The MacNeil/Lehrer Report; Welfare Reform

JIM LEHRER: Good evening. The reaction dust is still settling on that welfare reform proposal President Carter announced Saturday. The President called his plan a "break with the past" and with a welfare system he labeled a "national disgrace" during his days as a candidate. Specifically, it would replace existing programs -- food stamps, aid to dependent children, and so on -- with one cash payment. The blind, physically disabled and others unable to work would get a monthly support check, up to $4,200 a year for a family of four. Others working full or part time, the so-called "working poor," would have their incomes supplemented by federal payments.

A new federal program would be set up to find the needed jobs. The first priority would be in the private sector, but there would be 1.4 million public service jobs created as a last resort. In order to be eligible for income support, most able-to-work recipients would have to work. The exception would be parents with young children.

There would also be expanded tax credits for those families making up to $15,600 a year.

Some 32 million Americans would be eligible for some part of this program, an increase of two million over the current number. The cost is estimated at $30.7 billion a year, an increase of $2.8 to $6.1 bil lion over the current welfare bill, depending on whose math you use. Two billion dollars of that federal money would replace that now being paid by state and local governments.

Tonight, an examination of this Carter plan and of some of those particles of reaction dust. Robert MacNeil is on vacation tonight, and Barbara Newman of National Public Radio is sitting in in New York. Barbara?

BARBARA NEWMAN: As expected with any program as large and complicated as this, the reaction is both mixed and cautious. An endorsement with reservations has come from Vernon Jordan, the Executive Director of the National Urban League. Jordan recently accused President Carter of betraying his campaign promises to the blacks and poor. Lee Alexander, the Mayor of Syracuse, New York and President of the U.S. Conference of Mayors, said he was cautiously optimistic that the proposal was a step in the right direction. The Mayors would have preferred total federal assumption of welfare payments and would have liked the plan to become effective sooner than October of 1980. Meanwhile, the reaction in Congress has been equally equivocal, but it is known that the two key legislators on welfare reform - - Russel Long of Louisiana, Chairman of the Senate Finance Committee; and Al Ullman of Oregon, House Ways and Means Chairman -- each has serious reservations. Jim?

LEHRER: Before we get into some of those pros and cons of the Carter plan, a fleshing out now of what the President wants to accomplish with it, with Michael Barth, Deputy Assistant Secretary of

Health, Education and Welfare, and one of the major drafters of the President`s proposal. Mr. Barth, let`s take the President`s objectives one at a time as he stated them: first, keeping the family together. How will this plan do that, and can you give us an example so we can understand it comparing the old system with what the President proposes?

MICHAEL BARTH: Yes. Currently in a number of states the best thing a father of a family can do is leave his family, desert them. In twenty-four states currently there is no cash assistance at all for a two-parent family while they are eligible for food stamps. Under the program for better jobs and income we would assure to a family with children a job. The first attempt would be to provide a private sector job; if that failed, we would provide them a public sector job.

LEHRER: All right. The second objective was to make it more lucrative to work than to be on welfare. How?

BARTH: That`s certainly going to be the case. A four-person family with two parents would be in the following situation: the principal earner in that family would be eligible for a special public job if we couldn`t find that person a job in the private sector. And that job would pay $5,500 a year at the minimum wage. If the person did not take the job the family would be eligible for $2,300 a year.

Secondly, if the family took the job and still had low income, the job would be supplemented with a work benefit. The work benefit, together with the minimum wage earnings, would bring that family`s in come to over the poverty line. So we can say that if a principal earner in a family is willing to work all year long, that person would be assured earnings above the poverty line.

LEHRER: All right. In rough terms, how does that compare with how the system works now?

BARTH: Now we don`t try to assure 1.4 million jobs, we don`t try to assure a job to every family with children. And in many states, as I said, there`s no cash assistance to two-parent families with children. And we`re going to change that. We`re going to try to concentrate benefits on those who are most in need and not preclude people from participating in the system simply because they happen to be married.

LEHRER: All right. Another thing the President said his plan would accomplish is the reduction of fraud and error in the system. How would that work?

BARTH: Well, that would follow from a number of factors in the plan. First place, we think the plan will be simpler than currently. Right now in many jurisdictions a recipient has to file a twelve-page Aid to Families with Dependent Children application form and then a ten-page Food Stamp application form, which have redundant information on them. Filing one, more simple form would, we think, reduce the probability of error. There would just be less numbers and less information to collate and process.

