 77.55 782.55
WIA Adult Employment and Training
formerly JTPA IIA Training for
Disadvantaged Adults & Youth
766.00 766.00
Food Stamp Employment
and Training Program
393.00 166.00 559.00
Foster Grandparents 104.00 10.40 114.40
YouthBuild 110.00 110.00
Migrant Training 85.00 85.00
Native American Training 52.00 52.00
TRAINING TOTAL 7,324.90 1,085.88 8,410.78
TANF Block Grant Services 5,385.12 4,838.13 10,223.25
Title XX Social Services Block Grant 1,787.00 1,787.00
Community Service Block Grant 678.00 678.00
Social Services for
Refugees Asylees and Humanitarian Cases
417.28 417.28
Safe and Stable Families 553.00 553.00
Title III Aging Americans Act 369.00 369.00
Legal Services Block Grant 406.00 406.00
Family Planning 298.00 298.00
Emergency Food and Shelter Program 48.00 48.00
Healthy Marriage and
Responsible Fatherhood Grants
50.00 150.00
Independent Living (Chafee
Foster Care Independence Program)
140.00 28.00 168.00
Independent Living Training Vouchers 45.00 45.00
Maternal, Infants and
Children Home Visitation
36.00 36.00
SERVICES TOTAL 10,411.40 4,866.13 15,277.53
Headstart 7,559.0 1,889.75 9,448.75
Childcare and
Child Development Block Grant
2,984 2,176.00 5,160.00
Childcare Entitlement to the States 3,100.00 3,100.00
TANF Block Grant Child Care 2,318.56 2,643.78 4,962.35
CHILD CARE & CHILD DEVELOPMENT TOTAL 15,961.56 6,709.53 22,671.10
Community Development Block Grant
and Related Development Funds
7,445.00 7,445.00
Economic Development
Administration (Dept. of Commerce)
423.00 423.00
Appalachian Regional Development 68.00 68.00
Empowerment Zones,
Enterprise Communities Renewal
1.00 1.00
TOTAL in millions (2011) $717,093.48 $210,140.07 $927,233.55
Social Security OASDI (2013) $785,700
Medicare(2013) $574,200
TOTAL in millions $2,287,133
* Spending in millions of dollars
2.3 Trillion Dollar Total of Social Security, Medicare and Means Tested Welfare
is low since latest 2013 means tested data not available but 2013
“real” TOTAL will be higher

Social security

The Social Security program mainly refers to the Old Age, Survivors, and Disability Insurance (OASDI) program, and possibly the unemployment insurance program. Retirement Insurance Benefits (RIB), also known as Old-age Insurance Benefits, are a form of social insurance payments made by the U.S. Social Security Administration paid based upon the attainment old age (62 or older).

Social Security Disability Insurance (SSD or SSDI) is a federal insurance program that providesincome supplements to people who are restricted in their ability to be employed because of a notable disability.

Unemployment insurance, also known as unemployment compensation, provides for money, from the United States and the state collected from employers, to workers who have become unemployed through no fault of their own. The unemployment benefits are run by each state with different state defined criteria for duration, percent of income paid, etc.. Nearly all require the recipient to document their search for employment to continue receiving benefits. Extensions of time for receiving benefits are sometimes offered for extensive work unemployment. These extra benefits are usually in the form of loans from the federal government that have to be repaid by each state.

General welfare

The Supplemental Security Income (SSI) program provides stipends to low-income people who are either aged (65 or older), blind, or disabled.

The Temporary Assistance for Needy Families (TANF) provides cash assistance to indigent American families with dependent children.

Healthcare spending

Health care in the United States is provided by many separate legal entities. Health care facilities are largely owned and operated by the private sectorHealth insurance in the United States is now primarily provided by the government in the public sector, with 60–65% of healthcare provision and spending coming from programs such as Medicare, Medicaid,TRICARE, the Children’s Health Insurance Program, and the Veterans Health Administration.

Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other special criteria like the End Stage Renal Disease program (ESRD). Medicare in the United States somewhat resembles a single-payer health care system but is not. Before Medicare, only 51% of people aged 65 and older had health care coverage, and nearly 30% lived below the federal poverty level.

Medicaid is a health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states.[38] People served by Medicaid are U.S. citizens or legal permanent residents, including low-income adults, their children, and people with certain disabilities. Poverty alone does not necessarily qualify someone for Medicaid. Medicaid is the largest source of funding for medical and health-related services for people with limited income in the United States.

The Children’s Health Insurance Program (CHIP) is a program administered by the United States Department of Health and Human Services that provides matching funds to states for health insurance to families with children.[39] The program was designed to cover uninsured children in families with incomes that are modest but too high to qualify for Medicaid.

The Alcohol, Drug Abuse, and Mental Health Services Block Grant (or ADMS Block Grant) is a federal assistance block grant given by the United States Department of Health and Human Services.

Education spending

University of California, Berkeley is one of the oldest public universities in the U.S.

Per capita spending on tertiary education is among the highest in the world[citation needed]. Public education is managed by individual states, municipalities and regional school districts. As in all developed countries, primary and secondary education is free, universal and mandatory. Parents do have the option of home-schooling their children, though some states, such as California (until a 2008 legal ruling overturned this requirement[40]), require parents to obtain teaching credentials before doing so. Experimental programs give lower-income parents the option of using government issued vouchers to send their kids to private rather than public schools in some states/regions.

As of 2007, more than 80% of all primary and secondary students were enrolled in public schools, including 75% of those from households with incomes in the top 5%. Public schools commonly offer after-school programs and the government subsidizes private after school programs, such as the Boys & Girls Club. While pre-school education is subsidized as well, through programs such as Head Start, many Americans still find themselves unable to take advantage of them. Some education critics have therefore proposed creating a comprehensive transfer system to make pre-school education universal, pointing out that the financial returns alone would compensate for the cost.

Tertiary education is not free, but is subsidized by individual states and the federal government. Some of the costs at public institutions is carried by the state.

The government also provides grants, scholarships and subsidized loans to most students. Those who do not qualify for any type of aid, can obtain a government guaranteed loan and tuition can often be deducted from the federal income tax. Despite subsidized attendance cost at public institutions and tax deductions, however, tuition costs have risen at three times the rate of median household income since 1982.[41] In fear that many future Americans might be excluded from tertiary education, progressive Democrats have proposed increasing financial aid and subsidizing an increased share of attendance costs. Some Democratic politicians and political groups have also proposed to make public tertiary education free of charge, i.e. subsidizing 100% of attendance cost.[citation needed]

Food assistance

In the U.S., financial assistance for food purchasing for low- and no-income people is provided through the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program.[42] This federal aid program is administered by the Food and Nutrition Serviceof the U.S. Department of Agriculture, but benefits are distributed by the individual U.S. states. It is historically and commonly known as the Food Stamp Program, though all legal references to “stamp” and “coupon” have been replaced by “EBT” and “card,” referring to the refillable, plastic Electronic Benefit Transfer (EBT) cards that replaced the paper “food stamp” coupons. To be eligible for SNAP benefits, the recipients must have incomes below 130 percent of the poverty line, and also own few assets.[43] Since the economic downturn began in 2008, the use of food stamps has increased.[43]

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) is a child nutrition program for healthcare and nutrition of low-income pregnant women, breastfeeding women, and infants and children under the age of five. The eligibility requirement is a family income below 185% of the U.S. Poverty Income Guidelines, but if a person participates in other benefit programs, or has family members who participate in SNAP, Medicaid, or Temporary Assistance for Needy Families, they automatically meet the eligibility requirements.

The Child and Adult Care Food Program (CACFP) is a type of United States Federal assistance provided by the U.S. Department of Agriculture (USDA) to states in order to provide a daily subsidized food service for an estimated 3.2 million children and 112,000 elderly or mentally or physically impaired adults[44] in non-residential, day-care settings.[45]

Public housing

The Housing and Community Development Act of 1974 created Section 8 housing, the payment of rent assistance to private landlords on behalf of low-income households.

