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Chart 1: History of Total Welfare Spending
Chart 2: Welfare Spending by Program Type: Federal, State, and Local
Chart 3: Welfare Spending Per Low-Income Person
Chart 4: Welfare Cash, Food, and Housing Aid Per Low-Income Person
Chart 5: Total Welfare Spending as a Share of GDP
Chart 6: Welfare Spending As a Percentage of Other Government Spending
Chart 7: Total Spending on the War on Poverty
Chart 8: Total Cost of the War On Poverty
Table 1: What the $500 Per-Child Tax Credit Means For A Family with Two Children
Since World War II, Presidents and Members of Congress have promised American taxpayers that they would reform, in a serious way, America's failed welfare system. The reality, however, is that the system keeps growing, new programs are introduced when earlier reforms do not work, and the level of spending on federal and state welfare programs continues to increase.
There is a growing consensus that the current welfare system is a disaster, not only for taxpayers who are required to pay ever larger amounts of money to maintain and expand the system, but also for the poor who supposedly are being helped by it. While liberals and conservatives agree that the current welfare system is badly broken, only conservatives have been prepared to take the steps to achieve structural reform in 1995, liberals actually fought to block reform. In the election of 1996, conservative candidates need to articulate the clear choice. In particular, they must remind voters that:
President Clinton promised serious welfare reform, but when Congress sent him legislation that would have accomplished this, he vetoed it. Welfare reform remains a major domestic issue for the President and Congress. While the President promised in 1992 "to end welfare as we know it," the Clinton Administration's bill did nothing of the sort. It did not stop exploding welfare costs. It did not establish meaningful work requirements. And it did not address the persistent problem of additional out-of-wedlock births among women who are getting welfare benefits. While the President's bill proposed a two-year time limit on welfare, a reading of the fine print revealed that it merely placed a few welfare recipients in government "make work" jobs while allowing them to remain on welfare. Moreover, the work requirements were truly weak. The bill required only 7 percent of the welfare population to enroll in the work program by 1999, and would have required those enrolled to work for only 15 hours per week. Worse, instead of controlling spending, the Clinton plan would have continued the automatic and rapid growth of welfare spending.
On the other hand, Congress passed a serious welfare reform bill that establishes serious work requirements, addresses the problem of illegitimacy, and slows the growth in federal welfare spending. The President vetoed this bill.
Current welfare costs are rising, and without some fiscal discipline imposed by Congress, taxpayers will be saddled with enormous future tax burdens. There are 77 overlapping welfare programs to assist Americans officially designated as poor. Total welfare spending in the United States exceeds $324 billion, or over $3,400 for each taxpaying household in the United States. Of this spending, 72 percent is federal and 28 percent is state. About 90 percent of all state welfare spending is on federally designed welfare programs.
Liberals in Congress strongly support federal welfare programs, defend the current rate of spending for these programs, and oppose even modest reductions in the rate of growth of welfare spending. At current rates, the United States will be spending $500 billion on welfare by 1999, or a full 6 percent of the gross national product (GNP). Under current federal spending scenarios, this would mean $2 on welfare for every $1 we now spend on national defense.
Most important, serious welfare reform must address the illegitimacy crisis. In 1959, 28 percent of poor families with children were headed by women. By 1991, 61 percent of poor families with children were headed by single women. The illegitimate birth rate among white high school dropouts is now a stunning 48 percent.
Aside from its relationship to federal welfare policy, America's overall rate of illegitimacy is a social catastrophe. The social science literature on the subject is unambiguous and indisputable: Children born out of wedlock do not have the same chances in life as do children born into intact two-parent families. Children born out of wedlock have lower levels of educational achievement, lower economic achievement, increased psychological and behavioral problems, and a greater propensity to substance abuse, juvenile delinquency, and crime. For the President and Congress, the key relationship between the growing problem of illegitimacy and welfare policy is this: Should illegitimacy be the basis of a government entitlement to benefits? Americans either are or are not going to subsidize illegitimacy. There are no compromises on this point.
Needed: A Serious Policy for Welfare Reform. In overhauling this failed system, policymakers should be guided by the following four themes:
1) Reduce illegitimacy. First, and most important, welfare reform must seek to reduce the illegitimate birth rate and promote the formation of stable two-parent families. Any "reform" that does not dramatically reduce the illegitimate birth rate will not save money and will fail to help America's children.
2) Demand reciprocity and work. Reform must convert welfare from a one-way handout into a system of mutual responsibility in which welfare recipients are given aid but also are expected to contribute something to society for the assistance given.
3) Get costs under control. Reform must control soaring welfare costs, which are slowly bankrupting the nation.
4) Promote moral renewal. Halting the growth of the underclass ultimately will require not only welfare reform, but also moral and cultural renewal. The government can assist in the process of moral rebuilding by allowing private social institutions, such as churches and other community institutions, to play a far greater role in educating and shaping the moral code of young people. Among other steps needed to do this, parents must be given far greater choice in how their children are educated, including the right to use government vouchers to send their children to religious schools.
Social collapse over the last 30 years has coincided with growth in the welfare state. The U.S. welfare system may be defined as the total set of government programs, federal and state, explicitly de signed to assist poor and low-income Americans. Current welfare assistance has three ostensible objectives:
1) Sustaining living standards through cash and non-cash transfers,
2) Promoting self-sufficiency, and
3) Aiding economically distressed communities.
Most welfare programs are individually means-tested. Means-tested programs restrict eligibility for benefits to persons with non-welfare income below a certain level. Individuals with non-welfare income above a specified cutoff level cannot receive aid. Thus, for example, food stamps and Aid to Families with Dependent Children (AFDC) are means-tested, and thus constitute welfare, but Social Security benefits are not. Some 94 percent of total welfare spending takes the form of means-tested aid given directly to individuals.
Other welfare programs are community-targeted or categorical. Community-targeted programs provide assistance to communities which contain a high percentage of poor and low-income persons or are economically distressed. Some 5.2 percent of welfare spending is directed through programs of this kind. Pure categorical programs provide aid to specific disadvantaged or generally needy groups, such as migrant farm workers, homeless persons, or abandoned children, without a formal means test. Only 1.2 percent of total welfare spending is dedicated to simple categorical programs.
The Size of the Welfare System
The federal government currently runs 77 major interrelated and overlapping welfare programs. Many states also operate their own independent programs. This federal and state welfare system now includes cash aid, food, medical aid, housing aid, energy aid, jobs and training, targeted and means-tested education, social service, and urban and community development programs. A list of the 80 major federal and state welfare programs covered in this study is provided in the Heritage Foundation monograph America's Failed $5.4 Trillion War on Poverty.1
- In 1993, 48 percent of total welfare spending was devoted to medical programs. Cash programs took 22.1 percent. Food, housing, and energy programs comprised 18.8 percent of the total, while education aid, job training, social services, and urban and community aid accounted for 11.1 percent.
- Total federal and state spending on welfare programs was $324.3 billion in FY 1993. Of that total, $234.3 billion (72 percent) came from federal funding and $90 billion (28 percent) came from state or local funds.
- Welfare spending is so large it is difficult to comprehend. One way to make it more tangible is to recognize that, on average, the cost of the welfare system amounted to $3,357 in taxes from each household that paid federal income tax in 1993.
- Federal and state welfare spending is now the third largest category of total government spending, ranking below the first (combined Social Security and Medicare) and second (total government spending on general education) but above the fourth (national defense).
How the Welfare State Has Grown2
For the first 150 years of U.S. history, the government played little role in welfare.3 Charity or welfare was conducted largely by private religious organizations.
