The Welfare State at Risk
Brand, H.
The welfare state is about security. It is about employment security, income security, and communal stability. It is premised on macro-economic policies designed to mitigate the business...
...writes the Commission on the Future ofWorker-Management Relations...
...Quite the contrary: aid to the poor was to disappear along with poverty...
...Real long-term rates ran 51/2 percentage points higher than their earlier postwar averages—a huge increase by any historical standard...
...close to one-quarter reported being unemployed (looking for work), the remainder withdrew from the labor force (they were too discouraged or regarded themselves as being too old to find new jobs...
...Mere paper values...
...The social insurance system was therefore placed on a pay-as-you-go basis, beginning in 1939...
...Private savings and investment would presumably be restored to whatever their "normal" level is...
...and required notice of plant closings and mass layoffs...
...30, 1995, p. 87...
...It constitutes a grave threat to the welfare state...
...The line is fixed by a household budget composed by the Department of Agriculture forty year ago for "emergency situations," and subsequently adopted by the Social Security Administration to measure the extent of poverty...
...Such wealth is firmly anchored in the economic pre-eminence of American corporations...
...This of course added to the interest burden of the public debt (or the size of the deficit...
...And inflation exceeded projections...
...Moreover, part of the debt has been incurred to develop human and physical capital— assets whose wealth-producing value is bequeathed to future generations...
...Since the Johnson administration's War on Poverty, government efforts have been confined to financial support of education and training of displaced and underpaid workers—that is, to the supply side of the labor market...
...Its line of attack is radically focused on these programs, which it proposes to curtail or tax or cap...
...Proponents of the competitive model have therefore advocated the reduction of benefits, stricter eligibility rules, and so on...
...No wonder...
...Economic theory suggests the appropriate remedy: increased unemployment...
...The Center on Social Welfare Policy and Law reported in June 1994 that AFDC and food stamps together ran below the poverty line in every state of the union...
...Had the unemployment recipiency rate and benefit payments in the early 1990s been at the same level as in the mid-1970s, "about $20 billion more in...
...In earlier decades, Congress had encouraged the states to expand program coverage, pay better and longer benefits, and reduce harsh disqualifications...
...There were gainers of course, but it is clear that workers in the 1980s were far more liable to experience poverty than in the 1970s...
...and an outlandish buildup of U.S...
...A larger number of elderly persons would be exposed to the dictates of the labor market...
...The drop in employment continuity was even more pronounced in the lowest wage quintile, where only 30 percent held full-time, year-round jobs during the 1980s, as against 51 percent in the 1970s...
...but its steep rise cannot be attributed to social expenditures...
...The implied agenda of the commission in effect parallels the (likewise implied) agenda of the sponsors of the Balanced Budget Amendment to the Constitution: Social Security would become just another discretionary item in the budget rather than an enforceable right, subject only to the eligibility of the claimant...
...It arose from certain political constellations, forged by economic crisis, war, and the militancy of the left...
...It is, as Robert Kuttner has written, "an ideological assault, masquerading as fiscal prudence and generational compassion...
...Poverty rates among them declined precipitately...
...Since the mid-1970s, when the deregulation of labor markets began, employment policy has ceased being a public priority...
...military power...
...It is worth recalling that during the immediate postWorld War II years, the U.S...
...Hence, a "crisis" in Social Security, which, was resolved by various, relatively minor adjustments...
...The unemployed worker need merely accept the wage that results from competition among jobseekers, or between employers and jobseekers, to obtain work Were the labor market to operate according to the competitive model, full employment would be achieved, or nearly so...
...The commission claims that, as net savings have contracted, so has the growth rate of net investment— the part that exceeds the replacement of capital, paid for by depreciation set-asides...
...big tax cuts billed as incentives to entrepreneurship and investment, which had no such effect...
...True, some of the commission's proposals are progressive...
...The debt had declined as a percent of GDP throughout the post-World War II period...
...the Family and Medical Leave Act...
...The share of aggregate household income of the top quintile has consistently expanded over the past two decades, to 48.2 percent in 1993...
...388 • DISSENT...
