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Welfnehep
December 1, 1993
Children's Defense Fund
Bruce Reed, Deputy Assistant to the President
for Domestic Policy
David Ellwood, Assistant Secretary
for Planning and Evaluation
Mary Jo Bane, Assistant Secretary
for the Administration for Children and Families
Co-Chairs, Working Group on Welfare Reform,
Family Support and Independence
Washington, D.C. 20500
Dear Bruce, David and Mary Jo:
As the time for final decisions on the broad outlines of the
Administration's welfare reform plan draws near, I want to convey
my great hopes that this effort will bring the nation a step closer
to ending child poverty in America. We can do enormous good for
poor children, families and the nation under the rubric of welfare
reform. To realize this potential, however, we must begin to
tackle the root causes of child and family poverty in America and
do our utmost to see that the resources committed to welfare reform
are commensurate with the plan's scope and scale.
The opportunities before us are unmistakable. Elements of the
current welfare system that discourage work and marriage can be
changed to reward initiative and facilitate family formation.
Messages of parental responsibility can be strengthened. Barriers
to secure employment at family-sustaining wages -- ranging from
inadequate child care, education and training services to chronic
job shortages in many communities -- can be substantially reduced,
if not overcome. We hope the Administration will seize these
opportunities to chart a bold new course for the nation.
This effort to reform our nation's welfare system should
reflect our most basic values: the importance of work; the
responsibility of parents to care and provide for their children;
the nurturing of hope for a better life among children and parents
alike; and compassion and a helping hand to those who face personal
crises or insurmountable barriers to employment. These values --
work, responsibility, hope, opportunity and compassion -- must
provide the basis for a new social contract between government and
low-income parents, one that challenges all of us to lift our
sights and rescue our children from the dangers of sustained
poverty. It is shameful that children are the poorest citizens in
the richest nation on earth, and our failure to act to end their
continuing impoverishment now costs us dearly.
251 Street NW
Washington DC 20001
Telephone
ISM
The central premise of this social contract should be that
every parent, if given the opportunity, has the ability to
contribute to the care, nurturing and support of children. Parents
receiving AFDC who can work should be expected and enabled to do
so, and those who cannot move immediately toward employment should
work to strengthen their families and communities by participating
in parent education programs, seeking substance abuse treatment,
and/or promoting the development of their children through
involvement in Head Start or similar programs.
For this new social contract to succeed, government also must
do its share. In this context, I was deeply troubled by the
Administration's recent approval of Wisconsin's AFDC waiver request
-- an action that I fear gives legitimacy to the claim that it is
morally acceptable to cut off basic income support for poor
children merely because their parents are unable to find work.
This approach is antithetical to the basic tenets of a new social
contract for parents on AFDC. Rather than establishing a principle
of reciprocal obligation in our welfare system, the Wisconsin plan
signals the state's intention to walk away from families when they
cannot make it on their own. We fervently hope this action on
waivers is not an indication that the Administration similarly will
walk away from the tough decisions and key investments that must be
made in order for national welfare reform efforts to be successful.
Within the broad framework of a new social contract,
reinvigorated federal leadership and increased investments in a
number of key areas are crucial to support the work efforts of
parents receiving AFDC and to fulfill the promise of the
President's bold welfare reform pledge:
Child care - Even under the current system, AFDC child care
programs are under enormous strain. States are taking or
considering extraordinary steps to limit access to child care
assistance, reducing child care help for working poor families in
order to serve families on AFDC, and purchasing care of frighten-
ingly low or uncertain quality. An infusion of new child care
funds is essential if parents on AFDC are to increase their
participation in education, training or work activities and if low-
income working families teetering on the brink of the welfare
system are to continue their quest for economic self-sufficiency.
We will accomplish nothing through welfare reform if we do not at
the same time nurture our next generation of children and prevent
their future need for welfare.
Work incentives - Our welfare system must encourage and
promote work. The Administration has taken an enormously important
step in increasing the rewards of work by securing approval for the
historic expansion of the Earned Income Credit this summer. Now we
must build upon this progress by lowering the extraordinarily high
marginal tax rates on earnings (ranging from 70 percent to over 100
2
percent) imbedded in the current welfare system so that parents on
AFDC have the same financial incentives to work that other
Americans enjoy. A long-overdue increase in the minimum wage also
would bolster the message that this Administration intends to "make
work pay. "
Employment opportunities - We cannot achieve the fundamental
goal of "ending welfare as we know it" without creating paid work
opportunities for parents on AFDC when jobs are not otherwise
available. Those who are ready and able to work should have access
to full-time jobs with family-supporting wages. While some say it
is not possible, given current budget constraints, to create enough
full-time jobs for all parents who are ready to work, the dignity
of paid employment is terribly important and we must all work to
keep jobs at the top of any agenda to strengthen family self-
sufficiency. Tens of thousands of important jobs can be created
through full funding of Head Start, expansion of child care
programs, and full utilization of the summer food program alone.
Part-time jobs paying wages at or above the minimum wage represent
the very least we should do in order to put parents on the road to
full participation in the economic mainstream.
Job retention - For millions of parents on AFDC, the key issue
is not work motivation but job retention. Recent studies show that
half of all welfare spells now end because parents do find jobs,
but many families return to AFDC when work or child care arrange-
ments fall apart. Finding ways to keep these parents on the job
and off the AFDC rolls is one of the greatest challenges of welfare
reform. We need new mechanisms to offer help in overcoming
temporary job or family crises that jeopardize the work efforts of
such parents and to continue the investments in education and
training that will lead to long-term employment stability. We also
need to take additional steps to ensure that parents who leave AFDC
for work get child care assistance beyond the 12 months currently
available and have access to other follow-up services they need to
succeed.
Child support - Every child deserves the support of two
parents. More vigorous efforts to establish paternity and tougher
child support enforcement should be central elements of any welfare
reform plan, sending an unambiguous message of the importance of
parental responsibility to the well-being of children. We believe
a federalized, universal system of child support enforcement
coupled with an assured benefit would best meet children's needs.
At a minimum, we hope that state demonstrations of child support
assurance can be structured to build quickly upon successful models
and enable states meeting established criteria to join the program
in future years.
Education and training - Many parents who receive AFDC or pay
child support need additional skills if they are to avoid the
3
endless cycle of brief periods of employment followed by repeat
welfare spells. Americans have enormous faith in the power of
education and training to usher in a new era of "high skills, high
wage" employment for the vast majority of us; improved skills
surely play a similar role in enabling poor parents to secure
stable decent-paying jobs. The JOBS program, with its promising
focus on education and training for those AFDC parents who need
such services, still is a fledgling effort only recently
implemented fully in all states. Our next wave of welfare reform
should build upon the foundation that JOBS provides rather than
moving prematurely and counterproductively -- to dismantle it.
Serious initiatives in the areas outlined above -- child care,
work incentives, employment opportunities, job retention, child
support, and education and training -- require substantial new
investments by the federal government. While understanding that
the resources available for welfare reform may be sharply limited,
I continue to hope that we can achieve significant gains in these
areas despite difficult budget constraints. It would be a great
disservice to children on AFDC and the nation as a whole to cling
to bold, expansive rhetoric and goals for welfare reform while
failing to marshal the resources necessary to unlock the doors of
economic opportunity for families on AFDC. It would be an even
greater disservice to use the rhetoric of self-sufficiency as a
Trojan horse of punishment by driving parents off welfare rolls
when no jobs are available.
I am deeply concerned about the harmful consequences for
children on AFDC that likely would result from a dramatic mismatch
of small welfare reform investments and reform plans of sweeping
scope and scale. Broad new mandates that spread resources too
thinly and fail to tackle the central barriers to employment and
eventual self-sufficiency will not solve our welfare problem. Such
an approach can only distract us from the more fundamental tasks we
must undertake -- rewarding work, encouraging family formation,
reinforcing parental responsibility and creating the stable base of
jobs that will provide a lasting alternative to welfare and
poverty.
No one gains when welfare is a way of life. But the need for
a basic safety net to protect children from severe deprivation will
not disappear until we address the underlying causes of child
poverty in America. If we set realistic goals that are consistent
with the resources at hand, this welfare reform effort can succeed.
If we merely impose a rigid new set of requirements on families on
AFDC without providing more effective assistance to overcome their
barriers to employment, we only will add to the plight of our
nation's poorest and most vulnerable children.
4
We look forward to working with the Administration to develop
a welfare reform plan of which we all can be proud, and remain
eager to assist you in whatever way we can.
Sincerely yours,
Maiz
Marian Wright Edelman
MWE: stb
CC: Donna Shalala
Carol Rasco
bcc: Melanne Verveer
5
SERIS
WICE
AND
December 1, 1993
Ms. Carol H. Rasco
Assistant to the President
for Domestic Policy
Executive Office of the President
Children's Defense Fund
1600 Pennsylvania Avenue, N.W.
Washington, D.C. 20500
Dear Carol:
I wanted to be sure that you received a copy of my recent
letter to the Working Group on Welfare Reform, Family Support and
Independence co-chairs outlining our hopes and concerns regarding
the Administration's forthcoming welfare reform proposal.
CDF believes we can do enormous good for poor children and
families under the rubric of welfare reform. Yet new resources
will be essential for any constructive reform effort. It is my
understanding that proposals now under discussion, while setting
aside substantial amounts for child care, make very limited new
investments in education, training or paid employment opportuni-
ties, and would be financed almost exclusively by restricting AFDC
benefits to legal immigrants or reducing other assistance to poor
families. This approach to welfare reform will make no serious
dent in our child poverty problem and does not deserve the
Administration's support.
As you proceed with internal decisions, I hope that your
attention will remain focused on interventions that genuinely will
improve the lives of our poorest children and prevent the present
as well as future need for welfare. A welfare reform that truly is
pro-work and pro-family must include an expansion of paid
employment opportunities and new investments in education,
training, and child support assurance. I understand that we may
not be able to do it all now, given current resource constraints,
but let us be sure that what we are able to do moves us toward the
goal of eliminating child poverty in America.
Please let me know if we can help in any way. We will be
working very hard with Black community leaders and child advocates
across the country to assure a strong voice on the concerns raised
here.
Sincerely yours,
main
Marian Wright Edelman
MWE:stb
Enclosure
25 Street NW
Washington DC 20001
Telephone
Fdr 202,002 710
THE SEAiS so
WIDE AND
December 1, 1993
M7BOATIS
so
SMALL
The Honorable Donna Shalala
Secretary
U.S. Department of Health and
Human Services
Children's Defense Fund
200 Independence Avenue, S.W.
Washington, D.C. 20201
Dear Donna:
I wanted to be sure that you received a copy of my recent
letter to the Working Group on Welfare Reform, Family Support and
Independence co-chairs outlining our hopes and concerns regarding
the Administration's forthcoming welfare reform proposal.
CDF believes we can do enormous good for poor children and
families under the rubric of welfare reform. Yet new resources
will be essential for any constructive reform effort. It is my
understanding that proposals now under discussion, while setting
aside substantial amounts for child care, make very limited new
investments in education, training or paid employment opportuni-
ties, and would be financed almost exclusively by restricting AFDC
benefits to legal immigrants or reducing other assistance to poor
families. This approach to welfare reform will make no serious
dent in our child poverty problem and does not deserve the
Administration's support.
As you proceed with internal decisions, I hope that your
attention will remain focused on interventions that genuinely will
improve the lives of our poorest children and prevent the present
as well as future need for welfare. A welfare reform that truly is
pro-work and pro-family must include an expansion of paid
employment opportunities and new investments in education,
training, and child support assurance. I understand that we may
not be able to do it all now, given current resource constraints,
but let us be sure that what we are able to do moves us toward the
goal of eliminating child poverty in America.
