(Archived document, may contain errors)

41_

3/24/88 192

GUIDELINES FOR REAL WELFARE REFORM

Congress is considering leg'"islation that its supporters claim is a sweeping refor 'm ofthe nation's welfare system. Judging from the rheto ric, lawmakers are. poised to launch a real war on poverty and welfare dependency. That's the rhetoric. -The reality is that the legislation, passed by the House last,December, would increase welfare dependency, slow policy innovation by the states, and a dd $5.7 billion to federal welfare spending over five years.

The Senate is about to consider two rival welfare bills. One is aiithored.by Senator Daniel Moynihan, the New York Democrat., It improves'little on the Ho use bill. 'Me' other is spon- sored by Minority. Leader Robert Dole of Kansas. It essentially is the House Republican ' - measure, containing several White House Proposals, that was defeated last December. The White House strategy curiously is to negotiat e quietly with the Democrat-dominated Senate Finance Committee, hoping to win some cha'nges in the Moynihan bill. This strategy implicitly commits the Administration to the Moynihan bill as the vehicle for the reform. This is bad, -enough. What is worse is the near certainty that any concessions obtained in Committee will be diluted first on the Senate floor and then by House conferees. Meanwhile, the White House will have lost the chance to articulate a clear alternative strategy for resolving America's en o r- mous welfare problem. Without articulating such an alternative, the White House trim@ its. chances of successfully vetoing @n unacceptable final bill. Ronald Reagan thus should launch a public debate over welfare reform detailing the bill he could sign .

Repeating Past Mistakes. The bill passed last December by the House (H.R. 1720) would set back the clock for welfare reform. It repeats the mistakes of the past but cloaks them with contemporary rhetoric and adds a bigger price tag. It would encourage st ates to raise welfare' benefits significantly, further discouraging many welfare recipients from accepting entry-level jobs. It turns a blind eye to innovative state leadership in welfare policy by failing to allow the federal government to permit states t o. make substantial changes in the operation of currient welfare programs. Worse still, it would block many existing state workfare experiments. And while it would create thousands of jobs for middle-class welfare service providers, the legisla- tion does little to -nudge welfare recipients into employment.

The principal bill in the Senate, authored. by Moynihan, would improve little on the House legislation. For instance, it sets no minimum rates for participation by welfare recipients in federally sponso red training programs, nor does it tie federal dollars to measured success in placing welfare recipients in jobs. While it gives lip service to persuading recipients to take jobs, it does not compel anyone to take a job if that results in a net loss of in come and benefits. And while the bill would allow some state experiments and permit the federal government to

waive some regulations that constrain innovation by the states, it places severe restrictions on such decentralization.

An Appeal for Genuine R eform. Dole's alternative bill (S. 1655) would correct many of these deficiencies. The Dole measure essentially is the Republican substitute that was defeated 173- 251 in the House. The Administration backs this alternative and is negotiating with the Sen a te Finance Committee to win improvements in the Moynihan bill in keeping with the Dole legisla- tion, Yet engaging in such back-room discussions is likely to yield little, given the House vote and the balance of power in the Senate. Moreover, the strategy effectively precludes the White House from seizing the initiative by appealing directly to the American people for genuine wel- fare reform.

The W hite House instead should publicly inform Congress of the minimum elements any bill must contain if it is to be spared a Reagan veto. At minimum these elements are:

4+ Sweeping authority for the Administration to negotiate major revisions of current welfare programs with individual states. The White House already is granting waivers within the tight limits of c urrent law, leading to some highly innovative approaches by states. Federal law needs to grant the White House much greater discretion.

Minimum levels of participation by welfare recipients in any f6derally supported state training or jobs program. T'his should be accompanied by a "payments by results" mechanism for federal funding, much like that contained in the JEDI bill authored by Senator Edward Kennedy, the Massachusetts Democrat, and passed by the Senate last year. This mechanism provides bonuses t o states that have cut welfare rolls.

No increase in welfare benefits that would make local entry-level jobs less attractive, and no provision that would allow welfare recipients to turn down a job just because there might be a net loss of income. Legislat ion must make it explicit that being on welfare should be a last resort, not a free economic choice.

Tough child support legislation to crack down: on deadbeat fathers, to discourage the growth of unsupported single-headed families. This Congress seems ready to do.

Without these four basic elements, welfare "reform" legislation will reform nothing. It merely will be little more than a more expensive version of the current approach to poverty and de- pendency. No legislation would be better than the measur e passed by the House. After almost a quarter-century of expensive Great Society programs, America scarcely has made a dent on the poverty rate, while entire neighborhoods have fallen into the underclass gridlock. Struc- tural reform is needed. Congress, so far, has shown no inclination to, take the necessary action. It is up to the White House to raise the stakes.

Stuart M. Butler, Ph.D. Director of Domestic Policy Studies

F or further information: Stuart M. Butler and Amna Kondratas, Out of the Poveny Trap (New York: The Free Press, 1987). Ro berf Rbdtffr,-"Reforming Welfare: The Promises and Limits of Workfare," Heritage Foundation Backgrounder No. 585, June 11, 1987.

}}