2. Who benefits from social insurance
programs?
• Participation is compulsory
and nearly universal
• OASDI (Old Age, Survivors,
and Disability Insurance)
• OASDI provides cash to
people who have a work
history and their family
• Participants are the elderly
or their survivors and
people with disabilities
3. Who benefits from welfare programs?
• Eligibility is categorical
• Being poor is not
sufficient
• Many eligible people
choose not to participate
• TANF (Temporary
Assistance for Needy
Families)
• TANF provides cash to
poor people with children
and poor pregnant
women
4. Program Finance: Social Insurance
programs are funded by dedicated
taxes, welfare programs are not
OASDI is financed by
the FICA Tax, a
dedicated tax on
earned income
TANF is financed by
General Revenues, a
combination of many
different taxes
5. Social Insurance programs provide
higher benefits to higher income groups
• OASDI benefits are
higher for higher
income groups
• The benefit received is
a function income and
the amount of FICA tax
paid
• People who earn more
pay more FICA tax and
receive larger benefits
6. Welfare programs are means-tested
and provide benefits to people based
on need
TANF benefits are
inversely related to
income, the less
money you have the
more TANF support
you are eligible to
receive
7. Program Administration
• Social insurance
programs are
administered at the
national level of
government
• Welfare programs
are administered at
the state and local
level of government
8. Feeling “Entitled”
Grandma and
Grandpa “earned”
their social insurance
benefits by working
and paying dedicated
taxes
There is no shame or
stigma associated
with receiving Social
Security benefits
9. Feeling Shamed and Stigmatized
Welfare recipients
are stigmatized for
receiving welfare
benefits
Welfare programs
are politically
unpopular
10. Social insurance
• Who benefits?
• Almost everybody, because
participation is compulsory
• Finance?
• Dedicated taxes
• Means-tested?
• No. In fact, higher income people
tend to receive higher benefits
• Administration?
• National government
• Popularity?
• Widespread popularity
• Participants are not stigmatized
Welfare
• Who benefits?
• A narrowly defined group of
needy people
• Finance?
• General revenues
• Means-tested?
• Yes. You must be needy to
receive benefits and benefit
generosity is related to need
• Administration?
• State and Local governments
• Popularity?
• Controversial
• Participants are stigmatized
