Welfare (financial aid)

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Welfare is financial assistance paid to people by governments. Welfare payments are typically made to individuals, but may also accrue to companies or entities--these latter payments are often considered corporate welfare.

Welfare was started for the middle-class that lost their jobs during the depression. Many people consider that it was originally for poor people but that is considered false. It was not designed for poor people at all.

Individuals may apply for welfare due to disability, lack of education or job skills, low demand for unskilled labor, substance abuse, or other reasons. Assistance may also take the form of other relief, such as tax credits for working mothers.

Welfare is known by a variety of names in different countries, all with the avowed purpose of providing an economic or social safety net for disadvantaged members of society and those who chose not to work. Almost all developed nations provide some kind of safety net of this kind; nations where such programs are especially prominent are known as welfare states.

For welfare for the non-disabled, the programs are sometimes controversial, since working members of society are inherently obligated to support those who choose not to work. Welfare or assistance for the disabled, in contrast, may not eventually expect non-dependency.

"Corporate welfare," usually in the form of favorable tax policy, is sometimes used in order to provide capital to an industry that the government perceives needs financial assistance in order to survive or to expand, or which the government wishes to support for political or economic purposes.

Governments also provide benefits to wealthier individuals through what is sometimes known as the hidden welfare state. These are tax breaks for social goals such as the home mortgage interest deduction, deductions for retirement savings, charitable contributions, and education. These deductions reward wealthier taxpayers for allocating money in ways that ultimately benefit themselves.

Some of these ideal outcomes and purposes, as well as welfare's effectiveness have been challenged by political groups, such as those who oppose big government and "forced charity", such as minarchists or libertarians.

Recipients must sometimes demonstrate a low level of income such as by way of "means testing", or financial hardship, or that they satisfy some other requirement such as childcare responsibilities or disability.

Those receiving unemployment benefits may also have to regularly demonstrate that they are periodically searching for employment. Some countries assign specific jobs to recipients who must work in these roles in order for welfare payments to continue. In the United States and Canada, such programs are known as workfare.

1 History of welfare
2 Welfare in the United States
3 Corporate welfare
4 See also
5 References

[edit] History of welfare

In the Roman Empire, social welfare to help the poor was enlarged by the Caesar Nerva^[1]. Nerva's program brought acclaim from many including Pliny the Younger.^[2]

In the Jewish tradition, charity represented by tzedakah, justice, and the poor are entitled to charity as a matter of right rather than benevolence. Contemporary charity is regarded as a continuation of the Biblical Maaser Ani, or poor-tithe, as well as Biblical practices including permitting the poor to glean the corners of a field, harvest during the Shmita (Sabbatical year), and other practices. Voluntary charity, along with prayer and repentance, is regarded as ameliorating the consequences of bad acts.

The concepts of welfare and pension were also introduced in the early Islamic law^[3] of the Caliphate as forms of Zakat (charity), one of the Five Pillars of Islam, since the time of the Abbasid caliph Al-Mansur in the 8th century. The taxes (including Zakat and Jizya) collected in the treasury of an Islamic government were used to provide income for the needy, including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist Al-Ghazali (Algazel, 1058-1111), the government was also expected to store up food supplies in every region in case a disaster or famine occurs.^[3]

There is relatively little statistical data on welfare transfer payments until at least the High Middle Ages. In the medieval period and until the Industrial Revolution, the function of welfare payments in Europe was principally achieved through private giving or charity. In those early times there was a much broader group considered in poverty compared to the 21st century.

Early welfare programs included the English Poor Law of 1601, which gave parishes the responsibility for providing welfare payments to the poor.^[4] This system was substantially modified by the 19th-century Poor Law Amendment Act, which introduced the system of workhouses.

It was predominantly in the late 19th and early 20th centuries that an organized system of state welfare provision was introduced in many countries. Otto von Bismarck, Chancellor of Germany, introduced one of the first welfare systems for the working classes. In Great Britain the Liberal government of Henry Campbell-Bannerman and David Lloyd George introduced the National Insurance system in 1911,^[5] a system later expanded by Clement Attlee. The United States did not have an organized welfare system until the Great Depression, when emergency relief measures were introduced under President Franklin D. Roosevelt. Even then, Roosevelt's New Deal focused predominantly on a program of providing work and stimulating the economy through public spending on projects, rather than on cash payments.