...They do not secure "equality of bargaining power between employers and employees," as stipulated by Congress under the Wagner Act of 1935...
...Thereafter, driven in part by the growing federal deficit and the deteriorating unemployment insurance trust fund, Congress imposed restrictions that resulted in significantly reduced benefits...
...In 1992, 5 6 million workers, all of whom had at least three years of tenure, suffered "displacement...
...Justice If the welfare state is at risk, so is social justice...
...Another 13 percent of returns reporting income between $50,000 and $100,000 received 22 percent of all interest...
...AFDC, like Food Stamps, would be converted into block grants to the states...
...6 See Center on Social Welfare Policy and Law, Living at the Bottom: An Analysis of 1994 AFDC Benefit Levels...
...q Notes I See T. Smeeding et al., "Patterns of Income and Poverty: The Economic Status of Children and the Elderly in Eight Countries," in John L. Palmer et al., eds., The Vulnerable, (Washington: The Urban Institute Press, 1988), Table 5.11, p. 111...
...by 1992, the differential had risen to 83 percent...
...Block grants for the relief of need imply a denial that poverty is a national problem, arising from causes rarely associated with purely local conditions, and requiring national approaches, federal funds, and federal standards...
...3 Edward J. Harpham, "Fiscal Crisis and the Politics of Social Security Reform," in Anthony Champagne and Edward J. Harpham, eds., The Attack on the Welfare State (Prospect Heights, Ill.: Waveland Press, 1984), p.22...
...There can be no equality or opportunity, the first essential of justice in the body politic, if men and women and children be not shielded in their lives, their very vitality, from consequences of great industrial and social processes which they cannot alter, control, or singly cope with...
...budget deficit reduction a top priority...
...In text and chart the commission misleadingly links entitlements with the deficit and interest on the public debt...
...investment abroad in plant and equipment (a major stimulant of exports), have been accompanied by ceaseless insistence upon competitiveness...
...Insecurity and Unemployment "Slack labor markets and poverty tend to go hand in hand," writes Isabel Sawhill.' It is an argument for full employment...
...Moreover, and this speaks to the long-term deterioration of welfare state support for the poor, "current AFDC benefits are worth less than 1975 benefits in every state...
...earn markedly less than comparable workers in Western Europe...
...The commission states that budget deficits "consume private savings that are needed for domestic investment, productivity, and job creation...
...The average duration of unemployment, indicating the difficulty or ease in obtaining work, has similarly been high compared with earlier phases of the business cycle...
...Old people were thus definitively liberated from the dictates of the labor market...
...Interest paid on the debt, averaging around 8 percent of total unified budget outlays in the 1970s, rose to more than 15 percent by 1993...
...Union inability to maintain membership and win National Labor Relations Board (NLRB) elections is due in large part to the increasing difficulty of getting the board to hold an election, and to employers' challenges to the election process...
...General Accounting Office, Deficit Reduction: Experience of Other Nations, December 1994, p. 126...
...The severity of the direct impact of foreign trade on jobs and wages in the United States is in controversy among economists...
...and the proportion of the unemployed entitled to benefits also fell...
...two-thirds of such households had incomes of $25,000 or less...
...Welfare state programs were not to be dependent upon government revenues and their increment...
...In a disturbing speech delivered in September 1994, Secretary of Labor Robert Reich stated that fifteen years earlier, a male college graduate earned 49 percent more than a man with only a high school degree...
...We could do worse than using the following words from President Woodrow Wilson's first inaugural address as a guide to such resistance: The first basis of government is justice...
...For the United States, the budget deficit rose from 0.5 percent of the GDP in the 1960s to 2.1 percent in the 1970s...
...The link between these variables and the deficit is dubious but politically potent...
...Between . . . 1972 and 1992, the combined value of AFDC and food stamps for a threeperson family dropped 26 percent on average...
...The distribution of interest received from Treasury instruments likely parallels that of all interest...
...The politics surrounding these allocational and distributional functions determine the limits of "the imperialism of the market" (the expression is the late Arthur Okun's) The huge deficit weakens those functions, although not for the reasons usually advanced...
...That is not an argument against retraining...
