Working to Reform Welfare

Carter sees his plan as pro-family and pro-job. But will it fly?

"Things are beautiful," exults House Speaker Thomas ("Tip") O'Neill. "Beautiful." Beauty, of course, is in the eye of the beholder, but no one has a sharper eye for political artistry than the Speaker. The long-expected, much-feared collision between Congress and the President had not occurred, and as Congress recessed for a month last week, relations between the two branches of Government had considerably warmed. Jimmy Carter was losing some but winning others. He was optimistic about the prospect of soon signing a new Panama Canal treaty,* which will face a tough fight on Capitol Hill. And last week he unloaded his massive welfare-reform proposal on Congress.

Carter is by no means getting all he wants. His election-reform proposals are in a shambles; a filibuster by Republicans and Southern Democrats last week killed his bill for public financing of Senate elections. But a remarkable amount of his energy program is moving through Congress (see ENERGY). Carter also signed into law the first national strip-mining bill, which will compel operators to restore the landscape to approximately its original condition.

The President was getting along because he was going along. After threatening to veto big spending bills, he compromised more than people thought he would. He reached agreement with Congress on a raise in the minimum wage, from $2.30 an hour to $2.65 an hour, and on a farm price-support bill that may cost $4 billion this year instead of his original limit of $2.3 billion. Says O'Neill: "Carter's people came down here with a chip on their shoulder against Congress. Carter thought Congress was like the rednecks of the Georgia legislature." Now O'Neill feels that the new boy in the White House is coming along fine. "I don't know if he's going to balance the budget, but he is going to have a stable Government."

The welfare bill will be a further test of Carter's standing with Congress and the country. Its basic philosophy is clear and commendable: to get people off welfare rather than encourage them to stay on. Single cash grants will replace three of the largest welfare programs: aid to families with dependent children, food stamps and assistance to the aged, blind and disabled. The cash payment will amount to a guaranteed annual income; for a family of four with no other income, it would be $4,200 a year, or 65% of the poverty threshold of $6,440 for that family.

Far more welfare recipients will be expected to work under the new plan than under the existing system. If they cannot find jobs in private business, they will be offered a variety of public service opportunities. The White House proposes to create up to 1.4 million new jobs and training positions. The jobs will include serving as teacher aides, providing child care, weatherizing homes, controlling rats and insects, cleaning streets and escorting the aged in high-crime areas.

The only people who will be excused from working are the aged, blind and disabled, along with welfare mothers whose youngest children are under six. Senate Finance Committee Chairman Russell Long declares. "I find difficulty in saying a mother with children is not expected to work when most women with children are working." If a welfare mother refuses to take a job, she will forfeit her personal benefit of $1,900 a year. But payments would be continued to her children: $ 1,100 for the first child, $600 for each additional one. While the mother works, she will be allowed to deduct from her taxes up to 20% of her earned income for child care expenses.

Unlike the current system, there will be no penalties for working. Benefits will be paid to the so-called working poor, even though the father remains in the home. A working four-member family will receive an annual $2,300 payment if it earns no more than $3,800 a year. Beyond that, benefits will be cut by 50-c- on every dollar up to $8,400, when they will be eliminated altogether. If a wage earner cannot find a job after eight weeks of search, his family will receive the standard welfare payment of $4,200 a year. When he lands a job, the family benefits drop back to $2,300. Above all, this phase of the program keeps the family intact. The father is not tempted to leave home so that his family can collect welfare.

The program encourages work in the private sector by an increase in the earned-income tax credit, which will not be available to people in public service jobs. Currently, the tax credit is a rebate of 10% on all earnings up to $4,000 a year, for a maximum credit of $400; it is phased down after $4,000 and eliminated at $8,000. Carter would add another 5% credit on earnings between $4,000 and $9,000 for a family of four. The credit would be allowed on incomes up to $15,000 for a four-member family.

Some 32 million people will receive welfare payments or credits under the Carter plan, or 2 million more than at present. The cost to the Federal Government will increase by at least $2.8 billion a year, to around $30.7 billion. At first the President insisted that welfare reform not cost any more than the current system. But he was forced to give way, as the price of change.

The program does not amount to a federal takeover of welfare, as the states had hoped. But the welfare bill for state and local governments would be trimmed from $7 billion a year to an estimated $4.9 billion. States that have traditionally paid the highest benefits would all realize savings of more than 25%, and no state would save less than 10%.

The Federal Government will pay 90% of the basic $4,200 grant to the non-working four-member family; each state will contribute only 10%. Beyond that, Washington will pay 75% of the first $500 of state supplements to the $4,200. Then it will pay 25% of supplements that bring recipients up to the poverty line. States will be required to pay 10% of the wages of public service jobs, which will pay the minimum wage, and they can vote nonmatching supplements.

Congress will give the program the scrutiny its scope deserves. Carter says he hopes to get the jobs program passed "as soon as possible." But no part will be enacted before 1978, and the full program would not go into effect until 1981. Congressional reaction has been cautious, with a variety of quibbles. Al Ullman, House Ways and Means chairman, objects to putting the working poor on welfare because it could have a bad psychological effect. He also wants to base payments on income alone, not on the size of a family. Welfare families, he feels, should not be encouraged to have more children to get more money.

The first responses to the program around the country were favorable. Vernon Jordan, the National Urban League director who had criticized Carter for neglecting blacks' concerns, praised the program as an "improvement over the present system. The stress on job creation, the national minimum-income support level, the additional funds and the expansion of the current income tax credit are all positive aspects."

The resolute emphasis on jobs should enhance the bill's prospects. New York Senator -Daniel Patrick Moynihan, who devised Richard Nixon's ill-fated Family Assistance Plan, recalls that any attempt to put welfare recipients--especially mothers--to work was then denounced as "slavefare." Today, Moynihan thinks, no major group exists to raise an automatic outcry against work. He credits the women's movement with changing attitudes. "Work is no longer considered to be a form of punishment as applied to women. A liberal constituency no longer finds work unattractive." Thus liberals might go along with the traditional conservative position that able-bodied welfare recipients of either sex should work for their money. In that case, the basically sound Carter program has a reasonable chance of passage. -

*Because the Panamanians have substantially reduced their cash demands from the U.S., a draft treaty may be initialed this week.

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