Question

What role, if any, do you think the central government should play in creating social welfare safety nets for citizens? Include in your discussion how the economic stimulus package that is providing up to $1,200 for each taxpayer (not counted as a dependent), plus $500 for each dependent could become a disincentive for citizens to return to work when the economy and nation returns to something resembling normal.

Answer 1

Answer - The so called safety nets of the government act as the security to provide the assistance to the public at the time when they are not able to earn their livelihood and income drops considerably. Some of the programs like Temporary assistance to needy families , medicaid are some of the programs providing the safety net for all who are suffering from job losses.

But on the other hand , if the government continues to provide the monetary assistance to the dependents and non dependents , the substitution effect will take place here. The citizen will lose the interest to do work as they are getting the money without work. Due to this , the government will be facing losses , due to huge spendings and no tax revenues. So yes , the assistance will definately reduce the incentive to return to work when things become normal again.