Please let me know if we can help in any way. We will be
working very hard with Black community leaders and child advocates
across the country to assure a strong voice on the concerns raised
here.
Sincerely yours,
Main
Marian Wright Edelman
MWE: stb
Enclosure
25 E Street. NW
Washington. DC 20001
Telephone 202 628 8787
Fax 202 662 3510
DEC-10-1993 13:30 FROM CDF
TO
94562557 P.01
DEAR LOR
THE SEAiS so
BE GOOD TOME
WIDE AND
MYBOATIS
so SMALL
FAX TRANSMITTAL COVER SHEET
Children's Defense Fund
TO:
Melanne Verveer
FIRM:
The White House
FAX#:
(202) 456-2557
FROM:
T'Wana Lucas, Admin. Asst.
Division of Family Income
If you have a transmittal/receiving problem, please contact me at
(202)662-3542.
DATE:
10 Dec. 1993
TIME:
12:20 pm
NUMBER OF PAGES SENT (INCLUDING COVER SHEET):
17
COMMENTS:
25 E Street, NW
Washington, DC 20001
Telephone 202 628 8787
Fax 707 662 3510
DEC-10-1993 13:30 FROM CDF
TO
94562557
P.02
MEMORANDUM
TO:
Melanne Verveer
FROM:
Jim Weill, Cliff Johnson, and David Kass
DATE:
December 9, 1993
SUBJ:
New Polling Data on Welfare Reform
We are sending you a new poll conducted by Peter Hart Research Associates.
This poll shows that, while large majorities of the American people want the welfare
system to get people into work, they do not seek a system operating to cut people off
welfare. They believe that everyone on welfare must make an effort and take
responsibility for themselves, but they do not believe that everyone must be self-
sufficient within two years, or that cutting people off without getting them out of
poverty is an adequate job.
This poll was commissioned by a consortium of the Center for Law and Social
Policy, the Center on Budget and Policy Priorities, the Children's Defense Fund, the Joint
Center for Political Studies, and La Raza.
Here are some of the principal points in the poll:
1)
While the public is convinced that the welfare system is broken (see
Question #2b) and that recipients' behavior is wrong, the public
approaches solutions with sophistication and pragmatism. They reject
overly simplistic solutions:
The public believes that the single best approach to reforming the
welfare system is "improving and expanding education and job
training programs." In a list of four approaches, a two year limit
comes in a weak fourth (9 percent), lagging far behind responses
that involve teaching and helping people to work (Question #11a).
See also Question 10, where, as part of a different list, the two-year
time limit came in last among six approaches to poverty and
welfare.
Overwhelming margins were in favor of "providing subsidized child
care to poor mothers who want to work" and in favor of toughening
child support enforcement.
When asked about a hypothetical two year rule, 79% favored
applying it to able-bodied recipients on a case-by-case basis rather
than as a hard-and-fast cutoff (#14a). By a more than two-to-one
DEC-10-1993 13:30 FROM CDF
TO
94562557
P.03
margin, people said they supported a hypothetical candidate who
would require training and then work, rather than a candidate who
supported cutting off benefits after two years (#15).
2)
The public believes that welfare reform is about getting people to work,
not cutting people off of welfare. The polling results suggest that the
public wants to get recipients off welfare and out of poverty; just getting
them off welfare but increasing or deepening poverty will not be seen as
doing the job:
The poll found that 83% supported a plan that would require a
public service job after two years rather than a plan that ended
benefits and provided no job after two years (#13d).
86 percent believed a mother working part-time at below poverty
wages should continue to get welfare (#12c).
54 percent strongly agreed that "many poor children will be hurt by
a [flat two year] cutoff, through no fault of their own" (#14e).
3)
People continue to believe that many welfare recipients "collect benefits
they are not legally entitled to" (#7) and that poor people have the "wrong
values" (#3b). The public also believes that the breakdown of families and
family values is one of the most important causes of poverty (#4). But the
public will provide assistance if they believe that welfare recipients are
making some effort at self improvement and self-support:
When asked whether they would favor a plan that spent "a lot
more money in the short run than the current system because of the
costs of child care, job training, and other programs," 77% said they
would favor the plan (11b).
When asked whether too much money is spent on the welfare
system or the money is spent in the wrong way, 85% said the
money is spent in the wrong way vs. only 4% who said too much is
spent (#8).
The poll found that 47% thought that we spend too little on poor
families with children and 64% thought too little is being spent on
poor children (#5).
We have enclosed the poll results. Plans are being made for Geoff Garin of Peter
Hart Research Associates to brief David Ellwood and other members of the
Administration's welfare reform task force, hopefully, before Christmas. Also, we will
send Garin's narrative analysis to you as soon as it is ready. In the meantime, please let
us know if we can provide additional information.
DEC-10-1993 13:31 FROM CDF
TO
94562557 P.04
Study #38058-page 1
PETER D. HART RESEARCH ASSOCIATES, INC.
Interviews: 1020 Respondents
AMERICAN VIEWPOINT
Dates: November 12-15, 1993
48 Male
FINAL
52 Female
[5]
Study #38058
Income Security
November 1993
AREA
STATE
TYPE
SAMPLE POINT
FORM
DATE
November
1993
[6]
[7]
[8] [9]
[10]
[11] [12] [13]
[14]
[15] [16]
I'm calling from Peter Har: Research, the national public opinion polling firm. We are conducting a national survey and
rd really appreciate the chance to gat your opinions on some important issues facing the country today. (CHECK
BELOW FOR THE CATEGORY OF RESPONDENT YOU ARE SUPPOSED TO ASK FOR, THEN SAY:) Your number was
selected at random, and at this hous shoid, 1 am supposed to speak with the (youngest/oldest) (man/woman) age 18
or over who is at name now.
PERSON TO ASK FOR
ASK FOR YOUNGEST
ASK FOR OLDEST
(REPEAT INTRODUCTION IF RESPONDENT IS NOT THE PERSON WHO FIRST ANSWERED THE PHONE.)
1.
Are you currently registered to vote in the precinct or election district where you now live, or haven't you had
a chance to register yet?
Registered
100 CONTINUE
[17]
Not registered
.
TERMINATE
Not sure
2a.
All in all, do you think things in the nation are generally headed in the right direction, or do you feel that things
are off on the wrong track?
Right direction
29 [18]
Wrong track
50
Mixed (VOL)
15
NCE sure
6
DEC-10-1993
13:31
FROM
CDF
TO
94562557
P.05
Study #3805B-page 2
A
For each of the following areas, please tell me how well you feel things are working now in this country-very
well, fairly well, not that well, or not well at all First, (READ ITEM) is this working very well, fairly well, not that
wall, or not well at all? (RCTATE ORDER)
Very
Fairly
Not That
Not Well
Not
Well
Well
Well
At All
Sure
The criminal justice system
1
19
31
47
2
[19]
The Social Security system
9
49
22
14
6
[20]
The tax system
3
36
27
30
4
[21]
The educational system
5
34
28
30
3
[22]
The health care system
4
32
31
30
3
[23]
The welfare system
2
14
30
49
5
[24]
3a.
In your opinion, which is the bigger cause of poverty and people being poor today-peopie not doing enough
to help themselves out of powerty, or circumstances beyond people's control that cause them to be poor?
People not doing enough
48
[25]
Circumstances beyond people's control
33
Some of both (VOL)
17
No: sure
2
3b.
in your view, is the problem of continuing poverty mostly a result of government not having the right policies
or of people not having the right values?
Government nx having right policies
24
[26]
People not having the right values
44
Both equally (VOL)
28
Not sure
4
4.
For each of the following, tel me now big a factor it is in causing poverty, on a scale from 1 to 10. A razing
of "1" means the item is not a cause at all, a "10" means it is a top cause of poverty, and a "5" is somewhere
in the middle. Remember, you may use any number between 1 and 10, depending on how you feel First,
(READ ITEM)-how big a cause of poverty is this on a scale from 1 to 10? (ROTATE ITEMS EVERY OTHER
INTERVIEW. IF "NOT SURIE* RECORD A "".")
Not
Mean
(10-8)
(7-5)
(4-1)
Sure
Poor people lacking motivation
6.1
29
32
18
1
[27]
Absent parents not paying child support
7.0
49
35
15
1
[28]
Increased immigration
6.3
39
35
23
3
[29]
A shortage of jobs
6.7
42
39
18
1
[30]
The welfare system
6.9
45
38
15
2
[31]
The breakdown of families and anily values
7.6
60
29
10
1
[32]
Poor people receiving inadequate education
6.9
46
36
16
2
[33]
Too many jobs being part time or low wage
6.6
42
37
20
1
[34]
DEC-10-1993 13:32 FROM CDF
TO
94562557 P.06
Study #38058-page 3
5.
Do you think government is currently spending too little, about the right amount or 100 much on (READ
ITEM)? (ROTATE FIRST TWO ITEMS, THEN ROTATE THIRD AND FOURTH ITEMS.)
Spending
Spending
Spending
Too
The Right
Too
Not
Little
Amount
Much
Sure
Poor people
38
29
25
8
[35,39]
People on welfare
14
24
55
7
[36,40]
Unemployed people
28
44
20
8
[37,41]
(FORM A)
Poor families with children
47
30
15
8
[38]
(FORM B)
Poor children
64
22
6
8
[42]
6a
How would you complete this sentence: 'A family of three living in my area is poor if they make less than
BLANK dollars & year? How many dollars a year would you say? (PROBE:) Just give me your best guess.
(READ CATEGORIES IF NECESSARY, SAYING "SOMEWHERE BETWEEN 5,000 AND 10,000 DOLLARS,
SOMEWHERE BETWEEN 10,000 DOLLARS AND
$5,000-$10,000
13
[43]
$10,001-$15,000
29
$15,001-$20,000
30
$20,001-$25.000
11
$25,001-$30,000
8
Over $30,000
5
Not sure
4
8.
Of the people currently on Nelfare in the United States. how many would you say deserve to be receiving
weifare benefits-nearly all, most but not all, about half. less than half, or almost none at all?
Nearty al.
4
[44]
Most, bes: not all
14
About half
42
Less than half
32
Almos none at an
s
Not sure
3
6c.
About how much would you say the average family of three on welfare in your area receives in cash benefits
and food stamps each morth? (PROBE:) Just your best guess. (READ CATEGORIES IF NECESSARY.)
$100-200 a month
3
[45]
$201-300 a month
8
$301-400 a month
to
$401-600 a month
18
$601-$800 a month
13
$801-$1,000 a month
7
$1,001-$1,500 a month
5
$1,501-$2,000 a month
2
....
$2,001 or more a month
1
Not sure
33
DEC-10-1993
13:33
FROM
CDF
TO
94562557
P.07
Study #38058-page 4
6d.
Do you think that people on welfare generally live fairly comfortably or that they can barely get by?
LVG fairly comfortably
.....
34
[46]
Can barely get by
59
Not sure
7
(FORM A)
7.
For each of the following, tell me if you strongly agree, somewhat agree, somewhat disagree, or strongly
disagree with the statement First, (READ ITEM), do you strongly agree, somewhat agree, somewhat
disagree, or strongly disagree? (ROTATE ITEMS.)
Strongly Somewhat Somewhat Strongly Not
Agree Agree Disagree Disagree Sure
(FORM A)
Many working people are just a paychock away from poverty
45
35
16
3
1
[47]
The majority of welfare recipients never get off of welfare
47
35
11
3
4
...
