The MacNeil/Lehrer Report; Food Stamp and Welfare Cuts

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ROBERT MacNEIL [voice-over]: The nation's governors and the President are arguing over who should run the country's food stamp and welfare programs. How will their debates actually affect the poor?

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MacNEIL: Good evening. President Reagan ran into some resistance today from the nation's governors to his plan to swap welfare programs with the states. While many governors like the basic idea of the New Federalism -- turning programs back to the states -- they don't like the exact Reagan mix. The President wants Washington to take over Medicaid while the states assume food stamps and Aid to Families with Dependent Children, the major welfare programs. The National Governors Association, meeting in Washington, voted 36 to five this morning to negotiate a different deal with the White House.Part of the governors' opposition comes from anxiety about fresh cuts the White House wants to make in the same programs in 1983, the year before the swap with the states would begin. Democratic Governor Scott Matheson of Utah, the next head of the Association, said, "We cannot take another hemorrhage in 1983 like we did in 1982." Others familiar with the welfare programs fear that the new budget cuts, on top of those taking effect this year, will hit the poor very hard. Tonight, what happens to the needy under the budget cuts and the New Federalism? Jim Lehrer is off tonight; Charlayne Hunter-Gault is in Washington. Charlayne?

CHARLAYNE HUNTER-GAULT: Robin, the welfare programs at issue involve some 21 million Americans currently receiving food stamps and another 11 million, mostly single mothers, receiving Aid to Families with Dependent Children. Last year's cuts in the two programs totalled some $3 billion. This year, with food stamps alone, some 85% of the households now receiving benefits would either lose them entirely or be cut in some degree. In addition, the White House hopes to trim recipient rolls through a variety of new rules, including changes that would allow the government to count as regular income energy assistance payments to the poor, as well as to deduct such payments from either their food stamp or AFDC allotments. For example, an elderly couple living on $5,100 a year in Social Security benefits is now eligible for $312 a year in food stamps. Under the administration plan their food stamps would be cut to $108. If they also receive $360 a year in fuel aid, their stamps could be cut out entirely. Critics argue that this proposal would force many of the poor to choose between heating and eating. But that's not how the administration sees it. For a fuller explanation of the administration's plan, we go now to Alan Holmer, a deputy assistant to the President for intergovernmental affairs. Mr. Holmer, at the White House meeting that Robin referred to, how successful were the governors in getting the President to change his mind about having the states take over the welfare programs?

ALAN HOLMER: Well, it really was not a situation where anyone was trying to change anyone else's mind. I don't think it was a situation where the governors were arguing with the President. That wasn't the atmosphere that was in existence at all. It was really an atmosphere of the governors and other state and local officials who were in Washington coming and saying, "Mr. President, we are very, very pleased that you're talking about this federalism issue that we've been talking about for decades, that you're willing to trust us as true partners in the intergovernmental system." And you have to realize, as far as AFDC and food stamps and the Medicaid program is concerned, the historical position of the governors and state legislators and others has been that those should all go to the federal government. President Reagan's position has been that those could more appropriately be handled by the state government. What the President has done is he said, "Okay, I'll meet you halfway. We'll propose the federalization of Medicaid and in response we could hope the states would assume responsibility for AFDC and food stamps," and that what I sense from the meetings is a willingness on the part of governors and other state and local officials to say, "Let's keep talking. We'd like to have a chance to hear more about this proposal."

HUNTER-GAULT: All right. Did you discern any willingness on the part of the President to consider a different formulation in the swap, as the governors -- they may not have said it this afternoon, but they've certainly gone public with it in the past that this formulation that the President has come up with is not quite to their liking.

Mr. HOLMER: Well, again, the President has offered to have the federalization of Medicaid, which we project will save the states about $19 billion in fiscal year '84. In response, he's hoping the states could assume AFDC and food stamps, which we project would cost about $16.5 billion to them in FY '84. We think that's a pretty good deal.

HUNTER-GAULT: So in other words the President has not indicated that he is willing to compromise on this?

Mr. HOLMER: Well, he is not drawing the line in the sand, but he does think that he's come a very long way already, but he's still willing to talk.

HUNTER-GAULT: What is he willing to talk about?

Mr. HOLMER: Well, he's waiting to hear proposals from governors. He's had some from county officials, state legislators and others. I know we'll have some pretty spirited sessions over the course of the next few weeks.

HUNTER-GAULT: Is there any proposal that you've heard so far that even sounds remotely like something the President might be willing to consider, other than what he's already laid out?

Mr. HOLMER: Well, again, what the President laid out was a conceptual framework, and I think it's really too early to be able to speak on behalf of him or anyone else as to what the administration might be willing to finally agree to.

