The MacNeil/Lehrer Report; Welfare Reform

ROBERT MacNEIL: Good evening. Jim Lehrer is away this week. Jimmy Carter has apparently discovered what other presidents before him have found out: it`s a lot easier to talk about reforming welfare than to do it. Welfare reform, of course, was one of Carter`s major campaign goals. He promised to scrap the present system, eliminate waste, inefficiency and cheating, provide incentives to keep families together, and encourage those who can to work. He gave his staff until May first to come up with plans to accomplish all that. May first was Sunday. Yesterday Mr. Carter reported it will take until August to submit a detailed plate. But he sketched out his goals. They were to scrap-the present system, eliminate waste, inefficiency and cheating, provide incentives to keep families together, and encourage those who can to work. In other words, after three months in office, Mr. Carter is virtually back where he started, and tonight we want to ask why. Why is it so difficult to reform the welfare system, and why is Mr. Carter in particular having problems?

The chairman of the study group the administration appointed to review the welfare system and recommend changes is Henry Aaron, Assistant Secretary of Health, Education and Welfare, who`s with us in Washington this evening. Mr. Aaron, good evening. Back in March, when Mr. Carter had his town meeting in Clinton, Massachusetts, he told that audience, "On May first Joe Califano, the Secretary of Health, Education and Welfare, will come forward and propose to the Congress a comprehensive revision of the entire welfare system." What happened?

HENRY AARON: I think exactly what President Carter asked for did happen. Secretary Califano made a comprehensive report to the President yesterday. The President announced some general principles that represent a major change from the existing system. Among those principles, commitment to provide as many jobs as possible for those who are now on the rolls or who might fall onto the rolls because of lack of income. He also made a commitment to consolidate the existing programs of cash assistance -- to simplify them, to improve their administration. He backed up the reliance on the earned income tax credit, which is an accepted part of the system of aids to families with modest earnings. I think in those senses he delivered on the promise that was made. Secretary Califano provided the report, the President announced some major objectives which in the course of the next three months we hope to flesh out and provide draft legislation for Congress in early August.

MacNEIL: Wasn`t the expectation, though, a little while ago that this May first would be the date when actual legislation would be proposed?

AARON: No, sir. At no time was legislation promised on May first. It has been stated on each occasion that May first was a target for a report from the Secretary to Congress outlining the general principles that would guide the effort. I think it`s been clearly understood all along that the process of legislative drafting would entail additional weeks, and in this case I think it will take about three months.` In the first week in August I have every expectation that we will be able to deliver on the promise to have a good, constructive proposal for welfare reform in draft legislative form.

MacNEIL: Why did the complexities involved in welfare reform come as such a shock to Mr. Carter? Aren`t these well known by people like yourself who have been in the business a long time?

AARON: I think the main surprise was the degree of interrelated-ness among the various programs, the diverse objectives of the various programs, the recognition that each of these programs, when enacted piecemeal over the past years, has had a good and sufficient justification; each of these programs does a great-deal for a great many people. The surprise came that all of these programs -- I should say each of these programs -- that make so much sense taken individually, when fitted together produces a system of very serious complexity, one that creates perverse incentives that affect the recipients and that badly does need reform.

MacNEIL: There have been a lot of reports to the effect that your study group was not unanimous in its recommendations, that there were still philosophical disagreements about which route to go within the group, in the recommendations to Mr. Carter. Is that so, and have they yet been resolved, or do you have until August to resolve them?

AARON: The President is going to be the person to resolve any conflicting advice he may receive...

MacNEIL: There is some conflicting advice...

AARON: No, I`m not saying that there is conflicting advice; I would think it would be the first time in world history if on an issue of this complexity there were not some disagreements about points of view about specific recommendations. The President is going to have over the ensuing few weeks to resolve the general directions in which we will go; on the basis of those directions Secretary Califano has committed in his statement yesterday following the President`s statement to have discussions with representatives from all fifty states so that we can make sure the proposal we come forward with is as equitable and fair as possible to existing recipients and goes as far as possible toward simplifying the system and improving its equity.