Secondly, an important part of the program since it will be a national program, would be one uniform computer system so that when an applicant walks into an office we can check and see whether that applicant is getting benefits someplace else. And we think that`ll reduce whatever fraud and abuse there is in the system.

LEHRER: All right. Mr. Barth, as I said a moment ago, two million more people will be eligible under this total plan than are eligible now under the present plan with all its disparate parts. Who are these new people?

BARTH: Actually, we estimate that less people would be eligible under the plan than are currently eligible, but -- and this is very important -- more people would participate in the program. We estimate that about two million...

LEHRER: Wait a minute, you lost me there with the difference between being eligible and participating.

BARTH: In any program some of the people who are eligible under the rules of the program choose not to participate. For example, in the Food Stamp program now we estimate that while there might be some thing over thirty million people eligible, something around seventeen million currently participate in the program -- that is, they actually apply for and receive benefits. The reason for this is that many, under current Food Stamp rules, can`t come up with the money to purchase the food stamps, under the complex rules that program now operates under. The President in the spring proposed to eliminate that feature of the program. Now we`re proposing to take the next step, and that is to eliminate the food stamp itself and give the benefit in cash. Studies have shown that people are frankly stigmatized and embarrassed to shop with food stamps, and we think that the greater assistance they`ll be entitled to will be taken up by people by virtue of their being eligible for a cash benefit and not a food stamp.

LEHRER: All right, thank you. Let`s go now to some of the critics of the Carter plan, beginning with Richard Nathan, an expert on urban policy and welfare. He was Deputy Undersecretary of HEW in the Nixon administration and was an architect of the Nixon Family Assistance Plan, which died in Congress eight years ago. Dr. Nathan is now a Senior Fellow at the Brookings Institution. Dr. Nathan, what is your major quarrel with the Carter plan?

RICHARD NATHAN: I`d make three points, Jim. First of all, I certainly think the plan has some good features and I`m glad that it has gone forward, but it does seem to me that there are a number of problems -- very complex problems; this is a very complex field. And the important point that I would make as a third point is that there is a question here of approach. Eight years ago yesterday there was the Family Assistance Plan introduced by the Nixon administration which again was a comprehensive program that included everything in one bill. I think that there`s been so much change and so much growth in the nation`s welfare programs that what we should do now is look at the next steps in terms of the good features of the administration`s plan. I would hope that Mr. Rangel`s committee, I would hope that people in the Congress would move as quick as we can on the things that there`s agreement on and not wait until we can take a whole, very complex, single new system, because that whole, complex, single new system, in my opinion, doesn`t recognize the changes that have taken place, the great growth and the number of new programs that now deal with the needs of the poor in our society.

LEHRER: All right.- Let`s run through some of the things that I`ve just run through with Mr. Barth. Do you think that this plan as laid out now will accomplish these things like keeping the family together, make it more lucrative to work than to be on welfare, which has been one of the major things of any kind of welfare reform system, and also reduction of fraud and error, which has been another stickler?

NATHAN: Let me take the jobs point first. The plan proposes to put welfare family heads -- these are principally women, large numbers of minority women -- to put them in jobs at the minimum wage.

Now, in large cities around this country which have strong unions, as many city governments do, I think there`s an important question of whether it s realistic to think that productive jobs can be found for people at the minimum wage in these kinds of settings. Furthermore, I think that there`s a problem; Mike talked about the stigma of food stamps. I think there`s a stigma to saying we`re going to take welfare mothers and put them in separate jobs that pay much less than union scale jobs -- I think that`s a problem.

Second, on your point about fraud and errors in the system: what people don`t realize enough today is that automation has been substantially increased in welfare programs, and HEW -- and I credit the department for this -- has put in new systems to achieve better quality control. The error rates in welfare programs in the last three years have been cut in half; with the exception of New York City and the District of Columbia, we`re making a lot of progress. I think the welfare mess is overstated. I think the real mess is Medicaid. And I think that if we stop now and say we`ve got to go all the way on this whole new scheme, which will take two years or maybe four years to enact, that what that`s going to do is stop the progress that`s being made and it`s going to delay action to do things that need to be done, many of which are good and in the Carter plan, but there are some very deep problems with quite technical matters where I think that the work incentive and family breakup points that Mike Barth talked about earlier are not dealt with quite so fully and quite so effectively as some of the early reactions and early descriptions have suggested.