HUNTER-GAULT: Well, how did the implied threat to hold the New Federalism hostage to the budget proposals affect your plans to go ahead and cut programs like AFDC and food stamps?

Mr. HOLMER: Well, I don't sense that there's any particular desire to hold federalism hostage. What I sensed from the governors was the fact that federalism really is a very, very high priority as far as they are concerned. We recognize that we can't finesse the FY '83 budget issue, and that there are going to be governors and other state and local officials who may oppose us on the Hill with respect to some of those cuts. But what we have said to them is, however those battles come out on the Hill in FY '83, we're willing to lock in those dollars in terms of the whole federalism program for the succeeding three fiscal years -- something that the governors have been pushing for for a long period of time.

HUNTER-GAULT: All right, we'll come back. Robin?

MacNEIL: One of the leading critics of the Reagan plan is Robert Greenstein, who administered the food stamp program in the Carter administration. He now heads the Center on Budget and Policy Priorities, a research group which analyzes policies affecting the poor. Mr. Greenstein testified today at congressional hearings on proposed cuts in the food stamp program. Mr. Greenstein, in general, how do you feel that the mix that the President has proposed, having what Mr. Holmer just outlined -- the federal government be responsible for Medicaid and the states for Aid to Families with Dependent Children and food stamps -- will affect the poor -- the recipients?

ROBERT GREENSTEIN: Well, I think it'll affect them very negatively on both fronts -- on both the medical front and on the AFDC and food stamp fronts. Robin, when we look at what would happen in the states and how they would be able to maintain AFDC and food stamp payments, we have the fact that one of the reasons that these were set up as federal programs in the first place -- going back to when AFDC was set up in 1935 in the Social Security Act -- was because during an economic downturn -- the Depression, at that point -- state revenues contract and they can't finance these programs during a downturn. The first thing that this proposal does is that it transfers from the federal government to the states the added government cost you have during an economic downturn. And the states would be losing their own revenues because their economies contract during a recession, and they wouldn't have the funds. But perhaps even more fundamentally --

MacNEIL: Of course, the administration is predicting that the recession will have begun to turn upwards by the end of this year, or later in this year, and by 1984 we'd be on the road to recovery.

Mr. GREENSTEIN: But we're talking about a permanent change, and no one believes there will never be any more recessions. But more fundamentally, when we look at why we have a food stamp program in the first place, back in the 1960s there were alarming degrees of hunger and malnutrition in this country. States were not meeting the need. It was President Richard Nixon who proposed national eligibility standards in the food stamp program because that was the only way to resolve the problem. When we look at the AFDC program we find -- where each state sets its own benefits now -- we find that in many states, particularly in the South, the benefits are remarkably low. And the administration's response to this is that after the passage of the Voting Rights Act things have changed and states are more responsible to the poor, southern states in particular. The facts show that that's simply wrong. In the last 10 years, AFDC benefits have fallen 24% in constant dollars, and in the South, despite economic growth, the gap between benefits in the South and the North has widened in the last 10 years. In places like Mississippi, a mother and two children with no other income gets a grand total of $1,100 a year in AFDC benefits. So I think it's clear that if we turn these programs back to the states, we'll go back to the kinds of conditions we had that led us to set up a food stamp program in the first place.

MacNEIL: Can you generalize about what you think the impact will be of the administration proposal to cut these programs in the '83 budget?

Mr. GREENSTEIN: Yes. Frankly, I'm really more worried about that because I think the response from the governors and the counties and the state legislatures indicates that turning food stamps and AFDC back to the states probably isn't going anywhere. But the new cuts proposed for '83 are a serious issue. And in those cuts the impacts are very severe. What a lot of people forget now, Robin, is that there are no longer students or strikers or people with luxury cars on food stamps; they've been eliminated. We've cut the income limits three times in the last five years.The people on the program now are very poor. Ninety percent of them are below the poverty line while they're on stamps, and they get an average benefit of 43 cents per person per meal. That's our starting point. And to that starting point the administration proposals would cut 93% of the elderly or disabled would lose some benefits, a quarter of them all their benefits; 94% of the working poor, 40% of all the dollars going to the working poor would be eliminated. And two examples, I think, illustrate what would happen.

MacNEIL: Can you make them brief examples?

Mr. GREENSTEIN: Sure.

MacNEIL: Thank you.

Mr. GREENSTEIN: If you take a mother and two children, who is earning the minimum wage -- family of three; at the minimum wage they're below the poverty line -- they get $66 a month in food stamps now; they'd get $9 under the President's proposals. An elderly person living alone at $285 a month -- 79% of the poverty line -- would lose everything. Those are the kinds of people who get hurt.It's not waste; it's not students; it's not high-income people. It's people far below the poverty line who would bear the brunt of nearly all of the new cuts. That's why the governors as well as other people are upset about them.

