POSP final

What is social security

Kind of a government pension plan, you get different benefits depending on how much you pay in over your working life

Under what legislation was the Social Security Act created?

Social Security Act of 1935

Who administers the social security?

The Social Security Administration

How is social security funded?

Payroll taxes called the Federal Insurance Contributions Act tax (FICA) or Self Employed \n Contributions Act Tax (SECA)

What percentage obligations do people owe to social security and medicare?

Social security is 6.2%/6.2% employee employer and Social Security is 1.45%/1.45% employee employer

Title I Social security act

Grants to states for old age assistance

Title II Social Security Act

Federal Old-Age, Survivors, and Disability Insurance Benefits; establishes the Federal Reserve account used to pay for Social Security benefits and gives the Secretary of the Treasury the authority to invest excess reserves from the account (SS Trust Fund)

Title III Social Security Act

Grants to states for unemployment insurance

Title IV Social Security Act

Grants to states for aid and services to needy families with children and for child assistance programs; raises eligibility age for dependents to 18; Temporary Aid for Needy Families (TANF

Title VIII Social Security Act

Establishes the payroll tax; removed in 1939 amendments and placed in the tax code as the FICA tax

Title XVIII Social Security Act

Medicare

Title XIX Social Security Act

Medicaid

Title XXI Social Security Act

SCHIP

Who developed the policy proposal that eventually became the basis for SS?

Edwin Witte

Who popularized the idea of direct $200/month \n federal payments to the elderly who weren’t working?

Frances Townsend

What was FDR’s goal for the Committee on Economic Security?

Social Security, Unemployment, and national healthcare

What did the Committee on Economic Security create under FDR’s direction?

A state-based unemployment insurance plan and the Social Security Act of 1935

Steward Machine Company v. Davis (1937)

SCOTUS justified SSA under “promoting general welfare” clause of the constitution

Helvering v. Davis (1937)

The SSA is constitutional under Congress’s taxation \n powers

Flemming v. Nestor (1960)

Established that no one has a fundamental right to SS benefits either by citizenship or contract

Weinberger v. Wiesenfeld (1975)

SSA must treat widows and widowers equally

When was the SSA implemented?

Payroll deduction began in 1937, benefits began payment in 1940

1950 SSA amendment

Expanded benefits to the self-employed, railroad workers, domestic labor (working at least 2 days a week for the same person), non-profit workers

1954 SSA amendment

Added hotel workers, laundry workers, all agricultural \n workers, and state and local government employees

What are Cost of living adjustments (COLAs)?

Social Security payments are adjusted to inflation if CPI rises more than 3% in a year (passed 1972 started 1975)

Why were COLAs instituted?

Congress used to make political decisions to increase \n benefits, often beyond the inflation rate, and Nixon favored adjustments that were both more modest and more regular

What other than cost-of-living adjustments did the COLAs Act of 1972 do?

Took over administration of state assistance programs for the elderly and disabled and instituted a minimum benefit that applied to every state under a new federal program called Supplemental Security Income (SSI)

Who gets social security benefits?

3 categories: retired individuals and some family members, disabled persons and some family members, and survivors (factors in divorce status and timeline, but no longer differentiates widows and widowers)

How long do people need to work to earn SS benefits?

A worker must accumulate at least 40 quarters of \n work in "covered employment" and must earn at least $1,470 in a quarter (in 2021) for it to count

When can workers start claiming benefits?

62 with sufficient quarters, though a penalty is incurred for taking benefits before retirement age (which is 67)

What do payment amounts depend on?

Average of the person's highest 35 years of "adjusted" or "indexed" earnings (AIME)

Why is SS facing insolvency?

As Baby Boomers retire, expenses will exceed receipts and eventually all trust fund income.

Possible reforms to avoid SSA insolvency?

Lift the payroll ceiling to tax all income, increase FICA tax, raise the retirement and/or eligibility age, means test benefits, change the COLA, reduce benefits, average in more working years

Class-based critiques of SSA

SS is a regressive tax since high earners pay a lower percentage of their total income because of the income caps

What is a pension?

A fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments

What is a defined benefit plan?

A fixed sum is paid regularly to a person

What is a defined contribution plan?

A fixed sum is invested that then becomes available at retirement age (the 401(k) is the most common)

How does the government subsidize pensions?

Typically a tax deferred savings vehicle that allows for the tax-free accumulation of a fund for later use as a retirement income

Where does the concept of pensions date back to?

Ancient Rome, tied to military service

What was the first example of modern pensions in the U.S?

Federal civilian pensions, that were first offered in 1920 under the Civil Service Retirement System as part of progressive efforts to professionalize public service and defang the spoils system

When did pensions become common in America?

Became common fringe benefits during WW2 thanks to fringe benefits

How do tax systems increase desirability of defined contribution plans?

Employees can make tax-deductible contributions to defined contribution plans but not to defined benefit plans; The Omnibus Budget Reconciliation Act of 1987 reduced the amount of funding that could be put into a pension plan that was “overfunded” (more assets that liabilities). This reduced the amount that could accumulate in a defined benefit plan earning the tax-free rate of return, reducing the tax advantage of defined benefit plans relative to defined contribution plans

Why do only 33% of workers have a pension plan?

They work for small businesses that don’t offer them, they lack education on their importance or how to use them, or they prefer the money now

What are Roth IRAs?

A retirement plan funded by post-tax income that is generally not taxed upon distribution. Growth in the account is also tax-free

What crisis is facing public pension plans?

They are chronically underfunded, meaning the gap between the cost of pension benefits that states have promised their workers and what they have set aside to pay for them

What is “family policy”?

Answers the questions: When does government involve itself with either how the family works or what the family looks like? And what policies does government adopt to meet those goals?

What are the two main types of family policy:

1) Policies related to the economics of care like child care, family leave, or elder care 2) Policies related to the composition of the family like divorce laws, non-traditional families, and abortion

What is the child care burden?

Child care is very expensive and cuts into family budgets. It also keeps women out of the workforce.

When did work-family issues emerge?

Came as women started working outside the home, mainly as a product of the Industrial Revolution

When did work-family balance become an important issue?

By the 1960s, it was commonly realized that it was difficult for working mothers to coordinate work and family demands -- resulted in second-wave feminism “conservative feminist” counter-movement among women like Phyllis Schlafly that denounced women breaking from traditional family, work, and gender roles

Why didn’t government do much to address work-family issues post-1960?

This issue was hyper-partisan and ideological early on and any policy became a protracted fight, but employers responded to growing concern

What early form of child-care emerged during the industrial revolution?

“Day nurseries” - a common kind of childcare where local, charitable institutions cared for children whose mothers were compelled to work \*if\* their husbands had abandoned them, were ill, disabled, or dead

Why were day nurseries controversial?

1) Social workers blamed them for weakening the mother-child bond by encouraging women to work. Instead advocated for welfare policies to keep women at home

2) Public education supporters advocated for putting children in school instead

3) labor unions opposed them because it increased the labor pool

What established the Emergency Nursery School (ENS) program?

The Works Progress Administration

What was the Emergency Nursery School (ENS) program?

A make-work program for teachers during the Great Depression that provided free child care to children of any background

What was the Community Facilities Act of 1941 (“Lanham Act”)?

WW2 forced women to work, and this program refunded the ENS to allow them to do so in some “high-impact areas

Smith v. Commissioner of Internal Revenue (1939)

Held that child care expenses were not deductible as a business expense for working parents under existing law

What did the first child care tax credit do?

The 1954 tax credit allowed married couples earning up to $4.5k/yeah (about $46k in 2021) to deduct up to $600 for child care for a child under 12 from their income taxes, provided the services were needed “to permit the taxpayer to hold gainful employment.”

Who does the Child and Dependent Care Tax Credit (CDCTC) of 1976 apply to?

1) Dependents under thirteen for whom a dependency exemption is claimed on taxes may be claimed \n 2) Dependents of any age who share the same principal place of abode as the taxpayer and are physically or mentally incapable of taking care for themselves \n 3) Spouses who share the same principal place of abode as the taxpayer and are physically or mentally incapable of taking care for themselves

4) Certain dependent children of divorced parents

How does the Child and Dependent Care Tax Credit (CDCTC) of 1976 work?

The credit is a percentage, based on the taxpayer’s adjusted gross income, of the amount of work-related child and dependent care expenses the taxpayer paid to a care provider

What is the child tax credit?

A $500-per-child nonrefundable credit to provide tax relief to middle- and upper-middle-income families that was, over time, expanded poorer families and increased amount -- expanded under American Rescue Plan to be fully refundable amounting to $3,000 for kids 6-17 and $3,600 for under 6

What are the two largest federal programs that currently provide free or subsidized child care?

CDBG and Headstart

What is The Child Care and Development Block Grant (CCDBG)?

Largest source of federal funding for child care assistance and funds state-administered child care subsidies for ow-income families

Why isn’t CCDBG very effective?

Most states do not fully comply with most aspects of the law. And states often put tighter restrictions in place, especially on work requirements and income/wealth.

What is Head Start?

DHHS program launched in 1965 to provide comprehensive early childhood education, health, nutrition, and parent involvement services to low-income children and families

What is the Family and Medical Leave Act of 1993?

Mandates that firms with 50+ employees within a 75 mile geographic radius permit those who are eligible to take up to 12 weeks of unpaid leave per year to care for family members and return to the same or equivalent position

Who is covered under the Family and Medical Leave Act?

Applies to immediate family only—newborns; newly adopted or placed foster children; a child, spouse, or \n parent with a serious health condition; employee’s own serious health condition, including maternity-related \n disability and prenatal care

What is the main economic tool that we have to \n incentivize family care of elders?

The Child and Dependent Care Tax Credit

What are the general options for elder care?

1) Aging in place alone or with family, not always safely \n 2) Independent living facilities for able-bodied seniors \n 3) Assisted living facilities for able-bodied seniors with some needs \n 4) Home care either at home or in a residential facility

5) Continuing care community that transitions from independent living to skilled nursing \n 6) Nursing home/skilled nursing facility

What are the main deterrents to seniors using Medicaid for elder care?

