Welfare | The Complete Moderate's Guide

Monopoly is a classic board game where families sit around to argue and play out their own little simulation of free market capitalism There is no better system to teach kids about the joys of paying taxes and rent, really But in Monopoly, unless you bend the rules to keep the game going, when someone loses and goes bankrupt they just… vanish It doesn’t work like that in real life If enough people go bankrupt and aren’t allowed back into the game, eventually, they get out their torches and pitchforks So let’s examine how America has bent the rules in order to keep as many people as possible playing the game This video is brought to you by Skillshare The problem with wanting to discuss welfare in America is defining welfare There is no official government definition of welfare and in fact, there is no program with the word welfare in its name If you were to get seven different people into a room, you would have seven different interpretations of what counts as welfare I know this… because I tried on Twitter So for the purposes of this video, we’re going to go with the programs that most everyone agrees are welfare… Where the government is giving you monetary assistance based on your income or inability to work This can either be direct, or through a subsidy, or through free or discounted services So does using public roads and relying on the police for protection count? Not really, while it is a “free” government service, you’re not getting monetary assistance for that and you get it regardless of your income Does having a federally-backed mortgage or student loan count? Well, that’s a little foggy, the government is financially insuring your loan, but not to you directly, it’s mostly just insurance for the banks But when we start talking about tax credits, the fog starts to lift A tax credit reduces the amount of taxes you owe after taking your deductions and brackets into account Taxes in the United States are incredibly complex, and someone should definitely make a video explaining them Would you like to know more? And there are two refundable tax credits you can claim based solely on your income level and family situation Meaning that if you owe a negative amount of federal income tax at the end of the year, the government will give you extra money on top of getting back everything that was withheld The Earned Income Tax Credit, or just EIC, was designed to encourage working because you can only get it by… earning income Many analysts in both political parties believe that it helps lift people out of poverty The credit increases with the more you make and eventually decreases with the even more you make, you only get it up to a certain income level I wish I could tell you what that level is or what the average person gets, but it changes for literally everyone What I can tell you is that this credit is claimed on 27 million tax returns and cost the government 65 billion dollars in 2017 Both in lost tax revenue and in having to pay out extra The Earned Income Credit also increases with your family size, which likewise entitles you to claim the Child Tax Credit One thousand dollars for every child you have, I guess the government thinks that’s enough to pay for childcare for a year The Child Tax Credit is claimed by 35 million families and cost the government 52 billion dollars in lost revenue and payouts These two tax credits combined are why almost half of Americans pay no federal income tax… Romney was actually right when he said that But almost nobody who claims these credits would classify it as welfare – even though it fits our definition of direct monetary assistance based on income Probably because there’s a weird stigma about having received welfare and nobody wants to admit that they might have Take education for example, up through high school it’s free for everyone, regardless of income, so that’s not welfare But higher education is a different story We’ve already ruled out student loans, but if you filled out a FAFSA, you very likely received a Pell Grant This is monetary assistance based on income It’s not direct since it goes to the school rather than to you, but it is free education assistance that you never have to pay back You can receive up to $5920 per academic year for up to six years Seven million Americans received the Pell Grant last academic year, costing the federal government 28.2 billion dollars But these are still gray forms of welfare that not everyone would agree counts as welfare So let’s switch gears and talk about the more black and white forms of welfare… like the Obamaphone from the 2012 election, do you remember that? You got Obamaphone? Yes, everybody in Cleveland if you a minority got an Obamaphone, keep Obama in president, you know? He gave us a phone, he gonna do more The program is actually called Lifeline, it’s administered by the FCC and provides discounted telephone service to low-income households And it was actually started in 1985 by Ronald Reagan It used to only provide landline phones but has since moved on to cell phones and recently started to offer internet service Because c’mon, it’s 2019 and nobody uses a landline anymore – not even your grandma It’s not a free phone though, it’s a discounted service where the FCC only pays $9.25 a month on your bill, you cover the rest You actually help pay for it with that Universal Service Fund tax on your bill 10.7 million households are part of the program and it costs the government 1.3 billion dollars a year… this is by far the smallest program I’m going to talk about today She actually explains how you qualify in that clip… How’d he give you a phone? You sign up, if you on food stamps, you on social security, you got low income, you disability

