Ending Welfare As We Know It

By George P. Brockway, originally published March 14, 1994

1994-3-14 Ending Welfare As We Know It Title

1994-3-14 Ending Welfare As We Know It Moynihan

POLITICAL COMMENTATORS are practically unanimous in telling us that Candidate Bill Clinton’s most popular sound bite in his 1992 campaign was a pledge to “end welfare as we know it.” I don’t recall it that way. Welfare is certainly a part of the economy, stupid; but I doubt that many voters even know what “AFDC” stands for, let alone how it works. My suspicion is that the average middle-class citizen’s interest in the question is nothing more than a mean spirited irritation at anyone (especially anyone who is not a big-time operator) getting something for nothing.

There are three things that especially interest me about the present welfare problem, and I’m going to tell you about all three of them.

First, as near as I can determine, we ended welfare as we know it (or thought we ended what we thought we knew) in 1988, and I wrote about it in this space (“Reality and Welfare Reform,” NL, November 28, 1988). The Family Support Act of that year has a curious legislative history, and an even more curious media history. Senator Daniel Patrick Moynihan guided it to a 93-3 vote in the

Senate on June 16. (A “less stringent” version of the bill had passed the House by 230 to 194 the previous December.) The New York Times ran the story in the lead column on the front page the next day-and almost immediately dropped it. If you search business papers and magazines of that time, you will find little or no reference to the event. I can’t tell you about TV coverage because I’m not a close student of the medium.

I can, however, guess why the course of the bill through the Senate-House conference, the final passage by both houses, and its signature by President Reagan on October 7 attracted little attention. A tip-off is Reagan’s Budget Message of January 9, 1989, which includes funding for the Family Support Act but still reduces “welfare” by $800 million. A further tip-off is the fact that in the following two years 40 states froze or cut Aid to Families with Dependent Children, 11 cut emergency programs for the homeless, nine cut ordinary programs for the homeless, and 24 froze or cut programs for the elderly, blind or disabled. All this happened without causing any public uproar. No one gave a damn one way or the other.

I mention all this because, so far as I can make out, President Clinton’s end to welfare as we know it is the same as Senator Moynihan’s Family Support Act of 1988. Both make a fuss about tracking down “deadbeat dads”; both make a fuss about training welfare mothers for private sector jobs; and both propose to shove people off welfare and into workfare in two years, more or less. It therefore seemed to me it might be helpful to know how the 1988 Act has worked.

Well, I’m not paid to be an investigative reporter, but I tried. A full half hour on hold at the Department of Health and Human Services didn’t even console me with Muzak. Two letters to Senator Moynihan have gone unanswered. An appeal to his press secretary produced a sheaf of papers about the provisions of the 1988 Act, but nothing about its implementation or results. The Budget of the United States Government for Fiscal Year 1994 shows that in 1992 only about two-thirds of a $1 billion appropriation for payments to states with AFDC work programs was spent, and that the estimated outlays in 1993 and 1994 are about three fourths and five-sixths of the respective appropriations. Six years ago Senator Moynihan estimated that his plan would cost $3.34 billion over five years; so it would seem not to have been underfunded, at least on its own terms, but who knows whether it has done any good? Someone ought to answer that question before we end welfare as we know it all over again.

Which brings me to my second point of interest. There exists a fully worked out plan that actually would end welfare as we know it, that would practically administer itself, that would begin to heal the suppurating wound in our society between the haves and the have-nots, and that would start to restore the self-respect of fellow citizens who have become entangled and degraded in our safety nets. Not only does the plan exist, it was for one shining moment a major plank in the platform of a leading candidate for the Presidency of the United States.

The plan is the creation of Leonard Greene, an inventor who bubbles with three new ideas while he’s chatting with you. He’s president of Safe Flight Instrument Corporation, founder of the Institute for Socio-Economic Studies, leader in a fistful of social welfare activities, and author of a book I’m proud to have published titled Free Enterprise Without Poverty. Greene devised his plan in answer to a problem he ran into in his business.