MacNEIL: Thank you; we`ll come back. The administration has been getting some conflicting signals from the Congress. Congressional leaders say they can`t consider welfare reform this year because the two committees with jurisdiction will be overloaded with tax reform, energy proposals, and other matters. But some members of Congress think the issue is too important to let ride. Senator Daniel Patrick Moynihan of New York plans to convene his Finance Subcommittee on Public Assistance tomorrow and hold hearings on welfare reform even though there are no concrete proposals to hold the hearings on. Congresswoman Elizabeth Holtzman of New York is equally anxious for action. A member of the House Budget Committee, Ms. Holtzman serves on the Northeast-Midwest Coalition task force on welfare reform, which has submitted its own study of the problems to the Health, Education and Welfare Department. Ms. Holtzman, what`s your opinion of Mr. Carter`s outline?

Rep. ELIZABETH HOLTZMAN: I would be frank to say that I`m disappointed. I understand that welfare reform is complex, but if you break it down it`s actually not so complex. There are two parts of welfare reform: one is who pays for the cost of welfare; and the other is how do we achieve a system that`s more equitable, has more incentives for people to go to work and that eliminates fraud. The second part is difficult; but the first part, who pays for it, is very simple. And the question here is whether the government is going to relieve the states and local governments of this country of the extraordinary burden they`ve had to pay with respect to welfare. That decision is easy to make. The President had in his campaign talked about the necessity for tyre federal government to ease this burden; and I am disappointed that there is no relief in immediate sight for us in this respect.

MacNEIL: Do you feel in pointing out, as he did yesterday, that they would try to relieve that burden as fast as federal funds permitted, or words to that effect, that he is in a sense backing off the campaign commitment in that area?

HOLTZMAN: It depends on how you view "as fast as federal funds permit." If you remove this tax credit that`s going to businesses, you could finance the seventy-five percent federal pick-up of welfare costs; there`s $2.4 billion in the proposed credit -- welfare pick-up to the degree of seventy- five percent would cost $2.1 billion.

MacNEIL: It`s a fifty percent federal pick-up now.

HOLTZMAN: In fact, you could pick up a hundred percent of the costs of Medicaid and AFDC for less than the cost of the tax rebate plan. So I think that there are funds to pay for it; the question is, when the President`s going to decide to do it.

MacNEIL: From your point of view, is it realistic to say that it won`t cost the federal government any more to reform welfare than the present system does?

HOLTZMAN: I`m intrigued with that goal, but I find it hard to believe that it can be accomplished. After all, if you accept the principle -- and I think it`s an important one -- that welfare is not to break up families, then people in twenty-four states now will become eligible for welfare who are now not eligible; if you accept the principle as the President has stated that the federal government is to pick up some of the burden of states and local governments, even postponing that to 1981 or beyond, you still have an increase in the federal cost of welfare. And finally, it depends on the kinds of incentives you have to get people to work. If you want to make sure that people will work rather than stay on welfare, you can`t cut off welfare benefits as soon as they start working, and that means you have to have a gradual system; that`s expensive.

MacNEIL: Right; we`ll come back. Also in our Washington studio is Congressman Barber Conable, the ranking Republican member of the House Ways and Means Committee. Congressman Conable has authored several welfare reform proposals himself, but none has yet passed both houses of Congress. Congressman, what`s your reaction to the Carter proposals so far?

Rep. BARBER CONABLE: I don`t think they`re proposals; I think they`re goals, and it`s not difficult for the people of this country to conceive of what appropriate welfare goals we should have. I think to some degree they`re contradictory. I think the big problem is going to come in implementing these goals and that it`s probably going to take longer even now than is anticipated -- I think August is a very early date to set as a target.

MacNEIL: You mean to actually draw up specific legislation?

CONABLE: Yes; I think we may be able to handle some pieces of it in that length of time -- that is, the executive branch may be able to get out its recommendations. But a comprehensive program is going to have to be fit together very carefully. We have a hodge-podge of welfare in this country. We have some states with very high welfare benefits and others with very low welfare benefits, and the problem of establishing standards or federalizing, if you deem that an appropriate goal, is going to take a long time. And on what level do you federalize welfare, at the highest state level? That would be staggeringly expensive. At the lowest state level? That would be unacceptable to a state like New York, which has had a fairly high level of welfare.

MacNEIL: You, of course, yourself are on record frequently as opposing the total federalization of welfare. Do you feel that Mr. Carter, in the goals he indicated yesterday, is backing away from that idea?

CONABLE: I think President Carter is participating in a self-education process here in Washington at this point; he`s finding out that welfare isn`t as easy as it looked when he was Governor of Georgia and was dealing only with one welfare system in that state. So I think he is backing off. I`m not all that opposed to the federalization of welfare. My position has been that it`s just not going to happen in the foreseeable future because of the problem of putting it together and because of the political issues involved. Also, I think it`s very clear that the expense is going to be very high and that we have serious fiscal. problems that are going to militate against a ready and easy resolution of it; it is going to be expensive.

