The MacNeil/Lehrer Report; Poverty Rise

[Tease]

CYNTHIA BRAITHWAITE, welfare client: I was angry with the Essex County welfare system as well as Reagan and the budget cuts that he put in that forced me into that kind of a situation, because before that I was able to work and my grant -- be somewhat self-sufficient, you know. I would rather be self-sufficient than totally dependent.

[Titles]

ROBERT MacNEIL: Good evening. The government said today that Americans had more money to spend in July. Disposable personal income went up 1.7%, largely because the July 1st tax cut reduced the amount withheld from paychecks.Those figures, of course, cover Americans in general. For one segment of the population the latest government figures tell another story. Recently the census bureau reported the highest poverty rate in 17 years. It said that 34 million Americans live with less than the official definition of poverty, a cash income of less than $9,862 for a family of four.During the 1970s the poverty rate leveled off at about 11% of Americans, but starting in 1978 the rate began to climb, rising last year to 15%. All experts blame the weak economy and unemployment. Some also claim that Reagan administration cuts in aid to the poor are also a factor, a claim the administration disputes. Tonight, have Reagan policies contributed to the rise in poverty? Jim?

JIM LEHRER: Robin, some of you may remember a program we did on October 1st, 1981. It was about some changes in the welfare program which went into effect that day, changes which mainly touch those with jobs, for whom welfare was an income supplement. We went to a welfare office in Newark, New Jersey, and talked to a number of women whose benefits had been either cut back or eliminated. One working mother was Cynthia Braithwaite, a school crossing guard in the Newark suburb of Irvington. Mrs. Braithwaite, a mother of four, was taking home about $300 a month for her 20-hour-a-week job. On the day we met her her benefits had just been cut back, and this is how she felt about it.

CYNTHIA BRAITHWAITE: Because I actually felt that my hands were being tied behind my back and my throat was being cut, which, you know, disabled me to stop the bleeding. I felt as though I was, you know, being killed. Period.

LEHRER: We were interested in what has happened to Cynthia Braithwaite and her family in the nearly two years since then. Charlayne Hunter-Gault went to see, and here is her report.

CHARLAYNE HUNTER-GAULT [voice-over]: The first thing that happened to Cynthia Braithwaite is that she lost her four-room apartment in Irvington.

Ms. BRAITHWAITE: I never had any problems paying my rent before then. That's the day he kept cutting and cutting. I found myself unable to pay my rent.

HUNTER-GAULT [interviewing]: How much was your rent?

Ms. BRAITHWAITE: Two eighty-six twenty at the time. And I spoke to my landlords and they were very friendly and they waited and they carried me for three months while I was fighting with the welfare about my money, and eventually what it boiled down to was my landlords wound up having to evict me because they couldn't carry me any longer. I couldn't find an apartment here in Irvington because the prices, you know, were just out of my reach. So I was forced to move out of the town of Irvington. My kids had to be split up when we left our home. There was nowhere for me to go at the time that I was evicted. I had no apartment. So the family as a whole was dispersed. My kids were like, they were all over the place. My baby was with me; my daughter was down in Newark with some friends. My son was up in Union with some friends, you know. They were just -- my other son was upstairs with my neighbor. She was nice enough to keep my 16-year-old. And it was just -- it was a terrible thing, really. I was a school crossing guard for the town of Irvington, and this was my corner that I worked on for two years.Everyone in the area knows me, the parents and the students. So it was very, very easy for me to function here.

HUNTER-GAULT [voice-over]: But she lost her job when she lost her apartment.

Ms. BRAITHWAITE: Well, I got a letter telling me that, you know, in order for me to maintain my job I had to remain a resident of the town of Irvington. Since I could no longer find an apartment in Irvington because of my funds situation, my financial status, I was forced to move into the town of Newark, where the rent was more feasible to what I could afford. Seventy-five dollars a week is not a lot of money, but it's -- it helps. It aids from being totally dependent on the welfare system, which enabled me to feel that I was at least a functioning, you know, human being, able to contribute towards my own support and the support of my family. When I lost my job it made me dependent again on the welfare system, which I don't like, I don't approve of because I like to work.

