The MacNeil/Lehrer Report; The Welfare Cuts

Funding for this program has been provided by this station and other Public Television Stations and by grants from Exxon Corporation, and American Telephone & Telegraph Company and the Bell System Companies.

A co-production of WNET and WETA Air Date: October 1, 1981

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CYNTHIA BRAITHWAITE: 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.

ROBERT MacNEIL [voice-over]: Cynthia Braithwaite makes $300 a month take- home pay as a school crossing guard in Irvington, New Jersey. She was receiving $245 a month income supplement. Under the federal welfare cuts that take effect today, that supplement is cut to $209. That leaves her $127 a week to support herself and four children.

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MacNEIL: Good evening. On the NBC Today show this morning they were calling it "the day the New Deal died." At his press conference this afternoon, President Reagan said, "On this day, our economic recovery program begins," referring to the budget and tax cuts that go into effect with the opening of the new fiscal year. Tonight, we choose one area where the impact of the cuts may be greatest -- among recipients of the nation`s core welfare program known as Aid to Families with Dependent Children. Last year, AFDC tunneled some $8 billion federal dollars to some four million families. The states contributed an almost equal amount. The Reagan budget cuts trim an estimated $1.1 billion off the program this fiscal year. Tonight, who will feel those cuts, and how badly will they hurt? Jim?

JIM LEHRER: Robin, the new rules are designed to reduce or eliminate payments to those who don`t really need it, "those who don`t really need it" defined mostly as those who have jobs, for whom welfare is an income supplement. Thus, the new rules put an eligibility cap on outside earnings, based on what the cost of living is in each state. In New Jersey, as one example, a working mother with two children would be ineligible for AFDC if she makes more than $ 124 a week. Also, working AFDC mothers can deduct child care and work-related expenses. The amounts of those deductions are tightened up in the new rule. Another new rule has to do with assets. Before, if a person owned $2,000 worth of worldly things, no welfare. Now it`s $1,000 worth, a home and a car exempted, and also other items deemed necessary for ordinary living. Robin?

MacNEIL: Rules and formulas vary from state to state. In many states the impact will be delayed because new state legislation must be enacted. That`s not the case in New Jersey. There, letters went out in early September telling thousands of families that September`s check would be the last, or that they faced reductions under the new federal rules. Essex County, New Jersey, has declared a state of emergency at its welfare field offices because of the extraordinarily high caseloads expected early this month. Producer Ken Witty and reporter Gordon Earle visited Essex County`s busiest field office in Newark to see how the cuts are being felt.

ALEX BIRZIN, Field Office Supervisor: We have roughly about 2,500 cases being affected in this office for budget changes, food stamp changes, and a substantial number of those were also termination`s.

CASEWORKER [to client]: I`m not sure what to tell you, because we have new laws, and in my job we can only go by the regulations. You won`t be getting any more AFDC right now. Should your income fall below the $540 maximum allowable limit, you might be able to apply again.

LUZ MARIA MONTALVO, client: I need- it`s only $250.

CASEWORKER: Unfortunately, I`m just in no position now to make any change in what has already happened.

Mrs. MONTALVO: It`s not fair, you know, because I like to work but I need help, too.

MacNEIL [voice-over]: Luz Maria Montalvo is one of those working mothers already slated to be cut off. Her earnings as a food service worker provide her with $20 a month more than the new regulations allow. What particularly worries Mrs. Montalvo is the loss of Medicaid. She claims she is ill, and that her children need medical attention. Her daughter has asthma. Under the new regulations she is now on her own.

REPORTER: I mean, have you tried to explain to your family what will be the result of this -- aside from your son, but your daughter?

Mrs. MONTALVO: Yeah, I explained to my daughter because, you know, because she got asthma. I told her right now we don`t have no Medicaid; I don`t have no money to bring you to the doctor. And she told, you know, she told me, "Mommie, don`t cry because it`s not your fault," you know.

MacNEIL [voice-over]: School crossing guard Cynthia Braithwaite will also feel the cuts. She has four children and no husband.

Ms. BRAITHWAITE: Well, when I got the notice, it was-- it was Saturday and the letter just read, you know, very bluntly that my check would be cut from $245 to $209. And I was very aggravated about it, 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.