In the course of his civic work he had met and hired a bright and eager young black. The young man was a fast learner and seemed to have a rosy future, when one day, without warning or explanation, he quit. Greene sought him out at home and discovered that his wages, together with his mother’s Social Security and some AFDC payments for younger siblings, would make them too rich for their public housing and Medicaid and AFDC money, but would be far from enough to make up for what they would lose. “Welfare as we know it” would make it smart for him to leave home or not to work. Greene found it easy to collect scores of similar cases.

Greene’s reaction was to figure out how the law could be changed. His solution was beautiful in its simplicity, its comprehensiveness, its practicality, and its fairness. First, each person would take all his or her existing entitlements or transfer payments and put them in one pot. Those that were “in kind” (food stamps,Medicaid, public housing, and so on) would each be assigned a standard cash value that would be added to the cash received from Social Security and other transfer payments.

Second, every citizen, from Ross Perot to the bag lady on the comer, would receive what Greene gave the unfortunate name of a “Demogrant,” which is a sort of guaranteed income similar to what Milton Friedman calls a negative income tax. In most cases this would be a bookkeeping transaction; no money would actually change hands.

Third, all of the foregoing would be added together and taxed at progressive rates, starting, of course, very much higher than the rates do today. In general, none of the poor not now subject to Federal Income Tax would be taxed under Greene’s plan. But Greene’s excellent young man could accept a good job, paying the applicable income tax, without compromising his family’s public housing.

Most important, the hurdles now erected between underclass poverty and full membership in the commonwealth would be removed. The course would still be far from the level playing field demanded by the Wall Street Journal for speculators; but it would at least be a smooth upward path, and reasonably diligent young people could hope to do reasonably well on it.

I REMEMBER (more clearly than I remember talk about welfare reform) that hope was a steady theme in Clinton’s campaign message. As long as the inhabitants of the inner cities and the rural slums are without hope, we have no hope of solving the problems they make for society as a whole as well as for themselves. Conrad had it right: “Woe unto him who has not learned while young to love, to hope, and to put his trust in life.” The same woe threatens a nation.

Obviously, there would be complications in the Greene plan, especially as old plans were phased out and the new one was phased in. Yet work would not be discouraged, families would not be broken up, and everyone would be on the same scale as everyone else. Needless to say, the plan would not be without costs. Greene would cover them with a value added tax-but that’s another question.

As I’ve said, the plan once seemed a political possibility. Leonard Greene had George McGovern‘s ear. They were so close that Greene flew McGovern in his private plane to file for entry in the New Hampshire primary of 1972. McGovern carried the Greene plan into the primaries, where he had trouble getting it across.

The press made fun of “Demogrants,” which sounded like the grunting of Democratic candidates. Hubert Humphrey, I’m sorry to say, charged that the negative income tax was a gift to the rich. By the time of the California primary the Greene plan had come to seem a handicap. McGovern renounced it and never mentioned it again.

On reflection, I have concluded that the plan was too sensible, too simple, too practical. We Americans pride ourselves on our down-to-earth pragmatism, just as the French pride themselves on their rationality and the Indians on their spirituality. We are the most theory-driven people on earth, however, constantly prattling about market discipline and other such nonsense. And there is what the literary critics call a dark side to the issue: Everyone knows that blacks are disproportionately represented among recipients of the present welfare benefits. For a shamefully large number of us, welfare as we know it can be improved only by slashing it to ribbons.

Finally, there is the third thing I mentioned at the beginning. This is the notion that welfare recipients are to be given two years of job training and then pushed out into the labor market, where they will help us compete in the new global village.

Six years ago, when the Family Support Act was passed, I thought that was a nutty idea, and I still do. It is impracticable and it is vindictive. Moreover, it conflicts with the theory of a natural rate of unemployment (see Are You Naturally Unemployed?” NL, August lO-24, 1992). Although accepted by every mainstream economist in the land, the theory is a nutty idea too. If you believe in it, you must believe it would be a disastrous mistake to get everyone off welfare and into regular employment, because the natural rate of unemployment would be violated and inflation would rage without limit.

Indeed, the trouble is that if President Clinton actually begins to end welfare as we know it, the Federal Reserve Board will be theory-bound to raise the interest rate high enough to restart the recession and move those welfare mothers back among the naturally unemployed. I would like to see this conflict brought out into the open.

The New Leader

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