603 September 23, 1987 VVELE'ARE REFORM THAT IS ANTI-WO RK ANTI-FAMILY, ANTI-POOR Until relatively recently, the number of Americans who were poor declined steadily In the 1920s, more than half of the nation was poor by contemporary standards 30 years later, 30 percent were poor; by 1965, only 17 percent. Then came the "War on Poverty It mobilized a torrent of resources to fight poverty In constant 1986 dollars, welfare spending soared from $33 billion in 1965 to approximately 140 billion by 19

86. Yet progress against poverty slowed and then stalled. More impo rtant, the percentage of Americans incapable of "self-sufficiency of maintaining themselves above the poverty level without government handyouts rose markedly. More and more Americans, in other words, today seem to find that they can avoid poverty only by becoming dependent on the government.

American child in ten. One child in twenty d be raised in a famdy that ;is on the welfare rolls ten years or longer. Children in these families, growing up without the example of a working adult parent, clearly will h ave enormous difficulties assuming the personal and parental res onsibilities of adult life. Not surprising1 welfare families do far worse in the job market than do children from nonwelfare homes with the same social characteristics and income 1evels.l We l fare is now the surrogate father and principal financial support for one a recent study by the National Bureau o P Economic Research finds that children 8om Ixaming Little. Congress has begun to rebgnke at last that the U.S. welfare system has serious pro blems. Lawmakers are considering legislation to amend it.

Two bills reflect the Democratic leadership in both houses. In the Senate, S. 1511 1. Robert Lerman, "Do Welfare Programs Affect the Schooling and Work Patterns of Young Black Men in Richard B. Freeman and Harry J. Holzer, eds The Black Youth Emplqment Ckis (Chicago University of Chicago Press, 1986 pp. 403-443. -2 was introduced by Daniel Patrick Moynihan of New York. In the House, H.R. 1720 has b een introduced by Thomas Downey, also of New York. Both bills are designed to declare "the war on poverty--phase two These bills have learned little from past failures and thus will do little to deal with the deficiencies of today's welfare system.

Taken t ogether, H.R. 1720 and S. 1511 replicate virtually even mistake in welfare policy of the past two decades: eligibility for welfare is expanded; benefits are raised; work requirements are effectively barred; new social services and federal programs are add ed; and costly training strategies, which have proved ineffectual for nearly a quarter century, are proposed as a "solution" to welfare dependence.

These "reforms" would only exacerbate the present tragedy of welfare Chasm Between Rhetoric and Reality. To be sure, the Downey/Moynihan proposals have been larded with thick layers of popular conservative rhetoric.

Moynihan, for example, speaks of the need to replace handouts with mutual obligations between welfare recipients and society, of reaffirming the wo rk ethic and parental responsibility, and of strengthening families and ending dependence Yet his legislation falls far short on all of these counts.

Nowhere is the chasm between rhetoric and reality greater than on the question of work. The Moynihan bill has drawn nearly universal praise based on the false claim that, for the fit time, it would require large numbers of welfare recipients to work. In reality, the Moynihan bill would require no one to work--or even to be trained for work. On the contrary, i t would limit severely the authority of state governments to establish work requirements and virtually abolish required job search programs, many of which have proved successful. Were the Downey and Moynrhan bills to become law, the majority of work progr a ms created by state governments in the last six years would have to be shut down or sharply scaled back objectionable features of his bill in an effort to gain moderate support, committee amendments to the House bill have made it even worse. Senators enti ced by Moynihan's legislation should recognize that any resulting compromise legislation will of necessity reflect many of the House bill's worst features. dependence. They are anti-work, anti-family, and profoundly anti-poor.

The Downey bill is even worse . It would prohibit state work requirements Worst Features. While Moynihan recently has shed some of the more A much sounder approach to reforming welfare is contained in H.R. 3200 developed by Congressman Hank Brown, the Colorado Republican, and introduc e d 2. The Downey bill requires that job search must be combined with training; the very high cost of implementing this proposal would mean that the job search programs now operating in nearly all states would have to be shut down or sharply reduced. H.R. 1 7 20 eliminates workfare under the Community Work Experience Program operating in 20 states and severely restricts workfare under WIN demonstration rograms in 23 states; altogether workfare programs in 37 states would be abolished or dramatically reiuced. T h e Moynihan bill would eliminate workfare in WIN demonstration programs operated in 23 states. -3 by Illinois Republican Robert Michel, the Minority Leader. An equivalent Senate bill S. 1655, soon is to be introduced by Minority Leader Robert Dole. The Bro wn/Michel bill would actually do what the Moynihan legislation only claims to do, particularly on the issue of work.

