Time - Man of the Year/Time_Man_of_the_Year_Compact_Publishing_3YX-Disc-1_Compact_Publishing_1993.iso/moy/052592/05259926.000

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                                                                                SOCIETY, Page 44

How to Get America Off the Dole


The explosion in L.A. has redoubled calls for welfare reform,
but procedural Band-Aids and fiscal tinkering won't solve the
problem

By THOMAS SANCTON -- With reporting by Sylvester Monroe/Los
Angeles, Andrea Sachs/ New York and Elizabeth Taylor/Minneapolis


    The initial White House reaction to the Los Angeles riots
was to blame them on the "failed" Democratic poverty programs
of the '60s and '70s. That claim by Marlin Fitzwater was
pilloried so mercilessly that President Bush had to backpedal
away from his own spokesman. But Fitzwater's comments did not
come out of a vacuum. Bush has made public assistance --
specifically welfare -- a constant target of his campaign
rhetoric. He compared the dole to a "narcotic" in his State of
the Union message and regularly peppers his speeches with vows
to "change welfare and make the able-bodied work."

    This line is not surprising coming from a political heir
of Ronald Reagan, who voiced his contempt for public assistance
with apocryphal stories of "welfare queens" driving Cadillacs.
What is surprising is how many Democrats and liberals are
sounding the same themes. Presumptive nominee Bill Clinton
insists that "those on welfare move into the workplace" within
two years. New Jersey Governor Jim Florio denounces the current
welfare system as "morally bankrupt." Many state governments,
meanwhile, are slashing benefits and throwing thousands off the
rolls. "America has moved from a war on poverty to a war on the
poor," says Yale University professor Theodore Marmor, co-author
of America's Misunderstood Welfare State.

    What's going on here? Has America's traditional compassion
for the downtrodden worn thin? Is the country that paid
billions to liberate a wealthy oil sheikdom on the other side
of the globe suddenly unwilling to feed hungry kids at home?

    Not exactly. Americans have always been willing to help
the genuinely needy. But there is growing resistance to the
notion of giving money unconditionally to able-bodied adults --
and an insistence on mutual obligation as the only fair basis
for public aid. "There's a deep-running stream in American
life," says Marmor, "that comes out a fundamental belief in
individual responsibility, in the concept that you earn your own
way."

    Welfare has never been popular in the U.S. The word itself
has become a politically charged term, one that often conjures
up racial stereotypes. When participants in a TIME/CNN poll
conducted by Yankelovich Clancy Shulman were asked if the
government was spending too much on the "poor," only 17% said
yes; asked if too much was being spent on "welfare," 32% said
yes. Yet the same poll showed strong support for positive,
rather than punitive, reforms. Ninety-three percent said the
main goal of such efforts should be to make people
self-sufficient; only 3% cited cost cutting as the aim.

    The Los Angeles riots have cast a spotlight on the
problems of poverty and urban decay. But long before that
explosion, the recession put welfare high on the political
agenda by swelling public-assistance rolls with legions of
unemployed workers. Around 4.7 million households, or 13.6
million individuals, are receiving Aid to Families with
Dependent Children (AFDC), the main cash-assistance program.
That's an increase of 24% in the past two years. The number of
food-stamp recipients shot up from 20.9 million in October 1990
to 24.2 million a year later. The total cost of these two
programs alone is more than $40 billion a year.

    The reluctance of taxpayers to foot that bill is hardly
eased by the stereotype of inner-city welfare mothers having
baby after illegitimate baby while their boyfriends sell crack
on street corners. Or by the idea that most welfare recipients,
preferring idleness to work, remain on the dole for decades. Or
by the assumption that welfare costs are ruining the U.S.
economy. But much of the popular thinking about welfare is
contradicted by the facts. Items:

    -- Welfare is not primarily a problem of the urban black
underclass. Ninety percent of America's poor live in suburban
and rural areas, and 60% of all AFDC recipients are white.

    -- The average AFDC family has only 1.9 children, fewer
than the average U.S. family.

    -- No one is getting rich off the dole: the average
monthly grant in 1990 was $377 for a family of three -- less
than half the poverty level.

    -- Far from spinning out of control, AFDC payments have
declined 42% in real terms over the past two decades.

    -- Half of all aid recipients get off the rolls within two
years. Only 2% remain for more than a decade.

    These facts, of course, do not minimize the very real
problems associated with life on the dole. The system isolates,
stigmatizes and degrades its clients. It gives people few
incentives to become productive, self-reliant citizens.
Democratic Senator Daniel Moynihan of New York, one of the
country's leading welfare experts, believes that "dependency is
becoming the sort of characteristic problem of the
postindustrial age, just as unemployment was the absolutely
baffling and very destabilizing problem of the industrial age."
Moynihan notes that of all American children born in 1980, 1 in
3 -- including 8 out of 10 blacks -- will wind up on welfare.