As late as 1929, before the onset of the Great Depression, federal, state, and local welfare expenditures were only $90 million. Adjusted into 1993 dollars, this would be $813 million. Public-sector welfare spending in 1929 amounted to $6.68 per person in 1993 dollars. (Unless noted otherwise, all spending figures in this section have been adjusted for inflation into constant 1993 dollars.)
Charts 1 and 2 show the growth in welfare since 1929. The Great Depression, which threw nearly a quarter of the labor force out of work, led to a dramatic change in government welfare spending. Expenditures for work relief welfare programs such as the Civilian Conservation Corps, Works Progress Administration, and Civil Works Administration grew rapidly. By 1939, welfare spending hit a peak of $46.6 billion compared with less than $1 billion in 1929 (expressed in 1993 dollars).
In inflation-adjusted terms, welfare spending would not return to the 1939 peak until the onset of the War on Poverty a quarter-century later. The major Great Depression anti-poverty programs were terminated at the beginning of World War II. In the post-war period, welfare spending remained low relative to the 1930s.
In 1950, total welfare spending by federal, state, and local governments was $18.8 billion (in 1993 dollars), less than the cost of the food stamp program alone in 1993. During the 1950s and early 1960s, welfare spending grew slowly, reaching $34.9 billion in 1964 at the onset of the War on Poverty. In 1964, welfare absorbed 1.2 percent of gross domestic product (GDP) as compared with 1.1 percent in 1950.
The Explosion in Spending. In his 1964 State of the Union address, President Lyndon Johnson announced the "War on Poverty." New legislation and spending initiatives began to take effect by 1965. Between 1965 and 1970, over two dozen separate federal welfare programs were created. Eligibility for older programs, such as Aid to Families with Dependent Children and food stamps, was expanded. In three years (1965-1968), welfare spending in constant dollars more than doubled, rising from $38.3 billion to $80.5 billion.
In the first decade of the War on Poverty, there was explosive growth in all categories of welfare spending.
Between 1965 and 1975, measured in constant dollars, cash aid nearly tripled, social service spending tripled, medical aid almost quintupled, food aid did quintuple, housing spending increased sevenfold, and job training funds increased fifteenfold. By 1975, total welfare spending had reached $119.4 billion (in constant 1993 dollars), almost a fivefold increase compared with 1965 levels after adjusting for inflation. While total welfare spending absorbed 1.3 percent of GDP in 1965, just ten years later, some 3.8 percent of the economy was devoted to welfare.
Since 1975 welfare spending has continued to grow rapidly, although not at the record pace of the 1965-1975 decade.
- In constant dollars, federal, state, and local welfare spending rose from $158 billion in 1975 to $324 billion in 1993. After adjusting for inflation, welfare spending has risen in every year but two from 1965 to the present.
- Welfare spending is now 8.4 times greater than in 1965 when the War on Poverty began.
- Cash, food, housing, and energy aid are six times greater today than when the War on Poverty began.
Charts 1 and 2 also belie the political myth that President Reagan slashed welfare spending. As the charts clearly show, welfare spending grew during Reagan's presidency.
- Total welfare spending was $199 billion in 1980 when Ronald Reagan was elected President. By 1988, his last year in office, welfare spending reached $230 billion. Cash, food, housing, and energy spending rose from $89 billion to $102 billion over the same period (all figures in constant 1993 dollars). Ronald Reagan did not reduce welfare spending; he merely slowed its explosive growth rate.
Claims that Reagan cut welfare spending utilize the simple trick of selecting one or two programs in the list of 80 welfare programs and deliberately not counting the rest. By selecting one or two programs that have been reduced while ignoring the rapid growth in the other 78, it is possible to "prove" in every single year that welfare has been "slashed" when in fact aggregate spending continues to increase.
While Reagan slowed the growth of welfare spending, it exploded during the Bush presidency at rates that rivaled those of the late 1960s. In constant 1993 dollars, total welfare spending rose from $224 billion in 1988, when Bush was elected, to $324 billion in 1993, when Clinton assumed the presidency: a $100 billion increase in five years.
Spending Per Low-Income Person. A second way of examining the growth of welfare spending is to compare spending increases with the growth of the U.S. population. Chart 3 shows total welfare spending divided by the number of persons in the lowest income quarter of the population. This calculation provides a reasonably accurate picture of the level of welfare resources available relative to the pool of potential recipients.4 Chart 3 reveals a now-familiar pattern.
- Welfare spending per low-income person was nearly zero in 1929 but shot up during the Great Depression, reaching a peak of $1,419 per low-income person (in 1993 dollars). After World War II, spending fell to low levels and remained relatively constant until the start of the War on Poverty in 1965. Between 1965 and 1975, spending exploded, growing from $789 per person to $2,938 (both figures in 1993 dollars). Spending grew moderately during the Carter years, leveling off during the Reagan presidency and then exploding again during the Bush era.
- By 1993, total welfare spending per low-income person reached $5,023. In constant dollars, this was three times higher than the peak level in the Great Depression.
Chart 4 shows the same trends in per capita spending but limits welfare spending figures to cash, food, housing, and energy aid. As in the previous chart, welfare spending (in this case cash, food, housing, and energy) is divided by the number of persons in the lowest income quarter of the population. The chart clearly rebuts the claim that the growth in welfare spending has been limited to medical programs. The pattern is identical to that of the previous charts.
- In constant dollars, welfare spending for the limited basic programs peaked during the Great Depression, remained relatively low and constant during the 1950s and 1960s, exploded upward at the onset of the War on Poverty, and remained in a nearly vertical climb until the mid-1970s. Spending leveled off during the Reagan years and spiked sharply upward again in the late 1980s and early 1990s.
- In constant dollars, cash, food, housing, and energy aid per person is nearly five times higher today than at the beginning of the War on Poverty.
Welfare Spending as a Share of GDP. Another way to assess the growth in welfare spending is to measure the share of the total economy which is absorbed by welfare. Chart 5 shows total federal, state, and local welfare spending as a percentage of gross domestic product. The data match the patterns shown in Charts 1 through 4.
- During the Great Depression, welfare spending rose to around 4 percent of GDP, peaking at 4.8 percent in 1939. The growth of spending as a share of GDP was driven both by increases in real spending and by shrinkage in the size of the economy due to the Depression. It is also important to note that most welfare spending during the Depression was for work relief programs, such as the Civilian Conservation Corps, which bear little resemblance to most of today's welfare programs.
- After World War II, welfare spending fell to 0.5 percent of GDP. It rose to slightly over 1 percent in 1950 and remained at that level through the early 1960s.
- With the onset of the War on Poverty, a massive share of the economy was rapidly diverted to welfare programs. Welfare spending rose to over 4 percent by the mid-1970s. During the Reagan years, a slowdown in the growth of spending, coupled with a growing economy, led to slight declines in welfare as a share of GDP. By 1988, welfare spending was 3.75 percent of GDP. The Bush era quickly reversed this trend; by 1993, welfare constituted 5.08 percent of GDP, a new record level exceeding the previous peak set during the Great Depression.
Comparing Welfare with Other Government Programs. A final way to assess the growth in welfare spending is to compare it to the increase in spending on other government functions (Chart 6).
- Since the onset of the War on Poverty, means-tested welfare spending by federal, state, and local governments has grown more rapidly than spending on all other major government functions.
- In 1965, the U.S. spent 17 cents on welfare for each dollar spent on national defense. By 1993, this had risen to $1.11 on welfare for each dollar spent on defense.
