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Prioritizing assistance for those in need: The welfare reforms of the 1990s, despite their success, were never extended beyond cash welfare to other means-*‐tested programs. This budget completes the successful work of transforming welfare by reforming other areas of Americas safety net to ensure that welfare does not entrap able-*‐bodied citizens into lives of complacency and dependency.
The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides Federal grants to States for supplemental foods, health care referrals, and nutrition education for low-income pregnant, breastfeeding, and non-breastfeeding postpartum women, and to infants and children up to age five who are found to be at nutritional risk.
Chart Book: SNAP Helps Struggling Families Put Food On The Table ? Center on Budget and Policy PrioritiesSNAP offers nutrition assistance to millions of eligible, low income individuals and families and provides economic benefits to communities. SNAP is the largest program in the domestic hunger safety net. The Food and Nutrition Service works with State agencies, nutrition educators, and neighborhood and faith-based organizations to ensure that those eligible for nutrition assistance can make informed decisions about applying for the program and can access benefits. FNS also works with State partners and the retail community to improve program administration and ensure program the integrity.
SNAP plays a major role in helping some households lift themselves out of poverty. By providing benefits that must be used to purchase food, SNAP can be an important part of a low-income households budget. A CBPP analysis using the National Academy of Science measures of poverty, which counts SNAP as income, found that SNAP kept about 4 million people out of poverty in 2010, including about 2 million children. SNAP also lifted 1.3 million children out of deep poverty (defined as 50 percent of the poverty line) in 2010, more than any other government assistance program.
Social Security
In the words of President Franklin D. Roosevelt, Social Security was created to provide an antidote to the dreadful consequence of economic insecurity for the elderly and for vulnerable citizens in times of need.50 The program is financed through a pay-*‐as-*‐you-*‐go system, which means that current workers Social Security taxes are used to pay benefits for current retirees. In 1935 when Social Security was enacted, there were about 42 working-*‐age Americans for each retiree. The average life expectancy at birth for men in America was 60 years; for women it was 64.
The demographic situation has changed dramatically, however, since the creation of the program. This evolution in the demographic composition of the U.S. population was accompanied by the enactment of large expansions in eligibility for benefits and of taxes to finance those benefits. In 1950, there were 2.9 million beneficiaries. Currently, there are over 55 million beneficiaries an eighteen-*‐fold increase.51 When the program was created, workers and their employers each paid a 1 percent payroll tax. Today, they each pay a 6.2 percent payroll tax.
The explosion of payments in the 75 years since the Social Security system was enacted will be dwarfed by the demographic demands of the very near future. The first members of the baby-*‐boom generation those born between 1946 and 1964 are already eligible for early retirement. At the same time, thanks to innovations in medical technology and health care, life expectancies have lengthened to an average 75.9 years for men and 80.6 years for women, and are expected to grow further. This unquestionably positive development requires policymakers to respond with reforms that ensure that this 20th-*‐Century program can make good on its promise in the 21st Century.
Not only is the nation aging, but there has also been a demographic shift to a lower retirement age. In 1945, the average age of retirement was 69.6 years. In 2009, it was 63.8 years.
To put this in perspective: when Social Security was first enacted in 1935, each worker, on average, was contributing less than 2.5 percent of one retirees benefits. By 2030, each wage earner will be paying for nearly half of each retired persons full benefits.
This represents a massive shift of earnings away from younger families trying to build for their futures, toward Social Security recipients. No economy can grow and thrive under that heavy a tax burden.
Those who wish to solve this problem by raising taxes often ignore the economic damage that such large tax increases would entail. Just lifting the cap on income subject to Social Security taxes, as some have proposed, would, when combined with the Obama administrations other preferred tax policies, lift the top marginal tax rate to over 50 percent. Despite having a limited direct impact on the solvency of the program, these tax increases would impose adverse consequences to retirement security programs by weakening their most critical source of funding: a growing, prosperous economy.
Most economists agree that raising marginal tax rates that high would create a significant drag on economic growth, job creation, productivity and wages. This nation cannot fix its retirement-*‐security system by leaving young families with nothing to save.
If the nation acts now, those in and near retirement can enjoy the continuity of health and retirement arrangements around which they have organized their lives. If Washington continues to play politics with the future of these programs, however, then it wont just be future generations at risk: Current retirees will also find their benefits subject to a significant reduction of 23 percent when the Social Security trust funds are no longer able to pay full benefits.