    Another unsettling statistic: more than half of all AFDC
children are born out of wedlock -- five times the national
average. Some analysts blame the dole itself for the high level
of illegitimacy, arguing that it destroys the family structure
by giving women a financial incentive not to marry. Yet as
Harvard University professor David Ellwood contends in his book
Poor Support, there is no statistical evidence that differences
in aid levels over time, or from state to state, have any effect
on the number of single-parent families.

    What most Americans mean by welfare is AFDC, which
provides cash benefits to single parents and their children. Yet
AFDC, funded roughly half-and-half by federal and state
governments, is only a small stone in the edifice known as the
welfare state. The big-ticket entitlements are Social Security
and Medicare, which provide retirement pensions and health
services to virtually all elderly Americans; together they
gobble up 51% of all federal spending on social programs.
Medicaid, the means-tested medical plan for the poor and
disabled, accounts for 10%; it is the fastest-growing component
of the social-spending package, with costs soaring 36% between
1989 and 1991. But AFDC accounts for less than 4% of all federal
social spending. It amounts to 1% of the federal budget and 3.4%
of the average state budget. "If you're talking about saving big
dollars, AFDC is the last place you would start," says Philip
Harvey, co-author with Marmor and Jerry Mashaw of America's
Misunderstood Welfare State.

    Yet financially strapped states, required by law to
balance their budget, have taken the ax to welfare. In the past
year, about 40 states have reduced or frozen benefits, and many
have tightened eligibility requirements. Among them, Michigan
and Ohio have cut off all payments to 170,000 recipients of
general assistance, which provides aid to impoverished single
adults, and California Governor Pete Wilson has proposed to
reduce AFDC payments as much as 25%.

    But there is more to this movement than budget trimming.
Many states are attaching strings to welfare benefits, in an
attempt to modify behavior, provide job training and prod
recipients into the labor force through what is known as
"workfare" programs. New York University professor Lawrence
Mead, a conservative advocate of welfare reform, has dubbed this
approach the "New Paternalism." New Jersey, for example, has
passed a carrot-and-stick bill that denies extra payments to
single mothers who bear children while on the dole; on the other
hand, it allows them to keep their benefits if they marry, and
it contains incentives for them to earn outside income and
continue their education. Wisconsin's Republican Governor Tommy
Thompson has pushed through a program that docks payments to
teenage parents who quit school; he has also proposed to pay
single mothers an extra $77 a month to marry the fathers of
their children. Many of these innovations violate federal rules,
but Bush has made it clear that he will grant waivers to
encourage the states to take the lead in reform.

    There is some irony in this, since Congress four years ago
passed what was supposed to be the welfare blueprint for the
rest of the century. Drawing on dozens of state workfare
experiments during the previous decade, the Family Support Act
of 1988 was designed to channel able-bodied AFDC parents into
the work force. Among other things, it requires every state to
provide education and job-training programs and offers Medicaid
coverage and child-care payments for up to one year after
parents leave the welfare rolls to take jobs.

    Few experts, however, expect the 1988 legislation to solve
the welfare mess -- or even to come close. First of all, it
will affect only a fraction of the welfare population: the act
requires 20% of the eligible case load to enroll in the program
by 1995; since parents with disabilities and preschool children
are exempted, only an estimated 1 in 10 recipients will ever
take part.

    Second, it is underfunded: the job-training programs
necessary to get recipients back into the work force are costly,
but Congress provided only a billion dollars a year over a
five-year period, which works out to just $250 annually per
adult AFDC recipient. Challenging the Bush Administration "to
put up or, please, to shut up," Senator Moynihan last month
introduced a bill to increase federal funding to $5 billion a
year -- a nonstarter in the current fiscal climate. Meanwhile,
many financially strapped states have been backing out of the
deal, preferring to forfeit their share of federal matching
grants rather than fully fund the programs. A report published
by the State University of New York in March found that states
had qualified for only 48% of the available federal money.

    Finally, the 1988 reforms are based on a workfare approach
-- education, training, job search -- that produced only modest
improvements in employment and earnings when tried by various
states during the '80s. The chances of large-scale gains are
especially dim at a time when more than 7% of all U.S. workers
are jobless. "If you are going to have a workfare program in a
slack economy, the whole program will collapse," says William
Julius Wilson, a sociologist at the University of Chicago and an
expert on poverty. "People will get training for employment, but
if there aren't jobs out there, in the long term, it is just
going to be self-defeating."

    There is a growing consensus among policy experts that
tinkering with the existing system will not fix its fundamental
problems. Some, like conservative Charles Murray, say the
solution is to abolish welfare altogether and force its clients
to fend for themselves. In his influential 1984 book, Losing
Ground, Murray claimed that AFDC actually increases poverty by
serving as a disincentive to work and encouraging women to have
illegitimate children they cannot support. Others argue that the
dole should give way to an entirely new system based on social
insurance and jobs.