...The campaign to make labor markets—including those internal to the larger companies—more "flexible" is at the core of the decline of the U.S...
...labor, as impairing the "earned right" of income support, which only the social insurance principle would safeguard...
...The rate of unemployment has run mostly above 6 percent in the years since the early 1970s...
...The argument recalls the myth of a capital shortage propagated by business spokespeople and 384 • DISSENT Welfare State respectable economists during the 1970s, and later rejected in authoritative essays published by the Federal Reserve...
...By 1994, the ratio had nearly doubled to 52 percent of a much larger GDP...
...American capitalism and its beneficiaries are doing better than ever...
...Preventing such initiatives, however, has been an aim of Republican administrations since the early 1980s, and the deliberate enlargement of the deficit a way of achieving it...
...The evolution of Social Security into a retirement wage would cease and be reversed...
...External sources of funds account for a much smaller share of total corporate funds (17 percent in 1993...
...Deregulation aims at the elimination of "rigidities" imposed by trade unions in establishing wage floors, job descriptions and related wage rates, seniority rights, controls on hiring and firing, and other limitations upon management rights...
...The idea of financing welfare state programs from the resources that economic growth would generate arose only in the 1960s (the resources were dubbed "the fiscal dividend" by Walter Heller, then chairman of the Council of Economic Advisers...
...Preserving the social fabric of the country is not, however, the function only of Social Security...
...Shareholder wealth, as indicated by the value of stocks traded on the New York Stock Exchange, has nearly quadrupled since 1980...
...The first duty of law has been increasingly neglected, even rejected...
...Only 10 percent had incomes of $50,000 or more, compared with 26 percent for all households...
...Doubt may arise concerning the last statement...
...That will not endure...
...2 Commission on the Future of Worker-Management Relations, Fact Finding Report (Washington: U.S...
...Departments of Labor and Commerce, May 1994), pp...
...In the fiscal year 1993, governments at all levels spent $69 billion in cash and noncash benefits—"yet the system left most of its families still poor," according to the Budget of the United States for Fiscal 1995...
...5 Bipartisan Commission on Entitlement and Tax Reform Meeting, June 13, 1994...
...Labor markets, then, would operate like "other" commodity markets...
...It is a sign of the system's decay that the proportion of the unemployed receiving benefits dropped from 55 percent in 1952 to 29 percent in 1984...
...In 1993, 39.3 million persons, or 15 percent of the population, were poor...
...If minimal adequacy is defined as one-half of the median household income—a standard widely accepted by scholars and socialwork professionals—then the AFDC and food stamp benefit of a family of three in the United States averaged but one-third of that standard in 1994...
...They derive from the economy's presumed broader needs for saving and capital investment, and they thereby cast doubt upon the affordability of welfare state programs...
...But the funds this would have involved were so large that business leaders and conservative senators objected to their likely dominance of the capital markets, nearly "socializing" them...
...As suggested, its importance lies not least in the aura of reasonableness that (at the time of writing) congressional cutbacks in social programs entirely lack...
...Today, it seems as if but a few devoted people on the left understand this, and that meanness of spirit governs the land...
...that of black men from 70 percent to 50 percent—indicating severe losses in earnings...
...The welfare state is meant to bear at least part of the human costs of technological and industrial change, and to help repair historical ills that might otherwise be visited upon succeeding generations...
...The 'maneuverability' effect was the most immediate problem posed by the debt burden because it seriously limited the political system's ability to respond to public needs...
...Over the succeeding two decades, a period without war, it mounted by a factor of nine...
...Disposable personal income, for example, came to $19,000 per capita, an all-time high even after adjusting for changes in purchasing power...
...It is an inescapable predicament when the demand for workers is determined mainly by private employers, and public policy fails to underwrite full employment...
...unemployment rose, causing tax revenues to rise less than predicted...
...Similarly, the proportion of men whose earnings declined during the later decade rose to 36 percent from 24 percent earlier, the proportion of male black losers rising to nearly one-half, as against one-third earlier...
...They do not ensure or enhance the collective or, if you will, the class power of labor...
