Research Highlights Podcast
March 19, 2025
America’s public safety net
Christopher Howard discusses the history of public assistance and social insurance in the United States.
President Bill Clinton signs the Personal Responsibility and Work Opportunity Act, also known as the 1994 "Welfare Reform" bill.
Source: https://www.ssa.gov/history/welref.html
The patchwork nature of America's public safety net has evolved over centuries, shaped by political winds and changing views on poverty. Understanding this complicated history may help shed light on the core tensions that continue to define debates about who deserves assistance and how it should be provided.
In a paper in the Journal of Economic Perspectives, author Christopher Howard explored how programs targeted at people with low incomes expanded from meager, local support in colonial times to the large-scale programs of today. He draws a distinction between two parallel systems: means-tested programs targeted specifically at low-income Americans and inclusive social insurance programs available to citizens across income levels.
Howard recently spoke with Tyler Smith about the surprising political durability of some targeted programs, the dramatic success of Social Security in reducing elderly poverty, and the ongoing gaps in the public safety net that leave many Americans vulnerable.
The edited highlights of that conversation are below, and the full interview can be heard using the podcast player.
Tyler Smith: Why would we want a public safety net in particular and not just rely on a private safety net?
Christopher Howard: You can think of the public safety net as what the government does, and then the charitable sector and the family as the private safety net. We have had in this country for decades, if not centuries, charities and work by extended families to take care of people in need that became increasingly difficult to sustain starting in the early twentieth century. Today, you still have charities, especially in areas of food assistance and in medical care, that are important, but they think of themselves as the safety net to the safety net. And they realize they simply don't have the resources to deal with all of the people who are coping with food insecurity or who are medically uninsured or have low incomes, etc. In part, the government plays a substantial role here because the problem is just too big for those charities and for extended families.
Smith: How did the public safety net in the US get started, and what did the first efforts at public assistance look like?
Howard: If you think of the public safety net as being programs that are targeted at people with low incomes and therefore have a sort of means test, we've been doing that since colonial times. The responsibility was a local one, and that was true throughout the eighteenth century and the nineteenth century. By the time you get to the early twentieth century, you get state governments starting to play a bit more of a role. One of the early advancements there would be the old Mothers’ Pensions Program, which is the early effort at cash welfare for single mothers and their children. Some states in the 1920s also created old-age pensions for the poor elderly in their states, but that didn't reach a whole lot of people. Starting in the 1930s, we get the national government playing more of a role, but typically working in tandem with states to provide funding and to help decide eligibility, etc. At that point, the Aid to Dependent Children (AFDC) Program and the Old Age Assistance Program would have been the two major ones. So that part of the safety net goes way back. The modern versions today would be programs like Medicaid and Public Housing and the Temporary Assistance for Needy Families (TANF) Program. The other side of the safety net would be the more inclusive programs, usually social insurance programs like Social Security and Medicare, that originate largely in the 20th century, starting especially in the New Deal. Those programs, while they are quite inclusive, do a lot of good things for people who are poor or near poor.
Smith: I'd like to know a little bit more about the recent history during the 80s and the 90s, when there were some big pushes to reform means-tested programs. What were those fights primarily about?
Howard: If you think about the war on poverty being in the 60s and early 70s, then there's sort of a backlash in the 80s and 90s, and much of the criticism at the time was over the substantial increase in the number of people on cash welfare—that would have been the AFDC program at that time—and the amount of spending that was going to them. There was also evidence in the 1980s, some of it from economists, that some people were staying on welfare for years and years, either in a row or they were cycling on and off. There were greater concerns about welfare dependence. The sort of signature reform passed in 1996, the Welfare Reform Act, made substantial changes to the AFDC program. It imposed time limits, and it also transformed AFDC from a budgetary entitlement to a block grant and therefore limited the amount of money going to that program into future years.
If you're looking at the recent record of the last couple of decades, we've had more success expanding means-tested programs than we have the inclusive programs.
