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.