...The poor are in principle eligible SUMMER • 1995 • 385 Welfare State for Medicaid...
...Yet, Social Security and Medicare trust fund receipts (which are part of the "unified" budget) have been invariably larger than outgos: a $100 billion trust fund surplus partially offset the $355 billion so-called general fund deficit in 1993...
...20, 9, 10...
...In its origins, the welfare state was not predicated upon economic growth, either in the United States or elsewhere...
...For government officials in Germany, whose public debt and deficit experience has been similar to that of the United States, "the loss of fiscal and political 'maneuverability' was one of the most significant factors in [making...
...G.A.O., Labor Issues...
...The pressure of "free trade" upon wage levels has been another factor in deregulating labor markets...
...4. It is nonsense to insist that the public debt constitutes a burden on coming generations...
...Although non-entitlement (or "discretionary") programs for low-income people account for but 12 percent of all discretionary funding, these programs have suffered cuts of 66 percent in the House, and 55 percent in the Senate Appropriations Committee...
...By the same token, business has resisted the expansion of welfare-state programs...
...The ratio of total foreign trade (exports plus imports) to the U.S...
...Thus, displacement, which occurs mostly as a consequence of employer dominance of the labor market, threatens many workers with poverty...
...Let me briefly review certain fiscal features of the welfare state before dealing with the deficit arguments...
...It is or ought to be the function of the budget as such...
...Washington, p. 24...
...the universality of the system, a major barrier against benefits being means-tested, would be impaired...
...1. They have added enormously to the public debt...
...Growing job insecurity during the 1980s and 1990s is indicated by declines in the continuity of employment for men and women in their prime working age (for reasons of space, the illustrative data here apply only to men...
...Only two-thirds of them regained employment...
...Whether AFDC, food stamps, housing subsidies, Medicaid, and other transfers will remain entitlements adequate to reduce the post-transfer poverty rate is doubtful...
...made the country a lower wage competitor relative to several other advanced countries...
...8 Stabilizing the economy has been conceived as a key function of unemployment insurance since its inception—an "automatic stabilizer" that would help bolster employment even as it supported the incomes ofjobless workers...
...The pressure on wages and benefits from the factors outlined, as well as from changing technologies and organizations of production, and the deskilling often incident to them, have not been effectively countered by government programs, such as public employment at prevailing rates of compensation...
...It was no longer to be understood as "an earned right...
...The resistance of business to an active labor market policy has remained insurmountable, with "laissez-faire" or "free market" ideology fueling that resistance...
...Individuals or families are classed as poor if their annual cash income falls below an officially defined poverty line...
...Journal of Economic Literature, September 1988, p. 1112...
...If finally adopted, the former as well as the latter would spell a massive transfer of resources to capital...
...The low rate of investment in turn, so it has been said, has been the chief reason for the slowed advance in productivity (output per hour), and therefore of the low rate of economic growth and real income...
...Funding would be fixed (that is, capped...
...3. The Federal Reserve Board sharply raised interest rates during the 1980s, largely so as to SUMMER • 1995 • 383 Welfare State offset the inflationary effects it feared would result from the deficit...
...It contributes to, and makes the economy more dependent upon, excessive consumption and needless private investment...
...The underlying principle of the system, linking benefits to work experience rather than need, would be imperiled, possibly destroyed...
...But "only 23 percent [of families receiving AFDC] lived in public housing or received some form of housing subsidy" in 1992...
...It also reduces the political space for new, socially useful initiatives...
...but the moral basis of Social Security came more and more under scrutiny...
...to $649" (in inflation-adjusted dollars...
...Another risk associated with job insecurity is the displacement of workers owing to plant dos386 • DISSENT Welfare State ings, slack work, or abolition of jobs or shifts...
...it consists mainly of undistributed profits and capital consumption allowances (depreciation set-asides...
...Failing that, wage inflation will set in...
...The budget is the single most important vehicle for the allocation and redistribution of resources...
...Any such dependence was rejected, especially by U.S...
...Its meaning as an agent of social solidarity has ceased to be widely understood, and is frequently derogated...
...They were also tied to the Consumer Price Index...