MacNEIL: Thank you. Charlayne?

HUNTER-GAULT: Now for the perspective of an official who administers welfare on a state level.She is Faye Baggiano, Alabama's commissioner of pensions, security and Medicaid. And she is with us tonight at Alabama public television station in Montgomery. Ms. Baggiano, to the first question: where do you in Alabama stand on the President's proposed swap?

FAYE BAGGIANO: We agree with it. We feel when you can cite a specific example that you just heard, you can make any point you want, but if you look at the dozens of welfare programs available to people who really need them, we rarely can put together what programs which individuals receive. We never really can see a clear level of those benefits for any one person. For instance, you talk about the elderly suffering. In almost every state in the union in addition to what we've talked about, there are nutrition centers for the elderly that are funded through the Administration on Aging. Transportation is provided to those centers. Social needs are taken care of at those centers for the elderly. In Alabama a mother also -- ADC mother with two children -- has a very low benefit compared to other states, but if you add in all the total benefits that welfare recipients are eligible for, it becomes a little more positive as far as total numbers that you're looking at. We feel in Alabama that if we could have all of these programs, Medicaid included, turned back to the states with interim funding, with help in the future to fund those programs through taxes or whatever else that could be turned back to the state, that we in our state could develop a program for our people specifically that would be much more administratively lean, that would still provide the needs of those people.

HUNTER-GAULT: So you're saying in effect that there are a lot of programs out there that would take up the slack if these people were removed from some of these programs?

Ms. BAGGIANO: I'm saying really not that there are a lot of programs that would take up the slack. What we in Alabama would like to have is a complete turnback of all welfare programs to the state with some guidance, some money for the transition period to be able to develop a different system. We could not do it with the system as it is today where an individual goes one place for ADC, a different place for food stamps, a different place for this and that, but where we could develop a case management system in our state that would effectively alleviate poverty in our state, where we could work to train for jobs, encourage industry to work with us. We are already working with our community religious groups to provide meals in their churches on a daily basis for the elderly -- for the ones who don't go to the nutrition centers sponsored by the federal government. There are so many creative ways that you can work to get around a benefit "cut."

HUNTER-GAULT: Do you support that part of the plan that would count energy assistance as income?

Ms. BAGGIANO: I really think we need some method of being able to determine what a total benefit is to an individual or to a family. Let's really look at what they're receiving.

HUNTER-GAULT: Well, if you supported this particular plan, wouldn't that mean that -- the example I just gave showed that some of the elderly people would lose their food stamps altogether.

Ms. BAGGIANO: You're talking about just the specific cuts for next year?

HUNTER-GAULT: Right.

Ms. BAGGIANO: Okay, but remember those elderly people have for them as a resource in almost every community in this country a nutrition center wherethey can go and have a hot meal every day, visit with their peers, have socialization. Transportation, again, is provided to those centers for them if they're needed. There are a number of other resources in that community in addition to just food stamps.

HUNTER-GAULT: So are you saying in effect that both in terms of the swap as well as the immediate impact of the cuts -- the presently proposed cuts in Alabama -- that there are safety nets in place and that people would not suffer as Mr. Greenstein has outlined?

Ms. BAGGIANO: I don't know if people would suffer, Charlayne. The difficulty at this point is a cut that is being made without allowing a state time for preparation for that cut. If you had time to sit and decide how your programs will be run and how you'll work with the individuals to make sure that the commitment to the needy in the state is not lessened -- you do need some time to do that. We are experiencing some cuts right now in the ADC program that were unexpected. The omnibus act of last August mandated certain specific savings that states would make, and I understand from talking to my counterparts in other states that those savings have not materialized. And so if you're experiencing a substantial cut in funds for those programs this year, but you've been given no time to plan how you will handle those people who are receiving the cuts, that's difficult. You do need time.

HUNTER-GAULT: Well, in a word, would the '83 cuts fall under that difficulty you were just describing?

Ms. BAGGIANO: Not as much as they have this year, but they still will require a tremendous amount of planning, and we're not being given any time to do that.

HUNTER-GAULT: All right, thank you. Robin?

MacNEIL: Now another state administrator who runs one of the largest welfare systems in the nation. She is Barbara Blum, commissioner of the New York State Department of Social Services. She also chairs a national committee on welfare policy for the American Public Welfare Association. Commissioner Blum is with us in the studio of public television's New York network in Albany. Commissioner Blum, what do you think the impact is going to be of the cuts proposed for '83?