- In 1965, the U.S. spent 29 cents on welfare for every dollar spent on primary, secondary, and post-secondary education by all levels of government. By 1993, the U.S. spent 91 cents on welfare for every dollar spent on education.5
- In 1965, the U.S. spent 51 cents on welfare for each dollar spent on Social Security and Medicare. By 1993, 77 cents was spent on welfare for each dollar spent on Social Security and Medicare.6
Even if the analysis is restricted to welfare spending on cash, food, housing, and energy programs, the trends are virtually identical. Since the beginning of the War on Poverty, means-tested cash, food, housing, and energy programs have grown more rapidly than defense, education, or Social Security.
- In 1965, the U.S. spent 16 cents on cash, food, housing, and energy welfare aid for each dollar spent on Social Security. By 1993, the figure had risen to 43 cents.
Total Cost of the War on Poverty. The financial cost of the War on Poverty has been enormous.
- Between 1965 and 1994, welfare spending cost taxpayers $5.4 trillion in constant 1993 dollars.
- As Chart 7 shows, out of total welfare spending of $5.4 trillion, cash welfare programs cost $1.3 trillion. Medical programs assisting low-income persons cost $2.1 trillion. Spending on food programs equaled $599 billion, while housing and energy aid programs for low-income persons cost $489 billion. Special education programs for low-income children cost $319 billion, and jobs and training programs cost $215 billion. An additional $227 billion was spent on special social services for the poor, and $171 billion was spent on development aid for low-income communities.
The figure $5.4 trillion is difficult to comprehend. Chart 8 offers some comparisons. As the chart indicates, the cost of fighting World War II was $3.1 trillion (expressed in 1993 dollars).
- The cost of the War on Poverty has been some 70 percent greater than the price tag for defeating Germany and Japan in World War II, after adjusting for inflation.7
As Chart 8 also shows, the $5.4 trillion cost of the War on Poverty nearly equals the entire cost of the private-sector industrial and business infrastructure of the U.S.8 For $5.4 trillion one can purchase every factory, all the manufacturing equipment, and every office building in the U.S. With the leftover funds, one could go on to purchase every airline, every railroad, every trucking firm, the entire commercial maritime fleet, every telephone, television, and radio company, every power company, every hotel, and every retail and wholesale store in the nation.9
It is interesting to note the total cost of the many peripheral programs which often are ignored in calculating the cost of welfare or the War on Poverty. For example, the $172 billion spent on urban and community development is nearly enough to buy the entire plant and equipment of every auto manufacturer, every airline, and every trucking company in the U.S. The $445 billion price tag for job training and social services for low-income Americans would purchase all the steel plants, all the factories producing new industrial equipment, all the electronics manufacturing plants, and all the furniture plants in the U.S., as well as the whole U.S. commer cial maritime fleet. With the $440 billion which the government has spent in housing and energy aid, one could purchase the entire U.S. construction industry, all the hotels in the U.S., and the entire chemical industry.
Impact of the Welfare State on Families and Individuals
Two Kinds of Poverty. The growth of the welfare state has had a huge impact on U.S. society. In order to unravel its effects, policymakers must begin by understanding two separate concepts: "material poverty" and "behavioral poverty."
Material Poverty. Material poverty means, in the simplest sense, having a family income below the official poverty income threshold, which was $14,763 for a family of four in 1993. To the man on the street, to say someone is poor implies that he is malnourished, poorly clothed, and living in filthy, dilapidated, and overcrowded housing. In reality, there is little material poverty in the U.S. as the public generally understands the term.10
In 1990, after adjusting for inflation, per capita expenditures of the lowest income one-fifth of the U.S. population exceeded the per capita income of the median American household in 1960.11 There is little or no poverty-induced malnutrition in the U.S. Persons defined as poor by the U.S. government have almost the same average consumption of protein, vitamins, and other nutrients as persons in the upper middle class.12
Children living in poverty today, far from being malnourished, actually grow up to be one inch taller and ten pounds heavier than the average child of the same age in the general population in the late 1950s.13 The principal nutrition-related problem facing poor persons in the U.S. today is obesity, not hunger; the poor have a higher rate of obesity than do members of other socioeconomic groups in the U.S.
Similarly, poor Americans have more housing space and are less likely to be overcrowded than is the average citizen in Western Europe.14 Nearly all of America's poor live in decent housing that is reasonably well-maintained. In fact, nearly 40 percent of the households defined as poor by the U.S. government actually own their own homes.15
Behavioral Poverty. Behavioral poverty, by contrast, refers to a breakdown in the values and conduct which lead to the formation of healthy families, stable personalities, and self-sufficiency. Behavioral poverty incorporates a cluster of severe social pathologies, including eroded work ethic and dependency, lack of educational aspiration and achievement, inability or unwillingness to control one's children, increased single parenthood and illegitimacy, criminal activity, and drug and alcohol abuse. While material poverty may be rare in the United States, behavioral poverty is abundant and growing at an alarming pace.
The core dilemma of the welfare state is that prolific spending intended to alleviate material poverty has led to a dramatic increase in behavioral poverty. In welfare, as in other government policies, you get what you pay for. The current welfare system heavily subsidizes illegitimacy, divorce, and non-work. The past 25 years have seen dramatic increases in all three behaviors. The War on Poverty may have raised the material standard of living of a few Americans, but it has done so at the cost of creating whole com munities where traditional two-parent families have vanished, work is rare or nonexistent, and multiple generations have grown up dependent on government transfers. The disintegration of the family encouraged by the current welfare system has led in turn to other severe social problems, particularly a dramatic increase in crime.
The anti-marriage and anti-work effects of welfare are simple and profound. The current welfare system may be conceptualized best as a system that offers each single mother with two children a "paycheck" of combined benefits worth an average of between $8,500 and $15,000, depending on the state.16 The mother has a contract with the government. She will continue to receive her "paycheck" as long as she fulfills two conditions:
Condition #1: She must not work.
Condition #2: She must not marry an employed male.17
Thus, the current welfare system provides heavy incentives for individuals to work less or leave the labor force entirely and rely on the taxpayers for support. Even worse, welfare has made marriage economically irrational for most low-income parents; it has converted the low-income working husband from a necessary breadwinner into a net financial handicap.18 It has transformed marriage from a legal institution designed to protect and nurture children into an institution that financially penalizes nearly all low-income parents who enter into it.
Welfare also engenders long-term inter-generational dependence. Of the over 4.5 million families currently receiving assistance through Aid to Families with Dependent Children (AFDC), well over half will remain dependent for over ten years, many for 15 years or longer.19 Moreover, dependence passes between generations; children raised in families that receive welfare assistance are three times more likely to be on welfare than other children when they become adults.20
This inter-generational dependency is a clear indication that the welfare system is failing in its goal to lift the poor from poverty to self-sufficiency and is trapping many families in a repeating cycle of debilitating and self-destructive behavior.
Welfare's Effect on Work
The growth of the welfare state has coincided with a decline in labor force attachment. In 1960, among the lowest income quintile of the population, nearly two-thirds of households were headed by persons who worked.21 By 1991, this figure had fallen to around one-third, and only 11 percent were headed by persons who worked full-time throughout the year.22
Part of this decline in employment can be attributed to the increasing number of retired elderly households in this income group, but an equally important factor is the decline in labor force participation among non-elderly heads of households.