The contrast between the Brown/Michel approach to welfare reform and the Downey and Moynihan proposals is dramatic In debating the strategy of welfare reform, Congress will need to address six basic issues 1) establishing general work and training requirements 2) restructuring workfire and job search programs 3) raising welfare benefits 4) extending welfare to -parent families 6) strengtheni n gchildsupport Only on the question of child support enforcement is there general agreement between the Democratic and Republican positions On each of the other issues Downey and Moynihan appear cemented in policies of the past, which have actually harmed the poor and increased dependence.

The present welfare system has failed society and failed the poor; it has intensified many of the problems it was intended to solve. Federal lawmakers have a responsibility to create a new system of assistance, which offe rs something more than a check in the mail and the prospect of dependence. The Downey/Moynihan roposals fail to meet this responsibility. Both legislators refuse to recognize the the existing income maintenance system. By comparison, the Brown/Michel prop o sals, though offering no panacea for the problems of the poor, do provide a step forward out of the present morass. By decentralizing the welfare system and establishing, for the first time, the obligation for able-bodied welfare recipients to contribute t o their own support, H.R. 3200 would provide new hope for America's poor for the first time in several decades F ailures of traditional welfare and therefore propose a "reform" that simply enlarges There is broad agreement among congressional lawmakers an d social welfare scholars that one of the key goals of a welfare system must be to draw welfare recipients back into the work force. It is also wdely held that the current system frustrates this goal, breeding dependence and undermining the work ethos A ma j ority of families currently in the Aid to Families yith Dependent, Children AFDC) program, for instance, will spend a decade or longer on welfare. -4 Mothers on welfare are becoming the only grou of women in America who do not work. While nearly two-third s of mothers wit E children are in the labor force, less than 15 percent of the heads of AFDC families are employed. The low rate of work among welfare mothers was at one time explained by various "barriers to employment: a lack of jobs; deficencies in edu c ation and training; or a lack of such social services. These arguments are increasingly untenable. Jobs are available; surveys of welfare mothers themselves indicate that they can find jobs when they want them? Nor does a lack of education and training im pede employment. Most welfare mothers, in fact, have worked intermittently in the past.

The problem is not their unemployability but their lack of serious commitment to the labor force One reason for this is that in most states combined welfare benefits ne arly equal the income that many women can obtain through work. In high benefit states a welfare recipient can receive as much as $13,000 per year in tax-free welfare benefits without ~orking Welfare thus often provides the combined benefits of income and l eisure that make a 40-hour-a-week job seem unattractive. But this makes economic sense only in the short term. In the long run most welfare mothers and their children would be better off with the steady rise in earnings that normally accompanies a long pe riod in the work force.

Some 94 percent of Americans believe that welfare recipients should be required to wOrk.5 Studies by New York University political scientist Lawrence Mead find that enforcing the obligation to work is the key to increasing employmen t among the poorP In fact, a serious work obligation appears to be far more important in encouraging welfare recipients to join the work force than the availability of social services, training, or financial incentives requirements fiercely. Work was deno unced as "slavefare" by many liberals, and Congress prohibited states from establishing work requirements7 Instead, money and effort were diverted into training strategies, which proved largely ineffectual.

Policies improved with the arrival of the Reagan Administration. Following changes in the AFDC law enacted in the 1981 Omnibus Budget Reconciliation Act, 38 states have set up new work programs. Still, the scope of these programs is limited. In For nearly two decades, however, the welfare establishment h as resisted work 3. See Lawrence M. Mead Social Programs and Social Obligations Public Intemt, Fall 1982 pp. 17-33 4. For a family of four in California in 1986 combined benefits from the AFDC, food stamps Medicaid, school lunch, and Women, Infants and Ch i ldren food programs exceeded $l3,000 per annum 5. Results from a Sindlinger and Company poll conducted for The Heritage Foundation in July 1985 6. Mead, op. cit 7. For example, during the mid-l970s, the state of Utah attempted to establish a work program. As a result, the state was denied federal AFDC benefits for over two years. any given month, less than 4 percent of adult AFDC recipients participate in such programs.