Your income must be at or below 135% of the Federal Poverty Line or you have to participate in another federal financial assistance program And most of those other federal financial assistance programs are what we would call “welfare.” Temporary Assistance for Needy Families, or TANF, is a cash assistance program that fits almost everyone’s definition of welfare It’s also sometimes referred to as state-sponsored child support Its main purpose is to serve as a financial safety net, provide job opportunities, promote family stability, and prevent out of wedlock pregnancies… that’s a weird one It falls under the Department of Health and Human Services and distributes 17.3 billion dollars to 3.4 million families Though, like many of these programs, it’s actually run by the individual states and each state sets their own requirements and payout levels Under the program, you are supposed to accept a job within 24 months and be working or training for 30 hours a week, and you can only be on the program for a maximum of 60 months… the heck is that? That’s uh, that’s an asterisk Yes, I know what an asterisk is thank you, I mean why is it there? Well, like you said, a lot of these programs are run by the several states, so eligibility, time limit, and benefit amounts are all over the place, you know, not to mention all of the exceptions Ah, so every time that shows up it’s because there’s some fine print that I’m skipping over in order to keep this video from being an hour long? Yeah Like how Georgia limits TANF to only 48 months Georgia actually has some of the strictest TANF requirements You must have a child under 18 years old – which makes sense, it’s called assistance for needy families, not individual people You must be in a single parent home Which doesn’t make sense since the program is supposed to promote two-parent family stability And, again, you must be part of or applying for another federal financial assistance program Perhaps the fact that many of these programs require you to be on other programs is why they call it a safety net… You can’t just be on one, you have to be on several For a family of three, that is a single parent with two children, they must have an income under $784 a month and have less than $1000 in total assets Once you’re on the program for ten months, your payout cannot be increased because of having more children So the myth that some people intentionally have more kids in order to increase their welfare payments is… just that a myth… at least for TANF in Georgia If you meet all of these requirements, the maximum payout regardless of how many children you have is $280 a month Georgia hasn’t increased their TANF payout in 22 years, so taking inflation into account its value has dropped by 37% New Hampshire is the highest at $1039, California is at $714, and Texas is at $290 You get these payments on an Electronic Benefit Transfer, or EBT card EBT itself is not a welfare program, it’s just how welfare is received instead of on paper checks because it’s 2019 But TANF isn’t the only program that uses EBT, by far the most popular is the Supplemental Nutrition Assistance Program, otherwise known as SNAP or more commonly, Food Stamps It’s federally run by the USDA, serves 44.2 million people at a cost of 70.9 billion dollars You can only use SNAP for fruits and vegetables, bread and cereals, dairy, meats, and consumable plants and seeds Basically the food pyramid, but, without the top, no candy Yes, I know they don’t use the food pyramid anymore, I’m old But you literally can’t use food stamps for booze and cigarettes, that’s another myth that needs to end In fact, alcohol and tobacco are at the top of the list of things you can’t buy with SNAP, along with hygiene products, pet food, or hot and prepared food Which means, no fast food either A good rule of thumb is that if there is no sales tax on an item, you can probably buy it with SNAP In order to receive SNAP, you must be at or below 130% of the Federal Poverty Line For a family of three that’s $2252 a month, and for a single person it’s $1245 a month If you work full-time for federal minimum wage, you qualify for SNAP, just let that sink in for a second The maximum benefit for a family of three is $505 a month, while a single person will get $192 a month Just for reference, I spend way more than that on groceries and you probably do too… that’s why it’s just called an assistance program But I’m a single guy, I basically eat a trash-tier diet and I don’t have any special nutritional needs It’s not like I’m pregnant… or an infant Which is why we have the Special Supplemental Nutrition Program for Women, Infants, and Children, more commonly known as WIC, specifically for pregnant, post-partem, and breastfeeding women, infants under one, and children under five It’s also run by the USDA and serves 7.3 million people, at a cost of $6.58 billion dollars The financial requirement for WIC is quite a bit looser than SNAP at 185% of the Poverty Line, so 53% of all newborns in the country are part of the program Which is good, because one of its primary goals is to increase the vaccination rate

