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The Reluctant Welfare State by Bruce Jansson

The Reluctant Welfare State by Bruce Jansson

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  • 1. Chapter 12: Would President Barack Obama Reverse the Cycle of History?
  • 2. Selected Orienting Events 2.1.9
  • 3. Challenges for President Obama • Could a liberal president reverse the tide of history by contesting and surmounting conservative tenets? • Could he accomplish this even when tested by the most severe economic downturn since the Great Depression? • Could he successfully address other festering problems that preceding health care system? • Could he slow and reverse the dramatic inequality between social classes and races in the United States that had been made worse by the economic downturn? 2.1.9
  • 4. The Stimulus Plan—A Social Welfare Program in Disguise • Obama pushed American Recovery and Investment Act (ARRA), which came to be known as the Stimulus Plan when Obama signed the legislation in February, 2009. Its stated purposes were: • To preserve and create jobs and promote economic recovery. • To assist those most impacted by the recession. • To provide investments needed to increase economic efficiency by spurring technological advances in science and health. • To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits. • To stabilize state and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases. 2.1.8
  • 5. Programs and businesses funded by the stimulus plan 2.1.8
  • 6. Programs and businesses funded by the stimulus plan 2.1.8
  • 7. Programs and businesses funded by the stimulus plan 2.1.8
  • 8. Federal involvement in the economy • $290 billion in direct investments in banks • $700 billion in TARP funds • Up to $3.2 trillion in short-term loans, guarantees on bank debt and deposit accounts, and insurance against losses for Citigroup and Bank of America • Up to $2 trillion to provide cheap financing to investors to buy troubled mortgage securities and bonds backed by business and consumer loans • $83 billion in loans to GM and Chrysler and their suppliers, as well as $3 billion for the “cash for clunkers” program to subsidize consumers’ selling old cars to buy new ones • Roughly $750 billion for the Stimulus Plan—some of which financed investments in this list • $183 billion of direct investments in AIG 2.1.9
  • 9. Battle against Foreclosures • The Obama administration established a $75 billion program called the “Making Home Affordable Program” • As unemployment rates stayed above doubledigits through 2009 and well into 2010 • Some critics of Obama’s approach wondered why banks were not pressured to change the terms of mortgages 2.1.9
  • 10. Attacking Unemployment • The Stimulus Plan was the Obama administration’s at- tack against unemployment • It created jobs by giving states resources to avert layoffs in education and other service programs; by creating construction, research, and manufacturing jobs; and by extending and enlarging safety net programs • It also created jobs indirectly, in a so-called multiplier effect 2.1.9
  • 11. Obama’s Foreign Policy • Obama was particularly critical of President George W. Bush’s decision to invade Iraq • He argued to protect the nation from foreign threats • He made clear that he placed anti- terrorism high on his agenda, including defeating Al Qaeda. • Obama’s Afghanistan policies were opposed by many Democrats • Obama hoped to decrease the likelihood of terrorism by improving the image of the United States in the Muslim world 2.1.8
  • 12. Evaluating Obama’s First Year in Office • Obama had made excellent progress in fulfilling his campaign promises, according to PolitiFact.com • He had kept 91 of 502 promises and had made progress on another 285 • He convinced Congress to enact the second, $350 billion tranche of TARP funds • He permanently expanded EITC under the stimulus bill • Obama had made impressive gains in foreign affairs with the assistance of Hillary Clinton as his Secretary of State and Bob Gates as his Secretary of Defense • Obama had not, however, made sufficient progress in creating jobs and decreasing foreclosures. 2.1.3
  • 13. Rescuing Healthcare Reforms • In spring and summer 2009, Speaker Nancy Pelosi and top House Democrats made progress on legislation that eschewed a nationalized health system • It proposed that states regulate insurance companies • The House legislation anticipated rapid growth of Medicaid by 2014 • Health reforms narrowly passed the House in early November 2009 • Senate finally passed legislation on December 21 2009 • In spite of its imperfections, most health experts hailed the legislation as a positive development • Many Republicans threatened almost immediately to “repeal” the legislation 2.1.9
  • 14. Bank Regulations and Consumer Protections • The chairman of the House Financial Services Committee succeeded in drafting a 1,300-page bill in fall 2009 that had the authority to break up financial firms if they became so large that they could endanger the economy if they neared bankruptcy • It levied taxes on the financial industry to fund government takeovers. • It outlawed mortgage practices that enticed consumers • It established limits on banks’ trading of derivatives. • It regulated hedge funds and other private pools of capital. • It created a consumer protection agency 2.1.8
  • 15. The Great Recession Continues • Despite modest gains, the economic recovery remained stalled in summer 2010 • The national unemployment rate had barely dropped below 10 percent of workers • Housing foreclosures ran about 90,000 per month • Due to excessive red tape, Obama’s policies proved unable to prevent foreclosure • Commercial real estate also remained on the brink • Economic growth was delayed, as well, by the sharp decline in lending by smaller banks to small businesses • The American economy is vulnerable to economic developments in other nations in a global world • The Stimulus Plan had created many jobs according to the Congressional Budget Office (CBO) 2.1.9
  • 16. The Education Debate • Obama was determined to improve the nation’s schools: Despite the enactment in 2001 of No Child Left Behind (NCLB) • Obama and Arne Duncan, proposed to replace No Child Left Behind with an initiative known as Race to the Top • Race to the Top created more education reforms in secondary education in less than a year than • A new strategy for assessing teachers’ performance emerged in 2010: a “value-added evaluation.” 2.1.9
  • 17. Deferred Reforms • Obama had wanted to create new immigration, climate, and energy legislation during his first two years in office, but had to defer them to his second two years because of the sheer amount of time it took to enact health, financial, and stimulus measures. • Many Hispanics were angered that Obama had not yet tackled immigration reform. Many environmentalists were disappointed that Obama had not enacted major climate legislation 2.1.8
  • 18. Did Midterm Elections Presage Obama’s Downfall? • Polls showed that Obama and Democrats had lost significant support from moderates and independents • Republicans criticisms of the Stimulus Plan, TARP, and the rescuing of General Motors took a toll on Democrats’ popularity • Obama failed to receive much credit for his health- care and financial reforms • The 2010 election results were disastrous for Democrats • If unemployment remained near double-digit levels, Obama and the Democrats might suffer major defeats 2.1.9
  • 19. The oppression of vulnerable groups • Continuing oppression of poor • The Great Recession disproportionately harmed poor people • Women and their children bear the brunt of America’s poverty • The United States needs a policy geared to- ward helping female single heads of household to enter the social and economic main stream • Violence against women remains at high le- vels in their homes with uneven protection of them by the police as well as inadequate prosecutions of violent offenders 2.1.5
  • 20. The oppression of vulnerable groups • President Obama deferred action on immigration legislation • Many states decided to enact their own immigration legislation (e.g. Arizona) • Despite the successes of many persons who are covered by the Americans with Disabilities Act, many others live in institutional settings or cannot find employment because they lack the kinds of occupational and social services needed to mainstream them • Gays and lesbians still encounter virulent prejudice 2.1.5
  • 21. Policy Scoreboard • Troubled Asset Relief Program of 2008 • Race to the Top Education Fund of 2009 • Bailout of General Motors and forced sale of Chrysler Corporation • American Recovery and Investment Act of 2009 (the Stimulus Plan) with its many programs and tax cuts • Patient Protection and Affordable Care Act of 2010 as amended by the Senate • Dodd-Frank Wall Street Reform and Consumer • Protection Act of 2010 • HIRE Act of 2010 • Middle Class Tax Relief Act of 2010 2.1.8