The new work programs generally include three different types of activities 1 training and education; 2) job search, in which welfare recipients look for work under supervision; and 3) work experience or workfare, in which AFDC recipients are required to work in government agencies or nonprofit organizations in return for their benefits.

Be cause job search and workfare faced stiff political resistance in Congress, the federal government has restricted the states. ability to operate these programs.8 Workfare Is Essential Any serious effort to promote self-sufficiency must begin by eliminatin g the option not to work. Welfare dependence.must be made a last resort, not a preference. For that purpose only workfare can be effective. The ultimate goal of any work program of course, is to place the welfare recipient in a private sector job. But as a practical matter, it is impossible to require anyone who does not want to work to obtain and keep a private sector job. And a private firm is unlikely to hire a person who appears unenthusiastic about employment. Thus if a private sector job cannot immedi ately be found, the welfare recipient should be required to undertake work experience in a government or nonprofit organization.

Controlled experimental studies show that required job search or training is far more effective if no t working is prevented through a permanent workfare requirement. Example: a Manpower Demonstration Research Corporation study of the San Diego work program finds that the program became nearly twice as effective when an unsuccessful job search was followe d by mandatory enrollment in work experience.9 In other words, welfare recipients were more successful in obtaining jobs when it was made clear that they would have to work under any circumstance. Similarly a workfare program established by Mayor Edward Ko ch in 8. States must limit job search to ten weeks. Work experience in the Work Incentive (WIN) program is subject to the same restrictions as the traditional WIN program limitin participation to 13 weeks See Work and We

bn Current AFDC Work Progrems and I mpIications for Fe&raI Policy (Washington D.C General Accounting Office, 1983, p. 27 Work experience in the Community Work Experience Program (CWP) may be continued beyond 13 weeks, but the number of hours of work that may be required each week is determi n ed b dividing the AFDC grant by the minimum wage. Since on avera e only about 20 hours of work per week can be required. Effective wage rates (total welfare benef%s per hour of work) in CWEP equal 6.59 per hour for the avera e AFDC recipient. Since this 3 a work requirement will induce large numbers to leave welfare and obtain jobs. Still such a work requirement is better than none at all 9. Barbara Goodman, et al Find Report on the San Diego Job Search and Work Experience Demonsfmfion New York Manpower De m onstration Research Corporation, 1986 See Table 3.9 for AFDC payments, total earnings, and employment in the sixth quarter among AFDC applicants with no recent employment experience average the AFDC grant will be o J y 50 percent of total welfare benefits received by a family, on e rate is far above what most welfare recipients would earn in the la %o r market, it is unlikely that -6 New York City in 1984, combining training and job search with required work has reduced the welfare rolls by 60 percent amon g groups required to participate.lb Cqpsional Mership's Bills Undermine Work RequirementS recipients to work, or even to be trained. To be sure, the bill contains plenty of rhetoric about work requirements. Yet it leaves the decision to enforce these requi r ements" entirely to state governments. This is precisely the situation under current law The Moynihan bill merely reinforces the statu quo--it does not change it goes further, virtually eliminating workfare and severely restricting job search.ll Thus, rat her than improving the workfare system and encouraging more welfare receipients to enter the work force, the two bills would scale back existing workfare.

AFDC recipients can or should be expected to work.12 Instead, liberals wish to provide extensive trai ning and services only to a small portion of recipients who actively want to leave welfare. Thus, while H.R. 1720 abolishes workfare, it requires states to pay up to $13,000 per year in combined welfare benefits to an AFDC mother while she attends four ye a rs of college. In addition, the Downey bill requires states to give priority in training and work-related activities to recipients volunteering to participate. This channels resources to well-motivated indiwduals who are least likely to need help or prodd i ng to leave the welfare rolls. Such kreaming" would lead to high lacement rates, implying that the program is Despite deceptive claims, the Moynihan bill would not require weifare S. 1511 actually cuts back on existing workfare programs. The Downey bill I t seems that, at heart, the liberal establishment still cannot accept that most successful and bolstering calls P or more funding OTHER woRK-RELAl,ED ISSUES In place of workfare and job search, Moynihan and Downey focus on financial incentives, training, t r ansition services, and childcare for welfare recipients. These 10. Blanche Bernstein, Saving u Genefution (New York Twentieth Century Fund Inc 1986 p. 44 11. The Moynihan bill eliminates the WIN Demonstration program, which permits full-time workfare for u p to 13 weeks; remaining workfare would be part-time under the CWEP program. H.R. 1720, as amended by the Education and Labor Committee prohibits workfare entirely except as part of a larger training program, and the new "workfare" could be required for o n ly one =-week period during the entire course of an average ll-year stay on AFDC. H.R. 17u) states that if an AFDC recipient is required to articipate in job-search and does not find a job in 10 weeks, the recipient must be unsuccesfful seems to be a perf e ct method for rendering job search programs ine ective; moreover, the high cost of added training would mean that eXkting large-scale job search programs would become economically infeasible 12. Lawrence M. Mead, Bqond Entitlement: The Social Obligutions of Citizenship (New York The Free Press, 1986 pp. 92-1

