Welfare policies help those in economic need. These programs are also known as public assistance. The basic method of distributing public assistance funds is via income transfer: The government takes money from wealthier citizens through taxes, then gives some of that money to citizens with low or no income. Because funds are redistributed from the rich to the poor, we call such policies redistributive policies.

Poverty in America

The U.S. government established a standard for dealing with income inequality during President Lyndon Johnson’s War on Poverty in the 1960s. This standard, known as the poverty line, determined that those families that earn less than three times their annual budget for food would be considered poor and in need of public assistance.

Example: In January 2009, the U.S. Department of Health and Human Services determined the national poverty line to be approximately $22,000 for a family of four.

Basic Welfare Programs

Welfare consists of a variety of policies with different goals:

  • Supplemental Security Income (SSI): Offers aid to elderly and disabled people who do not qualify for social security benefits
  • Food stamps: Gives low-income people coupons with which to purchase food
  • Earned Income Tax Credit (EITC): Refunds some or all of a family’s social security taxes
  • Public housing: Creates and subsidizes apartments and other dwellings for low-income families
  • Rent vouchers: Provides grants to low-income individuals to help defray housing costs
  • Medicaid: Provides low-cost medical care to those on welfare

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