Much like TANF, WIC exists to provide assistance to the country’s poor, while promoting some other background goal like family stability or preventing epidemics In many states, over half of all newborns are also born under Medicaid We don’t have universal healthcare here in the United States, for reasons that are not in the scope of this video, but we do provide varying degrees of socialized healthcare for certain groups The first group is Medicaid, which is the single largest source of healthcare in the United States, for people living at or below 133% of the Federal Poverty Line It’s administered by the Department of Health and Human Services along with a similar program known as the Children’s Health Insurance Program, or CHIP, for children of people who make slightly more than the Medicaid limit For the purposes of this video, we’re going to combine them together since they’re basically the same program just for different age groups Together, they cover 73.9 million Americans at a cost of 576.6 billion dollars (2017), though slightly under half of that comes from the states rather than the federal government Because like many of these programs, it’s run through the individual states You might even be on Medicaid and not realize it because your state calls it something else, like MediCal or BadgerCare or PeachCare In fact, you might even be under ObamaCare and not realize it for the exact same reason Although it’s actually called the Affordable Care Act and it didn’t really provide socialized healthcare for anyone What it did do, among other things, was require health insurance companies to cover pre-existing conditions, increase the time you can be on your parents’ insurance, and require everyone to have insurance… at least for now You’re still buying private insurance, there is no ObamaCare card But the ACA did provide subsidies to help people get insurance that might not otherwise be able to afford it, which cost the taxpayers 42.6 billion dollars It also expanded the eligibility for Medicaid Remember when I said Medicaid covers people at or below 133% of the Federal Poverty Line? For people living at or below 133% of the Federal Poverty Line That’s because of the ACA Medicaid Expansion… which was optional So if you live in any of these states, which did not accept federal funding to expand medical coverage to poor people, the requirement is likely lower than 133% Meaning you have to be in super-poverty to be eligible for Medicaid Or super old if you want to be eligible for Medicare Medicare is the second largest source of healthcare in the United States, serving 58 million people who are at least 65 years old at a cost of 591 billion dollars And it’s also not a form of welfare Medicare is not a free healthcare from the government like Medicaid, most people on Medicare pay premiums, copays, and out of pocket expenses just like everyone on private insurance The only difference is that this run not-for-profit by the government It’s partially funded through those premiums and partially from that 1.45% that comes out of every paycheck… and the matching payroll tax from your employer Medicare is only free if you are dual-eligible for Medicare and Medicaid at the same time 9 million people fall into this category, costing 200 billion dollars, meaning that this small fraction of people on Medicare account for almost a third of Medicare’s entire budget (2017) The VA, or Veteran’s Affairs, is also not a form of welfare If we go by the definition we established earlier, you don’t get VA healthcare or disability benefits based on your income, it’s more akin to Worker’s Compensation… but for the military Not every veteran gets VA benefits, you have to have a service-connected disability That’s a physical or mental health injury that was directly caused by your military service Depending on the level of injury, you might only receive care for that specific injury Like a hearing aid if you have service-connected hearing loss You might also receive disability payments, which is compensation for your decreased ability to find a job elsewhere as a result of your injury It isn’t free money or welfare, it’s military worker’s compensation Worker’s Compensation, or Workman’s Comp depending on your state, is an insurance program paid for by employers and run through the state You only qualify for it if you have a workplace injury and even then… The idea is to pay for any healthcare costs related to that injury and maybe help cover the bills while you recover So that you can get back to work Unemployment, on the other hand, does fit our definition since it’s monetary assistance based on your inability to work Or at least inability to find work, hopefully only temporarily Unemployment Insurance is paid for by employers and again administered by