19. See also Bernstein, op. cit pp. 43-46 d provided wit E training. Guaranteeing welfare recipients expensive training if their ob search is -7 are very e ensive strategies, which have been shown to b e marginal, or even counterpro 7 uctive, in reducing welfare dependence Fhancial Incentiva H.R. 1720 ostensibly would encourage welfare recipients to work by reestablishing "earnings disregards Under the current system, when an AFDC recipient earns a doll ar, her ,welfare benefits are cut by almost the same amount.

H.R. 1720 would provide a permanent "earnings disregard so that welfare benefits would be reduced by only 75 cents for each dollar earned. Such earnings disregards were part of the welfare system from the late 1960s until they were abolished in 1981.

Disregards make sense in theor)r. Research shows, however, that they do not promote work.13 Their main effect is to encourage working mothers to go onto AFDC to obtain an income supplement. With disr egards, many families may reduce their work effort. When the Reagan Administration won congressional 'approval for the elimination of disregards, liberals warned that the working poor would flock back onto welfare rolls and into greater dependence. This d id not happen.

Welfare rolls in fact shrank. Reestablishing disregards over time could raise the number of working families. on AFDC and expand the welfare rolls by 5 to 10 percent.

Training and Education system since the mid-1960s. Yet training appears to be less effective than job search and work experience in promoting employment and reducing welfare rolls.

Training, moreover, almost never has proved a cost-effective means of reducing welfare dependence.14 To make matters worse, because training progra ms are much more cost1 than workfare or job search, they focus resources on only a small the widely acclaimed supported work program of the late 1970s cost nearly $25,000 per recipient per year, but produced no greater increases in employment than job sea r ch programs costing just a few hundred dollarsfi Today, the most highly praised training program is the Education and Training ET) program established by Governor Michael Dukakis in Massachusetts. Yet ET is a flop. In the program's four-year existence, AF DC rolls actually have risen Training programs for AFDC recipients have been a major part of the welfare segment o r the welfare population. And the cost of training can be considerable 13. Frank Le Journal of Human Raowces, Winter 1979, pp. 76-

93. Disre ds raise the maximum Work Too Wa eli

bility levels for partial AFDC benefits, thus making a new group of indivi uals eligible for welfare. This newly eli 'ble PO dation is actually provided with new net dismcentives to work; under H.R. 1720 such individux woudreceive 75 cents in added welfare payments for every $1 in earnings reductions 14. Robert Rector and Peter Butterfield Reforming Welfare: The Promises and Limits of Workfare,"

Heritage Foundation Backgrounder No. 585, June 11, 1987, pp. 8-10 15. Bid The Labor Supply of Female Household Heads, or AFDC Work Incentives Don't fi" despite Massachusetts's booming economy. Dukakis repeatedly refuses to permit controlled experiments to evaluate his unsupported claims of ET'S "success."

Formal education may h elp some welfare recipients to obtain work, but the evidence on this is mixed. The Downey bill's requirement that an welfare recipient would prolong welfare dependence in many cases by further postponing the recipient's entry into the work force. States s hould be allowed to determine when education is appropriate.