[48,55]
Welfare provides a crucial safety net for poor children, who are
not responsible for their poverty
40
40
10
7
3
[49,52]
Many weifare recipients collect payments they are not legally
entitled to
53
30
9
5
3 [50,53]
(FORM A)
Many people on welfare would like tz work, but cannot find a
job
25
38
21
15
1
[51]
(FORM B)
Most welfare mothers would take jote if they could find child
care
34
32
17
13
4
[54]
(FORM B)
The majority of welfare recipients never get off of welfare
44
36
...
13
3
4
[55]
(FORM B)
It's harder today than it used to be for people to work their way
out of poverty
47
28
13
10
2
[56]
8.
Which would you say is then bigger problem with the welfare system today-It spends too much money, n
spends money n the wrong way, or is neither one a problem?
Spends too much money
4
[57]
Spends money the wrong way
85
Neither one is a problem
6
Not sure
5
DEC-10-1993 13:33 FROM CDF
TO
94562557 P.08
Study #3805B-page 5
(READ:) Now t have some questions about possible changes in the welfare system. By welfare. we mean only
programs intended specifically for poor people and poor families-not those for the elderly or the disabled.
9a.
If the government was going to reform the wellare system. what would you say should be its most important
goal? (PROBE:) What would you most like to see changed about the system? [58-61]
Make recipients more accountable, make sure they are eligible, check, monitor 23%
them, curtai abuse, make sure money goes to people that really need it
Provide more job training
17
More restrictions on who gets wedare, stop making it so easy to get welfare
14
Educate people, more money for education
14
More jobs are needed, there aren't enough jobs
10
Make recipients work, no money if they don't shouldn't be giving money to
7
people that can't work and won't work
Don't know no response
7
9b.
Here are some possible goals for reforming the welfare system. Which one or two would you say are the
most important (ROTATE CRDER EVERY OTHER INTERVIEW. ACCEPT UP TO TWO RESPONSES.)
Strengthening families and family values
32
[62]
Helping people get off the welfare rolls and into the work force
52
A
Making sure poor children get the support they need
22
Ellminating traud and abuse
28
Ending long-term dependence on welfare as a way of life
29
Saving texpayers money by reducing spending on welfare
7
Not sure
1
10.
The following are some proposals related to poverty and welfare. For each one, tell me if you would strongly
favor, somewhat favor, somewhat oppose, or strongly oppose the proposal? (ROTATE ORDER EVERY
OTHER INTERVIEW.)
Strongly
Somewhat
Somewhat
Strongly
Not
Favor
Favor
Oppose
Oppose
Sure
A two-year limit on welfare benefits
35
30
19
12
4
[63]
Tougher measures to collect child support from
absentee fathers
81
14
2
2
1
[64]
Guaranteeing that no one would kge their health
insurance because they left welfare and got a job
68
21
6
3
2
....
[65]
Allowing welfare recipients to eam wages up to the
poverty level without losing all their welfare benefits
48
35
8
7
2
[66]
Requiring welfare recipients to work is return for their
waifare checks
71
22
3
3
1
[67]
Providing subsidized child care to poor mothers who
want to work
71
24
3
1
1
[68]
DEC-10-1993 13:34 FROM CDF
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34562557 P.09
Study #3805B-page 6
(FORM A}
11a.
Which of the following do you think is the single best approach to reforming the welfare system? (ACCEPT
ONLY ONE RESPONSE)
Improving and expanding education and ,00 training programs
40
[69]
Requir 9 recipients. to take a public service job if they cannot
find other employment
35
Tougha measures 10 collect child support from absentee
fathers of pane chalien
13
Ending benefits for all families after they have been on wellare
for two years
9
None x these (VOL)
1
Not SK re
2
(FORM B)
11a.
Which of the following do you think is the single best approach to reforming the welfare system? (ACCEPT
ONLY ONE RESPONSE)
Improving and expanding education and job training programs
46
[70]
Requiring reciplents to take a public service job & they cannot tho other employment
32
Tougher measures to collec: child support from atsenze fathers of poor children
10
Ending benefits or all reciptents after they have been on walfare for two years
9
None of these (VOL)
1
Not sure
2
11b.
Suppose it turns out mar welfare reform actually costs a hx more money in the short run than the current
welfare system. because of the costs of child care, job training, and other programs that help more people
to leave welfare Would you fevor or oppose such a welfare reform plan, even if it cost more money in the
shon run?
Favor plan
77
[71]
Oppose plan
15
Not sure
8
DEC-10-1993 13:34 FROM CDF
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94562557
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Study #3805B-page 7
11c.
Now, here are sxne additional proposals related to poverty and welfare. For each one, please tok me if you
would strongly favor, somewhat favor, somewhat appose, or strongly oppose the proposal? (ROTATE
ORDER EVERY OTHER INTERVIEW.)
Strongly
Somewhat
Somewhat
Strongly
Not
Favor
Favor
Oppose
Oppose
Sure
Stop giving extra money to mothers n they have
another child after they 90 on watte
48
20
17
14
1
[72]
Pay for transportation for welfare recipients to get to
their jobs
25
42
18
12
3
[73]
Require fathers of children on welfare to work at public
service jobs if they do not pay their child support
70
2:
3
4
2
[74]
Have the government provide public service jobs to
poor people who want to work DUI can't find private-
sector jobs
57
30
6
4
3
[75]
Raise the minimum wage from $4.25 an nour to $5.00
an nour
54
21
13
10
2
[76]
(FORM A)
12a.
Should mothers who have preschool children and who are on welfare be required to work? (IF YES:) Should
they be required to work fuilime or part time?
Yes, Should Work
Full time
17
[77]
Part time
38
CONTINUE
not sure how many hours
5
Nc. Should N# Work
34
SKIP TO Q12c
Not Sure
6
(FORM A)
(ASK ONLY OF RESPONDENTS WHO ANSWERED "YES, SHOULD WORK* IN 12a)
125.
And should mothers who have preschool children and who are on wellare be required to work only if child
care is provideci, or should they be required tc work even it child care is not provided?
Only if child care provided
36
[78]
Even if catd care not provided
19
Not sure
5
Do not s'ink should WORK (from Q.12a)
so
DEC-10-1993 13:34 FROM CDF
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94562557
P.11
Stuoy #3805B-page 8
(FORM B)
12a
Should mothers who have rdants and who are on welfare be required to work? (IF YES:) Should they be
required to word: full time or part time?
Yes, Should Won:
Full time
14
[79]
Pat time
27
CONTINUE
Not sure now тапу hours
6
No, Should No: Work
47
SKID TO 0.12c
Not Sure
6
(FORM B)
(ASK ONLY OF RESPONDENTS WHO ANSWERED 'YES, SHOULD WORK IN 12a)
12b.
And should methers who have infants and who are on welfare be required to work only if chila care is
provided, or should they be required to work even If child care is not provided?
Only if child care provided
27
[80]
Even # child Care not provided
16
Not sure
&
Do not ink should work (from Q.12a)
53
(ASK EVERYONE)
12c.
Do you think 8 single mother working R a part-time, minimum-wage job should be permitted to receive wellare
benefits, for as ong as she ENTS less man the poverty level or do you think she should not be permited to
do so?
Should be permited
86
[81]
should not be permitted
9
Not sure
5
(READ.) Now, I have a few questions about two different welfare reform plans.
13a
One welfare reform proposal places a wo-year limit on welfare benefits After two years, benefits would be
ended for all able-badied recipients, and the government would not provide a job. Would you strongly favor,
somewhat favor. somewhe oppose. or strongly appose such a two-year timit?
Strongly favor
26
izal
Somewher favor
30
Somewha opcose
24
Strongly appose
18
Not sure
3
13b.
An attentive wetfare reform: proposal would require wettare recipients to attend 100 training sessions as soon
as they start receiving welfare. After two years, if they have not found employment welfare recipients would
be required to york as a a bic service job. Would you strongly favor. somewher favor, somewhat appose.
or strongly oppose this proposal?
Strongly favor
64
[83]
Somewhat favor
28
Somewhat oppose
4
Strongly oppose
3
No sure
1
DEC-10-1993 13:35 FROM CDF
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94562557 P.12
Study #3805B-page 9
13c. Why do you feel that way about this proposal? (PROBE) What are some of the things you particularly like
or disike about this proposal? [84-01]
Net Positive Comments
87%
Net Negative Comments
11%
Plan gives a chance to be educated gives them job 28
Government can't guarantee everyone a job. if 3
training, e skill
they can't find a job they shouldn't be
penalized
Makes recipients work, trains them to and makes
26
Most of them don't have job skills
3
them work for what they get, if they am able they
should work
Plan gives them 8 chance to survive gives them a
15
Government will be using public funds to
1
chance to get off welfare, an incentive to make them
create jobs, disagree with concept of
feel better, more self worth
government funding jobs
Two years is enough time for people to find jobs
12
Why does government have to find them jobs? 1
Teaches people that welfare is not 2. free ride, will
7
Welfare recipients should be taught self-
1
get people used to working instead of collecting,
motivation first, If individuals are not motivated
decrease dependency on welfare
to work and get off walfare, plan will not work
Don't know: no response
5
13d. Which one of these two approaches to welfare reform would you say is better-1) after two years, benefits
would be endec for as able-bodied recipients, and the government would not provide any job; or, 2) after two
years, job? welfare recipients who have not found other employment would be required to work at a public service
Cutting off benefits later two years
12
[92]
Requiring recipients 10 work at public service job
83
Both the same (VOL)
2
Neither (VOL)
1
Not sure
2
(READ:) Now, 1 have some questions specifically about the first proposal that provides for a two-year limit on weifare
benefits, without any guarantee of a job.
14a. If there were a wo-year Mrd on walfare benefits, would you favor a hard-and-fast cutoff for all able-bodied
recipients after two years, or do you think the limit should be applied on a case-by-case basis?
Hard-and-fast cutoff
19
[93]
Case-by-case basis
79
Not sure
2
DEC-10-1993 13:35 FROM CDF
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Study #38058-page 10
14b.
For each at the following CASES, please tell me d the cutoff should apply to this person after two years on
walfare, or # an axception should be made in this casa First, (READ ITEM), should the two-year Ema apply
in this case, or should this be an exception? (ROTATE ORDER ON EVERY OTHER INTERVIEW.)
Apply
Make
Not
Limit
Exception
Sure
A mother with prischool children
21
72
7
(94)
Someone who this worked for many years and s on
wallare for the first time
35
59
6
[85]
A teenage mother who has rxx completed high school
43
50
7
[96]
Someone who the in an area where the unemployment
rate is more than ten percen:
36
56
8
(97)
someone who is in a job-traning program but still reads at
the seventh grada level
41
53
6
[98]
A mother on wellare who works part time at a low-wage job
18
77
5
[99]
14c.
in one version gi the two-year mimit, able-budied recipients who reached the limit would lose their benefits and
would not be alk wed to receive weffare for the next three years under any dicumstances Would you say this
plan is too harsh, too lenters, or about right?
Too 13rsh
51
[100]
Too enient
3
About right
42
Not sure
4
14d.
How many of the people who lose their waker benefits under this plan do you think will be able to find jobs-
nearly all of them, most but not all, some but not most or only a new?