For a growing number of poor Americans, the existence of generous welfare programs makes not working a reasonable alternative to long-term employment. During the late 1960s and early 1970s, social scientists at the Office of Economic Opportunity (OEO) conducted a series of controlled experiments to examine the effect of welfare benefits on work effort. The longest running and most comprehensive of these experiments was conducted between 1971 and 1978 in Seattle and Denver and became known as the Seattle/Denver Income Maintenance Experiment, or "SIME/DIME."23
Advocates of expanding welfare had hoped that SIME/DIME and similar experiments conducted in other cities would prove that generous welfare benefits did not adversely affect work effort. Instead, the SIME/DIME experiment found that each $1.00 of extra welfare given to low-income persons reduced labor and earnings by an average of $0.80.24 The significant anti-work effects of welfare benefits were shown in all social groups, including married women, single mothers, and husbands. They were particularly pronounced among young unmarried males; the number of hours worked per week declined 43 percent for those who remained unmarried throughout the experiment and 33 percent for those who married.25 The results of the SIME/DIME study apply directly to existing welfare programs: Nearly all have strong anti-work effects like those studied in this experiment.
Recent research by Dr. June O'Neill of New York's Baruch College, now Director of the Congressional Budget Office, confirms that higher welfare benefits increase the number of individuals who leave the labor force and enroll in welfare. A 50 percent increase in monthly AFDC and food stamp benefit levels was found to lead to a 75 percent increase both in the number of women enrolling in AFDC and in the number of years spent on AFDC.26 In other words, increases in benefit value cause a dramatic expansion in welfare caseloads.
An extremely important research discovery by O'Neill is that high AFDC benefits reduce the employment of young adult men even though few, if any, of these men benefit directly from AFDC payments. High AFDC benefits were found to reduce the employment of young adult men in a community by some 50 percent. High benefit levels apparently affect the work behavior of young men in two ways. First, they reduce the probability of marriage and thereby reduce the necessity for a young man to work to support a family. Second, it is likely that many young single men who are boyfriends to single mothers on AFDC indirectly share in the mothers' welfare benefits; higher benefits thereby reduce their need for work.27
Effects of Welfare on Family Structure
The onset of the War on Poverty coincided with the disintegration of the low-income family the black family in particular.
At the outset of World War II, the black illegitimate birth rate was slightly less than 19 percent. Between 1955 and 1965, it rose slowly from 22 percent in 1955 to 28 percent in 1965. Beginning in the late 1960s, however, the rate of black illegitimate births skyrocketed reaching 49 percent in 1975 and 69 percent in 1993.
If current trends continue, the black illegitimate birth rate will reach 75 percent within ten years.28
Rapid increases in illegitimacy also are occurring among low-income whites; the illegitimate birth rate among white high school dropouts is 48 percent. Overall, 30 percent of American children are born to single mothers.
Across the nation, the welfare system has all but destroyed family structure in low-income communities. Welfare establishes strong financial disincentives which effectively block the formation of intact two-parent families. Suppose, for example, that a young man has fathered a child out of wedlock with his girlfriend. If this young father abandons his responsibilities to the mother and child, government will step in and support the mother and child with welfare. If the mother has a second child out of wedlock, as is common, average combined benefits will reach around $13,000 per year.
If, on the other hand, the young man does what society believes is morally correct (marries the mother and takes a job to support his family), government policy takes the opposite course. Welfare benefits are almost completely eliminated, and if the young father makes more than a modest salary, the federal government begins taking away his income through taxes. The federal Welfare Reform Act of 1988 permits the young father to marry the mother and join the family to receive welfare, but only as long as he does not work. Once he takes a full-time job to support his family, welfare benefits are eliminated and the father's earnings are subject to taxation.
Largely because of welfare, illegitimacy and single parenthood have become the conventional "lifestyle option" for raising children in many low-income communities. As Washington Post reporter Leon Dash has shown in his book When Children Want Children, most unwed teen mothers conceive and deliver their babies deliberately rather than accidentally.29 While young women do not necessarily bear unwanted children in order to reap windfall profits from welfare, they are very much aware of the role welfare will play in supporting them once a child is born. Thus, the availability of welfare plays an important role in influencing a woman's decision to have a child out of wedlock.
Scientific research confirms that welfare benefits to single mothers contribute directly to the rise in illegitimate births. Recent research by Dr. C.R. Winegarden of the University of Toledo found that half of the increases in black illegitimacy in recent decades could be attributed to the effects of welfare.30 Research by Mikhail Bernstam of the Hoover Institution at Stanford University shows that childbearing by young unmarried women may increase by 6 percent in response to a 10 percent increase in monthly welfare benefits; among blacks, the increase may be as high as 10 percent.31
Another study of black Americans by Dr. Mark Fossett and Dr. Jill Kiecolt finds that higher welfare benefits lead to lower rates of marriage and greater numbers of children living in single-parent homes:
In general, in the Fossett study, an increase of roughly $100 in the average monthly AFDC benefit per recipient child was found to lead to a drop of more than 15 percent in births within wedlock among black women ages 20 to 24.32
Research by Shelley Lundberg and Robert D. Plotnick of the University of Washington shows that an increase of roughly $200 per month in welfare benefits per family causes the teenage illegitimate birth rate in a state to increase by 150 percent.33
Dr. June O'Neill's research has found that, holding constant a wide range of other variables such as income, parental education, and urban and neighborhood setting, a 50 percent increase in the monthly value of AFDC and food stamp benefits leads to a 43 percent increase in out-of-wedlock births.34
Research by Dr. Martha Ozawa of Washington University in St. Louis shows somewhat lower but still strong effects: An increase in AFDC benefit levels of $100 per child per month leads to roughly a 30 percent increase in out-of-wedlock births to women age 19 and under.35
Similarly, high benefits discourage single mothers from remarrying. Research by Dr. Robert Hutchens of Cornell University shows that a 10 percent increase in AFDC benefits in a state will cause a decrease in the marriage rate of all single mothers in the state by 8 percent.36
THE CLINTON ADMINISTRATION
President Clinton, at the outset of his presidency, promised "to end welfare as we know it." Unfortunately, the Administration's actions and proposals on welfare contradict the President's public statements. As recently as April 1995, President Clinton stated: "[I]n 1992 I was elected to end welfare as we know it. That was part of my New Covenant of opportunity and responsibility.... And I introduced the most sweeping welfare reform the country had ever seen."37
Elsewhere, the President has said that "You could not design a program that would be too tough on work for me."38
But the welfare reform bill the President submitted to Congress had the following characteristics:
The President's plan, called the Work and Responsibility Act of 1994, turned out to be more public relations than reform; if enacted, like so many other welfare reform measures of the past, it would do nothing but forestall serious systemic change of America's welfare system. When the rhetoric is removed, the Clinton Administration plan represents little more than a continuing rapid expansion of the current destructive system.40
THE 104TH CONGRESS
The 104th Congress passed a significant reform of America's failed welfare system based on three themes:
Among the many elements of reform in the measure, seven are crucial:
1) The bill ends the automatic entitlement nature of AFDC spending, with states that increase their welfare caseloads no longer rewarded by an automatic increase in federal funding. This change imposes a fundamental fiscal discipline at the state level that is essential to real reform.
2) The bill establishes a family cap. Mothers already enrolled in AFDC will not receive an automatic increase in federal benefits if they give birth to an additional child while on welfare. (However, states will be permitted to enact legislation to "opt out" of this requirement.)
3) The bill provides a funding mechanism to reward states which reduce out-of-wedlock births without increasing abortions.
4) The bill provides $75 million per year for a new block grant for abstinence education.