Tdtion Benefits lacking a high school degree must obmn a diploma before being r orced to work When an individual on AFDC begins working, AFDC benefits are cut incrementa lly as earnings rise. When earnings rise enough to put a family above the AFDC eligibility threshold, the family loses full Medicaid coverage, which is worth up to $2,500 per annum for a family of four. Thus, if $1 in added earnings were to take the famil y above the AFDC eligibility thresholds, it can result in a loss of $2,500 in net income role in discouraging welfare recipients to remain out of the work force. But to many, the policy still seems unfair. Current law allows Medicaid coverage to contmue fo r four months after an individual leaves AFDC. The Moynihan and Downey bills would continue Medicaid coverage for six to nine months after AFDC eligibility ended. A reasonable alternative might be to extend Medicaid coverage from four months to one year af t er an individual leaves AFDC with the former recipient paying a graduated premium for this extended coverage. As with any expansion of overall benefits, however, this policy probably would draw as many people into welfare as it would help remove from the r olls. Perhaps the best solution would be to permit states to experiment with a variety of approaches to the Medicaid transition problem There is little .evidence to suggest that loss of Medicaid benefits plays much The rising number of female-headed house h olds on welfare makes the availability of day care services more pressing if women on welfare are to enter the work force. Yet the Downey/Moynihan reforms would not make day care more readily available to AFDC mothers. On the contrary, by inflating the co s t of day care services and erecting new bureaucratic obstacles to informal day care, the bdls would restrict the availability of day care in poor communities The Downey bill states that AFDC recipients cannot be required to work unless day care is availab l e in an "appropriate" facility in compliance with state and local regulations. The federal government currently provides up to $160 per month per child in day care expenses for AFDC recipients. But Downey's H.R. 1720 would provide nothing toward day care c osts care unless the child were in an appropriate" facility. Today only one working mother in ten uses formal, state- -9 re lated day care organizations. Most leave their children with neighbors or other xrmal local providers. Some 90 percent of these fac i lities are unhcensed.l6 Parents' hhce. Informal day care is far less expensive than formal day care, and there is no evidence that it is less safe or 'less desirable. Headline grabbing cases of child abuse, in fact, almost always involve licensed centers far away from the parents' place of residence. Not surprisingly, most parents prefer informal care available within the neighborhood, where they have greater familiarity with and access to the care provider.

By limiting government day c&e support to state- regulated organizations, the Downey bill would raise significantly the cost of day care for AFDC recipients; the number of AFDC recipients who could receive day care funding would be reduced and the scope of any training or work requirement, restricted. T h us the effect of H.R. 1720 and S. 1511 would be to subsidize formal day care facilities, not to promote employment among AFDC mothers. Indeed, the fingerprints of day care mdustry lobbyists can be seen on the H.R. 1720 provision that allows an unspecified portion of "work opportunities" funding to be given as direct grants to formal day care centers. The Downey proposal also requires states to provide training for day care workers. It would put the federal bureaucracy into the business of writing day care r egulations for states by mandating that no state could "lower" its day care standards without losing AFDC funds RAISING. BENEFIT LEVELS WOULD BE A MISI'AKE A central feature of the original Moynihan and Downey welfare reform bills was to raise benefit lev e ls for families on welfare. This has been dropped from the Senate version to attract the support of moderates. H.R. 1720 continues to provide strong financial incentives for states to raise benefit levels by raising the federal matching rate by 25 percent for benefit increases authorized by any state. This would mean that the federal government would pay between 65 percent and 85 percent of the extra costs of raising benefit levels. In addition, H.R. 1720 would prohibit states from lowering welfare benefit levels To many Americans, raising benefit levels may seem a simple and obvious'way of combating poverty. Quite the opposite result is almost certain. The reasons Increasing Dependence: There long has been a direct correlation between welfare benefits leve l s and the number of single mothers who leave the workforce and enter the AFDC program. An average increase of 20 percent in combined welfare benefits nationwide almost certainly would add one million extra families to the welfare roUs.17 16. Karen Lehrman and Jana Pace, "Day-care Regulation: Serving Children or Bureaucrats Cut0 Policy Ana sis, No. 59, September 25, 19

85. Even among single mothers with children under age five 17. June O'Neill Transfers and Pover Cause and/or Effect The Cut0 loumul, Spring/Summer who work tlll -time, formal day-care is used by only one m three 1986, p.