...It runs far below the amount required for minimally adequate resources...
...Bureau of Labor Statistics has collected and published such data since the early 1980s...
...Resources for child care are reduced...
...Among the "reforms" that commission members have proposed are the capping of cost-of-living allowances for only the lowest 20 percent of the benefit distribution, which would erode the purchasing power of benefits above this quintile...
...Large numbers of workers have been disadvantaged by technological and locational changes, the financial and psychological burdens of which they have had to shoulder alone...
...The politics of that crisis cannot concern us here...
...it is not about aid to the poor...
...What do deficits signify other than a shortfall between tax revenues and expenditures...
...And the actions of these corporations lie at the root of inequity: "(I)n recent years, some of America's largest companies have dramatically SUMMER • 1995 • 387 Welfare State pared down the share of revenues going to workers by boosting productivity, cutting jobs, holding down wages, and outsourcing," states Business Week.9 These kinds of corporate actions must be resisted...
...it would not rise if wages decline or recession and unemployment ensue...
...Pressure on wage levels has not been a primary purpose of the expansionary drive, but it has surely been one of its effects...
...It traces the magnitude of the (current) deficit to the growth of entitlement programs...
...It is obvious that, at present, the risk is not intensified by capitalist crisis...
...It was never conceived as a mere "safety net...
...No new funding will go for welfare-to-work initiatives...
...The distinction between net and gross makes little real difference, for obsolete plants and equipment are not merely replaced...
...Both the payers defraying the interest and the Treasury bondholders receiving it belong to the same generation (although one-fifth of the public debt is held by foreigners...
...The increases in benefits were based on projections of continued rising wages and salaries financing the required growth in payroll tax revenue...
...Gross SUMMER • 1995 • 381 Welfare State Domestic Product (GDP) climbed from 9 percent in 1960 to 21 percent in 1991...
...Falling wages and declining job opportunities especially for lower skilled workers are the chief causes...
...Washington and New York, June 1994, p. 28...
...December 1992...
...6 True, poverty is relieved by the extent to which noncash benefits like public housing or rent subsidies supplement cash income...
...The decline in the exchange rate of the dollar and slow growth of wages in the U.S...
...Let us briefly deal with the commission's underlying argument...
...The 1980s were not a true exception to business's opposition to deficits, for the Reagan deficits built up the warfare rather than the welfare state, provided tax cuts for upper-income groups, and attempted to curtail welfare state programs More sophisticated and influential arguments have been advanced against the growing budget deficit than those based on mere ideological resistance to the reach of government...
...It is true that Social Security and Medicare have risen as a percent of GDP...
...5. The deficit contributes to the regressiveness of income distribution...
...9 Business Week, Jan...
...In the 1960s, an era of strong economic growth, social programs were initiated whose financing could not be sustained without incurring deficits in the 1970s, when growth slackened and tax revenues fell short of the expenditures that had been obligated...
...Cutbacks and procedural changes in the administration, and payouts of transfers currently proposed, may yet be modified, but the proposals indicate the tendency, which is to expose the weakest members ofAmerican society not only to aggravated impoverishment but to destitution...
...The unemployment figures don't, however, reflect growing job insecurity, with its depressing effects on incomes...
...Its early support of Social Security was in part motivated by the room it would make for younger, more adaptable workers, and by its self-financing nature...
...Although it rose to 40 percent in 1991, a recession year, that was still far below the rate during previous recessions...
...Among indications are • The House of Representatives proposes to reduce the cost of the food stamp program 21 percent by the fiscal year 2000...
...and the raising of the retirement age to 70...
...To attend once again to "the first duty of law" remains our urgent task...
...Thus, the deficit would diminish or disappear...
...Income maintenance and support do of course reduce what would otherwise be a (pretransfer) poverty rate of 22 percent (as of 1993...
...The budget is updated annually for price changes and adjusted for household size...
...Transition Series...
...A similar pattern holds for food stamps...
...See also, Staff Report on Entitlement Reform Options: Reference Materials, December 1994...
...the replacements are invariably more efficient and productive...
...that of the bottom quintile has as consistently contracted, to 3.6 percent...