Nearly all will fnd jobs
8
[101]
MCSI but not all will find lobs
34
Same but not TOST WIR find jobs
38
Only a few will find jobs
16
Not sure
4
DEC-10-1993 13:36 FROM CDF
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Study #3805B-page 11
140. Here are some concerns people have regarding a two-year fimit on welfare benefits. For each one, tell me
# you strongly agree, somewhat agree, somewhat disagree. or strongly disagree with the concern. (READ
concern? FIRST ITEM) Do you strongly agree, somewhat agree, somewhat disagree, or strongly disagree with this
Strongly
Somewhat
Somewhat
Strongly
Not
Agree
Agree
Disagree
Disagree Sure
Many poor children will be hurt by to cutoff, through no
fault of their own
54
34
7
4
1
[102]
A two-year firmit is too rigjid because some poor people
need more time than others to become self-sufficient
:
30
33
19
16
2
[103]
It's not fair to cut off benefits without guaranteeing a job
21
23
27
26
3
[104]
More children would be placed in foster care if welfare
for their families is ended
23
32
23
15
7
[105]
With the economy in trouble the way P is, this is a bad
time to start cutting families off from welfare
29
29
22
17
3
[106]
There aren't enough jobs for all the people who will be
cut off under the two-year limit
29
31
22
13
5
[107]
The limit will just increase crime andicisorder in poor
neighborhoods, without really solvir 9 the welfare
problem
31
26
23
16
4
[108]
More families with children will be homeless
29
33
23
11
4
[109]
15.
Finally, I'm going to read yes two statements that might be made by people running for public office. Based
just on these statements, tell me which candidate you would be more likely to vote for.
Candidate A believes the best way to get people off the welfare rolls is to require people to get the education
and training they need, and than to require those who are employable to take jobs. Able-bodied adults should
support their children, and the government should help them meet their obligations.
Candidate B believes the best way to get people off the welfare rolls is to cut off benefits after two years, so
that recipients will have tc go out and find jobs and support themselves. The government should not
guarantee else. jobs for welfare recipients at taxpayer expense because it does not guarantee a job for anybody
For which cancidate would you most likely vote-Candidate A or Candidate B?
Candidate A/Require training and work
64 [110]
Candidate B/Cut off benefits
31
Neither (VOL)
2
Not sure
3
DEC-10-1993 13:36 FROM CDF
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Study #38058-page 12
FACTUALS: Now I am going to 85A you 8 few questions for statistical purposes only.
Fia
Did you happen to vote in the 1992 presidential election?
(IF 'YES,' ASK:) For whom dd you vote-George Bush. the Republican, Bill Clinton. the Democrat, or Ross
Peral the Independent?
Voted a George Bush
30
[11:]
Voted a B# CEnton
38
Vated DI Ross Perox
15
Other candidate (VOL)
.
Too young (VOL)
1
Not surB/refused/didn't vote
16
F1b.
Regardless of how you may D3 registered. how would you describe your overall point of view in terms of the
potrical partiers? Would you say you are mostly Democratic, leaning Democratic, completely Independent
leaning Republican, or mosty Republican?
Mostly Democrate
25
[112]
Lesning Democratic
11
Completely Independent
30
Leaning Republican
12
Misily Republican
19
Nct sure
3
F2.
In politics today. do you generally consider yourself to be liberal, moderame, or conservative?
Liberal
20
[113]
Moderate
41
Conserve VE
32
Not sure
7
F3.
What is the last grade you completed in school? (DO NOT READ CHOICES.)
Some high school or less
8
[114]
High school graduate
34
Some college, no degree
20
Vocational training, 2-year college
8
year degree
18
Postgraduate work or degree
12
Not sure
DEC-10-1993 13:37 FROM CDF
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Study #38058-page 13
F4.
How old are you? (IF REFUSED, ASK:) Well, can you tell me which age group you belong to? Are you in
the age group 1:3 to 24, 25 to as 30 to 34, 35 to 39, 40 to 44, 45 to 49, 50 to 54, 55 to 59. 60 to 64, or 65 and
over?
18-24
8
[115]
25-29
8
30-34
11
35-39
11
40-44
11
45-49
10
50-54
7
55-59
7
60-64
7
65 and over
19
Refused
1
F5.
What type of work does the head of the household usually do? What is the job called? (BE SURE TO
CLASSIFY PROPERLY. WRITE JOB DESCRIPTION IN SPACE BELOW. IF HEAD OF HOUSEHOLD IS
UNEMPLOYED. GET USUAL OCCUPATION.)
High-level professional
9
[116]
Farmer/rancher
-A
[117]
Micktle-levei professional
11
Homemaker
1
Executive, manager
6
Retiree
23
Sales, proprietor
7
Student
T
White collar worker
8
Other
1
Skilled laborer
31
Not sure/retused
1
Semi- and unskilled laborer
(ASK OF ALL WOMEN.)
F6.
Do you work outside the name or not?
Work outside the home
29
[118]
Do not work outside the home
21
Not sure/refused
2
(ASK EVERYONE)
F7.
Do you have any children: wt o live at home with you?
Yes, have children at home
44
[119]
No, do not have children at home
55
Not sure/refused
1
F8.
in what religion were you becught up?
Protestant
53
[120]
Catholic
27
Jewish
2
Other
12
None
4
Not sure/refused
2
DEC-10-1993 13:37 FROM CDF
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94562557 P.17
Study #38058-page 14
F9.
Are you white, tack Hispanic, Asian, or something else?
White
83
[121]
Black
10
Hispanic
4
Asian
-
Other
2
Not sura/refused
1
F10. If you added together the yearly income of all the members of your family who were living at home last year,
would the total be less than $10,000, between $10,000 and $20,000, between $20,000 and $30,000. between
$30,000 and $40,000, between $40,000 and $50,000. between $50,000 and $75,000, or would the total be more
than that?
Less than $10,000
6
[122]
Between $10,000 and $20,000
16
Between $20,000 and $30,000
18
Between $30,000 and $40,000
17
Between $40,000 and $50,000
11
Between $50,000 and $75,000
15
More than $75,000
8
Not sure/refused
9
F11a. Have you or aryone in your immediate family ever received welfare benefits?
Yes, nave received
20
[123]
No, have not received
78
Not sure
2
F11b. Have you or anyone in your immediate family ever received food stamps?
Yes, have received
25
[124]
No, have not received
73
Not sure
2
F11c. When you were growing us; would you say your family was poor, working class, middle class, or well-to-do?
Family was poor
21
[125]
Family was working class
44
Family was middle class
31
Family was well-to-do
3
Not sure/refused
1
file welfne refree
tional in the state of Denmark. Methinks the end of my
Hamlet on Prozac.
parents' marriage is the result of people who did not
own their anger but who let their anger own them. Boy,
it's a nice temperature today! (Drinks again.) How won-
drous this quaff be! Hey, Laertes, man, I thank you for
THE HAPPY DANE
this juice and beg you give me more.
KING: (Darkly.) Yes, Laertes, let us to the apothecary
table and make new, more potent ones.
(They exit as OPHELIA enters.)
HAMLET: This castle wants but a little light
and
maychance some prettily colored throw rugs.
By Douglas G. McGrath
OPHELIA: (Singing eerily.) "Father's by the willow, its
hoar leaves crying on his eyes
(Scene: Elsinore. Enter CLAUDIUS, the King, and GERTRUDE, the
HAMLET: Ophelia, sing thee another song! Dost thou
Queen.)
know "Love That Month of May!"? Or sing ye about
KING: Wife, your face is sickled o'er with sadness. Be
what fair flowers are there entwined in your hair.
you still bestooped by the death of your husband, my
OPHELIA: Soon they will be dead, along with the per-
brother, once the king, who died during his nap when I
son in whose aforementioned hair they are entwined.
swear I was in town looking at some oxen?
HAMLET: Life, Ophelia, as now I see it, is all about
QUEEN: Beloved brother-in-law and husband, if I am
integration. Do not project your feeling states, but sit
sickled o'er, it is my son Hamlet whom I am sickled o'er
with your pain, and in the wake cometh joy. Think not
o'er. He doth so deeply mope!
of the sky as spotted with cloud but as partly sunny. As
KING: Manic-depression, thy name is Hamlet!
'tis, your grief is riven off from your integrated self and
QUEEN: In my chamber short seconds ago, he stabbed
that can only mean you're heading for a shame-spiral
Polonius through a curtain and Polonius is no more.
which will set your life at no more than a pin's fee.
KING: You know what this means, my queen?
OPHELIA: He who buys my life by a pin's fee will by
QUEEN: Indeed, m'lord. We'll need a new curtain.
that same fee be gouged, if value be his aim.
(GERTRUDE Exits. Enter LAERTES.)
HAMLET: O.K., O.K., I share your internalized anger.
KING: Hail, Laertes, fresh from apothecary class! Have
But if my experience may but guide you, take one of
you the unction I asked you should concoct for our
these pills every three hours in a cup of wine and flights
Hamlet, so sorely vexed?
of angels will follow you about all day long, humming
LAERTES: Indeed, m'lord. Enmixed in this chalice of
the most enjoyable little tune in your ear. I beg you take
mineral water, 'twill make Hamlet ne'er feel major bipo-
this advice to heed: get thee to a pharmacy! Take my
lar swings again! Nor with good fortune, any swing at
arm, I pray you, and let me hie you there. (Exeunt.)
all. "Tis titled "Prozachery," after my lab partner, Zach
Fortinbras who studies to be a golf pro. But hark, here
DOUGLAS G. MCGRATH is a frequent TNR contributor.
is Hamlet now!
HAMLET: Oh, that this too too solid flesh would melt,
thaw and resolve itself into a dew, or that the Everlasting
had not fixed his canon 'gainst-how now!
A welfare reform proposal.
LAERTES: Salutations, Hamlet. Hey, nice doublet.
Prithee, have some Poland Spring and so elate thy spirit.
HAMLET: Ha, Laertes, that is a good one! My spirit is as
dead as he whom I slipped it to through the curtain.
Still, this bubbly froth could hardly hurt it. (Drinks
deeply.) Now, where was I? Oh, yes-too too solid flesh,
TARGET THE KIDS
blah-dee-blah, blah, blah. That it should come to this:
so excellent a king but two months dead, and now his
widow serves the funeral meats at her wedding to his
By Paul Offner
brother! (Suddenly softening.) Of course, 'tis a conser-
vation of resources devoutly to be wished! And on
t last, we seem to be moving toward a consensus
deeper thought-and methinks I've ne'er had deeper
thoughts than these-I would not want mother to be
A
on welfare reform. Many in Congress, on both
sides, strongly support the proposition that the
alone the rest of her life in a country as prone to denial
nation's main welfare program, Aid to Families
as this one. If marry again she must, how deft that she
with Dependent Children (AFDC), should be converted
marry my father's brother, so alike my father in size and
into a program emphasizing work. The catch, of course,
beard and last name! (Drinks again.) Hey, and speaking
is that it's expensive. Including day care and the other
of too too solid, Mother and Father's relationship could
needed services, it costs at least $5,000 per year to edu-
not have been all that healthy if again so quickly she
cate or train a welfare mother, not counting the cash
could rebetroth herself. There's something dysfunc-
payments she receives. Just putting her to work costs
JANUARY 24, 1994 THE NEW REPUBLIC 9
$4,000 a year for day care, transportation and supervi-
started the Learning, Earning and Parenting (LEAP)
sion. And there are 5 million AFDC families. Meanwhile,
program in 1989, requiring teenage AFDC mothers to
the federal government is running a massive deficit.
stay in school. Since there are only 20,000 of these teen
Few people favor raising taxes to fund welfare reform,
welfare mothers, the state could afford to provide all of
and after repeated efforts at deficit reduction, there are
them with necessary support services. So the element of
a few easy spending cuts that haven't already been
uncertainty is eliminated-if you're a teen parent on
reserved for other purposes-funding health care
AFDC in Ohio, you're in LEAP. If you don't attend school,
reform, for instance.
your grant is reduced. If you show up regularly, you
receive a bonus. A recent evaluation by the Manpower
o here's the danger. Congress will pass some
S
Demonstration Research Corporation found significant
great-sounding welfare reform plan, but without
increases in school enrollment. Similarly, MDRC's evalua-
adequate funding. The states will not be able to
tion of the GAIN program in Riverside, California, shows
provide the needed training and work slots, and
relatively large earnings increases and welfare savings in
for most recipients nothing will change. In short order,
a work program in which the participation requirement
the critics will be saying that the 1994 initiative was a
applies to everyone.
failure, just like earlier ones. And that will undermine
So here's the quandary. Welfare reform is not likely
any future efforts at real welfare reform.
to succeed unless all members of the target group are
Half-measures are, after all, the norm with this sub-
required to participate. Unfortunately, that's expensive,
ject. When the Family Support Act was passed five years
and at the present time we're short on money. And
ago, for instance, Congress said that adult welfare recip-
even if we had the money, it's not clear we know how to
ients had to work or participate in job training, and
create all the needed jobs. So what do we do?
those who didn't would be sanctioned. Unfortunately,
however, only about one-sixth of the necessary slots
ne possibility is to phase in the new program.
were funded. The law gave priority to volunteers, and in
O
Thus, both the Clintonites and the House
most places that's all there was room for. So those who
Republicans would limit the reform program
wanted to sit at home watching television were free to
to welfare applicants, i.e., to those coming onto
do so. A study conducted by Rockefeller University
the rolls. Sadly, this doesn't help much because welfare
researchers a year ago found that the Family Support
recipients are constantly moving on and off the rolls.