5) For the first time in the history of AFDC, the bill establishes serious work requirements for welfare recipients. Up to 40 percent of the AFDC caseload will be required to work or become self-sufficient by the year 2002. Unlike all previous work requirements in the AFDC program, those in this legislation are real. Recipients who do not obtain private-sector jobs will be required to perform community service in exchange for benefits according to a "pay after performance" rule. Recipients will not receive benefits until the required work has been performed satisfactorily. If they fail to perform the required hours of work, benefits will be reduced pro-rata.
6) The bill properly recognizes that the goal of workfare is to reduce welfare dependence and welfare caseloads, not to maximize the number of welfare recipients in make-work public service jobs. It recognizes that the best road to self-sufficiency is to reduce the number of persons who become dependent on welfare in the first place. Unlike President Clinton's plan, which rewards states for expanding welfare addiction, Congress for the first time focuses on rewarding states that reduce the number of individuals who get hooked on welfare.
7) The bill establishes a firm time limit for receipt of federal AFDC funds; an individual may receive federal AFDC aid for not more than five years. States may exempt 15 percent of the AFDC caseload from this limit.
The President vetoed this welfare reform legislation.
Tax Relief for Families. In tandem with comprehensive welfare reform, Members of Congress have recognized the need to reward work, especially among lower and middle-income families.
Congress thus enacted a $500-per-child tax credit in its balanced budget package. For the average family with two children, that is a significant break, as Table 1 shows.
President Clinton vetoed this legislation.
Changes in the Earned Income Tax Credit. The 104th Congress affirmed the continuing expansion of the EITC enacted in previous years, passing a budget which would have raised the basic EITC rate for a working family with two children from 36 percent of earnings in 1995 to 40 percent in 1996.
Congress correctly rescinded Clinton's 1993 expansion of EITC coverage to individuals who were not parents. Single persons who work full-time at the minimum wage automatically have incomes above the poverty level; expanding the EITC to include single persons therefore was both expensive and inappropriate.
Congress did change the EITC formula for parents with children so that the value of the credit would phase down more quickly as family earnings rose above $18,000 per year. However, parents in this income range also would be eligible for the new $500-per-child tax credit. Overall, under the congressional plan, 95 percent of parents with children would see their incomes rise.
President Clinton vetoed these changes.
WHAT TO DO IN 1997
Rebuilding the Good Society. The reform of America's welfare system should be animated by a broader social vision. Candidates running for the presidency and the Congress should be clear, in this area, about what kind of society they wish to see for current and future generations of Americans. This vision of the better life should not be confined simply to the need to reform public assistance to low-income Americans. It extends to the broader society. The chief object of conservative social policy should be nothing less than the restoration and support of the traditional two-parent family. The traditional family is the foundation of American society: the principal social institution by which the work ethic, self-discipline, intellectual motivation, and moral character are passed on to the next generation. When the family is weakened, the nation is weakened. (For a discussion of how to make specific changes to improve America's social order, see Chapter 6, "Social Breakdown.")
For decades the federal government has pursued policies which promote the collapse of the family. Vast changes are required in a wide range of social and welfare policies. These changes should include reducing the government's financial burden on middle-class families with children; reforming welfare to control costs and require work; promoting policies to reduce illegitimacy and thereby improve the quality of life for America's children; reforming divorce law and strengthening marriage; and revitalizing the institutions of civil society.
The traditional family is the original department of health, education, and welfare. But for several decades the government has pursued policies which discourage marriage and make it difficult for the traditional family to carry out its functions. In 1950, the median family of four paid just 3 percent of its income to the federal government in taxes. Today that figure has risen to 24 percent; when state and local taxes are thrown in, the total is even higher: 38 percent.
Reforming Welfare to Require Work and Control Costs. A considerable portion of those taxes supports a welfare system which, with its huge costs and harmful consequences, requires immediate and drastic reform. Since most of the funding for the current system is provided at the federal level, it follows that the basic structure of reform should occur at the national level. Reform should promote individual responsibility by converting welfare from a one-way handout into a system in which recipients are expected to contribute something for temporary aid received. In addition, it must be undergirded by firm budgetary controls on the growth of future spending. Welfare bureaucracies are prolific in inventing new programs which allegedly promote self-sufficiency but accomplish nothing or actually draw more people into dependence. Without definite limits on the amount of money flowing into this system, such counterproductive "reforms" are difficult to block.
The extraordinary cost of financing the Great Society and the War on Poverty has been borne largely by the middle class, especially parents with children. In response to this crushing tax burden, many in the middle class have delayed marriage and, when they have married, have put off having children, reducing the number of those they do raise. Ironically, even as it discourages child rearing by traditional middle-class families, government aggressively subsidizes child rearing by never-married women who generally are ill-prepared to act as parents. The results of this disastrous policy are all too apparent. Any government policy which places punitive and crippling financial burdens on traditional two-parent families while subsidizing illegitimacy is a recipe for eventual social collapse.
Specific policies needed include the following:
Cut taxes on middle-class families with children.
The government must realize that healthy families are the foundation of a successful society; it must seek to strengthen marriage as the crucial institution in which future generations of Americans will be raised. The most obvious step it can take in this regard is to reduce dramatically the current crippling tax burden it places on young working and middle-class parents with children.
The $500-per-child tax credit passed by the present Congress and vetoed by President Clinton is only a first step. This tax credit should be enacted now and followed in the near future by larger tax cuts for families with children.
Cap the growth of welfare spending.
No matter how frequently policymakers supposedly end welfare, the costs continue to rise. Welfare absorbed around 1.5 percent of GNP when Lyndon Johnson launched the War on Poverty in 1965; it rose to over 5 percent by 1993. With a $324 billion price tag, welfare spending now amounts to $8,300 for each poor person in the U.S. Worse, Congressional Budget Office figures show total welfare costs rising to $500 billion, about 6 percent of GNP, by 1999. To the Clinton Administration, ending welfare has meant spending even more.
The long history of bogus welfare reforms, all of which promised to save money but did not, leads to one obvious conclusion: The only way to limit the growth of welfare spending is to do just that: limit the growth of welfare spending. The entitlement nature of federal welfare programs which permits unlimited automatic spending increases should be repealed, and the future growth of federal means-tested welfare spending (excluding medical programs) should be limited to 3 percent per annum.41 Most non-medical means-tested programs should be folded into a single welfare block grant to the states, with funding permitted to increase at 3 percent each year.
By slowing the outpouring from the federal welfare spigot, this spending cap would gradually reduce the subsidizing of dysfunctional behavior: dependency, non-work, and illegitimacy. It would send a warning signal to state welfare bureaucracies, most of which, cushioned by a steady and increasing flow of federal funds, have found no reason to grapple with the tough and controversial policies needed to reduce illegitimacy and dependency. With a cap on future federal funds, state governments for the first time would be forced to adopt innovative and aggressive policies to reduce the welfare rolls.
Establish serious workfare.
Although liberals often talk about requiring welfare recipients to work, existing welfare law makes it extremely difficult for states to require this. Similarly, the welfare "reforms" proposed by President Clinton would have made it impossible for states to operate efficient work programs.
Congress should establish serious work requirements for able-bodied recipients in federal welfare programs. The key to successful workfare is the number of welfare recipients who are required to participate. Real reform would require all fathers in the AFDC-UP program to perform 40 hours of community service work per week. It also would require able-bodied single persons in the food stamp program to work. Finally, half of all single mothers on AFDC should be required to perform community service for benefits by 1999.
Under a serious workfare program, recipients would be required to look for private-sector jobs. If a recipient cannot find a private-sector job, he or she should be required to perform community service in exchange for welfare benefits according to a "pay for performance" rule. Under a "pay for performance" system, the recipient would not receive benefits until the required work had been performed satisfactorily; if the recipient failed to perform the required hours of work, welfare benefits would be reduced pro-rata.
The goal of serious workfare is to reduce welfare dependence and caseloads, not to maximize the number of recipients in make-work public service jobs. A properly designed system must be based on an understanding that the most important effect of any work requirement is to separate recipients who truly need assistance be cause they cannot find employment from those who do not but are willing to take a free handout if it is offered. Thus, a properly designed workfare program has its greatest impact by dramatically shrinking the number of individuals who apply for welfare in the first place. Serious workfare recognizes that the best road to self-sufficiency is to reduce the number of persons who become dependent and "get hooked" on welfare initially.
Establish sensible workfare priorities.
Workfare programs should be efficient and low cost. Workfare should be established first for those who have the least justification for being out of the labor force: able-bodied, non-elderly single persons on welfare, followed by fathers in two-parent families on welfare and absent fathers who fail to pay child support.42 After workfare has been put in operation for the preceding groups, single mothers on AFDC who do not have pre-school children should be required to work.43
High day care expenses mean that putting a single mother with a young child to work in a community service program costs roughly two to three times as much as requiring a mother with an older child to work. Because work programs inevitably operate within fixed budgets, an emphasis on workfare participation by mothers with younger children leads to a sharp reduction in the total number of persons who will be required to work. One little-understood aspect of the debate is that liberals often attempt to focus workfare programs on mothers with very young children precisely because they understand this quickly soaks up available funds and thereby limits the number of recipients required to participate. Liberal welfare advocates also try to undermine the gen eral concept of workfare by claiming that all workfare programs cost more than they save; they promote the least cost-effective programs (that is, those with a heavy emphasis on mothers with young children) precisely for this purpose.
Around half of AFDC single mothers have no pre-school children under age five. Workfare should be imposed on single mothers with children under age five only after most mothers with older children have been required to work. However, if an AFDC mother gave birth to another child after her enrollment in AFDC, that should not exempt her from work requirements even if the child is under age five. This rule is needed to prevent mothers from having additional children to escape the work requirement.
Recognize the limits of job training.
A perennial panacea in the welfare debate is that education and job training will enable single mothers to obtain good jobs and become self-sufficient. Unfortunately, despite over three decades of experience, government-run training programs have failed to raise the wage rates of welfare recipients by more than a tiny amount. For example, the U.S. Department of Labor in 1993 completed a controlled scientific evaluation of its massive Job Training Partnership Act (JTPA) program. This evaluation showed that the average hourly wage of female trainees was raised by 3.4 percent; the hourly wages of males were not increased at all.44
The failure of government training programs is especially salient given the very low cognitive ability levels of many welfare mothers. A recent study by Child Trends, Inc., finds that mothers in the Aid to Families with Dependent Children program have signifi cantly lower math and verbal abilities than other women of the same ethnic group who are not enrolled in welfare programs. When all U.S. women are ranked according to basic math and verbal skills, over half of welfare mothers are found to have cognitive skill levels placing them in the bottom 20 percent of the overall population. The study states: "The average aptitude or achievement scores of welfare mothers are significantly below the mean of even the lowest of the occupational classes."45 Government can do little if anything to alter these cognitive skill levels.
The very low cognitive abilities of welfare mothers, coupled with the impotence of government educational and training programs and the cost of child care, underscore the futility of reform schemes aimed narrowly at making unwed mothers employed and self-sufficient. What is needed is more fundamental change aimed at reducing illegitimacy and restoring marriage. To repeat the basic historical lesson: Raising children is a difficult and expensive task which generally requires the efforts of the mother and father bound by the commitment of marriage. It is very difficult for a single parent to find the time and emotional resources needed to raise a child while also working to support the family. The importance of marriage and the contribution of both parents is intensified in the case of parents with low personal skills and earning capacity.
The well-being of American children requires policy changes that not only will reduce illegitimacy and promote marriage, but also will encourage potential parents to defer child-bearing until both the mother and the father have acquired the education, job skills, and personal maturity needed to support a family and nurture their children properly. Above all, it is imperative to eliminate the wide array of programs which subsidize and encourage young, poorly educated girls to have children out of wedlock.
Replace food stamps with commodities.
A major historic expansion of the welfare state occurred when the food stamp program replaced older aid programs which distributed food commodities directly to the poor. The current food stamp program gives individuals food coupons which they can use to purchase food in stores. Unlike food commodities, food coupons can be sold on the black market and converted into cash. Replacing the older food commodities programs with food coupons was a serious mistake that further encouraged rapid increases in welfare dependence and illegitimacy.
Congress should reverse this mistake. Families on AFDC and other persons receiving food stamps (excluding the elderly and disabled) should be given a carefully selected basket of food commodities in lieu of food stamp coupons. Each basket should be carefully balanced to provide the proper levels of proteins, calories, vitamins, and minerals for the family or individual receiving aid. This policy can ensure that no family receiving aid will be malnourished or hungry. It also can be operated at a lower cost than the current program. Moreover, this policy would eliminate food stamp fraud by restricting the beneficiary's ability to sell food stamps on the black market; there would be little or no black market for the donated commodities.
More important, replacing food stamps with commodities would reduce dependence and out-of-wedlock births by reducing the overall attractiveness of welfare. Assuming that substituting food commodities for food stamps would reduce the consumer "utility" of food benefits by a third and the "utility" of the overall AFDC/food stamp benefit package by 15 percent, it also could reduce illegitimate births by more than 5 percent and the AFDC caseload by over 20 percent.
Limit cash benefits to young unmarried mothers.
It has been a tragic mistake for the government to pay money to 14-year-old girls on condition that they have children out of wedlock. The government should begin to address the illegitimacy problem by ending its disastrous policy of giving direct AFDC and food stamp benefits to unmarried young mothers. This almost certainly would lead to a sharp and substantial drop in illegitimacy.
Today's welfare system mainly involves failed attempts to pick up the pieces for an ever-increasing number of individuals who have violated the above rules. But from the perspective of society and the child, to have a baby you cannot support either financially or psychologically is profoundly irresponsible. Government policy not only must stop subsidizing and promoting such irresponsible behavior, but must actively discourage it.
Serious welfare reform must focus on the root behavioral problems of illegitimacy and divorce, not merely on the superficial symptom of welfare dependence. Despite rhetoric pledging to "end welfare as we know it," President Clinton is unwilling to take the serious steps needed to deal with the crisis of illegitimacy. The Clinton Administration seeks to devise schemes to help individuals leave welfare rather than to reduce the self-destructive behavior that led to dependence in the first place. This approach is self-deluding. No array of government programs is going to make a 20-year-old woman who has had one or two children out of wedlock self-sufficient. Nor, despite her best efforts, is that single mother likely to be able to provide a truly healthy emotional environment for her children as they develop.
By paying young women to have children out of wedlock, the present welfare system encourages them in a course of action that in the long term proves self-defeating to the mothers and harmful to both the children and society. Placing millions of single mothers in work and training programs will have little positive effect on society as long as the illegitimate birth rate remains over 30 percent. Congress must go to the heart of the dependency problem by seeking to reduce the number of illegitimate births.
At the same time, government should not abandon all aid to children born out of wedlock; federal AFDC and food stamp funds currently given directly to unwed mothers under age 21 should be converted into block grants to the states. State governments could use the funds to develop innovative policies for assisting teenagers who continue to have children out of wedlock. Such policies could include providing in-kind benefits, promoting adoption and orphanages, or supporting the mothers in tightly supervised group homes; but federal funds should no longer be used to provide direct cash welfare benefits to teen mothers. The limitation on benefits should apply to all children born to unwed mothers age 21 and under one year or more after the date of enactment.
Do not provide increased AFDC and food stamp benefits to mothers who bear additional children while already enrolled in the AFDC program.
Under the current welfare system, if a mother enrolled in AFDC bears additional children, she receives an automatic increase in AFDC and food stamp benefits. No other family in America receives an automatic increase in its income by having more children. There is no reason to provide expanded welfare benefits to single mothers who have additional illegitimate children while already dependent on welfare. A limitation of this sort already has been put into effect in the state of New Jersey by Democratic Assemblyman Wayne Bryant. Evidence from controlled scientific experiments designed to determine its effects show a 10 percent decrease in illegitimate births to mothers on AFDC as a result of the family cap.46
Require the establishment of paternity for children receiving AFDC.
Current law requires that an AFDC mother make a "good faith" effort to identify the father of her child in order to receive AFDC. This law is ignored. The government should require, for children born prospectively, that the mother identify the father in order to receive any federally funded welfare aid.47 Exceptions to this rule in a few hardship cases could be made, but they should not exceed 10 percent.
Modern DNA testing permits determination of a child's real father with absolute confidence. Once the mother has identified the father and paternity has been established, the father can be required to pay child support to offset welfare costs. If the father claims he cannot pay any child support because he cannot find a job, the government may require that he perform community service to fulfill his obligation. Experiments with this approach in Wisconsin have led to surprising increases in the ability of absent fathers to locate private-sector employment and pay child support. Moreover, the definite expectation among young men that they will be identified and required to pay child support for their children may put an end to the ethos in some communities where young men assert their masculinity by fathering children they have no intention of supporting.
Encourage state-based "faith and families" programs.
The "faith and families" program created by Mississippi Governor Kirk Fordice is one of the most innovative and interesting welfare reforms in the U.S. today. This program seeks to link single mothers on AFDC with church congregations throughout the state, placing at least one welfare family under the tutelage of each church. The congregation effectively becomes the case worker for the welfare mother, providing mentoring, moral authority, life skills training, and contact with employment opportunities. The recipient continues to receive her welfare check from the government bureaucracy, but most other aspects of managing the case are under church control. The program also is voluntary in that any recipient can choose to have her case handled by welfare bureaucrats rather than a church.
Striking a theme which would have been common in earlier generations but has been painfully absent in American discourse for over half a century, Governor Fordice has declared that "God, not government, will be the savior of welfare recipients." This new policy should be copied in other states.
Reduce government welfare by increasing private-sector charity.
There is widespread recognition that government welfare has failed indeed, that government is the least effective institution in aiding the poor. Yet, each year, hundreds of billions of dollars taken forcibly from the paychecks of Americans are spent on government welfare programs in which the people no longer have confidence.
Real welfare reform will require rechanneling a major portion of current funding into private secular and religious charities rather than government programs. Legislation introduced in 1995 by Representatives Jim Kolbe (R-AZ) and Joseph Knollenberg (R-MI) would permit just that. The Kolbe-Knollenberg bill has three key principles.
- Any taxpayer could give up to $100 to any private charity devoted exclusively to aiding the poor;
- Taxpayers would have their federal taxes reduced by the sum given to charity; and
- Federal welfare spending would be reduced by the same amount.
The bill, in essence, would allow any taxpayer to opt out of the federal welfare system; those who lack confidence in government welfare could divert their money to private charity instead. The taxpayer would be able to choose among a large number of private charities which would compete with one another to demonstrate which was the most effective in aiding the poor. Similar legislation is being drafted by Senator Dan Coats (R-IL).
Q. Why are conservative welfare reforms punishing single parents and their children?
A. Nothing punishes single parents and their children more than the current welfare system. For millions of children and their parents, this system is the proverbial free ticket to a bus going nowhere. The reason: It is riddled with perverse incentives that discourage work and marriage while encouraging illegitimate birth and long-term dependency. Precisely because single-parent family life is much harder on the children, as well as their mothers and the broader society, it is no kindness for government to make either single parenthood or long-term dependency easier and more common.
Given the perverse incentives of the system, millions of parents and their children cannot escape to a better life, but will be locked instead into more of the same. It is a condition that not only undermines their upward economic mobility and eventual independence, but also robs them of hope for the future and reinforces spiritual despair.
Conservative welfare reform aims to discourage single mothers from having more children out of wedlock while helping them through the transition to a life in which it is economically rational to marry or get a job.
Q. Why do conservatives in Congress want to cut welfare?
A. Conservatives in Congress are not proposing to cut welfare. Under the Republican proposals aggregate welfare spending on non-medical programs will grow at roughly 4 percent per year.
Liberals in Congress generally oppose serious welfare reform and, as evidenced during the debate on school lunch programs, do not even favor reducing the rate of welfare spending. Total welfare spending in the United States is $324 billion, 72 percent of it federal and 28 percent of it state spending. Moreover, nine-tenths of all state welfare spending amounts to a state contribution to federal programs. At the current rate of spending, assuming nothing is changed, the United States will be spending $500 billion on welfare by the year 1999, or 6 percent of the gross national product (GNP). To put this in perspective, at the current rate, taxpayers will be shelling out $2 in welfare spending for every $1 we now spend on national defense.
Conservatives in Congress simply want to impose some discipline on welfare spending, just as they do in other areas of federal spending. They are prepared to let already high levels of welfare spending grow, but only at some reasonable rate, not at the explosive rate at which it has been growing.
Q. But didn't conservatives in Congress propose to cut school lunch and women, infants, and children (WIC) programs last year?
A.Congressional appropriators last year attempted to convert the federal school lunch and breakfast programs into a block grant, which would grow at 4.5 percent per year. Liberals complained that the original baseline for growth in the program was 5.1 per cent, and thus that reducing the growth in spending amounted to a "cut." It is patently dishonest to call a growth in spending a cut, but even with this modest change, Congress still would be wasting federal funds by providing school lunch subsidies to middle-class families and even to the children of millionaires instead of targeting them exclusively to poor children.
As for WIC, it was not cut. It was folded into a block grant with a few other programs. The money available for WIC, like the money available for school lunches, was to increase. Incredibly, under the traditional WIC program, benefits were available to families earning up to $28,000 per year even though a family in that income range pays about $6,000 per year in federal taxes. Conservative policy for middle-income families is not to give them welfare benefits, but to cut their taxes.
Q. Won't spending reductions in existing federal welfare programs and block grants jeopardize poor families?
A. Few, if any, welfare programs have operated as expected, so poor families have not benefited as expected. The largest federal program, Aid to Families with Dependent Children (AFDC), was designed in 1935 to support widows and orphans. Only 1.5 percent of the beneficiaries today are widows and orphans. Instead, AFDC has served as the financial mainstay of single parenthood among low-income persons. Likewise, there are nine different federal jobs and training programs for low-income persons, costing an estimated $5.3 billion.48 After three decades of federal job training programs, the wage rates of beneficiaries have hardly been affected. A Labor Department study of the impact of the Job Training Partnership Act, for example, showed that female trainees' wages increased by a mere 3.4 percent and that male trainees' wages did not increase at all. Five recent scientific studies of federal jobs programs for poor people showed that none of them worked. Few federal jobs programs ever lead to real, permanent jobs in the private sector.
By combining dozens of federal welfare programs into block grants to the states, eliminating tens of thousands of pages of federal regulations, and letting governors and state legislators take direct responsibility and do what they think is best for their communities, welfare reform can serve low-income people more efficiently. States and local communities, working with dedicated people in private organizations in these communities, are likely to have the best ideas about what works in preventing teen pregnancy or in setting up day care and jobs programs to help lift poor people out of poverty and dependency.
Q. If conservatives want to lift low-income families out of poverty, how do they propose to help them?
A. The best way to keep a mother and her children out of poverty is to help make sure they have a working father with a regular paycheck who comes home every night. Right now, if a young man marries the mother of his child and makes anything over $6.50 per hour, we tax his income. For persons currently on welfare, this does not encourage either marriage or upward economic mobility.
But by making serious tax changes, particularly by giving low-income families generous tax relief, a conservative social policy would reward work, increase disposable family income, and help keep families together. Under Representative Dick Armey's pro posal to replace the current tax code with a flat tax, for example, any family of four with an income of $33,000 per year or less would pay no income tax at all.49 Moreover, by eliminating outdated penalties on savings and investment, conservative tax policies would stimulate more investment and economic growth, and thus create more real jobs, open up new opportunities, and generate higher wages for family breadwinners.
Q. If conservatives in Congress want to help low-income working families, why didn't they support President Clinton's family tax relief proposal rather than pass a balanced budget plan that would gut the popular Earned Income Tax Credit and raise taxes on families earning less than $30,000?
A. Even after changing the Earned Income Tax Credit, the Balanced Budget Act of 1995, with its $500-per-child tax credit, would benefit 5.4 million more low-income working families with children than the Clinton Administration tax proposal with its $300-per-child tax credit. In fact, the congressional proposal, vetoed by President Clinton, would allow a low-income family to take a $500-per-child tax credit first, and then receive the full value of the EITC on top of the child credit. Under the Clinton plan, a low-income family would have to deduct EITC benefits from income tax before taking the less generous $300-per-child tax credit. Thus, a family with two children would have to earn $24,000 a year before becoming eligible for the Clinton credit. Worse, because the Clinton tax credit is available only to families with children under the age of 13, families are denied tax relief for children precisely when the cost of raising them becomes even more expensive. Under the Clinton tax credit plan, 2.8 million children in families earning less than $30,000 per year would be denied eligibility for tax relief. Under the congressional plan, a family would be eligible for a more generous tax credit at roughly $17,000 a year.
Q. What steps can the government take to reduce illegitimacy?
A. First, unlike age, disability, or veterans status, illegitimacy should not be the basis of a legal entitlement to a government check. Unwed mothers can and should be assisted in other ways, including the establishment of group homes for unwed mothers or maternity homes. Young men and women may be entitled to a mistake, but taxpayers cannot afford to subsidize further mistakes through automatic increases in benefits to women who continue to have additional children while on welfare.
Second, sexual abstinence programs should be incorporated into welfare reform measures, particularly at the state level. The data show that such programs work,50 much as the Just Say No campaigns against illegal drugs in the 1980s worked. Teenagers are not stupid. They can see the difference between a young man's lifelong commitment to the mother and their baby and the momentary enjoyment of sexual pleasure with life-changing consequences and without the commitment of marriage. All the proposals to make marriage more attractive also help to reduce illegitimacy.
Third, it is time to get serious about cracking down on statutory rape. In a significant percentage of illegitimacy cases, the mother is well below the age of consent and the father is in his mid-twenties. It is past time that such adult males, taking advantage of teenage girls, face charges of rape.
Fourth, toughen child support enforcement. Policymakers should inflict financial pain on men who sire children and then abandon the mothers. Men should be made to take responsibility for the upbringing of their children. Tough enforcement of child support also helps get the message across that the costs of illegitimacy must be borne by the father as much as by the child and mother.
Q. But don't congressional conservatives want to consign poor children to orphanages?
A. For neglected, unwanted, or physically or sexually abused children, state or local authorities might determine that an orphanage is not an unreasonable solution. In some cases, it is the only viable option. And, regardless of the negative images conjured up by liberal opponents, sound policy should include this possibility. While Hillary Rodham Clinton ridiculed the concept as "absurd," under persistent questioning from Representative Bill Archer of Texas, Chairman of the House Ways and Means Committee, HHS Secretary Donna Shalala admitted that even under the Clinton Administration welfare plan, orphanages would be an option.
Q. Aren't conservatives expecting too much of private charities when the government cuts back on the spending increases in social services?
A. Not at all. First, under real welfare reform, with new incentives to work and get off the welfare rolls, there will be a drop in the welfare rolls even as there is a simultaneous increase in total welfare spending. In other words, there will be more money, rather than less, for those in need. Second, under the congressional block grant approach, state and local governments will work directly with local charitable organizations, not only to provide social services, but also to help poor people become self-sufficient.
After decades of painful experience, Congress and the federal bureaucracy must admit that neither they nor the programs they have designed over the past half century have been effective in reducing the welfare rolls, curbing illegitimacy, or making low-income Americans economically independent.
Beyond the promise of welfare reform, Congress can assist private charities even more directly in helping the poor. Senator Daniel Coats (R-IN), for example, has introduced a bill that would allow a tax credit of as much as $1,000 for donations to charities that directly help the needy poor. This will increase the ability of charities to help these people.
Q. Won't conservative cuts in social programs increase the number of hungry children? HHS says that over 1 million people will be thrown into poverty.
A. The HHS study is flawed. It assumes that the conservative congressional reforms, just like the several previous and notoriously unsuccessful liberal attempts to "end welfare as we know it," will fail and that welfare rolls will continue to increase at about 3 percent per annum. But there are dramatic differences, both in assumptions and in policies, between liberal and conservative welfare reforms.
In the past, liberals have attempted to make the welfare system work. For the future, conservatives want to make welfare recipients work. Conservative policies can assume a decrease in the wel fare rolls precisely because they introduce serious work requirements into welfare reform. For example, in dealing with married AFDC families, states that have introduced serious work requirements for welfare recipients have registered significant drops in the welfare rolls ranging from 50 to 90 percent.
In speaking of the HHS study, American Enterprise Institute Senior Fellow Ben J. Wattenberg remarked that "The assumptions of these studies strangely do not take into account the very purpose of the bill to encourage young people to have children after marriage, not before, thus sharply improving children's economic circumstances. Studies that assume welfare reform will not work are the work of those who believe that welfare reform will not work. Hence, the studies are useless and misleading."51
SELECTED HERITAGE FOUNDATION STUDIES
Fagan, Patrick F., "Liberal Welfare Programs: What the Data Show on Programs for Teenage Mothers," Heritage Foundation Backgrounder No. 1031, March 31, 1995.
Fagan, Patrick F., "Why Serious Welfare Reform Must Include Serious Adoption Reform," Heritage Foundation Backgrounder No. 1045, July 27, 1995.
Rector, Robert, "Combating Family Disintegration, Crime, and Dependence: Welfare Reform and Beyond," Heritage Foundation Backgrounder No. 983, revised and updated March 17, 1995.
Rector, Robert, and William F. Lauber, America's Failed $5.4 Trillion Dollar War on Poverty, 1995.
Rector, Robert, "Why Congress Must Reform Welfare," Heritage Foundation Backgrounder No. 1063, December 4, 1995.
Robert Rector
Senior Policy Analyst
The Heritage Foundation
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phone: 202-546-4400
e-mail: rectorr@heritage.org
David Murray
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Patrick Fagan
William H.G. Fitzgerald Senior Fellow
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e-mail: faganp@heritage.org
Marvin Olasky
University of Texas at Austin
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phone: 512-471-7908
Robert Carleson
Free Congress Foundation
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