See also



  1. Jump up to:a b Krugman, P. (2007). The Conscience of a Liberal. New York: W. W. Norton
  2. Jump up^ Feldstein, M. (2005). Rethinking social insurance. American Economic Review, 95(1), pp. 1–24.
  3. Jump up^ Means tested programs [1] accessed 19 Nov 2013
  4. Jump up^ Social spending after the crisis. OECD. (Social spending in a historical perspective, Pg. 5). Retrieved: 26 December 2012.
  5. Jump up^ 2013 Status Of The Social Security And Medicare Programs [2] accessed 16 Oct 2013
  6. Jump up^ White house Historical tables. Table 1 [3] accessed 16 Oct 2013
  7. Jump up^ OECD database on social expenditures[4] accessed 9 Dec 2013
  8. Jump up^ Characteristics if Households by Quintile 2010 [5] accessed 19 Nov 2013
  9. Jump up^ Esping-Andersen, G. (1991). The Three Worlds of Welfare Capitalism. Princeton, NJ: Princeton University Press.
  10. Jump up^ by G. William Domhoff. “Who Rules America: Wealth, Income, and Power”. Retrieved 2012-08-14.
  11. Jump up^ Delaney, Arthur. “Food Stamp Cuts Might Come With Drug Testing”. Huffington Post.
  12. Jump up^ Goetzl, Celia. “Government Mandated Drug Testing for Welfare Recipients: Special Need or Unconstitutional Condition?”. Retrieved October 24, 2013.
  13. Jump up^ Cohen, Robin. “Drug Testing of Public Assistance Recipients”. OLR Research Report. Retrieved October 24, 2013.
  14. Jump up^ 2008 Indicators of Welfare Dependence Figure TANF 2.
  15. Jump up to:a b Gilens, Martin (1996). “Race and Poverty in America: Public Misperceptions and the American News Media.” Public Opinion Quarterly 60, no. 4, pp. 515–541.
  16. Jump up^ Gilens, Martin (1996). “Race and Poverty in America: Public Misperceptions and the American News Media.” Public Opinion Quarterly 60, no. 4, p. 516
  17. Jump up^ “Characteristics and Financial Circumstances of TANF Recipients – Fiscal Year 2010“. United States Department of Health and Human Services.
  18. Jump up^ “Demographic And Financial Characteristics Of Families Receiving Assistance“. United States Department of Health and Human Services.
  19. Jump up^ Demographics of U.S. population Table 1[6] accessed 26 Dec 2013
  20. Jump up^ 79 Means tested welfare programs in the United States[7] accessed 26 Dec 2013
  21. Jump up^ Alber, J. (1988). Is There a Crisis of the Welfare State? Cross-National Evidence from Europe, North America, and Japan. European Sociological Review, 4(3), 181–207.
  22. Jump up^ Hacker, J. S. (2002). The Divided Welfare State. New York: Cambridge University Press, USA.
  23. Jump up^ Ferrara, Peter (2011-04-22). “America’s Ever Expanding Welfare Empire”Forbes. Retrieved 2012-04-10.
  24. Jump up to:a b c d e Goodman, Peter S. (2008-04-11). “From Welfare Shift in ’96, a Reminder for Clinton”The New York Times. Retrieved 2009-02-12.
  25. Jump up to:a b c Average Incomes and Taxes 2009 [8] accessed 19 Nov 2013
  26. Jump up to:a b c Frum, David (2000). How We Got Here: The ’70s. New York, New York: Basic Books. p. 72. ISBN 0-465-04195-7.
  27. Jump up^ Frum, David (2000). How We Got Here: The ’70s. New York, New York: Basic Books. p. 325.ISBN 0-465-04195-7.
  28. Jump up to:a b c d e f g Deparle, Jason (2009-02-02). “Welfare Aid Isn’t Growing as Economy Drops Off”The New York Times. Retrieved 2009-02-12.
  29. Jump up^
  30. Jump up to:a b c “Welfare Rolls See First Climb in Years”The Washington Post. 2008-12-17. Retrieved 2009-02-13.
  31. Jump up to:a b c d e f “Stimulus Bill Abolishes Welfare Reform and Adds New Welfare Spending”.Heritage Foundation. 2009-02-11. Retrieved 2009-02-12.
  32. Jump up to:a b c “Ending Welfare Reform as We Knew It”The National Review. 2009-02-12. Retrieved 2009-02-12.[dead link]
  33. Jump up^ “Change for the Worse”New York Post. 2009-01-30. Retrieved 2009-02-12.[dead link]
  34. Jump up to:a b AllenMills, Tony (2009-02-15). “Obama warned over ‘welfare spendathon'”The Times(London). Retrieved 2009-02-15.
  35. Jump up^ Spending on largest Welfare Programs in U.S. [9] accessed 19 Nov 2013
  36. Jump up^ “Welfare Reform History Timeline – 1900s to current United States.” SearchBeat. Web. 12 Oct. 2009. <>.
  37. Jump up^ Means Tested Programs in U.S. [10] accessed 19 Nov 2013
  38. Jump up^ Medicaid General Information from the Centers for Medicare and Medicaid Services . (CMS) website
  39. Jump up^ Sultz, H., & Young, K. Health Care USA Understanding its Organization and Delivery pg. 257
  40. Jump up^ Jonathan L. v. Superior Court, 165 Cal.App.4th 1074 (Cal.App. 2 Dist. 2008). Text of opinion
  41. Jump up^ Lewin, Tamar. “NYT on increase in tuition”The New York Times. Retrieved 2009-01-15.
  42. Jump up^ “Nutrition Assistance Program Home Page”, U.S. Department of Agriculture (official website), March 3, 2011 (last revised). Accessed March 4, 2011.
  43. Jump up to:a b Erik Eckholm (March 31, 2008). “Food stamp use in U.S. at record pace as jobs vanish”The New York Times. Retrieved January 30, 2012.
  44. Jump up^ Why CACFP Is Important, Child and Adult Care Food Program Homepage, Food and Nutrition Service, US Department of Agriculture
  45. Jump up^ Child and Adult Care Food Program (CFDA 10.558);OMB Circular A-133 Compliance Supplement; Part 4: Agency Program Requirements: Department of Housing and Urban Development, pg. 4-10.558-1

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