the individual states, with some help from the federal government It cost the government 31.5 billion dollars in 2016, which is the lowest it’s been in decades You have to be unemployed through no fault of your own, so laid off or your employer goes out of business or something Not if you quit or were fired for misconduct Currently, you’re allowed to claim unemployment for 26 weeks – in most states – which is just over six months During the Recession it was extended to 99 weeks, which is just shy of two years The roughly 7 million people who relied on that extension are referred to as the 99ers It’s nearly impossible to track how many people rely on unemployment, because some people are only on it for a few weeks, some people are on it for months, and some people can be on it multiple times per year The payout amount depends on your previous income It varies widely by state, with the highest maximum payout being $783 a week in Minnesota

and the lowest being $235 a week in Mississippi Meaning regardless of your prior income, that’s the most you can get Some states require that you prove you’re looking for a job while claiming unemployment and a few require you to take any job that is offered to you Even if it’s part-time, minimum wage, or way outside of your skillset Studies have shown that in general, people who are on unemployment don’t spend any more time unemployed than people who live off of their savings It’s just a way to help you pay the bills and keep a roof over your head while you look for a job Speaking of keeping a roof over your head, I’m actually kind of surprised we haven’t talked about housing assistance yet It’s actually kind of complicated and I’m going to need some visuals… actually, hold on, I have something for this It’s a good thing I brought up Monopoly… F*** Alright so, this is a rich person’s house and this is a … wait Okay, alright so, this is a rich person’s house and this is a… Hold on a second I got this one So housing assistance today comes in a couple forms We’ll start with traditional public housing projects So a “project” was usually a certain number of towers or low-rise housing blocks clustered in an area, all built at once The most important thing to remember is the vast majority of public housing “projects” were built under the 1937 Wagner-Steagall Housing Act and its 1949 amendments The legislation was drafted to “improve” the housing supply, rather than to add to it — New public housing had to replace private housing “one-for-one.” This was so as to not “distort the housing market” with an excess of affordable public housing units So whole neighborhoods were levelled to build public housing Now, the low-rise blocks usually did quite well as they were cheap and easy to maintain, but the towers usually didn’t fare as well Once occupancy dropped below 100% there wasn’t enough rent to keep all the complicated systems that make a housing tower work in a state of good repair, and stuff started to fall apart Now, “HOPE VI” in the early 1990s was a program originally designed to demolish and replace the most “blighted” public housing towers with new, “mixed income” housing to reduce “concentrated poverty.” The idea being that if poor people live next to rich people they’ll stop being poor, because, I dunno, money travels through walls by osmosis or something Right Originally this program worked as designed but in the late 1990s under the leadership of some guy named “Andrew Cuomo” the definition of “blighted” expanded to include “any project on valuable land we can make a buck off of by selling or leasing it to private developers.” There is also a thing called “scattered sites.” where a public housing authority buys ordinary houses and rents them out to those who qualify for public housing You might live next to one and not even know it So you qualify for public housing if you are “low-income”, defined by the department of housing and urban development as making 80% of median area income Your rent is capped at 30% of your income, with a lower boundary of $25 a month Now if you think this sounds appealing, you’ll find that a lot of other folks also think so! My local housing authority, the Philadelphia Housing Authority, has a waitlist for its public housing projects which is 104,000 names long The average wait time for a unit is ten years This is of course compounded by the fact that demolition of housing projects are still underway under HOPE VI even as the waitlist expands Now, luckily there’s an alternative to government run public housing called Section 8 So a Section 8, or “housing choice voucher” works like this: You can rent a private residential unit in any building with a Section 8-friendly landlord You are expected to pay 30% of your income in rent, with the remainder made up by the local housing authority Section 8 landlords are required to charge no more than what the government calls “fair market rent” — usually well below actual market rent Since there are a lot of section 8 tenants to choose from and HUD is fairly prompt with the checks, it’s easy and steady money for landlords We spent about $32 billion on the Section 8 program in 2017 — as compared to $6.3 billion

