Social Insurance

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The Double Standard of Making the Poor Prove They’re Worthy of Government Benefits

There are two types of government benefits that are disbursed to citizens, but the recipients of each of these are treated differently depending on their income level. Welfare recipients are often observed with more scrutiny, as if they are expected to not use their benefits properly. The other group of recipients, that is those receiving Pell grants or mortgage loans, are paid less attention to because these types of benefits are part of what TCF fellow Suzanne Mettler calls the "submerged state."

Many, many Americans who do receive these other kinds of government benefits — farm subsidies, student loans, mortgage tax breaks — don't recognize that, like the poor, they get something from government, too. That's because government gives money directly to poor people, but it gives benefits to the rest of us in ways that allow us to tell ourselves that we get nothing from government at all.

Find out more about the "submerged state" from this Washington Post article.

Tags: welfare applicants, subsidies, submerged state, poor families, government services

Five Key Lessons About the Welfare State

There is much more to the welfare state than meets the eye. A recent New York Times article details the five key lessons pinpointed by scholars that can be taken from past social welfare policy. TCF fellow Suzanne Mettler is cited in the article saying that welfare can be combatted by just blocking changes to current policy, such as what might happen with today's Republican controlled Congress.

Rather than directly assaulting the welfare state, those seeking to remake the American political economy have mostly outflanked it, relying heavily on tactics of gridlock-inducing policy drift to produce major changes in taxes, industrial relations, corporate governance, and financial regulation that have been highly beneficial to the most affluent.

Here is the entire article.

Tags: welfare, state spending, social welfare, congress

Patching Up the Social Safety Net

The "social safety net" has been a complicated concept since the 1960's, since many of its programs benefit the poor, but need funding support from the whole population. TCF fellow Edward Kleinbard offers one solution that is highlighted in his book, "We Are Better Than This," which is to "raise[ing] top tax rates to where they were in the Clinton era and pare[ing] some personal tax deductions that benefit the better off."

As demands on Social Security and Medicare grow over time, pressure will be enormous to cut benefits, mostly at the top. If Mr. Cohen was right, this will drain political support from the only universal programs we have left. They may become poor programs too.

Read the NY Times piece featuring Kleinbard.

Tags: social security, social safety net, medicare, medicaid

How 401(k) Accounts Widen Race/Ethnic Wealth Disparities

TCF fellow Harold Pollack takes a deeper look at the data that shows how race affects an employee's 401(k) savings account behavior. He says that although most employees contribute a similar amount to their accounts, minority workers were more likely to invest with caution, even if that means low rates of return.

In effect, these workers were using their 401(k) accounts as current savings reserves or as an emergency fund. As my writing collaborator Helaine Olen noted over email, these apparently foolish savings behaviors suddenly seem to make a lot more sense in the life-context of the people who are actually making these decisions.

Pollack's article from Washington Monthly can be accessed here.

Tags: savings accounts, minorities, fiscal policy, 401k

Middle-Age Blacks Have Less in Their 401(k)s Than Young Whites

There's more to a 401K savings account than meets the eye, particularly when looking at factors such as age and race. TCF fellow Harold Pollack explains the ways that intergenerational wealth disparities play a role in a worker's ability to save for retirement.

Differences in financial sophistication certainly play an important role. An improved system might help employees make better choices. Minority workers at this firm strongly favored safer asset classes such as money market funds that provide very low returns over the long-run. An opt-out system with simple, low-fee target date funds could be especially helpful.

Read Pollack's full article featured in The Washington Post.

Tags: wealth inequality, social security, retirement security, 401k

The Rocky Road to Taking It Easy

Will Social Security go bankrupt by 2030 like policy makers on both sides of the aisle have claimed? TCF fellow Jeff Madrick says think again. Madrick discusses Social Security reform and suggested reading for those looking to learn more about proposed approaches to the issue. One of the books reviewed by Madrick includes Falling Short: The Coming Retirement Crisis and What to Do About It, which was co-authored by TCF trustee Alicia Munnell.

In light of the retirement squeeze, Falling Short by Charles Ellis, Alicia Munnell, and Andrew Eschtruth makes fixing Social Security an urgent priority. It doesn’t propose a single plan but offers a mix of moderate proposals from which to choose to assure Social Security’s solvency, including tax increases and raising the early retirement age at which a worker can receive benefits from sixty-two to sixty-four. It argues that raising the retirement age itself above sixty-seven to seventy would, however, result in too great a reduction in benefits. A retirement age of seventy would mean a 20 percent reduction in benefits for the typical earner. The authors also propose ways to increase employer and employee contributions to 401(k)s and improve investment returns.

See Madrick's piece in The New York Review of Books.

Tags: social security, retirement security, retirement, debt


Social Insurance

Social Insurance

Compared to other advanced nations, America’s retirement security and health care systems offer weaker protections against risks we all face. The Century Foundation’s work focuses on ideas for strengthening Social Security, pensions, and health care – including steps for building on the Affordable Care Act.

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