Act was failing to change "the welfare culture." Surprise.
Suppose the program starts in October 1994 (as in the
And it's not purely a matter of money. Many critics
Republican House bill), and is limited to those applying
doubt we could create all the jobs needed to put welfare
after that time. Even if we exempt those who cannot
recipients to work even if the funds were there. Accord-
work or who have very young children, there would be
ing to one estimate, for instance, the Clinton work-after-
1 million eligibles in 1995, 2.3 million in 1996 and
two-years proposal would require 1.2 million to 1.5 mil-
2.7 million in 1997. At $4,000 to $5,000 per person, the
lion public service jobs. That's twice the number of jobs
costs add up quickly.
funded by the Comprehensive Employment and Train-
Or the program could be phased in by area. Congress
ing Act of 1973 (CETA), our last effort to create jobs for
could limit the new program to five to ten states with
the unemployed. And that experience provides little
the understanding that other states would be brought
room for optimism-CETA was terminated in 1981 amid
in as funds become available. The only problem is that
a flurry of charges that it led to leaf-raking and scandal.
it would be hard for Clinton to claim that he had
Of course, attitudes have shifted. Twelve years ago,
changed welfare as we know it when he runs for re-
President Ronald Reagan led the fight against CETA out
election in 1996. In addition, the average member of
of an instinctive revulsion for public jobs programs.
Congress is not likely to support this approach unless
Today, by contrast, 162 Republican House members—
his state is in the group guaranteed funding at the out-
all but thirteen-are supporting a bill calling for even
set. So there would be great pressure to add states as
more public jobs than the Clinton plan does (it
quickly as possible, and in no time at all the demand for
extends the work requirement for welfare mothers to
resources would exceed the supply.
non-custodial fathers of AFDC children). Whether these
The only way to solve this problem is for Congress
members of Congress would continue to support, and
and the president to agree to target their efforts. Maybe
fund, a large national public jobs program if it started
five years from now the budget picture will have
attracting the kinds of criticism that were leveled at
improved, and a broader reform initiative can be put in
CETA twelve years ago remains to be seen, of course.
place. But for now let's do something that is consistent
Most of the forty welfare experts convened by Douglas
with available resources.
Besharov at the American Enterprise Institute three
For instance, Congress could target teenage parents
weeks ago doubted the feasibility of such a large public
on AFDC. This is where, after all, the whole cycle of wel-
jobs initiative.
fare dependency begins. Here's a possible reform pack-
In a few places around the country, there have been
age: teenage mothers would have to live with their fam-
welfare reform demonstration projects that have
ilies to receive AFDC (they could not move out and get
achieved the goal of universal participation. It has made
their own apartments), and they would have to stay in
all the difference. In Ohio, for instance, the state
school until graduation or until they reached the age of
10 THE NEW REPUBLIC JANUARY 24, 1994
20. Those who didn't would lose part of their AFDC
hours later in the freezing dawn at the airport in Yere-
checks. After receiving their degrees, or reaching 20,
van, the capital of Armenia.
they would be offered work, but not welfare. Finally,
The powdered milk was part of the nearly thirty tons
teen parents would go to the front of the queue for the
of aid (food, medicine and clothes) that Lady Cox and
purposes of determining paternity and obtaining child
Christian Solidarity International, a Swiss charity orga-
support orders.
nization, were delivering to the people of Armenia and
Since there are only about 400,000 teen AFDC moth-
especially of Nagorno-Karabakh. It was the ninth such
ers, the cost of these changes would be modest (about
charter-flight.
$500 million a year). But it would be a sound invest-
Although it declared independence in 1991 and has
ment. Teenage girls contemplating motherhood and
its own Parliament and flag and national anthem, and
welfare would know that they would have to live at
even a border crossing station, Nagorno-Karabakh has
home, stay in school and go to work after graduation.
not been recognized by any country-not even by
And it would be a sure thing.
Armenia, to which it would ultimately like to be
What would prevent young women from waiting
attached. And there is little reason to believe that the
until they are 20 to get pregnant and go on welfare?
five-year-old bloody conflict between the Armenians,
Nothing. But even this would be an improvement. For
Azeris and Karabakhs, which has cost an estimated
one thing, women of 20 are much more likely to have
15,000 lives, is coming to an end. This ethnic conflict
graduated from high school. It is the teen mothers who
was probably unavoidable: Josef Stalin declared in 1923
are most at risk of being permanently trapped in
that this small territory-approximately the size of
poverty. And by concentrating our efforts on this one
Delaware-was to be an enclave inside the Azeri Social-
group, we maximize our chances of reducing long-term
ist Soviet Republic, even though two-thirds of its
welfare dependency.
200,000 inhabitants were Armenian (Christians) and
The particulars of such a plan can be debated, of
one-third were Azeris (Turkish by culture, Muslim by
course (if the funds are available, it might make sense
religion).
to target mothers up to age 25, for instance). But what
matters is that there be a plan, and that it be realistic.
o there it was, separated from the Armenian
While there is great enthusiasm in Congress for carry-
S
motherland by a corridor four miles wide at its
ing out comprehensive reforms right away, we would be
narrowest, but ruled from the Azeri capital of
better off passing something more limited that has a
Baku. According to Zori Balayan, one of the lead-
real chance of working. There have already been too
ers of the Karabakh independence movement, during
many failures in the war against poverty. Showing tax-
Soviet times children here had no books in Armenian;
payers that real improvements are possible is the most
people in Nagorno-Karabakh could not listen to Arme-
important contribution any of us could make to the
nian radio or T.V. and were subject to a mixture of Russi-
long-term cause of rescuing the underclass.
fication and Azerization. Not surprisingly, the Armeni-
ans-whose appearance in Asia Minor, according to the
PAUL OFFNER is a legislative aide to Senator Daniel
Greek historian Herodotus, dates back to the twelfth
Patrick Moynihan. The views expressed here are his
century B.C.-were not happy with this arrangement.
own.
In the end of 1987, encouraged by perestroika, the
Armenians started raising their voices: deputies from
Karabakh demanded that their district be attached to
STEPANAKERT
POSTCARD
Armenia proper. At the end of February 1988 1 million
people were in the streets of Yerevan. The next day, in
the Azeri towns of Sumgait and Baku, groups of Azeris
carried out pogroms against Armenians living there:
hundreds died, thousands were injured and some
BURNED-OUT
150,000 escaped to Armenia. A double exodus fol-
lowed: Azeris fled from Stepanakert, the capital of
Nagorno-Karabakh, and Armenians from the neighbor-
ing former capital of Shusha, where Azeris were pre-
dominant. The hostility turned into a civil war, fueled
By Anna Husarska
by the fall of the Soviet Union in 1991. When the Rus-
sian troops withdrew from the region, Azeris and
hould I snore, please don't hesitate to
S
Karabakhs started facing each other directly-using
wake me up," shouted Lady Caroline Cox,
military hardware left by the Red Army.
of the British House of Lords, as we bed-
In May 1992 the Karabakh forces took Shusha and
ded down for the night inside the Russian
then the border town of Lachin, thus hooking up
cargo plane carrying us from Switzerland to Armenia.
Nagorno-Karabakh with Armenia through a corridor
Not to worry. The engine noise inside the cavernous
several miles wide. The next year they recaptured almost
hull drowned out all other sounds. We stretched out on
all of Nagorno-Karabakh and then doubled the territory
top of boxes of powdered baby formula-and awoke six
under their control by invading Azerbaijan proper. As of
JANUARY 24, 1994 THE NEW REPUBLIC 11
CENTER ON BUDGET
AND POLICY PRIORITIES
February 15, 1994
To:
George Stephanopoulos
Gene Sperling
Melanne Verveer
From:
Bob Greenstein
Re:
Welfare Reform Financing Options
The attached short memo describes a particularly disturbing welfare reform
financing option now under consideration. I can't believe this is the type of action
any of you would want to take.
777 North Capitol Street, NE, Suite 705, Washington, DC 20002 Tel: 202-408-1080 Fax: 202-408-1056
21
CENTER ON BUDGET
AND POLICY PRIORITIES
FINANCING WELFARE REFORM:
SHOULD HOUSING SUBSIDIES BE COUNTED AS INCOME
IN THE FOOD STAMP PROGRAM?
One of the suggested welfare reform financing options is to cut food stamp
benefits substantially for households that live in public or subsidized housing. This
would be done by assigning a dollar value to the housing subsidy and counting it as
income when determining food stamp eligibility and benefit levels.
If this proposal were adopted, the result would likely be the largest food stamp
benefit cut in the program's history, larger than any of the food stamp benefit cut
proposals enacted - or even proposed - under Ronald Reagan and rivaled only by
some of the benefit cut proposals advanced by Jesse Helms in the early 1980s and
rejected on a bipartisan basis. The Reagan Administration considered this proposal but
rejected it.
This same proposal was the subject of a study conducted by USDA in 1980 and
1981. The USDA report, written by a highly respected analyst who is now at CBO,
concluded that counting housing assistance as income when determining food stamp
eligibility and benefit levels could force low-income families to choose between living in
decent housing and eating an adequate diet. The USDA report also found that most of
those whose benefits would be cut would be elderly people and single mothers with
children who have very low cash incomes. In addition, the study explained that
attempting to place a dollar value on the housing assistance received by low-income
households would be complicated, costly, and almost impossible to do accurately or
equitably.
Families at Very Low Income Levels Affected
During the past week, we have reanalyzed this proposal, using Census data from
the American Housing Survey and USDA food stamp data. We have found similar
results to the USDA study. About two million households would have their food
stamps terminated or cut. Close to 85 percent of the affected households would be
elderly people or families with children. (When the disabled are added in, the
proportion approaches 90 percent.) Moreover, these households are quite poor. About
three of every five families with children whose food stamps would be cut have cash
incomes below half of the poverty line. And because of the way this proposal would work,
an even larger share of the benefit cut would come from families below half of the
poverty line.
