POL 321 Lecture Notes - Lecture 12: Social Security Trust Fund, Earned Income Tax Credit, Tax Credit

4 views5 pages
Lecture 12
Defining Poverty & Policies
Poverty is defined by the Federal Poverty Level which is set by U.S. Department of
Health and Human Services at 3 times the cost of groceries in a year (having income
above/below that)
Percent of number of people above or below the poverty line is done using the same rate
for every state
Senior citizens (65+) have seen greatest decrease in poverty rate
Children have highest rate of poverty
o 1/5th of children in poverty since 2012, based on household income
Those who are single & never married with high school education have seen poverty rate
Policies on addressing poverty tend to focus on: income, food, & housing
Government uses 2 tools: subsidies & direct provisions
Need policies to: provide minimum standard of living to help people meet basic needs
(food, water, housing) & create opportunities for viable employment
U.S. has reduced poverty 1966-2012
Policies: Income
Social Securityfor the elderly & disabled, 67+, income-focused, & some help for
children of disabled or whose parents died
o Not means tested
o Cash benefit tied to your earnings
o Individuals currently working support the individuals currently retired
o Social Security Trust Fundsaves money from payroll tax that is more than is
needed to pay out
o Worker-to-Beneficiary Ratio is declining, which is causing concern about the future
of the program
o Benefits vary to individuals by income
o Average of $1400, max is $3770
o Social Security was put in place to provide income to senior citizens since they are
less likely to be able to work
o Has dropped the seniors poverty rate (significantly)
o Major concern: when money coming in from payroll tax doesn’t cover money going
o This is a very politically popular program, so any modifications to be more
sustainable are critiqued heavily:
Increase age
Increase tax percentage
Increase cap
Adjust monthly benefits calculation
Adjust costs of living calculation
Privatize social security (responsibility transferred to self)
o All unpopular because either someone pays more or gets less
Means Tested Income Programmonetary support if meet eligibility requirements
Earned Income Tax Creditrefundable tax credit to low & moderate income workers
designed to incentivize work (earned income)
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 5 pages and 3 million more documents.

Already have an account? Log in
o Mostly for families, but some for individuals
o 97% of benefits go to households with children
o To pull people out of poverty with direct cash back
o Must have earned income though
o Phases out by income (less as you earn more)
Temporary Assistance to Needy Families (TANF)aid based on a work or work-
seeking requirement
o Originally AFDC from Social Security Act in 1935, but replaced in 1996 with TANF
o Aid to Families with Dependent Children had some stigma, disincentivized work
o TANF included some work or work seeking requirement
o 2 years to get work or do community service, unless child under 6
o Is a block grant that goes to states, & states set own requirements
o Average family of 3 gets $500/month
o Incentivizes work
o Benefits will vary a lot by state, but maximum of 60 months (5 years) getting benefits
o Challenging to qualify for
Unemployment Insurancenot offered by private market, assists people who lost job
through no fault of own (layoff, closure, etc.)
o Joint federal & state program
o Each state has own eligibility & benefit formula
o Often there is a max number of weeks eligible
o Small amounts, for example, FL max benefits of $275/week
o Temporary holdover for those who lost job while seeking new work
Policies: Food
Supplemental Nutrition Assistance Program (SNAP)"food stamps"
o Administered by states
o Currently 47 million people on it
o Average of $130-140/month/person
o Must be either seeking employment or currently employed
o Lots of work/hoops to get benefits
o Electronic card with money to spend at certain stores on it
Free & Reduced Lunch Programwhere benefit goes directly to the child
o Part of National School Lunch Act 1996
o Students eligible by family income can get free/reduced price lunch
o Free if family makes up to 130% of poverty line
o Viewed as a positive externality to provide children with 1 meal per day
o Government provides it directly to the student so the target of policy is children
Policies: Housing
Addressing housing is important since it is the number 1 expense of households
Also need to avoid homelessness which can impede employment
Housing affordability is getting worse, bot building as many apartments with lower rent
Section 8 Housing VoucherHousing & Urban Development (HUD) provides money to
local housing agencies that determine how to allocate funds
o About 1 in 4 eligible people get vouchers, there isn't enough for all
o Families income, in general, can't exceed 50% of median county income, in order to
be eligible
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 5 pages and 3 million more documents.

Already have an account? Log in

Get OneClass Notes+

Unlimited access to class notes and textbook notes.

YearlyBest Value
75% OFF
$8 USD/m
$30 USD/m
You will be charged $96 USD upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.