Welfare State

The role of welfare within our society has always been controversial. This
problem emphasizes the need to understand the roles of variable factors when
pertaining to the subject of welfare within our society. The proposed analysis
will address the phenomenon of welfare assistance and several factors which may
contribute to the increase or decrease of welfare assistance to the poor in 4
ways: (1) by defining major concepts and any other concepts about which there is
likely to be misunderstanding (2) by further examining the past history
pertaining to the subject of welfare assistance within the United States; (3) by
developing the formulation of a hypothesis which will provide for an explanation
of welfare; and finally (4) determining whether or not the benefits of welfare
assistance outweigh the cost. Ultimately, the purpose of this research analysis
is to investigate variable factors that may contribute to the increase or
decrease of welfare assistance. This cost benefit analysis is an attempt to
explain the tentative assumptions of others pertaining to the subject of
welfare, in order to determine and explain the relationship of welfare to the
economic cost and benefits. Cost-Benefit Analysis Before welfare assistance can
be analyzed there is a need to define the terms that will be used. Policies like
welfare assistance are worthwhile only if the benefits to society are greater
than the costs. When choosing among a set of policies, the policy with the
greatest net benefit (benefit over cost) should be chosen. Hence, this is where
the term cost-benefit analysis comes from. Cost-benefit analysis is a technique
for determining the optimal level of an economic activity such as welfare. In
general, an activity such as welfare assistance should be expanded as long as it
leads to greater benefits than costs. In purely economic terms, does the benefit
of welfare assistance justify the costs of welfare assistance? (Mishan 13) Why

Use Cost-benefit Analysis? Since 1981, government agencies have been required to
perform cost-benefit analyses called Regulatory Impact Analyses (RIA's) for all
major regulations within the United States. Many statutes require that
cost-benefit analysis be undertaken and the results be reported to Congress (Mishan

2). Cost-benefit analysis can also be a good way to measure how effective a
policy such as welfare assistance has been, or to find ways in which a program
can be improved. But, regardless of how it is used, the preparation of a cost
benefit analysis provides a useful framework for consideration of the possible
effects of a proposed policy. Past History of Welfare Assistance One of the
first welfare programs to provide income support to the poor was a federally
backed plan called the Aid to Dependent Children (ADC) program. This legislation
was introduced with the establishment of the Social Security program during the

Great Depression. (Rowley, and Peacock 43) The ADC program which had started
nearly sixty years ago is now better known as the Aid to Families with Dependent

Children (AFDC) program, which provided a federal entitlement to economic
support for single parents with children younger than 18 who fell below a
threshold of assets and income (Rowley, and Peacock 44). Federal guidelines
allowed for each state to set its own predetermined needs standards for families
of different sizes and living locations. Both the federal government and the
states supplied funding for the AFDC program (Rowley, and Peacock 50). In 1996

Congress adopted the Temporary Aid to Needy Families (TANF) program by enacting
the Personal Responsibility and Work Opportunity Reconciliation Act which
ultimately changed the structure of federal financial assistance to the states
thereby abolishing the AFDC program. Another social welfare program was the

Supplemental Security Income (SSI) program. Congress established the

Supplemental Security Income program in 1972, with payments beginning in January

1974. It replaced the former Federal-State programs of Old-Age Assistance (OAA),

Aid to the Blind (AB), and Aid to the Permanently and Totally Disabled (APTD)(

Myles, and Pierson 9). An individual may have qualified for payments on the
basis of age, blindness, or disability. Any person aged 65 or older was also
eligible. President Richard Nixon enacted the Supplemental Security Income
program with the signing of the Supplemental Social Insurance Act. The benefits
under this program were originally targeted to the elderly who did not qualify
for social security and the blind and disabled whose income and assets fell
below the specified thresholds. A third major welfare assistance program is the

Medicaid program. The Medicaid program is a health care support program targeted
toward the poor. Medicaid was originally suppose to provide the same health care
to the poor as privately insured Americans received with their health care
programs. (Myles, and Pierson 9) The