777 North Capitol Street, NE, Suite 705, Washington, DC 20002 Tel: 202-408-1080 Fax: 202-408-1056
The effects would be sharpest in high rent areas such as California and various
major metropolitan areas in the northern part of the United States. Under this proposal,
the higher the prevailing rental costs in an area, the greater the food stamp cuts would
be. For example, an AFDC family of three in San Francisco living in Section 8 housing
would have its food stamps slashed 95 percent, while an AFDC family living in Section 8
housing in Sacramento would lose 58 percent of its food stamps. An AFDC family of
three living in Section 8 housing in Boston would lose two-thirds of its food stamps. In
New York City, such a family would lose half of its food stamp benefit.
Some of the same geographic areas that are likely to be affected most heavily by
the Administration's proposed low-income energy assistance cut would be hit hardest
by this proposal. In addition, a significant number of low-income elderly Social Security
beneficiaries in high-rental cost areas would be terminated entirely from the food stamp
program.
The response from proponents of the proposal will be that since these households
pay less in rent due to their receipt of housing benefits, they need less in food stamps.
This argument misses several points. First, when a public housing authority pays a
landlord $250 a month to subsidize a family's rent, this does not provide the family with
$250 more for food and other necessities. Many families in subsidized housing do not
pay substantially less for housing than they paid before they began receiving a housing
benefit; part of what housing assistance does is to enable these families to move to
better quality housing that they previously could not afford. Being able to move out of
substandard housing or out of a drug-infested neighborhood to better quality housing
helps a family, but it doesn't necessarily provide substantial new cash income for
purchasing food and meeting other necessities.
In addition, the food stamp program already distinguishes between households
that receive no housing subsidy and spend a substantial portion of their income on
housing costs and households that do get a housing subsidy and spend a smaller
proportion of income on housing. Those spending a low proportion of income on
housing get little or no food stamp shelter deduction - and hence get a significantly
smaller food stamp benefit than those with high housing cost burdens.
This proposal presents some serious equity issues. Two households with
identical cash incomes to buy food would get radically different food stamp benefit
levels depending on whether they lived in a high rental cost area like California, Boston,
New York, or various other major metropolitan areas or in a lower-cost area like the
rural South.
Also of concern, the amount of "income" attributed to households living in
deteriorating public housing in crime-ridden neighborhoods could exceed what almost
anyone would pay to live in such units.
2
Racial Implications
Furthermore, low-income households that benefit from other federal, state, or
local forms of housing aid - like the mortgage interest deduction, a state or local
homestead exemption, the low-income housing tax credit, etc. - would not have their
food stamp benefits reduced; only recipients of Section 8 or public housing would. This
is of particular concern. Homeowner tax credits, exemptions, and deductions benefit a
disproportionate share of poor white households (the percentage of poor whites who are
homeowners is nearly double the percentage of poor blacks who own homes), while
public and Section 8 housing benefit a disproportionate share of poor black households.
As a result, this proposal would create some inequities along racial lines.
Exacerbating this problem, the proposal would cause much larger food stamp
reductions in urban than rural areas, because rental values are higher in urban areas.
This adds to the racial imbalance of the proposal since the ratio of the number of black
poor to the number of white poor is substantially higher in urban than rural areas. In
short, the proposal would affect blacks disproportionately, hitting the black poor
considerably harder than the white poor.
Lastly, this proposal could undercut one of the Clinton Administration's central
housing and anti-poverty policies - encouraging poor families to use housing benefits
they receive to move out of dangerous, high-poverty, inner-city areas with bad schools,
widespread crime, and few jobs to more stable areas with better job and education
opportunities. Since rents are higher in the more desirable areas, families that use a
Section 8 certificate to move to a better area would have their food stamps cut more
than families that receive a certificate but stay in impacted inner-city neighborhoods.
This could discourage poor families from moving out of slum areas.
The bottom line is that the proposal would almost surely lead more low-income
families and elderly people to run out of food before the end of the month and
experience hunger. Recent studies have found a significant incidence of hunger among
low-income children and elderly people. This proposal would exacerbate these
problems.
It would seem odd if an Administration that one year ago called for passage of
the Mickey Leland Child Hunger Prevention Act - and ended up getting only about
one-third of it - would now propose a deep food stamp cut that was larger than the
sum of all of the food stamp benefit improvement provisions it secured last year.
February 15, 1994
3
02/16/94
15:11
CBPP -> 4566244
NO. 721
901
FAX MESSAGE COVER SHEET
CENTER ON BUDGET AND POLICY PRIORITIES
Telephone: 202/408-1080
777 North Capitol Street, NE, Suite 705
Washington, DC 20002
Fax: 202/408-1056
If there are any problems with the transmission of this document,
please call 202/408-1080.
February 16, 1994
TO:
Melanne Verveer
FAX NUMBER:
202/456-6244
FROM:
Bob Greenstein
NUMBER OF PAGES:
6
(including cover)
Please note the graph. Additional material on welfare reform financing will come later
today or tomorrow.
02/16/94
15:12
CBPP
4566244
NO. 721
002
CENTER ON BUDGET
AND POLICY PRIORITIES
FINANCING WELFARE REFORM:
SHOULD HOUSING SUBSIDIES BE COUNTED AS INCOME
IN THE FOOD STAMP PROGRAM?
One of the suggested welfare reform financing options is to cut food stamp
benefits substantially for households that live in public or subsidized housing. This
would be done by assigning a dollar value to the housing subsidy and counting it as
income when determining food stamp eligibility and benefit levels.
If this proposal were adopted, the result would likely be the largest food stamp
benefit cut in the program's history, larger than any of the food stamp benefit cut
proposals enacted - or even proposed - under Ronald Reagan and rivaled orly by
some of the benefit cut proposals advanced by Jesse Helms in the early 1980s and
rejected on a bipartisan basis. The Reagan Administration considered this proposal but
rejected it.
This same proposal was the subject of a study conducted by USDA in 1980 and
1981. The USDA report, written by a highly respected analyst who is now at CBO,
concluded that counting housing assistance as income when determining food stamp
eligibility and benefit levels could force low-income families to choose between living in
decent housing and cating an adequate dict. The USDA report also found that most of
those whose benefits would be cut would be elderly people and single mothers with
children who have very low cash incomes. In addition, the study explained that
attempting to place a dollar value on the housing assistance received by low-income
households would be complicated, costly, and almost impossible to do accurately or
equitably.
Families at Very Low Income Levels Affected
During the past week, we have reanalyzed this proposal, using Census data from
the American Housing Survey and USDA food stamp data. Wc have found similar
results to the USDA study About two million households would have their food
stamps terminated or cut. Close to 85 percent of the affected households would be
elderly people or families with children. (When the disabled are added in, the
proportion approaches 90 percent.) Moreover, these households are quite poor. About
three of every five families with children whose food stamps would be cut have cash
incomes below half of the poverty line. And because of the way this proposal would work,
an even larger share of the benefit cut would come from families below half of the
poverty line.
777 North Capitol Street, NE, Suite 705, Washington. DC 20002 Tel: 202-408-1080 Fax: 202-408-1056
02/16/94
15:12
CBPP
4566244
NO. 721
903
The effects would be sharpest in high rent arcas such as California and various
major metropolitan areas in the northern part of the United States. Under this proposal,
the higher the prevailing rental costs in an area, the greater the food stamp cuts would
be. For example, an AFDC family of three in San Francisco living in Section 8 housing
would have its food stamps slashed 95 percent, while an AFDC family living in Section 8
housing in Sacramento (Rep. Bob Matsui's district) would lose 58 percent of its food
stamps. An AFDC family of three living in Section 8 housing in Boston would lose
two-thirds of its food stamps. In New York City, such a family would lose half of its
food stamp benefit.
Some of the same geographic areas that are likely to be affected most heavily by
the Administration's proposed low-income energy assistance cut would be hit hardest
by this proposal. In addition, a significant number of low-income elderly Social Security
beneficiaries in high-rental cost areas would be terminated entirely from the food stamp
program.
The response from proponents of the proposal will be that since these households
pay less in rent due to their receipt of housing benefits, they need less in food stamps.
This argument misses several points. First, when a public housing authority pays a
landlord $250 a month to subsidize a family's rent, this does not provide the family with
$250 more for food and other necessities. Many families in subsidized housing do not
pay substantially less for housing than they paid before they began receiving a housing
benefit; part of what housing assistance does is to enable these families to move to
better quality housing that they previously could not afford. Being able to move out of
substandard housing or out of a drug-infested neighborhood to better quality housing
helps a family, but it doesn't necessarily provide substantial new cash income for
purchasing food and meeting other necessities.
In addition, the food stamp program already distinguishes between households
that receive no housing subsidy and spend a substantial portion of their income on
housing costs and households that do get a housing subsidy and spend a smaller
proportion of income on housing. Those spending a low proportion of income on
housing get little or no food stamp shelter deduction - and hence gel a significantly
smaller food stamp benefit than those with high housing cost burdens.
This proposal presents some serious equity issues. Two households with
identical cash incomes to buy food would get radically different food stamp benefit
levels depending on whether they lived in a high rental cost area like California, Boston,
New York, or various other major metropolitan areas or in a lower-cost area like the
rural South.
Also of concern, the amount of "income" attributed to households living in
deteriorating public housing in crime-ridden neighborhoods could exceed what almost
anyone would pay to live in such units.
2
02/16/94
15:13
CBPP -> 4566244
NO. 721
004
Racial Implications
Furthermore, low-income households that benefit from other federal, state, or
local forms of housing aid - like the mortgage interest deduction, a state or local
homestead exemption, the low-income housing tax credit, etc. - would not have their
food stamp benefits reduced; only recipients of Section 8 or public housing would. This
is of particular concern. Homeowner tax credits, exemptions, and deductions benefit a
disproportionate share of poor white households (the percentage of poor whites who are
homeowners is nearly double the percentage of poor blacks who own homes), while
public and Section 8 housing benefit a disproportionate share of poor black households.
As a result, this proposal would create some inequities along racial lines.
Exacerbating this problem, the proposal would cause much larger food stamp
reductions in urban than rural areas, because rental values are higher in urban areas.
This adds to the racial imbalance of the proposal since the ratio of the number of black
poor to the number of white poor is substantially higher in urban than rural areas. In
short, the proposal would affect blacks disproportionately, hitting the black poor
considerably harder than the white poor.
Lastly, this proposal could undercut one of the Clinton Administration's central
housing and anti-poverty policies encouraging poor families to use housing benefits
they receive to move out of dangerous, high-poverty, inner-city areas with bad schools,
widespread crime, and few jobs to more stable areas with better job and education
opportunities. Since rents are higher in the more desirable areas, families that use a
Section 8 certificate to move to a better area would have their food stamps cut more
than families that receive a certificate but stay in impacted inner-city neighborhoods.
This could discourage poor families from moving out of slum areas.
The bottom line is that the proposal would almost surely lead more low-income
families and elderly people to run out of food before the end of the month and
experience hunger. Recent studies have found a significant incidence of hunger among
low-income children and elderly people. This proposal would exacerbate these
problems.
It would seem odd if an Administration that one year ago called for passage of
the Mickey Leland Child Hunger Prevention Act - and ended up getting only about
one-third of it - would now propose a deep food stamp cut that was larger than the
sum of all of the food stamp benefit improvement provisions it secured last year.