...It simply means that although retraining efforts, such as they are, address the supply side of the labor market, Reich and his associates, no doubt persons of good will, are powerless to match this to the demand side...
...It is increasingly at risk...
...In New York City, however, 36 percent of them are deemed ineligible...
...Even so, tens of millions of people live in conditions irreconcilable with common decency, unable to share in the life of community and to maintain their sense of self-respect...
...Let me merely note here that the preponderance of what is termed gross savings originates in corporate business...
...Blatantly contradicting this claim is the fact that between the recession trough of 1991-92 and the end of 1994, investment spending on producer durable goods rose at an average annual rate of nearly 13 percent—notwithstanding the deficit's hitting a post-World War II high in relation to GDP during the period...
...Examples include the prohibition of discrimination because of race, sex, handicap, and so on...
...4 U.S...
...It also required large-scale funding to cover risk probabilities...
...In Germany, Sweden, Norway, and the United Kingdom, poverty is not permitted to exist among families with young children, in striking contrast to the United States.' This contrast is unlikely to diminish soon, for our welfare state has fallen on evil times...
...Not until 1951 was the "independence" of the Federal Reserve conceded, and monetary policy restored...
...benefits would have been available to stabilize the economy and maintain a portion of the incomes of the unemployed," states a General Accounting Office report...
...Society must see to it that it does not itself crush or weaken or damage its own constituent parts...
...An astounding phenomenon: between 1946 and 1976, a period during which two major wars were fought, the public debt doubled...
...The most direct indicator of such risk is the rise of the budgetary deficit as avatar of anti-welfare politics...
...Together with the deliberate weakening of the unions, it has succeeded...
...The notion that the aged are generally affluent is false...
...In addition, real-wage differentials have been widening between skilled and less skilled workers, and between more- and less-educated workers...
...Over the past 35 years, central government budget deficits rose in the United States as well as in other advanced countries...
...Perhaps more important, "union avoidance" consultants have proliferated, and have helped develop sophisticated defenses against union organizing...
...See also pp...
...Agricultural interests, particularly in the South, long resisted the entitlement of farm labor to Social Security...
...The purpose of Reich's speech was to appeal to his audience to upgrade training efforts and invest more in human capital...
...In neoclassical economic theory, wages, construed as prices, would find their own level absent "rigidities...
...Global service and commodity markets became a more active field of capitalist expansion beginning in the mid-1970s...
...But Old Age and Survivor Insurance has nearly done away with poverty among the aged...
...It was more simply "a transfer from the working population to the nonworking population—community support for the elderly in retirement," preserving "the social fabric of the country...
...But the overall tendency is regressive, no less so than the Republicans' "Contract With America...
...Neither projection materialized...
...and that the rate remained at "historically low levels" throughout the 1980s...
...In 1990, 3 percent of individuals reporting income of $100,000 or more received 30 percent of the interest reported on all tax returns...
...bans on wrongful dismissal...
...That has been precisely the policy of the Federal Reserve since the late 1970s...
...in 1993, the deficit on the balance of trade ran close to $133 billion...
...Lower paid workers in the U.S...
...the ratio of unemployment compensation to the average wage declined...
...Unemployment is conceived as essentially voluntary...
...These laws are often weak or hard and expensive to enforce...
...Recurrent appeals for greater public and private support for job retraining are based on a critical fact: a vastly larger proportion of unemployed workers have permanently lost their jobs rather than being on temporary layoff, as in earlier years...
...It does not reflect changing patterns of consumption (for example, the need for a telephone, today as indispensable as the electric light...
...It needs no comment that such an interest burden restricts new governmental initiatives...
...Poverty is not a natural disaster...
...The proportion of white men working full time, the year round, dropped from 79 percent in the 1970s to 71 percent in the 1980s...
...What is more, unemployment insurance, so the logic of the theory goes, is an incentive to remain unemployed for the duration of benefits...
...Not everyone will accept my use of the term labor market deregulation, for in fact the workplace has come to be more regulated over the past thirty years than ever before...
...protection of pension rights...