In the late 20th century, a perception grew that existing welfare systems were becoming excessively bureaucratic and inefficient. The United States Social Security system has come under particular criticism, and many political figures, such as Bill Clinton and George W. Bush, have argued for a more work-based system of welfare provision.

[edit] Welfare in the United States

From the 1930s on, New York City government provided welfare payments to the poor.^[6] By the 1960s, as whites moved to the suburbs, the city was having trouble making the payments and attempted to purge the rolls of those who were committing welfare fraud.^[6] Twenty individuals who had been denied welfare sued in a case that went to the United States Supreme Court, Goldberg v. Kelly. The Court ruled that those suspected of committing welfare fraud must receive individual hearings before being denied welfare.^[6] David Frum considers this ruling to be a milestone leading to the city's 1975 budget disaster.^[6]

After the Great Society legislation of the 1960s, for the first time a person who was not elderly or disabled could receive a living from the American government.^[7] This could include general welfare payments, health care through Medicaid, food stamps, special payments for pregnant women and young mothers,and federal and state housing benefits.^[7] In 1968, 4.1% of families were headed by a woman on welfare; by 1980, this increased to 10%.^[7] In the 1970s, California was the U.S. state with the most generous welfare system.^[8] Virtually all food stamp costs are paid by the federal government.^[9]

Before the Welfare Reform Act of 1996, welfare 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."^[10] Prior to reform, states were given "limitless"^[10] money by the federal government, increasing per family on welfare, under the 60-year-old Aid to Families with Dependent Children (AFDC) program.^[11] This gave states no incentive to direct welfare funds to the neediest recipients or to encourage individuals to go off welfare (the state lost federal money when someone left the system).^[12] One child in seven nationwide received AFDC funds,^[11] which mostly went to able-bodied single mothers.^[9]

After reforms, which President Bill Clinton said would "end welfare as we know it,"^[9] amounts from the federal government were given out in a flat rate per state based on population.^[12] The new program is called Temporary Assistance to Needy Families (TANF).^[11] It also encourages states to require some sort of employment search in exchange for providing funds to individuals and imposes a five-year time limit on cash assistance.^[11]^[9]^[13] The bill restricts welfare from most legal immigrants and increased financial assistance for child care.^[13] The federal government also maintains an emergency $2 billion TANF fund to assist states that may have rising unemployment.^[11]

Millions of people left the welfare rolls (a 60% drop overall),^[13] employment rose, and the child poverty rate was reduced.^[9] A 2007 Congressional Budget Office study found that incomes in affected families rose by 35%.^[13] The reforms were "widely applauded"^[14] after "bitter protest."^[9] The Times called the reform "one of the few undisputed triumphs of American government in the past 20 years."^[15] Critics of the reforms sometimes point out that the reason for the massive decrease of people on the welfare rolls in the United States in the 1990s wasn't due to a rise in actual gainful employment in this population, but rather, due almost exclusively to their offloading into workfare, giving them a different classification than classic welfare recipient.

Aspects of the program vary in different states; Michigan, for example, requires a month in a job search program before benefits can begin.^[9]

Of the 2008 Democratic presidential candidates, both Hillary Clinton and Barack Obama supported the 1996 reform.^[13] Obama said: “Before welfare reform, you had, in the minds of most Americans, a stark separation between the deserving working poor and the undeserving welfare poor. What welfare reform did was desegregate those two groups. Now, everybody was poor, and everybody had to work.” ^[13] The assistant secretary of social services in the Clinton administration, Peter Edelman, resigned his job in protest after the reform was signed.^[13] As a Senator, Clinton proposed that welfare recipients should be able to receive cash assistance while in school, a measure which was unsuccessful.^[13]

The 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 again base federal grants to states on the number of people signed up for welfare rather than at a flat rate.^[12] 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.^[15] The House bill provides $4 billion to pay 80% of states' welfare caseloads.^[11] 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.^[10]

[edit] Corporate welfare

Main article: Corporate welfare

Corporate welfare is supposed welfare on a larger scale for entities and companies. The term is often pejorative.

The term was originally coined by Ralph Nader in 1956.^[16]^[17] The concept of "corporate welfare" creates a satirical association between corporate subsidies and welfare payments to the poor, and implies that corporations are much less needy of such treatment than the poor; as such, the term is usually used by those who oppose such handouts to corporations.