66. This issue will be dixusse T fully in a forthcoming Heritage Buckgrounder 10 Redu Work The Seattle/Denver Income Maintenance Experiments SIME/DI~ of the early 1970s foun d that among welfare recipients an increase in benefits of $1 produced a decrease in labor and earnings of 80 cents.18 If the goal is restoring self-sufficiency and the work ethic, then no policy can be more counterproductive than raising welfare benefits researchers David Ellwood and Mary Jo Bane of Harvard University found that an increase as modest as 15 percent in combined welfare benefits per family would increase by 10 percent the number of divorced and separated mothers nationwide and by 50 percent t he number of divorced and separated mothers under age 24.l9 The same mcrease would expand the number of female-headed households by 15 percent and could double the number of households headed by young women DesEroying Families: Comparing high benefit stat es to low benefit states THE ERROR IN TWO-PARENT WELFARE BENElTJS is to extend AFDC to two-parent families when the male parent is unemployed.

Currently, 28 states have two-parent AFDC programs known as Aid to Families with Dependent Children-Unemployed Pa rent (AFDC-UP The Downey and Moynihan proposals would requlre all states to establish such two-parent welfare programs arent households promotes famdy breakup. Because the family of an unemployed rather cannot receive AFDC as long as he remains with his f amily, the system allegedly encourages the father to leave' in order to entitle the family to benefits.

There is no study, however, that actually shows that AFDC-UP increases marital stability. States with AFDC-UP programs do not have fewer marital break-ups than those without the program.

The SIME/DIME studies, in fact, show that two-parent welfare boosts the rate of divorce and marital separation by up to 68 percent among families enrolled in the program (when compared with divorce and separation rates a mong control group families who. remained ineligible for two-parent welfare).20 It would seem that two One widely advocated solution to the anti-family impact of the welfare system The theory behind this proposal is that restricting the welfare system to s ingle 18.' Gregory B. Chriistiansen and Walter E. Williams Welfare, Family Cohesiveness and Out-of Wedlock Births in Joseph Peden and Fred Glahe, The American Famifv and the State (San Francisco Padk Institute for Pubhc Policy Research, 1986 p. 398 19. Da v id Ellwood and Mary Jo Bane, The Impact of AFDC on Famifv Livhg Amgement and Sbucfum, unpublished report ashbgton, D.C Department of Health and Human Services, March page 4-5 shows de effects of a $100 per month increase in AFDC payments for a family of f our in 19

75. After taking into accoullf the offsettine reduction in food stam benefits, a $100 monthly increase and Medicaid) for an average family of four in the U.S. in 19

75. This issue will be discussed more fully in a forthcoming Heritage Buckpunder 20. John H. Bishop Jobs, Cash Transfers and Marital Stability: A Review and Synthesis of the Evidence Journal of Human Resouxes, Summer 1980, pp. 301-334 1984 This stud estimates t 6" e impact of interstate variation in AFDC benefit levels. Figure 1 on i n AFDC would have equalled a 15 percent mcrease in combined we P are benefits (AFDC, food stamps 11 parent welfare decreases marital stability because it accustoms two-parent families to the culture of welfare dependence. It thereby undermines the father's social role as provider."

Two-parent welfare thus is not a solution to the anti-family AFDC The fact is single-parent welfare and two-parent welfare the family. Extending the welfare system to cover more families states to institute AFDC-UP will only add to existing problems consequences of both undermine by requiring all THE DIVIDENDS OF D-I'ION The Reagan Administration recently proposed legislation to decentralize the welfare system. Its plan would pool the federal funds currently given to the states i n 59 separate anti-poverty programs If they desired, states could continue to receive funds through the 59 existing programs, or they could apply for a waiver that would allow them to shift funds between programs or to combine and alter programs. Total fun d s received by each state would remain the same as under current law. Each state, however, would be free to design its own simplified welfare system from the bottom up. While safeguards would be'provided to ensure that the funds continued to serve the need s of the poor, states would be given broad discretion to experiment with .new approaches to tackling the poverty problem new Interagency Low Income Opportunity Advisory Board was created to coordinate waiver authority between federal departments and agenci es. States wishing to redesign welfare systems now can apply for a waiver from a single board, instead of submitting waiver proposals to five or six separate departments.