February 16, 1994
3
Monthly Food Stamp Benefits
With and Without the Proposal
02/16/94
(AFDC Families of Three)
15:14
$250
$224
$219
CBPP -> 4566244
$200
S172
$152
$152
$152
$150
$131
$110
$100
$64
$58
$50
$34
$7
$0
San Francisco
Los Angeles
Sacramento
Boston
New York
Chicago
Current Law
Proposal
NO. 721 905
02/16/94
15:15
CBPP -> 4566244
NO. 721
906
How Food Stamp Benefits Would Be Affected
For Households in Section 8 Housing
Benefit under
Benefit under
Current Law
Proposal
% Change
AFDC family of three, San Francisco
$152
$7
-95%
AFDC family of three, Los Angeles
$152
$34
-77%
AFDC family of three, Boston
$172
$58
-66%
AFDC family of three, New York
$219
$110
-50%
AFDC family of three, Sacramento
$152
$64
-58%
AFDC family of three, Chicago
$224
$131
-41%
Average single-parent family
of three in large urban area
$183
$110
-46%
Average family of three with children
(reflects both single and two-
parent families) in large urban area
$169
$89
-47%
file welpre CONFIDENTIAL repm
CENTER ON BUDGET
AND POLICY PRIORITIES
TO:
Leon Panetta, OMB
Alice Rivlin, OMB
Belle Sawhill, OMB
We' w asked sears
malaured to
-
George Stephanopoulos, White House
Gene Sperling, White House
All Here about this
Melanne Verveer, White House
Eller
FROM:
Bob Greenstein
INITIALS: M DATE: 8/14/2014
ADMINISTRATIVE MARKING
DETERMINED TO BE AN
DATE:
February 3, 1994
RE:
Serious Substantive and Political Problems in One of the Potential
Welfare Reform Financing Mechanisms
David Ellwood and Wendell Primus have asked me to review and work on
some welfare reform financing options they are putting together to "coordinate tax
and transfer mechanisms," including an option to count food stamps, AFDC, and SSI
as part of adjusted gross income. I've appreciated this opportunity to help.
But now that I'm into this work, I am very troubled by the principal options
under consideration. I fear they would cause serious problems, both substantively
and politically. Some options, such as the option to count these benefits as part of
adjusted gross income, would have disturbing and far-reaching effects.
For example, counting food stamps as part of adjusted gross income would
result in a substantial EITC cut for several million working poor families and thereby
require the President to abandon his goal that if a family works full time, it shouldn't
be poor. Furthermore, under such an approach, a significant number of low-income
working families would have the EITC increase they are set to receive as a result of
last year's reconciliation act canceled out entirely. And some low-income working
families would not only have their EITC increase canceled (and in some cases, be
subject to a net EITC cut), but would be hit with an increase in their income taxes on
top of that. This would undermine the President's statement that only the top 1.2
percent of Americans are subject to an income tax increase.
In addition, these options would raise marginal tax rates on many working
poor families to punishing levels that would be likely to discourage work, a matter
likely to spark criticism by Administration foes. Also, these options are quite
complex to administer; they would increase the administrative costs borne by state
welfare agencies, while being likely to drive up error rates in the income tax system.
777 North Capitol Street, NE, Suite 705, Washington, DC 20002 Tel: 202-408-1080 Fax: 202-408-1056
21
Tax filing also would become more complex for low-income working families,
causing many more than at present to have to pay commercial tax preparers.
There could be unintended side effects on the health care reform plan, as well.
Under the health care plan, the amount that a working poor family would be charged
for health insurance premiums depends on the family's adjusted gross income.
Counting benefits such as food stamps as part of adjusted gross income would raise
AGI - and thereby increase the amounts that millions of working poor and near-
poor families would have to pay for their premiums under the Administration's plan.
I have shared these concerns with David and Wendell (as well as serious
concerns on several other "tax/transfer coordination mechanisms" they are
examining) and wanted to share them with you also. I'm enclosing a memo on these
issues.
The issues raised in the memo do not mean that no viable savings options can
be developed in this area. As noted at the end of the memo, I think several
alternative options are worth exploring, and I know David and Wendell are working
hard on the knotty problems raised here. But the principal options now on the table
appear deeply flawed.
CC:
David Ellwood
Wendell Primus
2
file welfne reform
CENTER ON BUDGET
CONFIDENTIAL
AND POLICY PRIORITIES
TAXING MEANS-TESTED BENEFITS AND
OTHER TAX/TRANSFER COORDINATION MECHANISMS
The Welfare Reform Task Force is looking at an option to count food stamps,
INITIALS: 8/14/2014
DATE:
poses some serious problems.
ADMINISTRATIVE MARKING
DETERMINED TO BE AN
AFDC and SSI as part of adjusted gross income for income tax purposes. This option
I.
Problems With The Proposal
In his maiden address to Congress on February 17, 1993, President Clinton
pledged to secure policy changes ensuring that if a parent worked full-time, his or
her family would not be poor. "The new direction I propose," the President declared,
"will make this solemn, simple commitment: by expanding the refundable earned
income tax credit, we will make history; we will reward the work of millions of
working poor Americans by realizing the principle that if you work 40 hours a week
and you've got a child in the house, you will no longer be in poverty."
The Administration's EITC proposals, enacted last summer, were carefully
designed to achieve this goal. This were fashioned so that full-time minimum wage
earnings - plus the EITC and food stamps - would bring a family of four to the
poverty line.
Counting food stamps as part of adjusted gross income would, however,
undermine this achievement. It would reduce the EITC for full-time minimum wage
families that receive food stamps.
Under the tax code, EITC benefits are reduced $21 for each $100 by which a
family's wages and taxable unearned income exceed $11,000. If food stamps are
counted as part of adjusted gross income, a full-time working parent who is paid at
or near the minimum wage, and who earns between $8,500 and $11,000, will be
considered to have income exceeding $11,000. As a result, the parent's EITC will be
lowered. One consequence is that contrary to the President's pledge, a family of four
with a full-time minimum wage worker would be pushed below the poverty line.
As a number of you will recall, the Administration's EITC proposal was based
on the assumption that the minimum wage would be indexed for inflation from its
1992 level and would equal $4.50 an hour in 1994 dollars. This hasn't been done, and
as a result, we're still a bit short of the President's goal (a fact we've all soft-
777 North Capitol Street, NE, Suite 705, Washington, DC 20002 Tel: 202-408-1080 Fax: 202-408-1056
pedalled). To enlarge this problem substantially by taking back part of the EITC
increase won last year - and thereby eroding one of the President's top policy
accomplishments of 1993 - would be unwise from both a substantive and a political
standpoint, in my view.
During last year's budget debate, the Administration repeatedly said that its
EITC increase was set at the level needed to bring full-time working families out of
poverty. It would be embarrassing for the Administration to advance a proposal
now that effectively says "Whoops, we didn't mean it. We're going to withdraw
some of the EITC increase and walk away from the President's goal that if you work
full time, you shouldn't be poor."
To make matters worse, this problem is only the tip of the iceberg; other
problems posed by the proposal to count food stamps and other benefits as part of
adjusted gross income go deeper. For example, under this proposal, a number of
low-income working families would receive a net EITC decrease when both the EITC
expansions and the welfare reform bill provisions were considered. Last summer's
reconciliation act increased the maximum EITC for families with one child by only
$200. Counting food stamps as part of AGI would reduce the EITC by more than
$200 for a significant number of low-income working families with one child.
In addition, some families would not only have their EITC reduced but would
be saddled with an income tax increase on top of that. A family of three with one
child and with earnings between about $12,250 and $15,000 would face both a net
EITC cut and an income tax increase, if it received food stamps.
I would think this would pose some political problems. Last week, in his State
of the Union address, the President stressed that only the top 1.2 percent of taxpayers
will face an income tax increase, while much larger numbers of working families will
get a tax break due to the EITC expansion. This should be a winning theme for the
Administration and its Congressional supporters this year and for several years to
come. In fact, I understand you are planning an event in April at which the
President would urge eligible working families to file for the EITC, with the event
choreographed to call attention to the President's role in winning a tax cut for
millions of hard-pressed working families. The proposal to count food stamps and
other benefits as part of adjusted gross income would muddy this message and
compromise it. I believe that unveiling a welfare proposal which seeks to pay for
increased costs in the welfare system by canceling a portion of the EITC increase for
a sizable number of working families - and which results in a net EITC cut and an
income tax increase for some families that work for low wages and don't get AFDC
benefits - would be a political mistake.
2
Discouraging Work by Raising Marginal Tax Rates
This option also has other liabilities. One is that it would discourage work by
raising marginal tax rates to excessive levels. (As used here, marginal tax rates refer
to the portion of each additional dollar earned that the government takes away
through a tax increase or a benefit reduction.) For some working poor families, the
marginal tax rate would more than double under this proposal and be raised to the
70 to 75 percent range. In other words, 70 to 75 percent of the additional earnings a
family received from working harder would effectively be taxed away.
There are two reasons that counting food stamps and other benefits as part of
adjusted gross income (AGI) causes marginal tax rates to rise. First, many working
poor families whose earnings are too low to owe federal income tax would, when
their food stamps and other benefits were counted as part of AGI, be considered to
have adjusted gross income above the income tax threshold. As a result, they would
have to start paying 15 cents in income tax for each additional dollar earned.
Second, as noted above, counting food stamps as part of AGI would move
some families into the part of the EITC structure where EITC benefits decline with
each additional dollar earned. For families with two children, this would cause an
additional loss of 21 cents for each additional dollar earned. For families with one
child, it causes a loss of 16 cents for each additional dollar earned.
At present, many working poor families face a 31.65 percent marginal tax
rate - for each additional dollar they earn, their food stamp benefits are reduced 24
cents and they pay 7.65 cents in payroll taxes. Families that become subject to both
the federal income tax and EITC benefit reductions would lose another 31 cents to 36
cents for each additional dollar earned. (In many states, they also would become
subject to state income taxes. Most states use the federal definition of adjusted gross
income; since AGI would now include food stamp benefits, many families that didn't
owe state income tax before would now have to start paying it. That would raise
their marginal tax rate further.)
It's worth noting that the Administration's health care plan would already
raise the marginal tax rates facing these low-income working families, because the
low-income premium subsidy would decline with each additional dollar earned. If
the health care reform provisions are taken into account as well, some of these
working poor families could face marginal tax rates that approach 75 percent.
The increases in marginal tax rates caused by the health care plan are modest
enough to be manageable. So is the small marginal tax rate increase reflected in last
summer's EITC changes. But to add large, additional increases in marginal tax rates
on top of these other increases would raise marginal tax rates too high. It would
3
subject the Administration to criticism that it was penalizing work while claiming to
encourage it.
Effects on the Health Care Plan
The proposal to count food stamps and other benefits as part of adjusted gross
income also would cause many low-income working families to pay more for their
health care coverage than the Administration has said they would pay. Under the
Administration's health care plan, the amount that a low-income family would pay as
its share of health care premium costs would depend on the family's adjusted gross
income. If AGI is boosted by counting food stamps as part of it, the premium costs
that millions of low-income working families have to pay will rise as well.
Complicating the Tax Code
The proposal would add substantial new complexity to the tax system. The
IRS rules on what constitutes a "tax filing unit" differ from the food stamp rules on
what constitutes a "food stamp household" and the AFDC rules on what constitutes
an "AFDC family." The members of a food stamp household or AFDC family are not
always synonymous with the members of a tax filing unit. As a result, under this
proposal, a tax filer would need to know the amount of AFDC and food stamp
benefits provided during the tax year on behalf of each person who is a member of
the tax filing unit.