on public housing in the same year However, much like public housing units, the demand for Section 8 vouchers far outstrips the supply In 2011, for instance, the Oakland California PHA received 100,000 Section 8 applications in its 5-day application period Through a lottery, 10,000 of them actually made it on the waiting list, which was 6 years long at that point Most Section 8 waiting lists are outright closed And there are a dozen or so smaller programs like the low-income heating assistance program or LIHEAP, which helps folks pay for gas and electric in the winter, and some programs that subsidize private low-income housing developments, often in the form of tax credits A lot of these are administered by municipalities so it’s hard to track how much they cost us on a national level So there is housing assistance for the poor, but it’s not easy to get Do you get anything if you’re middle-class or rich? Yes it’s called a 30-year mortgage and is one of the most durable facets of the New Deal which has had the largest impact on American life But you’ll have to go to my channel to learn more I’m donoteat, but my channel is called “donoteat01” because someone already took “donoteat.” I have an hour on this subject of public housing over there, soon to be 2 hours, and that second hour is where you’ll learn about mortgages, so go over there and watch that if you wanna know more about public housing and housing assistance in America Ok, the commercial’s over, back to the studio Wait, sorry, hold on! Alright, so there’s one last program that we need to talk about here – Social Security – and before you freak out and say it’s a benefit you’ve earned You’re right, Social Security itself isn’t welfare by our definition But there are three parts to Social Security and two of them definitely are Social Security Disability Insurance, or SSDI, is a cash assistance program for people who have a physical or mental condition that prevents them from engaging in a “substantial gainful activity.” It’s not Worker’s Comp, you don’t get it because of a workplace accident It has to be a disability that prevents you from getting a job for at least twelve months, or less than twelve months but will eventually result in death, and be under 65 years old You also have to have contributed to Social Security for at least half of your working life 10.7 million people are on the program, costing the government 142.9 billion dollars, with the average person receiving 1166 dollars a month SSDI comes from the Social Security Trust Fund, which is separate from general taxes Supplemental Security Income, on the other hand, does come from general taxes and the regular federal budget SSI is a supplement to Social Security or SSDI for people with low incomes You have to be drawing from Social Security or SSDI already, but that amount is low enough that you’re still not able to make ends meet The maximum payout is 733 dollars for a single person and 1100 for a couple It’s still run by the Social Security Administration, 8.3 million people are part of this program and it costs the government 63.4 billion dollars So alright, the elephant in the room Social Security is a mandatory socialized retirement program in the United States, and like Medicare, is subsidized through that 6.2% FICA Tax on your paycheck and is not run for profit Unlike the retirement program that you may or may not have through your employer It’s not a Ponzi scheme, it’s not going to run out, that’s just something politicians used to say because they wanted to lower taxes and privatize it Isn’t weird that they stopped talking about that when the Baby Boomers started retiring? That fear came from the idea that each generation would be bigger than the last, which isn’t the case, Social Security isn’t going anywhere It probably won’t be enough for you to retire on, but it will be there You can retire early at 62 for a reduced amount, but for most of the people watching this video, the full benefit doesn’t start until you’re 67 You also have to contribute to it for at least 10 years This is why undocumented immigrants aren’t a drain on Social Security, because they probably didn’t contribute to it at all Can we stop with that stupid myth please? Once you’ve contributed enough, you’ll start getting a statement in the mail detailing how many credits you’ve earned and how much you would get if you retired or were injured today Or, you can also check it online 49.5 million people are part of the general Social Security program, which costs the Social Security Trust Fund 762.1 billion dollars The average person receives 1345 a month, but it varies widely depending on how much you contributed Social Security is not welfare under the definition that we established, it’s a general retirement fund that you contribute to during your working life and draw from later in life You’re not getting it because of your income or inability to work, aside from SSI and SSDI