HUNTER-GAULT [voice-over]: Fourteen-year-old Artina Braithwaite is an emerging track star, and already is a state champion. She used to work out on the track at Irvington High. Now that the Braithwaites have moved to Newark, she runs on the sidewalk. This is her new home, a four-room apartment on the first floor. Mrs. Braithwaite is now totally supported by welfare. She receives $258 a month in cash, and $227 a month in food stamps.

[interviewing] Would you find another job?

Ms. BRAITHWAITE: I've tried. I've honestly and earnestly tried to find jobs since I lost my job in Irvington. Because of my education status, it's very difficult.

HUNTER-GAULT: What do you mean?

Ms. BRAITHWAITE: Well, like I said, I only have a sixth-grade -- on a job application they ask you last grade completed. Mine is the sixth. It's the last grade that I completed. I'm no dummy because I taught me, but they don't want that on a job application. They want "did you graduate or didn't you" -- what grade you went to, and if you put the sixth grade, you can forget getting a decent job.

MacNEIL: The person in charge of welfare in Essex County, New Jersey, where Ms. Graithwaite lives, is Rebecca Andrade. She is director of the Department of Citizen Services. Mrs. Andrade, what exactly happened to Mrs. Braithwaite? Why was her welfare supplement cut?

REBECCA ANORADE: Well, Ms. Braithwaite and her four children really have been the victims of what we call the Reagan administration cuts that hit us in 1981 under the omnibus budget reconciliation act. There were six major changes in the Aid to Families with Dependent Children program at that time, and at least five of those changes affected Ms. Braithwaite. For example, her 18-year-old child, her 18-year-old, son, even though he was still in high school, was no longer receiving assistance because he had reached age 18.

MacNEIL: So she lost money for that?

Ms. ANDRADE: So she lost money to help her with support of her oldest child. The $75 loss that she refers to is a second problem. She lost -- after four months on her working job, she lost benefit of what is called income disregard, which means that most her income on her job was counted against her welfare. In addition to that, she also has to report monthly. She has to come into us when she's working and report monthly what her working income is. That, of course, creates many problems if someone is working that they take the time to come in. Another problem, or a couple other technical -- highly technical changes in calculations, but the net result is that it does a reduction in the money that we're allowed to give to her for her family.

MacNEIL: She is one of how many families in Essex County who were dropped from the rolls or had substantial cutbacks?

Ms. ANDRADE: There were two major changes, and as a result of the two major changes, one that occurred October, '81, which was an establishment of what we call the 150% rule, and the second change was in February of '82. Of those two changes, 4,000 families in Essex County alone were affected.

MacNEIL: Out of how many?

Ms. ANDRADE: Out of a caseload of about 37,000 families. I might add that the families that were affected were all working poor, similar to Ms. Braithwaite, mostly women heads of households with children to support.

MacNEIL: Now, how many of them are now back, like Ms. Braithwaite, fully dependent on welfare?

Ms. ANDRADE: The reports we're getting is that the national average is about 15%, but our estimates are coming in higher than 15% on our caseload.

MacNEIL: You don't have a precise figure?

Ms. ANDRADE: We're getting there closely. We know it's coming in well over 15 at this point.What we found was that in the first year, between '81 and June of '82, we did not see an appreciable difference, that the people were cut from the caseload and they were not appearing. However, by June of '83, one year later, what we're finding is that about -- our caseload has gone up about 3,000 families, and we know a substantial part of that are families such as Ms. Braithwaite, who have lost their jobs, have lost their other source of income, and now have come back to us for assistance.

MacNEIL: Is it your opinion that these welfare changes have caused a rise in poverty in your area?

Ms. ANDRADE: I think the most devastating thing that these welfare changes have done is that it, first and foremost, have locked people into the welfare system. Ms. Braithwaite makes a very good case for herself as well as other women in her situation. The OBRA -- as we call it -- regulations really attacked the working poor.

MacNEIL: The OBRA is?

Ms. ANDRADE: The Omnibus Budget Reconciliation Act of 1981. All of the regulations were geared to take off the assistance rolls those people who had working incomes. And in Essex County it's reduced our working caseload from about 5,000 families to under 700 people now who are working.

MacNEIL: We'll leave it there for the moment. Thank you. Jim?

LEHRER: We get the Reagan administration's view of this situation now from Dr. Robert Rubin, assistant secretary of Health and Human Services. Mr. Secretary, what figures do you have nationally on this business of the number of working poor who have returned to the welfare rolls after these changes of 1981?

Sec. ROBERT J. RUBIN: Nationally, Mr. Lehrer, the figures are roughly 15%, which is what the figures are for New Jersey as a whole. That is to say, of the people who lost their welfare benefits, only 15% have returned to the welfare rolls.And I might point out that of those people who have returned, over half have only been on the welfare rolls for two months.

LEHRER: Well, you have seen the situation involving Cynthia Braithwaite. What's your reaction to that as somebody who was involved in designing the policy that was involved in the 1981 changes?

Sec. RUBIN: Well, as Mrs. Adreotti [sic] pointed out, Mrs. Braithwaite was affected by virtually every one of the changes in the Omnibus Reconciliation Act, and for that I ought to congratulate you in your foresight. Fortunately, she is very atypical. As I said, 85% of the people who lost their benefits are no longer on welfare. I think it's striking to take a look at some other numbers.Prior to the changes, in all the states in this country you could earn the minimum wage and still be on AFDC or welfare. In fact, in 15 states you could have earnings as high as $15,000 a year and still remain on welfare. Indeed, of all the people on AFDC prior to the changes, 16% were above the poverty line. As a result --

LEHRER: What are you telling me, Doctor?

Sec. RUBIN: What I'm telling you is that what we've done is decrease the number of people that are on welfare now, that are above the poverty line and served an additional 200 --

LEHRER: Which was the purpose of the changes, correct?

Sec. RUBIN: That's correct. -- and served an additional 200,000 who are below the poverty line.

LEHRER: Well, let me ask you directly. Were people like Cynthia Braithwaite the people you had in mind that you wanted to get off the welfare rolls when this policy was devised in 1981?

Sec. RUBIN: The people that we'd liked to have gotten off the welfare rolls were people who had earned incomes that were significantly higher than the poverty line. Whether Mrs. Braithwaite is a good example or not, I'm not qualified to point out. I think the other point that I'd like to make is one that Mr. MacNeil raised at the beginning of the show, and that is that people like Mrs. Braithwaite get a lot of services from the federal government and from the state government in addition to AFDC.

LEHRER: Like food stamps.

Sec. RUBIN: Like food stamps. And I think New Jersey is an instructive example. For a family of four, if one takes into account food stamps, Medicaid, low-income energy assistance, subsidized housing, etc., all of those have a value of roughly $865 a month, which happens to be 105% of the poverty line.And one of the things that the administration did in their policies, of course, was to dramatically decrease the rate of inflation. If inflation had continued at the pre-1981 levels, that same $865-worth of benefits would have put her at 95% of the poverty line, which is an enormous difference in terms of one's living standard. So the total overall economic policies of the administration, I think, have been successful and indeed have helped people who rely completely on the federal government and the state governments for assistance.

LEHRER: Do you agree with Mrs. Andrade's conclusion that all of those changes, whether you include Cynthia Braithwaite as an example or as atypical or typical, were designed to affect the working poor?

Sec. RUBIN: They were designed to affect the people who had high incomes and were still on -- receiving welfare. I think it's important to point out that the changes that she talked about, and some of them are highly technical, but she talked about the income disregard, was put in and went into affect in 1969. It's instructive to take a look at the number of people on welfare who worked before 1969, between 1969 and 1981, that is when this incentive to work, so to speak, was in place, and who continue to work following the removal of this disregard. It's interesting that the number is precisely the same -- 14% of welfare recipients worked before '69, from '69 to '81, and post-1981 changes.

LEHRER: In a nutshell, Mr. Secretary, your view is that these 1981 changes worked out just the way you wanted it to work out, correct?