    Solving the welfare problem will require providing a whole
support structure for moving people into the workplace: national
health insurance, reliable child-care networks, a
public-education system worthy of the name and, above all, good
jobs at living wages. Achieving all that is a tall, perhaps
impossible order. But if Americans are serious about fixing the
welfare mess, they will have to start with some bold,
far-reaching steps.

    1. GUARANTEE JOBS. The current welfare program could be
replaced with a system of government jobs modeled on the Works
Progress Administration that employed more than 8 million
American workers during the Depression. In his forthcoming book,
The End of Equality, Washington-based journalist Mickey Kaus
outlines a stark and simple plan that would replace welfare with
a guaranteed-employment program: he would prohibit new people
from being added to the welfare rolls, eliminating handouts and
offering instead day care and WPA-type jobs on useful public
projects -- sweeping streets, building roads and parks, doing
clerical work and the like. David Ellwood's scheme, which has
strongly influenced Clinton's proposals, would convert welfare
into a system of short-term, transitional support lasting no
more than three years, after which minimum-wage government jobs
would be offered to those who couldn't find work in the private
sector.

    Some of these ideas are being picked up on Capitol Hill.
Democratic Senator David Boren of Oklahoma last March proposed
a bill to create a modern-day version of the WPA. In the wake
of the Los Angeles riots, bipartisan momentum seems to be
building behind Housing Secretary Jack Kemp's "empowerment"
approach. By offering tax breaks to entrepreneurs investing in
50 inner-city "enterprise zones," Kemp hopes to generate new
jobs and wean welfare recipients off the dole. That trickle-down
solution seems problematic: it will take more than fiscal lures
to bring major investment into rubble-strewn areas like South
Central L.A., downtown Detroit and the South Bronx.

    2. ENFORCE CHILD SUPPORT. AFDC could be drastically
reduced if absent fathers were forced to support their children.
Of the $16.3 billion in annual child support ordered by courts
in 1989, only $11.2 billion was paid and only 11% of those
receiving support were AFDC mothers. Under current law, welfare
recipients are allowed to keep only $50 in child support. The
Family Support Act bolstered efforts to collect the money by
requiring automatic withholding from the wages of absent
parents. A plan proposed by Ellwood would expand those efforts
and add a new twist: collection insurance. In cases in which the
absent father could not be tracked down or did not have the
money to pay up, the government would pay the mother a fixed
amount per child each year. This approach is the basis for a
bipartisan plan, announced in the House last week by Democrat
Thomas Downey and Republican Henry Hyde, that would guarantee
a single mother a minimum of $2,000 a year and would collect
payments from the father through the Internal Revenue Service.

    3. MAKE WORK PAY. Even for those who want to work, the
current welfare system is full of perverse disincentives. In
most states, a single mother who earns, say, $700 a month has
that amount deducted from AFDC benefits; she also loses Medicaid
and food stamps and often has to pay for child care as well as
payroll taxes. In many cases, her increased income is so
marginal that it literally does not pay for her to work. "For
a very large proportion of single mothers, it's impossible to
find a job that pays as well as being on welfare," says
Northwestern University professor Christopher Jencks, author of
Rethinking Social Policy.

    The problem is that the American economy no longer
provides enough decent jobs for low-skilled workers. A full-time
minimum-wage job doesn't support a family of four at the poverty
line. Even two-parent working families have a hard time making
it at the low end of the pay scale.

    There have been numerous proposals to supplement the wages
of poor working parents with combinations of refundable tax
credits, medical benefits, housing allowances and food stamps
-- what Gary Burtless of the Washington-based Brookings
Institution calls "aid to breadwinners with dependent children."
Some of this is being done already. New Jersey's reform, for
example, would allow working AFDC parents to earn up to 50% of
their grant levels without losing benefits. In 1975 Congress
enacted the Earned Income Tax Credit (EIC), which currently
offers cash supplements of up to $1,192 to working parents with
incomes under $21,250. A number of recent congressional
initiatives would vastly expand such efforts. Bills introduced
by Congressman Downey and Democratic Senator Jay Rockefeller
would use a combination of tax breaks and increased eic payments
to beef up the revenues of working families.

    The estimated cost for these plans ranges from $20 billion
to $50 billion a year. Such an ambitious project cannot be
carried through without a major fiscal and political effort --
the kind of all-out drive that has rarely been seen in the U.S.
except in times of great national crises or foreign challenges.
"I think we know that small interventions won't work," says
Brookings economist Henry Aaron, "and therefore we have to
decide whether this is a problem like going to the moon or
winning World War II or Operation Desert Storm, where we say
we're going to pour in the resources we think are necessary to
do the job." In Aaron's pessimistic view, there is currently "no
evidence of that kind of commitment in the nation."

    He may be right. But in that case, Americans will just
have to accept more of what they almost universally decry: more
dependency, more wasted national and human resources, more
generations of children growing up in poverty, more unproductive
and unskilled citizens, more racial tension and, finally, a more
polarized society in which haves and have-nots glare at each
other across a widening economic and social chasm. And if that's
not a national crisis, what is?