Christopher Howard
Smith: What do you think listeners should know about the more broad-based social insurance programs and why we have them the way that we do today?
Howard: The classic justification for social insurance is responding to risks of people having a big drop in income for reasons that are largely beyond their control—for things like getting hurt at the workplace or the big drop in income from retirement or protection against major health care expenditures. All of these risks are seen as sort of classic risks in an industrial capitalist economy. We've got these programs to protect against those risks. Other countries have more of these programs than we do to protect against risks like the drops of income when you have a kid and more paid family leave and things of that nature. The two key programs, Social Security and Medicare, have had a dramatic effect on poverty among the elderly. If you look at changes in the 1960s, 1970s, and early 1980s, that's when Medicare was created in 1965 and Social Security went through a substantial series of expansions in the 60s and early 70s. That's also the point where poverty among the elderly drops by more than half. And it's a really remarkable success story for American public policy. Since the 80s, there's been some decline, but not as much progress. Part of the significance of Social Security and Medicare is certainly protecting lots of Americans against difficulties they might find in their later years, but it also has some pretty profound effects on helping people who might otherwise be poor.
Smith: There's a lot of political battles over these programs, especially the means-tested programs. What factors do you think determine which means-tested programs thrive and expand and which struggle?
Howard: I think there are a couple of things that matter here. One is certainly the employment or not working that ties into traditional notions of deservingness. So, the earned income tax credit gets favored in that way over programs like cash welfare even though many single parents on cash welfare do, in fact, work. I think another factor that matters is having a strong business constituency. Medicaid is probably the best example. There have been multiple efforts over the last couple of decades to convert Medicaid to a block grant, and pretty much every time that happens, you'll get some resistance from Republican governors who don't want to lose that funding. But you'll also get a whole network, especially of hospitals, who depend heavily on Medicaid to keep afloat. So it's not so much the recipients themselves who are mobilizing here politically but the third-party providers who are able to advocate on their behalf. In contrast, with a program like public housing, there isn't that sort of third-party provider. I think one reason we do more for rental vouchers than for public housing is that rental vouchers mobilize a constituency of private landlords who have an interest in preserving the program, and that turns out to be generally a stronger constituency than the public entities operating traditional housing projects.
Smith: There has been a lot of emphasis on pushing forward the inclusive programs, like Medicare for All, right now. Do you think that that is the right approach, or would a push for more targeted programs be a better strategy to continue fighting poverty?
Howard: If you're looking at the recent record of the last couple of decades, we've had more success expanding means-tested programs than we have the inclusive programs. There has been and still is interest in Medicare for All, but when we came to the Affordable Care Act, we relied on Medicaid as the engine for expansion, not Medicare. We have done things to the Earned Income Tax Credit and the SNAP program that have expanded eligibility or expanded benefits. At the same time, people have been calling for paid parental leave, but that hasn't gone anywhere except for in a few states. There's also been greater interest at the national level in trying to expand Social Security to provide greater benefits for some of the very old or the very poor, but that's had real limited success. If you had asked me a year or two ago which path seemed more promising, I would have said that the means-tested programs were more likely to succeed, partly because of polarization and the difficulty of getting Republican support for big-ticket initiatives. I would have said that in part because of the size of the deficit as well. The article that I wrote for the journal is one that was written about a year ago, and things have changed a lot, especially in the last couple of months. The programs that look like they're on the chopping block right now are the means-tested ones. Social Security and Medicare have been declared off limits by Trump and congressional Republicans, and it's Medicaid and food assistance that look like they're going to take the big hits. This is a reminder that you need to be qualified about any conclusions here. Things do change. Right now the story for these means-tested programs looks a lot darker than it did a year or two ago.
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“Two Histories of the Public Safety Net” appears in the Winter 2025 issue of the Journal of Economic Perspectives. Music in the audio is by Podington Bear.