REPORTER: Did you have any idea that you were going to get a notice? Did it catch you completely by surprise?

Ms. BRAITHWAITE: It caught me by surprise because of the fact my sister`s grant has been cut five times just this year, from last August to this August.

EYVONNE BYRD, welfare recipient: If Reagan feels that he has to cut welfare off, okay, cut it to a certain extent, not completely off. Because these jobs are not paying enough.

REPORTER: Will the changes that are being imposed-- are they going to affect the way you go about living your life?

Ms. BYRO: I can`t get by, but I`m trying, okay? It`s the best I can do. And with the cutback on the checks, I`ll never make it unless I find another job that`s going to pay more.

REPORTER: And the likelihood of that?

Ms. BYRD: Ha! Barely. I`ll never do it -- unless I get some kind of--oh, I become a genius overnight.

REPORTER: What do you think the long-range consequences for this office will be over the next six months to a year as a result of the cuts? Do you have any idea?

PAULA K RUG MAN, Field Office Supervisor: Well, I think that there will be- some types of fraud will undoubtedly be cut down. I think that we`re going to have situations where clients who are employed are going to quit employment under var-ious-- under a varied number of reasons.

REPORTER: Has that happened already?

Ms. KRUGMAN: Yes. We have already gotten telephone calls from some people. I can`t say that it`s a direct result of the new legislation, but I can say that the letters have gone out in the mail telling clients that their cases will be reduced, or that their cases will be discharged because of the new way in which their employment is evaluated, and that after those letters have gone out, the units have gotten some number of letters from clients telling them that they have lost their jobs -- or that they have quit their jobs.

LEHRER: President Reagan has said often that what he`s doing nationally to the welfare system is exactly what he did earlier to the state system in California when he was governor there. The man who implemented the California reforms for him was Robert Carleson, then the state welfare director. He`s now special assistant to President Reagan for policy development, and is known as the chief architect of the new rules that went into effect today. Mr. Carleson, those three people in that particular welfare office say it`s not fair. They say they`re going to get hurt. If they were sitting here right now, what would you tell them?

ROBERT CARLESON: Well, of course, one of the things that I would not tell them is to quit their job. I think that the last person who was on -- the lady, I think, in the welfare department in New Jersey -- who indicated that some people may be quitting their jobs after they get the notice, may be making a mistake because if they do quit their job voluntarily, of course, they`re no longer eligible for welfare. I think that it`s been unfor-tunate that in the last several weeks there have been newspaper articles and other things that have said, well, a lot of people will simply quit their jobs if they don`t get that much more working than they would get on welfare not working. But, and I had to say that because--

LEHRER: I was going to get to that in a minute. Go ahead, but--

Mr. CARLESON: Well, I had to say that because I think that it would be unfortunate if people would start quitting their jobs, and then find out they weren`t eligible at all.

LEHRER: Well, I think the explanation there is that they wouldn`t just quit their jobs; there would be a reason. They would come up with some reason that would not auto-matically disqualify them for welfare. That`s the whole point of quitting their job, right?

Mr. CARLESON: Sure. If they didn`t quit -- if they were laid off or fired - - that`s not the case. But anyway, in answer to your other question, one of the problems is -- in fact, the real problem of welfare over the years in the country, has been the fact that, frankly, there just isn`t enough money to provide adequate benefits to those who truly need it -- in other words, the people who are aged, blind, disabled; people who just can`t work; families that have to rely entirely on their welfare benefits -- and also provide benefits for people who are working. Now, I don`t think there`s anyone in the country -- with some exceptions -- that really feels that they have enough. Everybody, particularly with inflation, is in real trouble. But one of the reasons we have inflation is because of the heavy government spending and deficits- And welfare benefits can stay the same, but with inflation your benefit is automatically cut. So what we`ve seen happening is that people who have to depend entirely on their welfare benefit are falling farther and farther behind because the funds are spread so thinly. So, in welfare reform, you have to assure that the funds really go only to those who truly need it. Now--

LEHRER: And those three people, in other words, do not fall into that category of "truly needy"? Just based on what we just heard about them and heard them say.

Mr. CARLESON: Well, it`s hard-- it`s hard looking at something like that to know whether it`s even been an accurate assessment. They may find that they appeal and that somebody made a mistake. And so it`s hard to make that kind of a judgment. But on the other hand, it means that at least they`re making one-and-a-half times -- 150 percent -- of the standard of need. In other words, the basic needs for food, clothing, housing, and so forth. And probably they would be making quite a bit more than that. As a matter of fact, before the rules went into effect, you could have $27,000 a year and be eligible for welfare. And these weren`t exceptional cases. One case was in Minnesota. Another case in a nearby state. But I guess the main thing is-- let`s take New York, for example. New York has been lagging behind for some time in their welfare benefit -- in their basic benefit. Inflation was going up but the benefits were staying the same. That`s the same problem that Governor Reagan faced in California when he started reforming welfare in 1971. There hadn`t been a benefit increase in 13 years in California, and that`s because the funds were spread so thinly over-- to people who were really not truly in need. The states are going to be saving as much as the federal government is saving. In other words, if the federal government saves a billion dollars in these reductions, the states that match -- and some states match even less than 50 percent -- will receive at least an equivalent amount of money. Now, with that--- with those savings of money that is going to people who have incomes -- significant income -- the states will then have funds that, if they choose to do so, they can choose to increase the basic benefits. In fact, some of these people would find that they would then be eligible again.

LEHRER: What about the concern that was expressed in the film about losing Medicaid benefits as well because in most states, if you`re on AFDC, you`re automatically eligible for Medicaid. You lose AFDC, you lose Medicaid, and then you have an additional new expense of medical costs, as well.

Mr. CARLESON: Well, this is one of the anomalies of the system that we`re-- that I think is going to have to be addressed when we reform the Medicaid program. And that is that you might technically be eligible for AFDC for maybe only $10 a month, or $5 a month. I gave you the example of the case in Minnesota where they were making $27,000 a year. But then you`re eligible for the entire range of Medicaid benefits. And this is having a lot to do with the tremendous explosion in Medicaid costs within the states and other places. However, most people who are working at a full-time job are actually covered by some kind of health insurance and, very frankly, if their income is as high as a lot of welfare families who have been eligible under past rules, if they weren`t covered by health insurance, they would have access to purchasing their own health insurance. But the real-- one of the real problems that`s facing us, and it has nothing to do with these cuts, because even before the reforms in AFDC, someone could make a dollar more, go off AFDC, and lose their entire Medicaid benefit. And we`re going to have to address that problem when we face the Medicaid reform.

LEHRER: Thank you. Robin?

MacNEIL: Now the reaction from an official who administers one of the largest state welfare systems in the nation. Barbara Blum is commissioner of the New York State Department of Social Services. She also chairs two national committees on welfare policy for the National Governors Conference and the American Public Welfare Association. Mrs. Blum, what will the effect of these cuts be on welfare recipients in New York? Will the truly needy -- as you define them -- still be covered?

BARBARA BLUM: Well, certainly, that group of individuals who have no income supports will continue to receive our assistance. The group that I am most troubled about, of course, are similar to the women who were shown in the New Jersey center. We`ve worked very hard in New York to control what had been a burgeoning caseload, and we`ve succeeded in having some reductions in the caseload by helping young women begin to work. We provide, of course, daycare so that they are able to perform appropriately during the working day. My greatest concern is not so much that women will go back onto the caseload -- because I think we all recognize the importance of working -- but that those children will not be properly cared for because there won`t be sufficient income to provide that support.

MacNEIL: Do you agree with Mr. Carleson`s thesis that by providing income supplement to people who are working, you are spreading the available money so thin that the people who cannot work are suffering because their benefit doesn`t keep up with inflation?

Ms. BLUM: Well, I think that there is the problem of resources, but again, in our state, while we did not have an increase for a very long period of time, we still had a grant much higher than most of the other states. At the same time, we were able to see a reduction in caseload. So that if one looks at cost-benefit, my thesis is that one can maintain people at a decent level of support, and help them into the working world. It may be that we`re working with an old program -- the ADC program -- that was really designed for widows and orphans. We`re not looking at income support, certain kinds of services and employ-ment training needs that our clients have. And I hope that over the next five years we`re going to change direction, and begin to make some good public policy decisions.

MacNEIL: So you define women, as you have described them, who are young with families, on their own, and working. You regard them as truly needy, do you?

Ms. BLUM: Well, I regard them as truly needy because I feel if we don`t reach them early, that they will become totally dependent in their later years. Much harder to take a woman 27 or 28 years of age who has never been in the work force into employment. Simpler to take the young woman who, perhaps, unfortunately, had a teenage pregnancy, but who is 18 or 19 and motivated to become independent, and help that individual learn some skills, get employment, have appropriate care for the children, as she moves into the work force.

MacNEIL: Have you made an estimate in New York State of how many women like that may suffer as a result of these cuts?

Ms. BLUM: Well, we know that there will be at least 7,000 households where women will be losing totally their benefits. And then there`ll be about 26,000 other households where benefits will be drastically reduced.

MacNEIL: Do you expect many women to leave work -- either to quit voluntarily, or to find some excuse or some rationale for leaving?

Ms. BLUM: I don`t really think for the most part our clients find excuses. We`re going to do everything we can to keep those women in the work force, because I believe that`s the road to independence. I suppose we`ll have some tragedies where women will not be able to continue in employment because they don`t have child care. We`ll have other awful instances, I believe, where children are left alone and without appropriate care.

MacNEIL: It sounds, on balance, as though you`re not too worried about the effect of these cuts.

Ms. BLUM: Oh, I`m dreadfully worried. I think they`ll be devastating.

MacNEIL: Well, in what way will they be devastating?

Ms. BLUM: I think that, as I was trying to point out, we will have families that don`t have appropriate service support. And we`ve got too many instances already where children do not receive the services that they require. And of course, we were touching earlier on the Medicaid. Medical services are very, very important to young children. And part of the tragedy here is that those 7,000 women, for instance, whom I mentioned who will prob-ably go totally off the caseload, will not have access to good medical care for their children.

MacNEIL: Thank you. Jim?

LEHRER: There are others who believe strongly the changes that went into effect today are going to lead to disaster for many poor Americans. One of those who so believes is Henry Freedman, director of the Center for Welfare Policy and Law in New York, which provides legal representation to welfare recipients. Mr. Freedman also teaches welfare policy and law at the Columbia University Law School. Do you also believe that truly needy people are going to be hurt by these changes?

HENRY FREEDMAN: Oh, I don`t think there`s any question about that. The term "truly needy," of course, has been bandied about. We`ve heard tonight from Mr. Carleson about people with substantial incomes, yet when we look at the statistics which the administra-tion provided in support of the omnibus budget reconciliation act, they indicated that families of four with incomes of $300 or $400 a month -- in many states, $200 -- and in a number of states would be cut off the AFDC rolls and lose Medicaid completely as a result of this legislation. So we think there is no question that very needy people will be affected.

LEHRER: Why should-- as a matter of principle, why should a welfare system provide income supplements to people who are working?

Mr. FREEDMAN: I believe that a welfare system should provide funds to people who are needy to enable them to meet their needs and their children`s needs. And each state has defined what it believes to be a minimal level of subsistence. And then, many states pay an amount that is far lower than that. If a family is working and still not able to generate enough income to get above that minimum level of subsistence, we desperately need to provide help to that family to keep them afloat, to enable them to pay the rent, to enable them to purchase food, to enable them to see that their children have shoes to get to school.

LEHRER: Of all the changes and new rules that went into effect today, Mr. Freedman, which do you particularly believe will be the most devastating -- will have the worst effect on the largest number of people?

Mr. FREEDMAN: Well, there`s no question that in straight dollar terms the different treatment of earned income will cause hundreds of thousands of families -- which means many, many hundreds of thousands of young children -- to be deprived of basic income that they need. But there are other serious changes made in the legislation as well. States that have provided benefits for pregnant women in the first or second trimester of the pregnancy, are now forbidden to provide those benefits with federal funds. States are actually forbidden to meet a dire need that will arise because of the loss of earnings for one or two months until after the need has arisen. States-- and most of the states, now, have chosen to provide benefits for children 18, 19, 20 years old, in college or in vocational school or technical school. They`re now forbidden to provide those benefits with federal funds. Each of those changes will have a devastating effect throughout the country.

LEHRER: A devastating effect. And what`s the impact of that devastating-- what`s the devastating effect going to be?

Mr. FREEDMAN: Well, the income of families who have been receiving public assis-tance has always been extremely low, and in the last several years, has fallen further and further behind as a result of inflation. We know of children who can`t go to school because of clothing. We know of families who run out of food before the end of the month. We know of people here in New York City who find it more profitable to stand in a line at a garbage can than in a welfare center in East Harlem because of the inability to get what they need from the system. Each of these cuts means that there will be more families, more children, facing these crises, and I think it is safe to say -- without being able to point to any one particular family -- that there will be more children institutionalized, more families broken up, more children missing school as a result of these cuts.

LEHRER: Thank you. Robin?

MacNEIL: Mr. Carleson, what do you say to all this? Both these New York experts say that the effect is going to be devastating here. And you heard the examples they have given.

Mr. CARLESON: I heard those same examples hack in 1971 when I was welfare director in California for Governor Reagan, when we started the reforms back there. Exactly the same examples. The same dire predictions of horrible consequences. When the dust settled, it turned out that we had reduced the rolls by over 300,000 people. We had stopped the tremendous growth in the roils, and what we ended up with was enough money to not only give relief to the taxpayers, but to increase basic welfare benefits for the first time in 13 years. Now, a couple of other points. The gentleman indicated that the whole purpose, or one of the purposes of welfare, is to make sure that the basic needs are met, and that states have standards of needs, and so forth. What we`re talking about here is the fact that you have to have one-and-a-half times -- 150 percent -- of the state`s standard of need before you`re cut off under this system. In addition, there are other provisions for income disregards, child care disregards, and so forth. So, one thing that should be very clear: benefits are not being cut to people who have to depend on welfare -- who have income below the standard of need, and so forth. These are not affected by the federal changes. As we get to the point of young women with children that want to-- should be brought into the work force -- as Mrs. Blum indicated -- there is nothing in these AFDC changes that`s going to stop that. As a matter of fact, we`ve added several provisions of law. One is that states can have work, and require that welfare recipients provide some kind of useful work from which they will receive the kind of basic training that would be necessary to break into the general work force.

MacNEIL: So-called "workfare" provisions?

Mr. CARLESON: Well, workfare-- what workfare really means is-- that`s an old word that a lot of people have gotten mixed up. It simply means that if you`re able-bodied, if you`re able to, and if, in the case of women with small children, there`s adequate child care, that you can do some useful work in the community -- work that otherwise wouldn`t be done. And you simply take the welfare benefit that they receive, divide it by the minimum wage, and those would be the hours that they would work. But the recent CETA program, that has been phased out, has been providing those kinds of work opportunities -- the opportunities for people who were on welfare to learn some kind of basic skills -- in some of these basic jobs. Now, it`s possible to finance these kinds of programs through the welfare system.

MacNEIL: Let me ask Mrs. Blum. Mr. Carleson has been suggesting that the states are going to save money, as the federal government is going to save money, and then you can use that to improve the welfare benefits of the people who can`t work.

Ms. BLUM: I think that that`s a fallacy. I think that there will be initial federal savings. I think both the federal government and the state governments are going to see actual increases in costs over time.

MacNEIL: Why?

Ms. BLUM: They`re going to be in related areas. First of all, at the federal level, we`re going to see increases in food stamp expenditures almost immediately because, as there are reductions in certain of the grants, there will be increases provided in food stamps. Here in New York State, for a certain number of the individuals, we`re going to be spending local and state dollars for what`s called home relief -- a general assistance program that we have. And I think that you will, over the longer range, see mental health and alcoholism problems grow. It has been our firm conviction here that by providing a decent level of support, and helping young people and children into the world of independence, that the dollars are much better expended. And obviously, we`re going to try to formulate the state`s program to continue along those lines. But I`d like to make a point.

MacNEIL: I wish we had time for you to make it, and maybe we`ll have to do another program on this soon, but that`s where we have to end it tonight. I`m sorry. Mr. Carleson, thank you very much for joining us in Washington; Mrs. Blum, Mr. Freedman, 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.