LEHRER: All right, we`ll give you a chance to go into that in detail with Mr. Barth in just a moment. Thank you, Dr. Nathan. Barbara?

NEWMAN: The Public Assistance Subcommittee of the House Ways and Means Committee will begin hearings on the welfare reform package in September. Representative Charles Rangel of New York is the ranking member of this subcommittee. Congressman, you`ve been sitting here while Dick Nathan has been talking, saying, "So right, so right," and taking no.... What`s so right about what he`s saying?

Rep. CHARLES RANGEL: Well, I wonder where Dr. Nathan was when I needed him the most, when we were wrestling with (unintelligible) program. First of all, with a complex bill like this it bothers me that the administration saw fit to announce it the day after the Congress went into recess. And since our committees -- that is, our Joint Committee, the Ways and Means Committee, the Agricultural Committee and the Committee of Education and Labor -- are prepared even to work during the Thanksgiving-Christmas recess, it would seem to me that it would make more sense to allow the legislators to examine the program so that we have this public debate in determining where the balances should be. It could be far more informed than having legislators such as myself with primary jurisdiction responding to what you read in the paper. But Dr. Nathan really was expressing some of the concerns I had.

First of all, we can call it welfare reform if we want; I`ll accept the fact that it goes a long way in reshaping and rechanneling, providing services to the poor. But we really should call it a job program. And why in God`s name do we have to wait three years to set into place employment opportunities, I don`t know. The only people we`ll be dealing with with welfare are those people that are unable to work. And it makes it just sound too simple, without the benefit of public hearings, to find out where are these incentives for private sector jobs. The incentive is provided to the recipient if they had to choose between public works jobs and private sector jobs, but if it is not shown to the Congress that we have the ability to provide jobs in the private sector or to provide the so-called "meaningful" jobs in the public sector at the wage that is suggested, then of course we`ll have to start dealing once again with providing social services to the unemployed welfare recipients.

NEWMAN: Let me just ask you this: you`re saying that as a jobs program you accept it, but what about the other side, that you may need some welfare reform, which you don`t think is included in this, is that correct?

RANGEL: I`m saying that it`s going to be difficult for the Congress to ever get to evaluate the social services that are provided until we wrestle with what opportunity do we have to expand the opportunity for employment in the private sector, and if that fails, to use the billions of dollars that are available to create jobs in the public sector.

NEWMAN: But are you accepting this work provision mandating work for welfare women at the minimum wage?

RANGEL: Yes, they are safeguards in it, and I don`t see where the word "mandate" is supposed to be an emotional signal for certain people; but there`s no question in my mind that most people that are able to work and are on welfare are anxiously now seeking employment. And so for that reason, if the complexity of the bills involved merging the SSI recipient, cashing out food stamps, providing a common, one-base standard for all people that would have to receive federal assistance, that is one thing which may take a little time. But it should not take that time that the President has called for to see whether or not the employment opportunities actually will exist in the private sector, and if they can`t prove it to the Congress then the Congress has to speed up to make certain that these employment opportunities are available in the public works sector.

NEWMAN: All right: jobs faster. Thanks a lot, Congressman Rangel. Some of the strongest criticism to date has come from the American Conservative Union. An ACU task force is currently at work on a conservative answer to welfare reform. Robert Carleson was U.S. Commissioner of Welfare under Presidents Nixon and Ford, and he will be a principal drafter of the conservative program. Mr. Carleson, what are the elements that you`re going to have that are not in the Carter program?

ROBERT CARLESON: Basically, we`ve been hearing a lot of disagreement up till now, and it really isn`t very serious disagreement. I think the three people, who have spoken before me-- I`ve dealt with at least two of the- three over the last few years quite a bit -- are in general agreement on the direction they want to go; their only argument is whether they want to move incrementally, one step at a time, or whether they want to go at one big move, which is to federalize the welfare system and in effect make everyone eligible and have only income and assets be a test for welfare. So the disagreement really is degree. And as a matter of fact, I`ve talked to Dick Nathan a lot, and I think his point is that if they try to go in one big move, all the other actions will stop; and I agree.

NEWMAN: What`s your position?

