Liberalism and the Course of American Social Welfare Policy
RUSSELL L. HANSON
For the past decade policymakers and scholars alike have been keenly interested in the development of welfare states, albeit for different reasons. In many industrialized countries, policymakers are struggling to contain the growth of social welfare policy; some are even trying to reduce its size out of concern for economic vitality. For their part, scholars are trying to understand the functions and limits of social welfare policy in different settings, and at different times. Interestingly, both groups have focused their attention on the United States, which has an "exceptional" welfare state regarded by some policymakers as a model for the future, and by many scholars as an anachronism in a postindustrial age (Bell, 1989).
Indeed, the U.S. welfare state is exceptional in many respects, including its rather late appearance on the scene. Although its lineage may be traced to pension programs for Civil War veterans, the welfare state in this country really did not take shape until passage of the Social Security Act in 1935, which established Old Age Insurance (OAI), unemployment compensation (UC), and three forms of public assistance: Old Age Assistance (OAA), Aid to Dependent Children (ADC), and Aid to the Blind (AB). By then equivalent programs existed in Western Europe, Scandinavia, and even Canada, so the development of social welfare policy in the United States was slow in comparison with other industrialized nations in the West.1
Furthermore, programs enacted in this country were far from universal. A broad spectrum of the population was entitled to support in many European countries, but not in the United States. The public assistance programs addressed only certain categories of dependency, and they were means-tested. OAI covered a fairly narrow segment of the work force, until it was extended in the 1950s to include the self-employed. Also, OAI was a contributory program funded by workers and their employers (although most economists believe the payroll tax merely constituted a sub