Providing this information to tax filers would not be easy. Each year between
December 31 and January 31, every state would have to print and mail large volumes
of W-2 type forms showing the amount of AFDC and food stamp benefits provided
during the year on behalf of each food stamp household member and each AFDC
family member. Since AFDC families and food stamp households often change
composition during the year, the state would have to prorate each month's benefits
among the individuals who were in the AFDC family or food stamp household in
that month and then add up the benefits that each individual had received during the
year as a whole.
I don't know whether all states could accomplish this task by January 31. (I
doubt anyone in the Administration yet knows the answer to this question either.)
Whether states could perform this task depends largely on the capabilities of state
automated data processing systems and the extent to which states do or can
computerize the necessary data.
4
One thing that is certain is that performing these tasks would entail added
administrative costs at the state level. I would expect that states would loudly insist
that the federal government bear 100 percent of these added costs.
Other complexities also would arise. During the course of a year, the
composition of many low-income families changes. As a result, the W-2 type forms
for some individuals would be sent to the wrong tax filer. If a child lived with a
low-income single mother for four months - and received AFDC and food stamps
during that time - but then moved in with the child's father and received no further
benefits, the mother would receive the W-2 form for the child. The father would
presumably claim the child as a dependent on his tax return. But it's unclear
whether he would ever get the W-2 form for this child.
A likely result of this process would be a significant increase in tax filing
errors. Furthermore, low-income families would almost surely be driven to
commercial preparers in larger numbers than at present. Meanwhile, the fees that
commercial preparers charge low-income families would rise to reflect the added
complexity of tax preparation for these families.
Marriage Penalties?
A related issue involves the effect of the proposal on marriage penalties.
While I haven't looked into this issue in any detail, there is likely to be a problem
here. If a prospective marriage partner has to pay taxes on the benefits received
earlier in the year by his potential spouse and her children, he might be discouraged
from entering into the marriage, at least until the end of the year. (If children were
born during the interim, they would be born out-of-wedlock.)
Deterrence Effects
This proposal also might deter a substantial number of poor families from
applying for basic means-tested assistance during times when they needed it, because
the families feared having to pay taxes on these benefits at the end of the year.
Studies indicate that after the enactment of legislation in the 1980s which required
that unemployment insurance be counted as taxable income, the proportion of
eligible households applying for unemployment benefits declined. A decrease in
participation rates is of less concern in a non-means tested program that does not
serve a primarily low-income clientele, but would be of greater concern in means-
tested programs targeted on families in need.
5
II.
Is the Proposal Needed to Curb EITC Abuse?
The argument has been made that a proposal such as this may be needed to
curb EITC abuse. If there is EITC abuse, it should be dealt with. But this proposal is
not the answer to this problem. It also is unclear whether an abuse problem exists on
a significant scale.
On the question of whether there is an abuse problem, all that we currently
know is that the number of head-of-household tax filers who receive the EITC is
larger than it looks like it should be, based on Census data. But we don't know what
this discrepancy between the number of families receiving the EITC and the number
that appear to be eligible, based on Census data, really means or whether it signals
something is wrong on a large scale.
The Census data are based on the income of families, not of tax filing units.
Because the IRS definition of tax filing unit and the Census definition of family differ
substantially, it is hard to match up these data. Adding to this problem, the Census
Bureau measures total money income, while IRS secures data on adjusted gross
income. AGI excludes various forms of income that the Census Bureau counts, such
as AFDC, SSI, most Social Security payments, child support, and the like. These
differences in the definitions of a filing unit and of what constitutes income make it
difficult to know how much of the discrepancy between estimates based on Census
data and the actual number of EITC filers reflects problems with the data, rather than
an abuse problem. For example, the number of tax filers who claim head-of-
household filing status is substantially larger than the Census data indicate it should
be at higher income levels as well (although the discrepancy is somewhat greater at the
lower income levels). This strongly suggests that a substantial part of the apparent
discrepancy is due to the lack of comparability between the income tax system and
the Census data, rather than to EITC abuse.
Adding to this dilemma, the Census data used in these comparisons appear to
leave out a few categories of families with children that are eligible for the EITC,
such as families that have a child over 17 who is disabled. Without going into the
details, there are technical problems with the data that may be responsible for some
of the apparent discrepancy. These are among the unanswered questions about these
data.
Let's assume, nevertheless, that a significant portion of the discrepancy is real
and an EITC abuse problem exists. The data we currently have do not tell us the
cause of such a problem. If there is significant abuse, we don't yet know its source
or what type of families are responsible for it.
6
One hypothesis that has been mentioned in some Administration meetings is
that some single parents may be receiving AFDC and food stamps for themselves
and their children, while having a live-in boyfriend who claims the children for EITC
purposes. Perhaps this is occurring. But we currently have no evidence of it.
(Moreover, this would require the boyfriend to claim the children as his foster
children on his tax return. I think it is unlikely that is occurring on a large scale,
especially since many of these families would be likely to fear it could jeopardize
their continued receipt of AFDC.)
Furthermore, if the number of families receiving the EITC is excessive, this
problem could also be due to other factors. Some middle-class families may be
underreporting their income to lower their income tax liability - and qualifying for
the EITC as a result. Or some married families in which the husband and wife have
different last names could be illegally filing as two heads-of-household, with the
result that one or both have incomes that fall in the EITC range. The bottom line is
that we neither know the extent to which an EITC abuse problem exists or what is
causing such a problem.
This makes proposals to tax food stamp, AFDC and SSI benefits especially
problematic. If there is an abuse problem caused principally by families at higher
income levels that receive no food stamps or AFDC, this proposal would do little to
curb this abuse but would lower the living standards of many poor and near-poor
working families. Until we know the nature and source of any abuse problem, we
cannot design an appropriate remedy for it. Advancing a "remedy" like taxation of
benefits to deal with a potential EITC abuse problem entails using a shotgun
approach that is likely to injure many more of the innocent than of the guilty. As
noted above, large numbers of hard-working two-parent families that don't get AFDC
and are not guilty of any abuse - but that rely on food stamps to help make ends
meet - would be hit by the taxation-of-benefits proposal (and by most alternative
proposals under examination).
III.
Recouping Benefits from Households With High Annual Incomes
A second argument sometimes advanced for this proposal is that it would
recapture a portion of the benefits provided to households that received benefits for a
few months of the year while their incomes were low but that had relatively high
incomes for the year as a whole. Households whose principal wage-earner was
unemployed for part of the year would be affected most.
There may be merit in pursuing this issue. But the proposal to count food
stamps and other benefits as part of adjusted gross income reduces EITC benefits and
raises taxes on many families that work year-round, earn their income steadily
7
throughout the year, and have annual income below the poverty line (or below the
food stamp income limits). Here, too, counting food stamps and other benefits as
part of adjusted gross income represents a shotgun approach that claims large
numbers of the innocent among its victims.
IV.
What to Do?
I've also looked at some of the other options under consideration to
"coordinate taxes and benefits," such as proposals to use the tax system to recover a
portion of the food stamp, AFDC, and SSI benefits provided to households whose
adjusted gross income plus their benefits exceeds the income tax threshold (or under
an alternative approach, exceeds 130 percent of the poverty line). These options pose
quite serious problems as well. They would raise marginal tax rates on some
households to 80 percent or more, reduce benefits for many working households who
have quite low incomes and are committing no abuse - the type of households the
Administration has said it wants to help - and complicate tax filing even more than
the option discussed in the preceding pages. These options essentially constitute a
back-door way to reduce the EITC for these families, since EITC reduction would be
the most common way of collecting a portion of the food stamp and other benefits
the family received during the year. These options also might result in some elderly
and disabled SSI recipients having to pay back part of their benefits at tax time. I've
written a memo for Wendell and David outlining what I believe to be the flaws with
these options.
All of this doesn't mean that no viable options can be developed in this area.
It may yet be possible to do so. But doing this will be a stiff challenge.
At the present time, I can think of two options that may warrant exploration:
Counting AFDC and SSI cash assistance - but not food stamps and
non-cash benefits - as taxable income, and doing so in a way that does
not affect EITC benefit calculations. This would mean some families
still faced an increase in their income taxes, although that occurrence
would largely be limited to families that were on welfare part of the
year; it would not affect poor families that worked throughout the year
and received no AFDC benefits, but relied on food stamps to help make
ends meet. Hence, it would not compromise the President's goal of
ensuring that full-time working families were raised to the poverty line.
Recovering a portion of AFDC, SSI, and food stamp benefits provided
during the year to tax filers whose annual income exceeds 150 percent
of the poverty line (the level used as the cut-off for the low-income
8
subsidies in the health care reform plan). This would target the
provision on those who received benefits during part of the year but
had relatively high annual incomes. It would avoid making low-income
working families whose incomes are low enough to qualify for food
stamps year round pay back some of their food stamp benefits, with the
collection made by cutting their EITC.
These options would ease some of the problems outlined here, although
significant problems would remain. These options also would save less money than
the option to count food stamps and other benefits as part of adjusted gross income.
It's unlikely a sound option can be developed that yields big savings in this area.
To proceed in looking for viable options, two issues first need to be addressed.
One is to ascertain the extent - and the causes - of any EITC abuse problem that
may exist so that appropriate remedies can be designed to address the problem. The
second is to learn what options can be administered by states and the IRS, and to
determine how much lead-time would be required to put complicated new tax and
benefit tracking procedures of this nature into place.
February 2, 1994
9
FEB 25 '94 03:34PM CATHOLIC CHARITIES USA
file welfre refree
P.2
Catholic
February 25, 1994
Charities
USA President William Jefferson Clinton
The White House
Washington, D.C.
Dear Bill,
Rov. Free Kammer, H
President
If the reports were not so persistent regarding cuts to means-tested programs
for the poor, I would not be writing. Like you, I am deeply interested in
reform of the welfare system, with the emphasis -- which you have
championed - placed upon moving those who can from welfare to work.
The sad turn of events appears to be that those charged with developing plans
for reform now find themselves turning to programs for other poor families
to find necessary funding. Refugees are singled out, but they are not the only
ones who seem to be falling outside a Reagancsque "truly needy" category.
We hear of cuts reminiscent of the early 80s and envision driving millions
more people into deeper desperation. The argument that funds are merely
being shifted into job training and support services falters on the reality that
money will go from poor families to non-poor providers.
We all recognize the constraints of debt and deficit and the various items
"taken off the table" in one way or another. We also recognize that whatever
your administration brings to Congress will likely be only the starting point
from which Congress will make things worse, not better
My strong recommendations are: (1) scale back the cost of the plan as far as
possible, focusing on critical groups; (2) avoid deep cuts in means-tested
programs that will only worsen poverty; and (3) protect those willing to work
but unable to find jobs, no matter how long it takes.
Only you can protcct the poorest Americans and set a positive tone to the
national debate that values work and rejects bigotry and punitive measures.
Thank you for your continuing leadrship on welfare reform. My best to
Hillary. Hope to see you both soon.
1731 King
Street.
Sude 200
Sincerely yours.
Neo ndhla
Virginia
22314 ,
Feds
Phone:
(113) 549-1350
Fred Kammer, SJ
Fax
(7(3) 545-1656
Clinton Presidential Records
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1999 Report
file welfne reform
poverty
amid
PLENTY
The Unfinished Business of Welfare Reform
A NATIONAL CATHOLIC
SOCIAL JUSTICE LOBBY
NETWORK's National Welfare Reform Watch Project
NETWORK
This chart replaces the one at the top of page 8.
Quality of Life Indicators of Respondents
from Table 6, Appendix A
Adults
Parents reporting
chidren's suffering
50
40
45%
43%
30
29%
24%
24%
20
14%
10
0
Quality of Life
Unmet
Unmet
Eating Less
Indicators:
Health Needs
Dental Needs