States are responding enthusiastically to the White House decentralization plan by su bmitting waiver requests. Examples The White House hk begun to partially implement this strategy. In July a A Wisconsin waiver proposal would require teenage AFDC mothers without a high school diploma to return to school. Work and training requirements wo u ld be expanded for AFDC mothers with children six or older. Wisconsin would cut basic AFDC benefits by 6 percent and divert the saved funds to anti-dependence strategies, including training, childcare, extended earnings disregards, and Medicaid extension N ew Jersey proposes to reduce welfare rolls through extensive work, job search, and training programs. The resulting savings would pay for greater semces and transition benefits. Specifically, New Jersey is seeking waivers to: establish work and training r e quirements for mothers with children aged three and up, raise temporary earnings disregards to 50 percent in some cases, extend job search beyond the present ten-week limit, and prowde Medicaid coverage for one year after a family leaves AFDC success--no d oubt many would fail. It is that America'is more likely to find answers to poverty and dependency with 50 states experimenting with new ideas The key point about such proposals is not that they are guaranteed to bring 12 than with the federal government p u rsuing a one-size-must-fit-all strategy. Small scale experimentation is the driving force behind innovation in the American economy. It should also be leading welfare reform now needed AU 59 major federal welfare programs should be included in the waiver a uthority: states should be permitted to shift funds between these programs raise or lower various benefit levels, and expand or constrict eligibility to programs. This would provide states with the flexibility to depart from traditional income maintenance schemes and to focus resources on promoting self-sufficiency.

Downey's H.R. 1720, however, contains no decentralization provisions. On the contrary, it places more restrictions and requirements on states. While the Moynihan plan refers to decentralization , it would restrict the waiver, authority to just a handful of programs and would permit only ten state experiments Waiver Authority. But legislation providing far broader waiver authority is THE E"T OF CHILD SUPPORT PAYMEN'IS The only bright light in eit h er the Moynihan or the Downey bill is found in the provisions to stren then the child support system, which requlres divorced or support their children separated fathers and athers of illegitimate children to pay part of their earnings to Under the Moynih an bill, states would be required to set up legislative guidelines for child support awards that would be binding on judges in most cases.

Child support payments would be revised continually, rising with the father's salary.

States also would be required by the year 2000 to achieve at least a 40 ercent rate AFDC funds. Currently, many states fall well below this figure. Texas, for example, establishes paternity for only 1.7 percent of illegitimate births. The Moynihan bill wo u ld require states to garrush wages to collect child support awards established in future years of paternity establishment in cases of illegitimate birth or face losses in P ederal These changes follow through on welcome reforms initiated by Reagan in 1984 .

Still, legislators should be wary of Senator Moynihan's misleading claim that his reforms would replace the existing welfare system with a new system that would put the primary responsibility on the parent to support the child and rely on taxpayer funds only as a second resort as a2child support supplement Under the bill about $1 billion in child support payments would be collected each year from absent male parents for families on AFDC, yet combined welfare payments for these families still would exceed $35 billion per annum. In addiuon, the Congressional Bud4et Office estimates that over the next five years the Moynihan plan would provlde for $14 in new welfare spending for every $1 in welfare sawngs generated by its child support provisions 13 THE PRIC E TAG FOR "REFORM According to the Congressional Research Service, the federal, state, and local rograms in 19

84. That is e uivalent to nearly $5,000 for each poor American or governments in the U.S. spent $145 billion on low-income/means-tested assistance programs has climbed since 19

81. The Moynihan/Downey "reforms" would pile still another layer of spending onto the current unwieldy system. The Moynihan bill would spend over $2.3 billion extra in five years, according to the Congressional Budget Offic e. The Downey bill would increase welfare spending by $5.2 billion over five years and by $2 billion per annum thereafter. This estimate conservatively assumes that few states would raise benefit levels in response to the federal financial incentives. If a verage benefits were increased by as little as 10 percent the resulting expansion in AFDC rolls could raise welfare costs by an extra $4 billion each year 20,000 for a poor family of 9 our. Measured III constant dollars, spending on these THE FOUNDATIONS F OR WELFARE REFORM There is nearly universal recognition that the existing welfare system is in need of serious reform. True reform will seek to end the growing pattern of dependence generated by the current welfare system and to reintegrate welfare recipi ents into mainstream society. Such reform should be based on five principles 1) There should be no increase in benefits.