I only bring it up because it was one of the most mentioned programs when I asked on Twitter – but also because it could serve as a decent scaffold for what we could turn welfare into Many people in both major parties want to reform our welfare system Our system is extremely complicated, we only talked about fifteen programs in this video and that barely scratches the surface And many of them overlap and require you to be in multiple programs We could simplify this system by introducing a Universal Basic Income, that is a flat check to everyone in the country, regardless of income, age, disability, or anything else It’s also known by other names like “Mincome” and the Negative Income Tax, which was first proposed by Nixon of all people You’ve probably already heard about UBI from politicians or… a certain German Youtube channel whose name I would butcher if I even tried… For this video, we’ll talk mostly about the Minimum Basic Income, enough money to be above the poverty line In the US, this means about 1000 dollars a month, or 12,000 dollars a year Before you go thinking that that is an excessively large amount, if we were to combine every program we talked about in this video and disperse it evenly among every man, woman, and child in the United States, each person would get 635 dollars a month So without making any other changes whatsoever, we’re already about two-thirds of the way there We could combine all of these programs and eliminate all of the bureaucracy that we already have in the budget and shift it to one program that covers everyone And we already have an agency that collects from and tracks everyone – Social Security One of the common arguments against a universal basic income is that people would get lazy, stop working, and just live off of the government As if $12,000 a year is enough to live on, there’s a reason they call it the Poverty Line But while studies are currently starting in the United States and wrapping up in Finland, they were done 40 years ago in Canada And almost nobody quit working Really, the only people to work less were women who took a longer maternity leaves and teenage boys who chose not to drop out of school because the family wasn’t desperate for another source of income Oh man, what a socialist dystopia Imagine that, not having to drop out of school to go slave away in the mines so your family has enough to eat But there are other benefits to a Universal Basic Income Since automation is likely going to reduce the amount of jobs available, people will be laid off through no fault of their own UBI could keep them afloat, rather than unemployment Likewise, if work becomes optional, employers will have to improve conditions or offer extra incentives in order to keep people working there We could also accomplish that Libertarian dream of abolishing the minimum wage If all of your basic needs are already met and you don’t need your job in order to keep your apartment or go to the doctor, you wouldn’t need to be paid a livable wage Because you already have a “livable” wage Work just becomes extra money, they could pay you whatever the market decides is fair, because no one needs it to survive And what would you do with all of that extra time on your hands? Learn a new hobby from Skillshare by going to skl.sh/knowingbetter4 Skillshare is an online learning community where you can learn new life skills from experts in their field If all of your basic needs are met, you can finally learn how to basket weave, it’s not underwater but you have to start somewhere right? Or, like me, you can try to up your video editing skills by taking this course in Adobe Premiere You may have noticed a few style changes here and there on my channel recently and learning Premiere is part of that transition I would be completely lost without this series So head on over to skl.sh/knowingbetter4 and get 2 months of unlimited access to all of Skillshare’s courses for free, you’ll also be supporting the channel when you do A Universal Basic Income would require us to fundamentally change the way we think about money Which is actually a lot harder than you might think, people get very set in their ways, especially when it comes to money If we introduced UBI and got rid of minimum wage, many people would have a hard time adjusting taking a job that only pays 2 dollars an hour We’d also probably have to restructure the way we do taxes But not changing because – ugh, it’s just too hard – isn’t a good enough reason This is America, I thought we took pride in accomplishing difficult things It would also stop people from complaining about how certain people are takers and should work just as hard as them If everyone is getting the same amount, everything is fair As the world changes, technology gets better, and jobs disappear we’re going to have to adapt with the times, just like we have in the past Remember when we got off the Gold Standard in the US or when Europe adopted the Euro? So now that you have a better understanding of the systems we already have in place, you can start thinking about how we can change them in the future, because now you… know better I’ll be streaming the State of the Union much like I did last year, so be on the lookout for that announcement Big thanks to DoNotEat for helping me with the housing segment, be sure to check out his channel in the links below If you’d like to help support the channel, head on over to patreon.com/knowingbetter, don’t forget to subsidize that subscribe button, follow me on twitter and facebook, and join us on the subreddit