...Nevertheless, they mitigate the treatment of workers as commodities...
...The growing dependence of the economy on foreign trade evidenced by that rising ratio, and U.S...
...Poverty It is emblematic of the decline of the welfare state that poverty in the United States has persisted and even increased steadily in recent years...
...In the 1980s, the ratio doubled (it has remained at that level into the mid-1990s...
...Since the late 1970s and early 1980s, the unemployment insurance system has become restrictive...
...Yet, a large part of the audience consisted of representatives of firms that have "downsized" not only less skilled workers but professionals with substantial educational background...
...labor movement...
...Unemployment benefits began to be taxed as income...
...It was occasioned by continued slow growth...
...The Deficit The federal deficit has been widely defined as the central problem of budgetary policy, the root cause of the supposedly low rate of savings, and hence of the presumably low rate of capital investment in the United States...
...The first duty of law is to keep sound the society it serves...
...This attitude contrasts starkly to deficit reduction policy in the United States, aimed as it is at constricting if not doing away altogether with social welfare programs...
...As part of the War on Poverty, Social Security benefits were raised during the 1960s and early 1970s, both absolutely and relative to preretirement earnings...
...The nutritional adequacy of food stamp benefits would decline by more than 10 percent...
...In 1993, absent Social Security benefits, the poverty rate among persons sixty-five and above would have been more than twice as high as the actual reported rate of 12.4 percent...
...That function has been in effect dismissed under the impact of "free-market" labor theories hostile to the system's underlying social purposes...
...A large proportion of re-employed workers were compelled to accept lower pay in their new jobs...
...they would "clear" the market...
...occupational health and safety laws...
...7 Isabel V. Sawhill, "Poverty in the United States: Why Is It So Persistent...
...These arguments have most recently been stated, or restated, by the Bipartisan Commission on Entitlement and Tax Reform.' The commission's proposals have in many respects been overtaken in their right-wing radicalism by congressional legislation...
...Welfare state programs in the United States do not account for the budget deficit, but they are inextricably involved in the politics surrounding attempts to overcome it...
...Even so, the median income of households with a head sixty-five years old or over was $17,000 in 1991 according to census data...
...5, 19...
...2. The rise of the public debt has driven the deficit...
...It is a function of the inadequacy and, more recently, of the retreat of the welfare state...
...in forty-two states they amounted to less than 74 percent of that line, and in most states they were below the state's own definition of the minimum needed for basic living costs...
...in 1980, the ratio was around 27 percent...
...The principle, however, could not be sustained in its conventional form...
...The mutual responsibility principle that has underlain the 1988 Family Support Act is abandoned...
...Labor Market Deregulation There is another, less visible factor that has undermined the political strength of the welfare state: the indirect deregulation of the labor market...
...8 U.S...
...Yet, it is simply to paraphrase Wilson to say that the idea of the welfare state is social solidarity...
...Indeed, employers have in some cases initiated decertification procedures, and have won in the majority of the ensuing elections...
...Unless the demand side is also addressed, such efforts will fail, as indeed they have over the past thirty years...
...The payments it allowed 382 • DISSENT Welfare State were too small to obviate the continued need for old-age assistance...
...Treasury strongly resisted the Federal Reserve's inclination to raise interest rates, so as to keep the cost of the public debt within bounds...
...It is premised on macro-economic policies designed to mitigate the business cycle and its employment and income effects and to ensure that advancing technologies and productivity do not for long disemploy workers...
...Arguments based on it are not only of questionable validity but cloak ideological and material interests seeking to curb government, privatize social services, and reduce taxes...
...And why not...
...The U.S...
...the taxation of Medicare Part A and the assessment of monthly premiums...
...See Discussion Document on Entitlement Reform, p. 1 ff...
...Such workers make up roughly half of the American work force.' Merchandise trade imports have exceeded exports in every year but one over the past twenty years...
...But its leverage—its indirect effect on wage levels—where workers fear job loss unless their employers meet import competition, cannot be doubted...
...Pressures to Retrench Business and its allies have always favored a balanced federal budget as a constraint upon government spending...
Vol. 42 • July 1995 • No. 3
