Welfare (financial aid)

This article is about financial assistance paid by government organizations. For other uses of term welfare, see welfare.

For the means-tested benefit in the United Kingdom, see Income Support.

Welfare is financial assistance paid by taxpayers to people who do not support themselves. Some welfare is general, while specific and can only be invoked under certain circumstances, such as a scholarship. Welfare payments can be made to individuals or to companies or entities--these latter payments are often considered corporate welfare.

Individuals may apply for welfare due to disability, lack of education or job training, a low demand for unskilled labor, substance abuse, or an unwillingness to work. 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. 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.

The desired outcome and purpose of welfare varies. For welfare for the non-disabled, the purpose often is to prevent complete destitution. Welfare or assistance for the disabled, in contrast, does not eventually expect non-dependency, and the justification is more philosophical.

"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.

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

The amounts paid to recipients are typically modest, and may fall below the poverty line. Recipients must usually 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.

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. 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. One of the questions on the World's Smallest Political Quiz asks the reader whether or not he/she supports ending "corporate welfare"; this is one of the questions used to differentiate between different political ideologies (centrist, liberal, conservative, statist and libertarian).

Welfare in the United States

Main article: Federal assistance in the United States

See also: Social Security (United States)

Welfare services in the United States have traditionally been more limited than those in European nations. As one author writes, "compared with most other rich capitalist societies, the American welfare state is more market-conforming."

Welfare assistance of various kinds is provided in the United States partly by the federal government and partly by state governments. Federal welfare and public assistance spending is provided by federal government agencies, such as the US Department of Housing and Urban Development and the US Department of Health and Human Services, through special programs to recipients.

In the United States, personal welfare is normally given to households with children, often headed by single mothers. Since the landmark federal welfare reform act in 1996 (the Personal Responsibility and Work Opportunity Reconciliation Act), individual recipients are limited to a lifetime maximum of five years cumulative for receiving federal welfare of all types. Before 1997, United States personal welfare for households with children was first named Aid to Dependent Children, which was later called Aid to Families with Dependent Children (AFDC).. It was administered by the United States Department of Health and Human Services. In 1996-97 as part of welfare reform, AFDC was replaced by Temporary Assistance for Needy Families (TANF), which included more limits on the amount of time an individual or family can receive welfare. Since 1996, the Earned Income Tax Credit (EITC) has largely replaced AFDC as the primary anti-poverty program in the United States.

While not termed "welfare" in the USA, there are a variety of other personal transfer payments which are financial assistance programs; examples of such transfer payments are unemployment compensation (which, unlike welfare, is not means-tested and is prepaid by employees before job loss) and tobacco taxes, part of which are disbursed for hospital care for the needy (as well as the general public).

With regard to personal welfare for individuals without children, most U.S. states had been providing welfare or assistance benefits to single adults and childless married couples since the Great Depression, but the number of states doing so declined steeply during the 1990s, and many of the states that still provide such benefits use methods other than cash payments to render the assistance. For example, many California counties currently provide only vouchers. At present, only a few states — New Jersey, Utah and Minnesota among them — still provide cash benefits to poverty-stricken adults who do not have child dependents. These programs were often known officially by such names as Home Relief, General Assistance, or General Relief.

History of welfare

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. This system was substantially modified by the nineteenth-century Poor Law Amendment Act, which introduced the system of workhouses.

It was predominantly in the late nineteenth and early twentieth 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, 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 programme of providing work and stimulating the economy through public spending on projects, rather than on cash payments.

In the late twentieth 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 George W. Bush, have argued for a more work-based system of welfare provision.

See also

• Poverty
• Financial aid
• Aid
• Welfare fraud
• Welfare trap