1) Frozen Assets Test (a single Medicaid applicant must have income less than $2,382 per month and may keep up to $2,000 in countable assets to qualify financially)

2) Frozen personal needs allowance (PNA) means state can garnish any income

3) Admissions discrimination: rates are lower for medicaid recipients

4) Estate recovery

Historically, what aspects of marriage have states regulated?

1) Number of people – limited at 2, though most states didn’t regulate this under law until Mormonism in the 1850s \n 2) Interracial marriage – typically banned from the colonial era onward \n 3) Sex of spouses – regulated in reaction to 1990s developments \n 4) Family status – limiting what level of cousin one can marry \n 5) Competency – typically banned under “idiot laws” through the 1960s

6) Age – setting a minimum age for marriage, which is typically now 18, though 30 states allow marriage at 13 with the consent of parents

Loving v. Virginia (1967)

Struck down state anti-miscegenation laws, which banned both inter-racial marriage and inter-racial sex

Where did privacy come from?

1. Buck v. Bell (1927) – no privacy right exists
2. Griswold v. Connecticut (1965) – privacy exists
3. Loving v. Virginia (1967) – privacy exists in marriage
4. Eisenstadt v. Baird (1972) – privacy extends outside of marriage

Roe v. Wade (1973)

Abortion is a privacy right

Webster v. Reproductive Health Services (1989)

Abortion as an equality issue, but restrictions okay

Planned Parenthood v. Casey (1992)

Undue burden standard for abortion restrictions

Bowers v. Hardwick (1986)

Constitution allows sodomy laws

Lawrence v. Texas (2003)

Overturned Bowers v. Hardwick and established at sodomy laws violate personal liberty in the Due Process clause of the 14th amendment

Defense of Marriage Act (1995)

Banned federal recognition of same-sex marriage by limiting the definition of marriage to the union of one man and one woman, and it further allowed states to refuse to recognize same-sex marriages granted under the laws of other states.

United States v. Windsor (2013)

DOMA portion restricting marriage to only opposite-sex couples is unconstitutional violate of 5th Amendment due process clause

Obergfell v. Hodges (2015)

Same-sex marriage guaranteed under both 5th \n Amendment due process AND 14th Amendment \n equal protection clause.

When did the American government begin regulating divorce?

Following the secularization of marriage in the 1800s

What kinds of laws around divorce were common before the 1970s?

Fault divorce laws: One spouse had to show “fault” to legally file for divorce, including: abandonment, cruelty, incurable mental illness, or adultery

What are no-fault divorce laws?

Allows divorce without an allegation or proof of fault of either part

What does homeownership signify?

The American Dream -- an idealized part of successful middle class living

How does buying a house work?

1. Buyers get a mortgage with a fixed interest rate -- the value of the loan depends on your income. Then, people house hunt and put in an offer. Mortgages usually last 30 years.

Stuff to know about evictions

They’re a huge problem for the poor, but banning them messes up the market

What is gentrification?

The process whereby the character of a poor urban area is changed by wealthier people moving in, improving housing, and attracting new businesses, typically displacing current inhabitants in the process

Positive sides of gentrification?

Increase in housing stock, business expansion (especially for small business), lowers unemployment, lower crime rates, increase in property values (benefiting \n remaining landowners and local government via taxes), tends to create racially and economically integrated neighborhoods

Negative sides of gentrification

Shifts poorer people elsewhere where housing may also be in a crunch. And for some, changes the ”character” of neighborhoods, especially transitioning very segregated Black (and sometimes Hispanic) neighborhoods into not that

What local zoning laws do cities focus on?

Redeveloping toward apartments or multi-unit housing where height and affordability are main concerns

What local zoning laws do suburbs focus on?

Maintaining single unit housing on larger lots

Urban housing crisis

Cities tend to have adequate housing numbers, but 1) price problems with all housing, 2) quality problems vis-à-vis older ungentrified housing, and 3) single unit \n family home shortages (but enough apartments

Suburban housing crisis

Suburbs tend to have too little housing, both single unit family homes and especially apartments. And among single units family homes, the affordability problem is \n especially acute

Rural housing crisis

Rural communities tend to have too much housing and depressed prices, but some do have problems with adequate rental housing.

What laws enforced housing segregation?

Local laws

What is the National Housing Act of 1934 do?

1) Formed the FDIC Corporation, which insured individual accounts and loans from bank failures

2) Created HUD which allowed the Home Owners' Loan Corporation to create "residential security maps," outlining the level of security for real-estate investments in 239 cities

3) Redlining

Shelly v. Kraemer (1948)

Banned racial covenants, which was a clause in the deed of a house that said it could never be sold to a black person

How did the National Housing Act of 1934 encourage home ownership?

Financially encouraged banks to charge lower interest rates, move deposits from 50% to 20%, and extend typical mortgages to 25-30 years, thus setting the foundation for the entire industry and furthering home ownership

What was the Housing Act of 1937?

Created 160K units of public housing for poor to working class persons, all segregated, eventually caused white flight