BARBARA BLUM: Oh, I think that the cuts proposed for '83 are of such a magnitude that the programs would have to be entirely reshaped. We're talking in our own state about a reduction of $200 million, for instance, in the ADC program.

MacNEIL: Out of how much?

Ms. BLUM: Out of a budget of approximately $1 billion.

MacNEIL: Well, that's a cut of a fifth.

Ms. BLUM: Yes. A reduction of that magnitude will bring a great deal of harm to our clients. You know that in New York we have been working very hard to have decent benefits and to help people into the work force, and we have had some degree of success. We have a stable caseload at a time when many states throughout the nation have rising caseloads. We are very, very concerned that our success over the past several years not be totally destroyed. We've just been through a very difficult period implementing the changes from the last congressional action, and here we are faced now with proposals that are inexplicable. After all, the ADC program is a no-growth program nationwide. It's one of the smallest of the entitlement programs. And yet that program is taking the most severe hit if this proposal goes through.

MacNEIL: What will be in the impact in a state like New York of the proposal to make energy assitance or fuel assistance deductible, as it were?

Ms. BLUM: Well, that of course wouldhurt tens of thousands of households, not only households which now receive ADC -- Aid to Dependent Children funding -- but also marginal-income households and households with elderly persons who depend very much now on the food stamp allotments as well as the energy payments.

MacNEIL: The administration's argument in proposing these cuts last year and again this year is that the neediest people will not be hurt, that the safety net in effect has not been taken away or doesn't have holes in it. What is your view on that?

Ms. BLUM: Well, I think that we can all see through the safety net at this time.There are very, very large holes in the safety net. The fact is, as I just mentioned, the ADC program has taken a cut much, much larger than any of the other human service programs. And it seems to me that when one sees such clear targeting -- here we are with a proposal for the coming year that would bring an average reduction for each child in the United States who is dependent of $300 a year at the same time that other programs are not being reduced. And I think we have to think about the future of those children. Are we going to help them become independent? Are we going to help them to join the work force and support the elderly in the future, or are we going to take the simple way out and hurt those persons who have very little advocacy?

MacNEIL: Finally, what is your view of the administration's proposal, which is welcomed by your colleague in Alabama, Commissioner Baggiano, to turn the welfare programs back to the states? She says she'd like in Alabama a complete turnback.

Ms. BLUM: Well, I think I liked most what was said by the White House spokesperson. I think it's important to keep the dialogue open. I happen to think that every citizen in this nation has a stake in understanding whether or not the federal government should support income maintenance programs. I think that's something that really requires nationwide debate, and I would come down on one side of it and it would be the other side than the administration. However, we have an opportunity here to restructure programs. I agree entirely with my Alabama colleague that these programs could be better structured. No reason that they can't be better structured nationwide. We have perhaps a chance to ensure some equity, some floor of support, for our dependent children across this nation. We have some opportunity to simplify programs that are inordinately complicated to administer, like the food stamp program. Let's try to have open debate. Let's not have a long dialogue, but let's have an important debate about the role of the federal government.

MacNEIL: Well, thank you. Charlayne?

HUNTER-GAULT: Mr. Holmer, Ms. Blum says that your cuts are going to cause a great deal of harm to people who have very little advocacy, and Mr. Greenstein says that your cuts are going to take us back to conditions that in the '60s led to the creation of programs like food stamps and AFDC.

Mr. HOLMER: Well, with respect to the President's proposed cuts, I think all of us recognize that any of the budget cuts that he proposes are not necessarily painless. But they have been proposed, we feel, as a matter of fiscal and economic necessity in order to be able to get the budget deficits down, to get interest rates down, to get our economic engine back on track.

HUNTER-GAULT: But Ms. Blum just said that the reduction in the AFDC program would have little or no effect. It's so small that that reduction would do serious harm to children but would have little or no effect on the deficit which you are attempting to eliminate.

Mr. HOLMER: Well, you can nickel-and-dime the budget to death, and you're not really nickel-and-diming it; you're talking about cuts in the neighborhood of a couple of billion dollars that really can make a major impact on the national -- or on the national deficit.

HUNTER-GAULT: What about that, Commissioner Blum? Nickel-and-diming it?

Ms. BLUM: Well, I certainly hope I'm not nickel-and-diming it. I do believe that a $2 billion reduction balanced against the major increases that we see in other portions of the budget and in other of the programs that we're discussing tonight needs to be carefully examined. In government we have a tendency to think short range.Maybe we should be thinking about how best to reduce the ADC rolls long-range. How do we really reduce the number of children five years from now, 10 years from now, who need this kind of support? And it's not by reducing food stamps and income maintenance at the present time.