The federal government should not raise welfare benefit levels. States should be encouraged to lower benefits for those who do not stri ctly need them and channel the savings into dependence reduction programs 2) The AFDC program should be converted hm an income maintenance program into a program based on mutual obligation between recipients and society Recipients should be expected to pe r form service to society in return for benefits. The federal government should mandate that states require welfare recipients to participate in work, training, education, or job search, leaving it to the states to design the programs. Special emphasis shou l d be placed on women with children over age five and young mothers prone to long-term welfare dependence 3) Federal restrictions on worldare and required job search should be abolished There should be a recognition that job search, training, and education will be more effective when reinforced by a permanent workfare requirementFl 21. If the requirement of the CWEP program that a recipient should not work for less than the minimum qe is retained, then not just AFDC but all welfare benefits (AFDC, food stam p s, Medicaid housing subsrdies, and so on) should be used in determining the number of hours of required work 14 4) The child support system should be strengthened States receiving federal AFDC funds should be re uired to set up bindin8 support award guide l ines, to raise rates of paternity esta B lishment, and to gmsh wages for child support except when both parents agree otherwise. The federal government and the Internal Revenue Service should work with states to ensure that payments are made 5) The welfar e system should be decentrakd Funds from all 59 major welfare programs should be pooled and broad waiver authority should be extended to states to design their own welfare systems.

Except in the area of child support, the Downey and Moynihan proposals will solve no welfare roblems. The Brown/Michel bill, on the other hand, offers real by 1998 to raise the number of adult AFDC recipients participating in workfare, job search, education, or training to 70 percent. Restrictions on workfare would be eased, and the bill's waiver provisions, though less than perfect, would permit significant state experimentahon. Moreover, while the Brown/Michel bill would cost contrast, two-thirds or more'of the increased spending in the Moynihan/Downey bills would go to expande d benefits. One regrettable drawback in the Brown/Michel bill is that it contams many of the same restrictions on informal day care as the Downey bill. But overall the bill provides powerful, positive reform reform in each o F these five vital areas. Under H.R. 3200, states would be'required 1.6 billion over five years, it funds mainly activities to reduce dependence. By Today, welfare spending in the United States (excluding Social Security and Medicare) nearly equals the gross national product of India. B ut tragically, America seems to be losing the war on poverty. According to official poverty stahstics, the number of poor Americans is greater today than when the war on poverty began.

Even worse, it has created a new subculture of welfare dependence that stunts the aspirations of millions of Americans. Large segments of the U.S. population are losing the capacity for self-sufficiency and are in danger of slipping into a permanent economic underclass.

Legislators debating the issue of welfare reform have a heavy responsibility.

Changes in welfare enacted by Congress this year will shape welfare policy for a decade or longer and will influence the lives of poor Americans for a generation.

It is critical not to repeat the mistakes of the past that have spaw ned the present welfare problems romise of genuine improvement in the welfare system and provides the guidelines P or real reform: restoring the work ethic, enforcing parental responsibility through child su port, and decentralization of an overly complex system. The trouble is that close the gap between slogans and policies Closing the Slogam Gap. The rhetoric of Senator Moynihan offers the many o P Moynihan's proposed reforms directly contradict his rhetoric. It is time to I 15 The focus of'welfare refor m must be on reducing welfare dependence. But reducing dependence means more than offering new training services and benefits to welfare recipients. The cycle of dependence can be broken only by restoring the work ethic: by establishing a clear obligation f or able-bodied welfare recipients to contribute to their own support. Large-scale obligatory workfare, supplemented by training and required job search, is the only realistic way to achieve this goal Freedom for the States While the federal government sho uld firmly establish the principle that welfare is no longer a one-way handout, it should give states as much freedom as possible in designing work education and training programs.

There are few easy solutions to the problems of poverty and dependence. Fed eral lawmakers must recognize that the present overly centralized welfare system imposes a bureaucratic straitjacket on the states and stifles the very experimentation so necessary to finding new approaches to aiding the poor. State governments should be given far more authority to shape their own welfare olicies. Federal restrictions should be eased and states should be encouraged to sh' H t federal funds from antiquated programs into new anti-poverty efforts designed at the state level.

The original war on poverty was launched with the best of intentions. But it is time to accept that traditional welfare strategies have failed. True welfare reform does not mean an expansion of the existing welfare behemoth, but a rebuilding of welfare on the new foundati ons of work, parental responsibility, and decentralization.

Robert Rector Policy Analyst