Addressing the Social Policy and Welfare Deficit of the United States: Key Notions and Policy Implications

Introduction: The Context

Following World War II, European governments embarked on high levels of social spending and expanded the welfare state. Part of the explanation for the post-war welfare state development in the continent lies with the impact that the war itself had on European society. The destruction was so massive that it generated new social needs and created new demands among citizens, according to Obinger and Schmitt (2017). The presence of strong labor movements and socialist and left-wing parties also played a key role in the expansion of the European welfare state given their emphasis in the protection and promotion of social rights. Indeed, most European constitutions following the Second World War were influenced by socialist parties. Accordingly, by the 1950s, a consensus had emerged between conservative and social democratic/socialist parties throughout Western Europe on the principles of the postwar socio-economic order. The capitalist market would be regulated, while the state would guarantee the provision of free social services, such as, healthcare and education at all levels, social housing and generous benefits.

Although costly, the welfare state was perceived by most European governments as a ‘social investment’ that can bring about multiple tangible and intangible benefits and would pay itself along the way. The expansion of the welfare state depended on taxation and expenditures incurred for redistributive or growth purposes. In almost all western European states, the most important reason for the increase in the government expenditure/GDP ratio was government transfers to households due to demographic changes and the advent of social security programs. The more general cause of the rapid growth of transfer payments was the increasing demand for ‘merit’ goods (e.g., education, health, social security) in most European countries. Clearly, the welfare arrangements are more developed in some countries than in others, and the nature of government involvement is also different among different countries. However, in general, since the 1980s, the attempt to control government spending by setting ceilings on budget deficits has resulted in a decreasing expansionary effect of public expenditures (OECD, n.d.).

Social programs in the United States are programs designed to ensure that the basic needs of the American population are met. There are federal and state social programs which include health insurance, cash assistance, food assistance, housing subsidies, energy and utilities subsidies, and education and childcare assistance. Similar benefits are sometimes provided by the private sector either through policy mandates or on a voluntary basis. In fact, the American government sector has played an important role in the development of these private plans. Employer-sponsored health insurance is an example of this. American social programs vary in eligibility with some, such as public schooling, are available to all while others, like housing subsidies, are available only to segments of the population. Programs are offered by various organizations on a federal, state, local, and private level. This diversity in services and service populations helps to provide for basic needs like food, shelter, education, and healthcare to residents of the U.S. through primary and secondary education, subsidies of higher education, pensions, health insurance programs, unemployment and disability insurance, subsidies for eligible low-wage workers, subsidies for housing, and Supplemental Nutrition Assistance Program benefits. Social Security, Medicare and Medicaid are the country’s prominent social programs (Wikipedia.org, “Social programs in the United States”).

Historically, the United States has been spending less on social policies and welfare programs compared with advanced European countries, in terms of gross public social welfare expenditure. Such social welfare spending varies between different states in the U.S. The country tends to tax lower-income people at lower rates, and relies substantially on private social welfare programs and philanthropy. Since the late 19^th century, notable government initiatives to promote social welfare took place: