Welfare Reform

...One objection to this solution, that the variation in the cost of living in different parts of the country warrants variations in welfare payments, is easily met...

...Or the taxpayer and local governments...

...Yet only recently federalization was seen primarily as an answer to problems more directly related to welfare than to local finances, and it still will affect the welfare system in ways that transcend its effect on city budgets...

...First, that President Carter's most basic decision in terms of welfare will be whether he is more concerned with the economic status of the poor, the solvency of the cities, or with the burgeoning of federal welfare costs...

...Yet the problem of welfare remains a pressing one...

...Who now stands to benefit most by those reforms...

...This may be a necessary and even an admirable goal, but it should not be confused with welfare reform...

...And it is unarguably in the interests of the urban poor as well as the urban rich that the cities continue to provide the services that bankruptcy would disrupt...

...Insofar as the left has any hope of ever affecting the ideological bias of the welfare system, it will be on the federal level and, indeed, the moves mentioned above toward providing increasingly unconditional assistance—Food Stamps and SSI—both originated at the federal level...

...Ignoring the improbability of this action, what do we do about states currently above the national average...

...This issue is no longer a driving force among advocates of complete federalization...

...Part of the left's position must be determined by Jimmy Carter, for so far as his prime commitment appears to be decreasing welfare costs under the cover of rationalizing its administration, pressure for reform may simply provide him with a convenient cover for punishing the poor...

...Federalization has taken on special significance in the context of New York City's repeated brushes with bankruptcy...

...But things have changed...

...Many opponents of Nixon's Family Assistance Plan (among them the National Welfare Rights Organization) argued that state supplements would inevitably decrease and eventually dis127 appear, trapping the poor in a squeeze between the federal and local governments...

...While the state was eventually pressured into backing down, support in the liberal community began to build for the federal government to take over the funding and administration of welfare, so that such incidents could not be repeated...

...WHAT OF federalization...

...Given this set of facts, is it not more likely that an attempt at establishing a universal income guarantee will simply lead to an attack on SSI and Food Stamps than to formalized guarantees...

...There are, however, two other kinds of problems that strike me as somewhat more intractable, The first was referred to above...

...Federalization may be an answer to both the problems of the cities and the problems of the welfare system...

...Through the proliferation of in-kind assistance programs and informal income supplements, many poor people are already receiving an income equivalent greater than any minimum income suggested in any politically realistic proposal for federalization of cash-transfer programs...

...Consider two concepts that have long dominated radical discussion of the welfare issue—guaranteed annual income and federalization of welfare...

...It is a unit of government that might gain—local governments that will have shifted the burden for cash transfers to the federal government while keeping much of their control of the treatment the poor receive...

...Even liberals who once championed federal intervention have reacted against the confidence so many showed during the 1960s in the superior wisdom of the federal government...

...There is still another, and in some ways more compelling, argument favoring federalization of welfare...

...Yet it would be a mistake to look upon the interests of either the poor or the cities as a whole as unambiguously served by federalization per se...

...It is now discussed primarily as a means of rescuing local governments from the ruinous burden of welfare payments...

...So far as he exhibits a genuine commitment to improving the lot of the poor, the left can attempt to insure that no reform, such as federalization, be undertaken without explicit consideration of its real effects on welfare recipients...

...The term can be taken to mean anything from complete federal responsibility for welfare to federal provision of earmarked funds to localities with minimal guidelines on how the money is spent...

...Indeed, President Carter expressed interest in some such solution during the campaign...

...The apparently "simple" solution of federal assumption of the financial burden of cash transfers appears unlikely to help the poor...

...it is unlikely that it is the answer to either or both...

...q 128...

...Assume that, in a burst of federal generosity, the Carter administration decides to cash out in-kind programs all around the country and to establish a federal minimum cash payment equal to the average cash equivalent (including the informal "emergency" subsidies) received by welfare clients throughout the country...

...The poor...

...These discussants have all assumed that the poor should be classified into those deserving and those not deserving aid...

...Replacing these programs and supplements with all or some simple income transfers would only hurt many of the poor unless it were done on a more generous basis than seems likely...

...Ideological objections remain as valid as ever...

...A negative-tax provision associated with an income guarantee could insure that most people are still made better off by working than by not working, whatever the level of the guarantee...

...In December, new HEW Secretary Joseph Califano surprised no one by announcing that welfare reform would have to wait until it could be undertaken comprehensively...

...Mindful perhaps of the disaster of McGovern's negative-tax proposal, Jimmy Carter avoided commiting himself to specific reform proposals...

...Payments could be pegged to the cost of living in each region of the country...

...It still operates under the assumption that being poor is, in some way, the individual's own fault rather than the fault of a society that has built in a place for poverty...

...The welfare system still categorizes the poor into the "deserving" and undeserving...

...Many now argue that the Supplemental Security Income program passed by Congress in 1974 and the Food Stamp program that now aids enormous numbers of people who would not traditionally have been considered "deserving" are effectively an income guarantee to an increasing percentage of the poor...

...Until the 1970s, support of a guaranteed income was a matter of faith on the left...

...There are two sorts of concerns for which federalization has traditionally been proposed as an answer...

...There is wide variation among states in the amount of both cash and other forms of assistance that recipients of welfare receive...

...This not only appears unfair but is believed to encourage patterns of migration that directly hurt states inundated with potential welfare clients...

...It still treats the poor essentially as beggars...

...The first, a major issue among liberals throughout the 1960s, was discrimination at the local level...

...FEDERAL FUNDING of welfare without detailed federal control seems to be the solution of the hour to one set of our national problems—the financial difficulties facing the cities...

...Provision of a guaranteed income can be seen as a concession on the part of the nonpoor that poverty itself is the creation of a given social structure...

...It shifts concern from the individual reasons for poverty to concern with the condition of poverty itself...

...And we should remember that, even were such a shift to take place, it might be purchased with increased suffering among current welfare recipients...

...For those on the left it poses an agonizing dilemma: while, until recently, ideology and practical concern for the economic plight of the poor united in condemning the present welfare system and in urging certain basic reforms, this may no longer be true...

...Formally, however, the country is still committed to categorization of the poor, and Jimmy Carter's campaign pledge to employ federal 126 resources to guarantee dignified aid to the genuinely unemployable while at the same time withdrawing assistance from those who choose not to work does not bode well for a change to a universal income guarantee...

...Second, that for the left the immediate future must be a time in which to show caution in urging welfare reform...

...A federally funded floor on welfare payments has often been suggested as the most logical solution to this problem...

...Thus, as with a guaranteed income, the poor might not stand to gain from federalization of welfare...

...The second problem to which federalization was supposed to provide an answer involves both equity and economics...

...While the number of those deemed "deserving" has grown, the basic concept, that only those among the poor whom the economically solvent define as unable to earn a living should receive aid, has persisted for more than 200 years...

...Guaranteed annual income is usually discussed as some form of negative income tax and thereby represents a major break with traditional American ideas about provision of aid...

...In 1960, many people were appalled at action taken by the state of Louisiana, when 20,000 children, most of them black, were kicked off the Aid to Dependent Children rolls because their mothers had given birth to one or more illegitimate children since going on welfare...

...Yet "cashing out" many programs and thereby simplifying the administration of assistance is the main appeal that federalization holds for many political figures including, presumably, Jimmy Carter...

...Still, neither of these programs was intended to signal a major shift away from the basic principal of categorical and conditional aid, and hence we should avoid being overly encouraged by them if our hope is that federalization will lead directly to such a shift...

...But changes in the nature of welfare in recent years have raised questions about the outcome of many reforms that have long been advocated by the left...

...What is the bottom line on all this...

...it is fiscal reform undertaken with little concern for the interests of the poor...