CARLESON: Our position is that we should actually turn it around. I was welfare director in California for two years during a very comprehensive and tough reform of the welfare system. We were able to take what was considered to be an impossible mess, we reduced the welfare rolls, but more importantly we used the savings from the reduction in the rolls to increase the benefits to the needy families, the first increase in thirteen years.

NEWMAN: How would you do this, though?

CARLESON: You do it with a lot of hard work, a lot of eligibility checking, a lot of verifying. You know, when you have a twelve-page form it makes it easier to avoid mistakes and avoid abuse and particularly avoid fraud than when you have a little short form. You have a little short form and they don`t ask all the right questions, and then when the inspectors go out later they find a lot of ineligible people.

NEWMAN: So you would have inspections, you`d have more people disqualified.

CARLESON: No, Dick Nathan talked about HEW going ahead with doing more verifying and more checking and reducing error rate by fifty percent. Well, that happened largely through some of the efforts we had when we were there.

But that`s not the real answer. The real answer is to move this back in the direction of the states. I would say the same thing: let`s junk the present system. I`d take the AFDC program, the Food Stamp program, not necessarily SSI, but a couple of the other programs; I would take all the federal money that`s being spent on those programs in each of the states now -- based on last year, for example -- send that money back to the individual states, give them some more money, if necessary, for cost of living and for other reasons, remove all the federal constraints, the federal regulations and the guidelines, remove the influence of HEW and the Department of Labor; let the states design their own welfare programs, have some matching in there so that they`ll have a fiscal responsibility. In my opinion, if the states have that money, have that authority, they`re going to be able to increase benefits to the people that are truly in need and they`re going to make an effective work requirement.

The Carter proposal is very similar to other ones in the past: it does not have an effective work requirement. The reason Mr. Rangel is com7ortable with the mandate on work is because it really isn`t a work requirement. Secondly, it actually doesn`t strengthen families. They tried to strengthen the family staying together by giving assistance to the entire family; but they went one step farther by giving assistance to individuals and couples. They now made it possible for a father to leave his family, go get on welfare himself as a single. And by the way, once he`s on welfare as a single he can`t be made to take one of these new jobs because those new jobs are only for intact families. And as far as eliminating fraud and abuse, it is in our opinion going to cause more mistakes and more abuse and probably a much, much bigger bureaucracy.

NEWMAN: Thank you very much, Mr. Carleson. Jim?

LEHRER: Besides that, Mr. Barth, everybody loves your plan. Let`s go back through some of these criticisms, beginning with the ones we just heard from Mr. Carleson. He says it`s not going to decrease fraud and abuse.

BARTH: Well, we think that it will. Fraud, on the one hand -it`s difficult to determine how much of the errors are caused by fraud. There seems to be fraud in all systems. We`ve recently found out that there are residents of the metropolitan Washington area who are receiving welfare benefits in the District and also receiving them in Virginia. There seems to be fraud on the part of doctors. How much of the total problem of the high error rates -- nine percent in AFDC, eleven percent in Food Stamps -- is due to that sort of thing, we don`t know. What we do know is that by making the program simpler, by having a nationally uniform program with one computer system that would make it possible for us to tell whether a recipient was on assistance in another jurisdiction will make it possible to reduce error rates.

But I`d like to stress one point: Mr. Nathan`s right, a computer is not a panacea. You can only program into a computer a simplified program if the program itself is relatively simple. And one of the things we`re trying to do is develop program rules that are as simple as possible.

LEHRER: Mr. Carleson, what about the argument that by nationalizing it, so to speak, and putting it on a national computer that you can in fact check and double-check much quicker than you can if it`s state by state?

CARLESON: It really won`t work. The SSI program, which is a federalization of the aged, blind and disabled, has shown that there`s a very high error rate with the Social Security Administration. And by the way, there`s another problem: if. I were a representative of the poor I would be very concerned about all of a sudden turning everything into one great, big federal information system that would in effect make it possible for everybody in Washington to know everything about everybody else in the country. I think one of the strengths of the present system is the fact that we do have fifty different state systems, and I think that the states can exchange information. When I was welfare director in California we practically begged HEW to help us set up some of these kinds of computerized systems between jurisdictions and between states.

LEHRER: All right. Let me go back to you, Mr. Barth, on the other criticism of Mr. Carleson`s, that it does not have really an effective work requirement -- the argument that he used about the married man who can leave the family and go on welfare, et cetera.