HUNTER-GAULT: Mr. Holmer?

Mr. HOLMER: Well, I think you need to look, for example, at what has happened to the cost of the food stamp program over the course of the last two decades. I doubt if anyone would have believed, when the food stamp program was originally proposed in the early 1960s, that that cost, which was $35 million in 1965, would go up to $5 billion in 1978, and up to $11 billion in 1981. What the President has said is the entitlement programs, which comprise over $300 billion in the federal budget, have to be brought under control, and this is a part of this effort to be able to do that.

HUNTER-GAULT: Mr. Greenstein, you disagree with that?

Mr. GREENSTEIN: Well, I think the figures are a little misleading. When the food stamp program cost $35 million, it existed in eight counties, and almost all of the United States had no program at all. It wasn't until the late '60s that we had all this hunger in America problem and all those medical surveys, and we extended it nationwide. So that's not a valid comparison. But more importantly, when Mr. Holmer talks of $300 million in entitlements, what the administration never says, is that most of that money is not for poor people. It's Social Security. It's Medicare. It's programs in which most of the beneficiaries are middle-income and not poor.All of the low-income programs that are limited to people who are poor are less than one-tenth of the federal budget. And there is where the administration is concentrating all of its big cuts -- 20% and 30% in each program.

HUNTER-GAULT: Briefly, a response to that, Mr. Holmer?

Mr. HOLMER: Well, the important point, I think, that must be made, that hasn't come out as yet is the fact that the President's swap program does have a maintenance of minimum benefit requirements that would be applicable to the states to make sure that they're not the kind of major cuts that have been discussed.

HUNTER-GAULT: Robin?

MacNEIL: Yes, Mr. Greenstein, Richard Snelling, the governor of Vermont, who is the current chairman of the National Governors Association, said today, "We must now, we cannot accept a program which would leave us with any doubts about our capacity to be a just society." As they're proposing this program, can it be consistent with that aim?

Mr. GREENSTEIN: I don't think it can, Robin, and I'd like to come back to this point that the cuts in the programs --

MacNEIL: I was talking about putting programs back to the states -- the New Federalism.

Mr. GREENSTEIN: I see. I see. Well, I really don't think it canbecause states have different fiscal capacities. The per-capita income and the revenue base is much less, say, in southern states than in northern states. And while Mr. Holmer talked of a maintenance-of-effort requirement, we all know that's not intended to be permanent, and eventually states would have to finance these programs on their own. And when we look at Alabama, for example, where the Commissioner spoke from, what she didn't mention was that the welfare payments in Alabama are only about $1,000 or $1,400 a year for a family of three with no other income, but a family earning $2,400 a year is ineligible in Alabama for either welfare or Medicaid.

MacNEIL: As compared, that $1,400 is compared with what in other states?

Mr. GREENSTEIN: Well, it would vary. It could go up as high as $5-6,000 in some of the northern states.

MacNEIL: We just have a minute. Let's go back to Commissioner Baggiano in Montgomery. Do you think that we can maintain a just society from your perspective in Alabama with the proposal to turn it all back to you?

Ms. BAGGIANO: Certainly in Alabama we will not lessen our commitment to the needy people of our state. If it were the responsibility of the administration of this state to see that people are taken care of, they will be taken care of. That same woman he mentioned with $1,400 for a year, her monthly benefit, before any money she earns in Alabama for just a portion of the total programs that she's eligible for, is about $730 a month. She can still earn money beyond that. She's still eligible for a number of other programs that aren't even included in that such as free school lunches and other things for her children. You have got to find some means of getting this welfare system back to where it should be, which is to developing a system that will put people on welfare temporarily to help them until they can find jobs and get back into a system instead of doing what we are doing, which is turning welfare into a lifelong commitment to the people who go onto it.

MacNEIL: Finally, Mr. Holmer, briefly, Mr. Greenstein said that the governors' reaction indicated the idea of turning these welfare programs back to the states probably wasn't going anywhere. What's briefly your reaction to that?

Mr. HOLMER: Well, I think it's still too early to tell. We are in a stage where the President's set forth a proposal, the governors are clearly willing to have a chance to continue to talk with the President about it, and we're willing to listen.

MacNEIL: Well, thank you. We have to end it there. Thank you for joining us, and thank you, Mr. Greenstein in Washington, in Albany, Commissioner Blum, and in Montgomery, Alabama, Commissioner Baggiano. Thank you all. Good night, Charlayne.

HUNTER-GAULT: Good night, Robin.

MacNEIL: That's all for tonight. We will be back tomorrow night. I'm Robert MacNeil. Good night.