MacNEIL: Do you suspect that the reason for the delay,. if that`s what it is, in bringing these proposals forward is actually due to anxiety about the possible increased cost?

CONABLE: I think that`s part of it. You know, there are rarely single motivations behind complex decisions, and the cost is part of the problem; part of the rest is the complexity.

MacNEIL: Congressman, I know you`ve got to get back to the Hill because you`re on the Senate-House Conference Committee, which is marking up the tax bill, and we wouldn`t want to delay that process for a moment, but can I just ask you before you go -- you and Congresswoman Holtzman -- starting with you, Congressman, is Congress too busy, as, for instance, Senator Byrd says, to consider welfare reform along with these other things?

CONABLE: No, Congress isn`t too busy. I must say that the committee on which I serve, the Ways and Means Committee, has most of the major issues in it that are facing the Carter administration, many of them long-deferred issues -- issues like social security, trade, the gasoline-energy tax problems, the problem of national health insurance -- all these things are in the Ways and Means Committee, and the result is that committee has an ample plateful of opportunities for entertainment. But the Congress as a whole can do anything it decides has a high enough priority to be put on the top of the heap.

MacNEIL: Congressman, what`s the motive of Senator Byrd and others saying, "Couldn`t possibly consider it this year -- too busy with energy and other things"?

HOLTZMAN: I can`t answer for the Senator, but I agree with my colleague that the Congress is certainly capable of dealing with both the energy problem and the welfare problem and a host of other problems at the same time.

MacNEIL: So in other words, in the view of the two of you, Congress could manage these things -- welfare along with the other things on its plate?

HOLTZMAN: I certainly believe so, and I think it should.

CONABLE: I question whether they can all be done at the same time, but if they put a high priority on welfare reform -- and there is a strong constituency for it out in the public -- that could be put, as I say, at the top of the heap, ahead of some of these other issues, also deferred, also important. But no more important than welfare reform.

MacNEIL: Congressman, thank you for coming; we`ll let you get back to the Hill.

CONABLE: Thank you.

MacNEIL: As several of our guests have indicated, one of the basic problems of the present welfare system is the fiscal burden it places on state and local governments. During the Presidential campaign Mr. Carter promised to, lighten their welfare burdens, but he gave no more specifics yesterday. Mitchell Ginsberg, Dean of the Columbia-University School of Social--Work, has a New Yorker`s view of what he should do. He`s a past Commissioner of Social Services and of Human Resources for New York City. He was a member of candidate Carter`s task force on welfare and has been advising the administration on welfare matters since the inauguration. Dean Ginsberg, first of all, will this delay until August, at least, and the delay that Mr. Carter also spelled out of possibly several years beyond that before the reform is complete hurt cities like New York?

MITCHELL GINSBERG: I don`t think August is a significant delay, Mr. MacNeil. I don`t think anybody that was close to these programs really thought that they could come in with significant legislation before then.

MacNEIL: So you agree with Mr. Aaron, in other words?

GINSBERG: Yes. I don`t think that`s a significant factor. I think it`s what happens after that; and if there is delay until-`81, and particularly in light of the President`s comment of no additional federal expense, that would be a very serious problem, not just for New York but for every state and every local community in the country.

MacNEIL: I see. Do you feel that -- whether you call it delay or whatever - - that there are still, from your understanding of what`s going on, serious philosophical differences about which route they should go?

GINSBERG: Oh, I`m certain there are; it`s inconceivable to me -I know many of the members of that task force; they`re very knowledgeable people -- you couldn`t get them together in the same room and not have philosophical differences. You have to remember that while most people agree that many things are wrong with welfare, they have quite different objectives in mind as to what they want to have accomplished. Some people want better payments to people; others want to save money; others want fiscal relief; these are often in conflict with one another, and then even the so-called experts often have different ideas as to what to do about it, because -- if I can make one point, Mr. MacNeil -in a way welfare gets a bum rap. Welfare really picks up failures of a whole lot of other systems: lack of employment, poor education, poor health systems. In many ways they are the fundamental factors that are wrong with welfare. So when you`re trying to reform a program which really is not the cause of the difficulty in the first place, you get into these kinds of troubles.

