Question

Discuss the pros and cons of reducing spending on these two types of programs relative to stimulating economic growth.

social insurance programs

public assistance programs

Answer 1

Answer:-

• Social Insurance Programmes:-

They are set of insurance programmes that are administered by the government just like private sector insurance. They provide assistance on the happening of a specified event. These are funded in the United States through payroll taxes.

For eg;- OASDI-Old Age Survivors and Disability Insurance Benefits, SSDI- Social Security Disability insurance, Medicare.

• Public assistance Programmes:-

Even these are certain programmes which provide assistance to certain classes of individuals who are poor. But every poor is not elligible. Only the deserving like those who are not responsible for their own poverty (children, old people) etc are covered here.

For eg:- Temporary needy families (TANF), Supplementary Security Income (SS), The Earned Income Credit (EIC) etc.

The pros:-

• These programmes increases the trust of the people belonging to the lowere income group on the government.
• lt helps in reducing the gap between the rich and the poor.
• These schemes increase the income of the low level groups and provides them with economic stability.

The cons:-

• These kind of programmes cannot be effective if they do not reach the population in need. But broad coverage is difficult.
• The administrative expenses increase the total cost of these programmes without increasing any such benefit from them.
• Sometimes the distribution of benefits and cost is difficult to manage.
These programmes have not kept the pace with the growing economy.

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