Welfare systems

Canada

The Canadian social safety net covers a broad spectrums of programs, and because Canada is a federation, many are run by the provinces. Canada has a wide range of government transfer payments to individuals, which totaled $145 billion in 2006.^[7] Only social programs that direct funds to individuals are included in that cost; programs such as medicare and public education are additional costs.

Generally speaking before the Great Depression most social services were provided by religious charities and other private groups. Changing government policy between the 1930s and 1960s saw the emergence of a welfare state, similar to many Western European countries. Most programs from that era are still in use, although many were scaled back during the 1990s as government priorities shifted towards reducing debt and deficit.

Italy

The Italian welfare state's foundations were laid along the lines of the corporatist-conservative model, or of its Mediterranean variant. Later, in the 1960s and 1970s, increases in public spending and a major focus on universality brought it on the same path as social-democratic systems. These policies proved to be financially unsustainable, as public debt and inflation grew alarmingly, not allowing the welfare state to develop completely. In the 1990s, efforts moving towards decentralization and privatization were used in an attempt to cope with European pressures for economic stability, which were finally reached by 2001.

Sweden

Sweden has been categorized by some observers as a middle way between a capitalist economy and a socialist economy. Supporters of the idea assert that Sweden has found a way of achieving high levels of social equality, without stifling entrepreneurship. The viewpoint has been questioned by supporters of economic liberalization in Sweden.

Government pension payments are financed through an 18.5% pension tax on all taxed incomes in the country, which comes partly from a tax category called a public pension fee (7% on gross income), and 30% of a tax category called employer fees on salaries (which is 33% on a netted income). Since January 2001 the 18.5% is divided in two parts, 16% goes to current payments. And 2.5% goes into individual retirement accounts, which was introduced in 2001. Money saved and invested in government funds and IRAs for future pension costs are roughly 5 times annual government pension expenses (725/150).

United States

From the 1930s on, New York City government provided welfare payments to the poor.^[8] By the 1960s, as whites moved to the suburbs, the city was having trouble making the payments and attempted to purge the rolls of those who were committing welfare fraud.^[8] Twenty individuals who had been denied welfare sued in a case that went to the United States Supreme Court, Goldberg v. Kelly. The Court ruled that those suspected of committing welfare fraud must receive individual hearings before being denied welfare.^[8] David Frum considers this ruling to be a milestone leading to the city's 1975 budget disaster.^[8]

After the Great Society legislation of the 1960s, for the first time a person who was not elderly or disabled could receive a living from the American government.^[9] This could include general welfare payments, health care through Medicaid, food stamps, special payments for pregnant women and young mothers,and federal and state housing benefits.^[9] In 1968, 4.1% of families were headed by a woman on welfare; by 1980, this increased to 10%.^[9] In the 1970s, California was the U.S. state with the most generous welfare system.^[10] Virtually all food stamp costs are paid by the federal government.^[11]

Before the Welfare Reform Act of 1996, welfare was "once considered an open-ended right," but welfare reform converted it "into a finite program built to provide short-term cash assistance and steer people quickly into jobs."^[12] Prior to reform, states were given "limitless"^[12] money by the federal government, increasing per family on welfare, under the 60-year-old Aid to Families with Dependent Children (AFDC) program.^[13] This gave states no incentive to direct welfare funds to the neediest recipients or to encourage individuals to go off welfare (the state lost federal money when someone left the system).^[14] One child in seven nationwide received AFDC funds,^[13] which mostly went to able-bodied single mothers.^[11]

After reforms, which President Bill Clinton said would "end welfare as we know it,"^[11] amounts from the federal government were given out in a flat rate per state based on population.^[14] The new program is called Temporary Assistance to Needy Families (TANF).^[13] It also encourages states to require some sort of employment search in exchange for providing funds to individuals and imposes a five-year time limit on cash assistance.^[11][13][15] The bill restricts welfare from most legal immigrants and increased financial assistance for child care.^[15] The federal government also maintains an emergency $2 billion TANF fund to assist states that may have rising unemployment.^[13]

Millions of people left the welfare rolls (a 60% drop overall),^[15] employment rose, and the child poverty rate was reduced.^[11] A 2007Congressional Budget Office study found that incomes in affected families rose by 35%.^[15] The reforms were "widely applauded"^[16] after "bitter protest."^[11] The Times called the reform "one of the few undisputed triumphs of American government in the past 20 years."^[17] Critics of the reforms sometimes point out that the reason for the massive decrease of people on the welfare rolls in the United States in the 1990s wasn't due to a rise in actual gainful employment in this population, but rather, due almost exclusively to their offloading into workfare, giving them a different classification than classic welfare recipient.

Aspects of the program vary in different states; Michigan, for example, requires a month in a job search program before benefits can begin.^[11]

The National Review editorialized that the Economic Stimulus Act of 2009 will reverse the welfare-to-work provisions that Bill Clinton signed in the 1990s and again base federal grants to states on the number of people signed up for welfare rather than at a flat rate.^[14] One of the experts who worked on the 1996 bill said that the provisions would lead to the largest one-year increase in welfare spending in American history.^[17] The House bill provides $4 billion to pay 80% of states' welfare caseloads.^[13] Although each state received $16.5 billion annually from the federal government as welfare rolls dropped, they spent the rest of the block grant on other types of assistance rather than saving it for worse economic times.^[12]