Sec. RUBIN: I think in isolated cases, as you pointed out, where somebody loses their job because they moved from one town to the other, there certainly were hardships created, but by and large, if one looks at the national picture I think that these changes have accomplished what it is we've set out to do and to better target the welfare -- the welfare dollar, and indeed gave an extra billion dollars to the states and over half the states have used that to increase the payment standards.

LEHRER: Thank you. Robin?

MacNEIL: Now to someone who's been following the impact of the Reagan welfare policy changes. He is Frank Farrow, deputy director of the Center for the Study of Social Policy in Washington. Mr. Farrow, you heard Dr. Rubin say that overall nationally the changes have accomplished what they wanted and have better targeted the welfare dollar. What is your view of it?

FRANK FARROW: Well, quite different, obviously. In fact, it's hard to believe that the administration would want to claim success for some of the things that the changes have brought about. I think Mrs. Braithwaite is very typical of many of the families who were cut.She is not atypical. We're doing interviews with families in Georgia who were cut off AFDC by the OBRA cuts, and many of them have the same type of multiple benefit impacts that Mrs. Braithwaite did. Many of them are at low-income levels. What seems to have been in the administration's mind when these policieswere designed was to get rid of the relatively few high-income cases on AFDC. They've not only done this, but they have reached much further down into the income scale and taken off many people like Mrs. Braithwaite who were below the poverty line and who fell further below poverty.

MacNEIL: Let me ask you about Dr. Rubin's point that it isn't only AFDC, that many of these people also receive a variety of other benefits, adding up in some cases to a value of over $800 a month. You mentioned food stamps and so on. What is your response to that?

Mr. FARROW: Well, it is possible in some states for the total of benefits to add up to close to the poverty line or slightly over it. In fact, that was the case before the new Reagan policies went into effect, that working mothers with their earnings, with other benefits, could get their incomes to just over the poverty level.

MacNEIL: The federal poverty level?

Mr. FARROW: That's right. What we found when we looked on a state by state basis at what would happen to average earners on AFDC after the OBRA cuts is that their income would be reduced anywhere from three to 30 percent, and thus they would fall below the poverty line.

MacNEIL: Do you -- Dr. Rubin says that nationally about 15% of people affected by these changes have come back to be totally dependent on welfare, but that only -- half of them only came back for about two months or so. What is your view of it nationally?

Mr. FARROW: I don't think the evidence is all in nationally. There are two major research studies still underway, one that we're doing in conjunction with the University of Michigan and the University -- or Columbia University, funded by the Ford Foundation, and another that the General Accounting Office is doing. Certainly our data in Georgia shows a much higher rate of return than the 15% that Dr. Rubin talked about. The figure is closer to a third.

MacNEIL: When you take the return to welfare balanced against the savings introduced by the changes, has there been a net saving to the Treasury or the taxpayer in these changes?

Mr. FARROW: There certainly has been savings, but it's not at all clear that they're from the earnings cases, which is the cases that we're talking about. Many different types of cases were terminated as the result of OBRA, and so money was saved. If you cut people off AFDC you're going to save money. With the earnings cases, because most of them were on at very small grant levels prior to the OBRA cuts, for example, $30 a month, for every one woman who comes back on full grant at, say, $300 a month, you costs have gone up incredibly. So if only one in 10 comes back on the earning cases, you can still be awash financially.

MacNEIL: Thank you. Jim?

LEHRER: Dr. Rubin, can you add anything? Has the net been a savings of federal money as a result of these program changes?

Sec. RUBIN: Of the 7% that would have been on the welfare rolls prior to the OBRA cuts, yes, we have saved money, but clearly, because of the growth of the welfare rolls because of the population and also because of the recession, the net cost has been about the same in terms of spending.

LEHRER: But there are 7% fewer people, is that right?

Sec. RUBIN: That's correct.

LEHRER: On AFDC as a result of these cuts?

Sec. RUBIN: Yes.

LEHRER: And your position is that with the exception of a few, like Cynthia Braithwaite or whatever, that these are all people that deserved to get cut, correct?

Sec. RUBIN: These were all people who have interestingly not been the subject of scientific study or theoretical machinations of social theorists, but these are people who, by their own vote, that is to say, they have stayed working, they continue to work, and they've stayed off welfare. So they must be subsisting in a way that they find acceptable to them.

LEHRER: Ms. Andrade, what do you say to that?

Ms. ANDRADE: Well, I say that certainly the idea that we're locking people into poverty could not be acceptable to the parents or to us as a society.One of the things I think we have to remember is that Aid to Families with Dependent Children is a program designed for children.Seventy to 75 percent of the recipients on welfare are children. And the intent of the law is to make sure that they receive the proper shelter, food, clothing and parental support. When we look at what's happened in our own county, for example, what we're finding is that the 18-year-old rule, for example, is creating a disincentive for young people to stay in school. In the case of Ms. Braithwaite --

LEHRER: In what way? Excuse me, why?

Ms. ANDRADE: For example, in her case as well as many others, when a youngster now reaches age 18, he or she no longer is on the grant. This in fact encourages young folks to leave school so that they can try to find some ways to heop the family.

LEHRER: Let's ask Dr. Rubin about that. That wasn't one of the intents of your program, was it?

Sec. RUBIN: The intent was -- and I think Ms. Andrade in describing the 18-year-old rule is sloughing over some fine points. If the child is in their last year of high school, they can continue on the grant.The point is the college-age students ought not be on welfare. They tend to have left the family; they tend to be able to go out and earn parttime employment. There tend to be other government programs in terms of scholarships that can heop them out. But I was --

LEHRER: Well, let's ask --

Sec. RUBIN: I would agree with Mrs. Andrade on the important point, that this is a child's program. I think one of the things that the administration is doing has been overlooked.If we take a look at the poverty statistics, one of the things that's striking, is the growth of female-headed households in this country that have children to support. And part of that reason is that those women are not receiving child support payments that are due them. The census bureau has reported that roughly 47% of women that have child support payments due them do not get it. And 25% of those people get nothing at all.The government and President Reagan has recently signed a resolution and sponsored a bill in Congress, has called this a national disgrace, and we have proposed legislation designed to increase those payments and bring those people above the poverty level and out of welfare.

LEHRER: Mr. Farrow, would you agree that's a good direction to go?

Mr. FARROW: It seems to me that exactly what Dr. Rubin is saying argues for a different course of policy. The poverty population is growing. A large part of it are female-headed families. And instead of penalizing those families when they try to work, making it more difficult for them to work, having less financial gain when they do work, seems to me the answer is to focus on how to get those families into the labor market. It might be an employment strategy, a training strategy. We certainly have to reduce the discrimination that those women encounter in the labor market. But the point should be to do everything possible to promote work among those families --

LEHRER: And your point is --

Mr. FARROW: -- not to reduce their incomes.

LEHRER: And your point is that what the administration is doing now is just the opposite of that.

Mr. FARROW: That's right. Reducing the incomes of women who are already below the poverty line, putting them further below the poverty line.

LEHRER: He's right. That's exactly -- that is what's happening in some cases, is it not, Dr. Rubin?

Sec. RUBIN: I think the administration has done a lot of the things that Mr. Farrow has talked about. The Job Partnership Training Act is designed to help people on AFDC learn the skills that would improve their educational status, as Mrs. Braithwaite pointed out, and help them get jobs.We've asked Congress to institute Workfare.Workfare in New York, which is requiring people to work in exchange for a welfare grant -- Workfare in New York has a benefit-to-cost ratio of two to one, and even in New York, which is not far from Irvington, New Jersey, they've had very good success. In Harlem and other places. New Brunswick, New Jersey, has 20% employment as a result of these kinds of programs.

LEHRER: I'm sorry, but we have to leave it there. Robin?

MacNEIL: Yes, Mr. Farrow, Dr. Rubin, thank you for joining us in Washington; Mrs. Andrade in New York. Good night, Jim.

LEHRER: Good night, Robin.

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