MacNEIL: I see. Mr. Carter speaks -- did during the campaign, and did again yesterday -- of scrapping the entire present system. From your knowledge of the present system, is it all going to be scrapped, or will various pieces have to stay in place?

GINSBERG: No, I don`t think it can all be scrapped, and I noticed the President did say, for instance, that he wanted the food stamp program to continue; that`s a significant part. No reference was made in it -- and I understand that`s not their charge -- to Medicaid, the medical care program; that`s the single most expensive program. In fact, Medicaid now is more expensive than all the rest of these welfare programs put together.

MacNEIL: And Medicaid cost goes into the $60 billion figure that is frequently used.

GINSBERG: Absolutely. And so you`d have`-to either have what I would prefer, some form of national health insurance; or you`re going to have to do something about that particular problem. I don`t think it`s possible to scrap it. Given the fact that you have such a variety of different populations in the United States -- poor, people, some who need, primarily, a job; some who are working but who get low income and need financial assistance to supplement that; some who really can`t be expected to work -- I don`t believe, Mr. MacNeil, that there is any one program that can achieve all these objectives. I think you have to have specific programs targeted and related to the specific needs of a group. And I suspect -- or at least, I hope -- in the end that`s the way it`ll come out.

MacNEIL: Would you agree with Congressman Conable that Mr. Carter might appear to be, in a sense, backing away from the idea of totally federalizing welfare, from what he said yesterday?

GINSBERG: I`d like to see what they come up with in August before I make that kind of judgment. My own point of view about that is I don`t think it`s realistic to move immediately toward total federalization. I think we can move by stages toward it. President Carter as a candidate did mention that he wanted to see the local communities not bear part of the expense -- that seemed a logical step; but personally, I`d push for a step which called for the federal government to take over fifty percent of the non- federal share, which would benefit all the states to some extent and which, for the public assistance programs...

MacNEIL: Which would be going to seventy-five percent.

GINSBERG: That`s right -- well, it would vary, because it`s now fifty to eighty; it`s not straight fifty. Thus it would go from seventy-five to roughly ninety and would cost roughly two and a half billion dollars.

MacNEIL: I see. Mr. Aaron, back to you -- a lot of various things have been said, and you`ve been listening there. First of all, on this point of the federalization of welfare, is the tendency of the administration to be retreating from that idea?

AARON: I`m not sure there is something to retreat from. The basic question is, should the federal government increase expenditures on the welfare system by eight billion dollars, the current state and local share, recognizing that that will be relief to state and local taxpayers but none of that will go to recipients? The question I would ask is, where should that eight billion dollars come from? It is a large sum of money. Those who have looked at the budget forecasts for the next four years recognize that things are going to be very, very tight indeed over that period. I think the question one has to ask with respect to any sum of money of that size is, if it`s available, what are the most pressing priorities that should be addressed with those funds?

MacNEIL: Do I take from that that you`d like to do that in the administration -- you`d like to have the federal government take over the whole cost -- but it just isn`t feasible in view of other budget constraints right now?

AARON: I think we have to stand by the President`s statement on this, that he would like to relieve state and local governments of the uncertain and growing burden of welfare costs as rapidly as federal re sources permit. I would repeat that the budget forecasts that have been done in recent months, projecting out three or four years, indicate remarkably little fiscal elbow room. This is no secret; these kinds of forecasts have been done by such groups as the Brookings Institution last year, and if anything, developments since then have reinforced those projections.

MacNEIL: So would you read that, Dean Ginsberg, as a philosophical difference, or merely that the fiscal constraints are such that they cannot:..

GINSBERG:I think it`s a combination of both. I tend to agree with Henry on part of that. I think if it`s two billion, four billion, six or eight, I wouldn`t want to see it go all in fiscal relief, either; I`d want to see it a combination of some fiscal relief and some money spent to improve the program and help some of the people in it. So I do agree that whatever the amount is -- and I think some amount is necessary -- I guess I`m the most skeptical about the notion that you can have any significant impact on these programs without some additional federal cost.

MacNEIL: Congresswoman Holtzman, could Mr. Carter, from your point of view, keep his campaign promises to cities like New York unless he goes rapidly toward total assumption by the federal government of the cost?