BARTH: I think that it`s curious to posit that a man would leave his family when he would be in a situation if he stayed with his family of being assured at the very least a minimum-wage job, full time, year `round, that would pay him $5,500 a year and to that, if there was no other family income, would be added at least a $1,400 work benefit; if that job was in the private sector you`d add on top of that a $470 earned income tax credit benefit to the family so that their total income would be over $7,400 a year, in excess of the poverty line. If he leaves his family, he would, if he could not be placed in a job in the private sector, be eligible for that grant. However, we think that we would place him in a job in the private sector, in which case he`d be eligible for no grant.

Contrast that to the current system where we`re not providing any jobs. And the current work requirements under the AFDC program and under the Food Stamp program are really job search requirements. We`re telling people that you`ve got to search for a job, but there aren`t any jobs out there; and then these programs are called failures. We are saying that we`re going to stop that; we`re going to attempt to assure jobs to all families with children. And that`s the first step.

LEHRER: And that brings us to the criticisms of the Congressman. Congressman Rangel says this is basically a job program, and how in effect do you supply meaningful employment in the private sector first and then in the public sector?

BARTH: Jobs is one of the two important components of the program. We think that consolidating cash assistance into one more simplified, equitable, more nationally uniform program is important; we think the jobs component is important. We really don`t think you can have one without the other. We think the extension of...

LEHRER: How do you do it, which is the Congressman`s point, is that right, Congressman? How do you get that done?

RANGEL: Yes, and I`m sorry that we`re dealing with Secretary Barth, because this is a question I`d like to present to Secretary Marshall of the Department of Labor. But I`d like to look at this as a job program that I can support, and I`d like to get an answer, because without the jobs then we have to look at little more sensitively to the social service aspect of the program.

LEHRER: Well, we`ll go with Secretary Barth. Secretary?

BARTH: We have no objection to it being called a jobs program because we think jobs are a very important part of it. We`ve been very gratified with the response of state and local governments and the Comprehensive Employment and Training Act sponsors -- those are the sponsors that would be developing the jobs under this program -we`ve been very gratified with their response to the recent expansions in the CETA program that were recently enacted by the Congress and signed into law by the President...

LEHRER: Explain that. BARTH: This spring the... LEHRER: No, you don`t have to explain that, just what CETA is BARTH: CETA is the Comprehensive Employment and Training Act; it`s the basic manpower and employment legislation in this country.

RANGEL: We`re not supposed to get to the question of public service jobs until after we`ve expanded the opportunity in the private sector, so I`d like to take it one step at a time and see where are the incentives to expand the job opportunity in the private sector, and then we can go to the public works.

CARLESON: I think one thing we really want to make clear -- at least, in this program -- and that`s the fact that a lot of people have been talking today -- in fact, at the start of the program in a description -- that it means work instead of welfare, or getting a job instead of being on welfare. What this program does is makes a lot of people who are working now eligible for welfare and their income from their work, and it makes a lot of other people who are on welfare eligible to get jobs and continue to receive their welfare. Now, it was hard to believe when I looked at the HEW statistics, because using all the data they have in their program, in a state that does not supplement -- this means the poorest states in the Union, the ones that rely completely on the federal grant -- a woman with three children who uses the child care deduction would have to get at least $12,000 a year in salary before she`d leave this welfare system. And as a matter of fact, if you use the figures that were used in the HEW survey, she`d have to get $15,600 a year.

RANGEL: I`d still like to find out about the job opportunities.

LEHRER: Gentlemen, excuse me, we`ve just got a few moments left and I want to get finally from you, Mr. Barth, the question that Dr. Nathan raised: is this an effective way to get it through Congress and get it enacted, taking it in a big, overall thing rather than one piece at a time?

BARTH: I think that the piecemeal approach that Mr. Nathan would support has as its goals about the same goals as our program -- at least, that seems to be what he`s saying. I think the difference is

in the piecemeal approach you can`t buy any structural reform. You can`t consolidate the programs -- we think that`s important -- you won`t transform food stamp coupons, that are stigmatizing, into cash benefits. And we think that those are worthy goals and they`re worth whatever the costs are.

LEHRER: I hate to do it, but we have to go. Thank you all, gentlemen in New York; good night, Barbara. Gentlemen, thank you here in Washington. Tomorrow night, other news permitting, Barbara Newman and I will be back to look at the latest thing in advertising: jumping on the competition. I`m Jim Lehrer. Thank you and good night.