July 24, 1995
"AFDC is Cheap; Moving Off it Isn't"
San Jose Mercury News
By Timothy Taylor
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MAILING OUT welfare checks is relatively easy and cheap. Assuring that welfare recipients make a transition from government support to self-reliance, so that a culture of dependency does not become entrenched, is genuinely difficult.

One approach has proven not to work: gradually phasing down the amount of an average welfare check. Aid to Families with Dependent Children, the primary cash welfare program, paid an average household $676 a month in 1970, $483 a month in 1980, $434 a month in 1990, and $373 a month by 1993 (with all figures adjusted for inflation).

Even as the size of welfare checks shrank, the number of families on welfare increased, from 1.9 million in 1970 to 3.5 million by 1980, to 4 million by 1990 and almost 5 million in 1993. It should be transparently clear, given the experience of the last two decades, that steadily cutting welfare benefits doesn't reduce the number of teenage mothers nor create a wave of self-sufficiency.

There was a time, not so very long ago, when conservatives and Republicans recognized this point, and argued that genuine welfare reform would require both give and take: that is, taking away or reducing the unconditional AFDC welfare checks; and giving welfare families incentives to work, opportunities to work, and assistance for children.

But welfare reform is being sucked into the whirling blades of the budget debate. Rather than rethinking and restructuring how America helps its poor, the Republicans are now focused only on saving money and sounding tough.

For example, one mainstay of genuine welfare reform has been the Earned Income Tax Credit. Although Ronald Reagan was one of the first to propose such a tax credit in the early 1970s, it has long been a bipartisan favorite.

This credit is a tax break for poor families with children. As its name hints, the amount of the credit increases as the family earns more income. When Reagan signed an expansion of Earned Income Tax Credit funding in 1986, he called it "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress."

With bipartisan support, the credit was expanded in 1993, and the maximum a poor family could receive was about $3,500 per year. The credit was projected to cost the federal government $24 billion by 1998 - a year when the federal government would pay only $16 billion for welfare payments through the Aid to Families with Dependent Children program. The budgetary image was striking: incentives to work would become a larger category than welfare checks.

But now Republican budget cutters are after the Earned Income Tax Credit. One extreme proposal would slash a total of $120 billion from the program by 2005. Instead of thinking about how to provide incentives for poor families to take a job at or near the minimum wage and to become attached to the labor force, Republicans are trying to slash the incentives.

A second standard for authentic welfare reform is to assure that welfare recipients have opportunities to work. Many welfare recipients are low-skilled parents with limited work experience, who live in neighborhoods where job opportunities are scarce. Hooking them up with jobs will cost some money.

The House Republicans' "Contract with America" aimed to put 45 percent of welfare recipients to work by the year 2000. One of the only spending increases proposed in the Contract is the call for $10 billion over five years to implement these work requirements.

According to the non-partisan Congressional Budget Office (now headed by a friendly Republican appointee), that funding won't be nearly enough. CBO says it will cost $10 billion in the year 2000 alone to meet the work requirement. But Republican budgeteers are focused on reducing spending, not on putting people to work.

A third imperative for welfare reform is to reach out to children in poor families. Newt Gingrich expressed this need, in his low-key and conciliatory way, by shooting off his mouth about putting children of welfare families in orphanages. Talk of orphanages opened the curtain on a stylized political melodrama where Republicans looked stern, Democrats looked horrified, the politicians had a good time, and nothing got done.

But there is considerable evidence that children's behavior patterns are set early: in grade school and even younger. If we want disadvantaged children to have a good foundation for success in life, we need to experiment with variations of Head Start, day care, home visits by social workers, alternative living arrangements, and more.

Of course, these proposals will cost money and come between parents and children. But anyone who has supported an expansion of orphanages - which could easily cost $25,000 annually per child - is in no position to whine about the cost or intrusiveness of other alternatives.

No one knows what combination of work incentives, work requirements, family intervention, and lower welfare checks would work best to reduce welfare dependency. That's why Republicans are right that states need freedom to experiment. But states also need money. Welfare experiments with inadequate funding will only prove that if you don't commit resources, you won't get results.

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