HOLTZMAN: I think that New Yorkers would be extremely disappointed if there were not any fiscal relief in sight. By 1981, who knows what kind of condition the city will be in? The President has said that time is running out on our energy problems; think the-time-is running out just as fast on our cities, and I think that the statement before, that we can`t afford federalization of welfare even at a hundred percent, is just absolutely not true. As I said before, the cost of the tax rebate package was greater than the cost of the federal government picking up the entire cost of Medicaid and AFDC. And so it seems to me the question is really "where there`s a will, there`s a way." And a seventy five percent takeover of welfare costs -- just AFDC -- could be paid for by this business tax credit that`s now being considered by the Congress and which the President has proposed. So I think that it`s clear that the government can afford, without increasing any costs, to take over additional welfare costs -- perhaps not the entire percent; but I think that this will create some additional benefits. Remember, state and local governments, to pay for welfare costs, have to engage in the most regressive kinds of taxation. State and local governments have been among the hardest hit sectors of the economy, they have laid off thousands of people, and they`ve raised taxes to deal with the recession. If the federal government gives fiscal relief to state and local governments through picking up part-of the welfare costs, that means that state and local governments can use that money for a variety of purposes. It can use the money to create additional jobs and get some of the people off the welfare rolls; and these are jobs, for example, that have a very important payoff -- they`re jobs in the public schools -- and we`ve had teacher layoffs around the country, and there are other ways in which state and local governments :..by helping them we will stimulate the economy, and I think that it ought to be done.

MacNEIL: Is it your view as a liberal Democrat that thoroughgoing welfare reform is falling victim to fiscal caution in balancing the budget?

HOLTZMAN.- It`s not fiscal caution. As a member of the House Budget Committee, I can move those figures around just as well as anybody else and produce for you the same kind of budget that won`t increase the deficit. The question is, what are the priorities of this government? Is the federal government going to pay for additional tax breaks for businesses, or is the federal government going to pay states and local governments so that they can stay alive?

MacNEIL: Let`s ask Mr. Aaron that.

AARON: I think it`s going to try and do some of both. I`d like to inject one fact into this; the commitment that the President made was to move to relieve local governments of as much of the welfare bur den as it could possibly could do. There are two important facts to recognize: first of all, the federal government could provide an increased match under AFDC or under other programs...

MacNEIL: Could you just define AFDC for us?

A AARON: Aid to Families with Dependent Children.

MacNEIL: Thank you.

AARON: It`s the major welfare program for families with dependent children. It could provide increased funds for states. There is no way, however, that it can guarantee relief to New York City or to Los Angeles County. That depends on the will of New York State and the State of California. Furthermore, fully eighty percent of the local burden of welfare is borne within only two states in the United States -- New York and the State of California. I would suggest that that would create rather serious problems in designing a fair and equitable and politically appealing system of relief for local governments.

MacNEIL: Congresswoman?

HOLTZMAN: Yes, I just wanted to say that the federal government could obviously rewrite the welfare laws so that no city would have to be paying the cost of welfare; that would be simple to do, and I disagree with Mr. Aaron`s statement.

MacNEIL: Do you want to make a point, too?

GINSBERG: Yes; I think that could be done also. I think there are ways -- the federal government is quite skilled at these things when it wants to be -- I think there are ways of ensuring that local communities don`t have to pay the share. It`s true that local communities in New York, particularly - - more than any other state -- pay a disproportionately high share, and that`s a state action and I agree that something has to be done on the state-level. But I don`t think there`s any real reason why the federal government should not pick up a larger share of the welfare cost; it`s a national problem. And if it gave it the same importance that it does give other things, it would find the money for it.

MacNEIL:. So you`d agree with the Congresswoman -- it`s a matter of priorities.

GINSBERG: Yes, I do think. On this particular issue, I certainly agree with her.

MacNEIL: If they don`t do this, does that mean that the priority on that aspect of welfare reform has been given a slightly lower position?

GINSBERG: It certainly means to me that something else has been put up in a higher position, yes.

MacNEIL :Mr. Aaron, is that right?

AARON: I think the question of whether there`s been any reneging on a commitment is an important one, and every evidence to date is that there hasn`t been any such reneging. We`ve met the schedule that was set out; the President has acted within the fiscal constraints that he faces; there are going to be a host of other needs, some of which Congressman Conable mentioned before, that are also going to be claimants on the federal budget -- social security, for example.

MacNEIL: I think we`ll have to leave it there. Thank you very much, Mr. Aaron. Thank you, Congresswoman, and the absent Congressman Conable. Thanks very much, Dean Ginsberg. Jim Lehrer is away this week; I`ll be back tomorrow night. I`m Robert MacNeil. Good night.