A closer look at the American welfare

state with a W&M social policy expert

Christopher D. Howard - is the Pamela C. Harriman Professor of Government and

Public Policy at William & Mary. Howard recently spoke with W&M News about the
history and future of the American Welfare State. Photo by Stephen Salpukas
By Justin K. Thomas
March 10, 2017

Although Americas social welfare system may be lacking in relative size, it more than
makes up for it with its complexities, according to Christopher D. Howard, William &
Marys Pamela C. Harriman Professor of Government and Public Policy.

Howard has spent the past 25 years researching and teaching classes on the unique
aspects of Americas welfare state. He has found that while the United States system
is still significant in size, what makes it different from the rest of the world is the
implementation of specific strategies such as using the American tax code to drive
social policy in maintaining social programs at the federal level.

What is unusual about our system is our public-private mix, and the broad range of
policy tools we as a nation employ, he said. Our welfare state relies a lot on
programs that are funded by the government, but private or non-profit actors provide
the benefits. We create huge tax breaks so that companies will provide pensions and
health insurance to their workers. As far as policy tools, we do use social insurance,
which is a hallmark of the modern welfare state. But we as a nation also use tax
expenditures or social regulations such as minimum wage laws or policies such as the
Family and Medical Leave Act more than most other countries.

History of the welfare state

According to the Disability History Museum, the welfare state in America as a concept
goes as far back as early as the 1600s when the United States was just a combination
of a few settlements under the rule of Great Britain. But the welfare state today is
attributed to 19th century Germany, according to Howard.

Germany is usually credited with being the first modern welfare state, he said. The
countrys government pioneered social insurance for the sick and elderly in the late
1800s, under [Otto Von] Bismarck as the nations chancellor. Countries around the
world have cared for their poor long before this time, usually at the local level.
However, the model welfare state is usually defined by actions taken at the national
level, and that started with Germany.

For the United States, that began in 1935 with the passage of former President
Franklin D. Roosevelts Social Security Act under his New Deal for America,
according to the Library of Congress.

Although the reasoning behind the Social Security Act of 1935 was to provide
monetary assistance to Americans for the long-term, Roosevelts real aim was to try
and provide immediate relief for Americans adversely affected by the Great
Depression, said Howard.

There were a couple of programs the Roosevelt administration immediately

implemented, he said. What was then called Old Age Assistance was meant to
provide cash benefits to the nations poor elderly which we now know as Supplemental
Security Income. Secondly, the Roosevelt administration put into effect a program
called Aid to Dependent Children which is what we would call today, welfare. Its
intentions were to help provide assistance to children of poor single parent families.
And due to the millions of people who were without jobs, the creation of unemployment
insurance was another immediate policy that the Roosevelt administration
implemented.
Since its inception, the American welfare state has gone about many changes. Those
changes include the increase in funding for federal programs and subsidies given to
employers throughout the country, according to Howard.

The way to think about the growth of the American welfare state is like this, he said.
Weve had two big bangs. The first beginning in the 1930s and the second in the
mid-1960s. Social Security starts out in 1935 as a small program, but it gradually and
deliberately expands. And as time passes we see a big jump in private companies
offering their own types of social safety nets.

Those safety nets according to Howard were the federal governments creation of
disability insurance and the levying of substantial tax breaks for employers who offered
their employees private retirement pensions and private health insurance.

Taxes and social policy

Although many social and political science experts study the history of welfare,
Howards research is unique among that of social scientists in that it has focused on
the relationship between the tax code and the welfare state.

The tax code is used to make social policy, he said. Often there are programs or
policies like tax expenditures, or what some people would call tax breaks or tax
loopholes. On many occasions, these small amendments were slipped into larger tax
legislations. And by doing so, social policy is created without any real deliberate
consideration by Congress or the president.

As to whether or not these amendments work, Howard said that the American
government does not necessarily track the overall effectiveness of these tax breaks,
so the data is limited.

Most economists will tell you that an ideal tax code has few if any tax expenditures,
he said. These tax breaks often reward people for actions they would have taken
anyway such as purchasing a home, lead people to over-invest in tax-favored goods
and provide benefits to the most affluent. Interestingly, the U.S. government rarely if
ever evaluates how well these tax expenditures work. What we do know comes
largely from economists outside of government, and they are usually pretty critical of
these tax breaks.
However, Howard does note that there is a particular case that the tax code is not
used to drive social policy.

The Earned Income Tax Credit is a notable exception, he said. The benefits go
exclusively to low-income families, and the tax credit rewards work, not the purchase
of a specific good like health insurance or housing.

Howards research has found that welfare systems of other countries around the world
try their best to adapt to the changing aspects of their societies. These changes could
be the nation's infrastructure diverging from manufacturing to technologically-based
jobs or a shift in social norms such as having an increase in two-income families.
However, some nations have had difficulties adjusting to these changes, according to
Howard.

In [the United States], for instance, we havent moved very quickly to help families
where both parents work outside the home, said Howard. The United States is one of
the very few countries in the world without paid parental leave, and our child care
policies leave a lot to be desired. Were also not moving very decisively to deal with the
gradual erosion of health and pension benefits offered by private companies.

The future of the welfare state

As to the outlook of the American welfare state, Howards research indicates that when
it comes to the social welfare system of any nation, there will always be the need for
possible improvements. The reason behind this is because, at some point in their life,
many Americans may have to use one or more of the nations social programs,
according to Howard.

Virtually [every American] will benefit at some point in their lives, and will use the
nations social programs, he said. For example, as a child, you might benefit from
Medicaid or Food Stamps, and as a parent, you might take advantage of the Child Tax
Credit or the Earned Income Tax Credit.

And what I try and teach my students is for them to objectively look at what is the
most pressing and least pressing issues concerning our current social welfare system.
Whether that be healthcare as a whole or the benefit formulas that the government
uses to calculate whats distributed to people applying for aid, there will always be
room for improvement.
Howard recently finished a guide to research methods for undergraduates, Thinking
Like a Political Scientist: A Practical Guide to Research Methods, which will be
published by the University of Chicago Press in March.