How to Get America Off the Dole

By THOMAS SANCTON

THE INITIAL WHITE HOUSE REACtion to the Los Angeles riots was to blame them on the "failed" Democratic poverty programs of the '60s and '70s. That claim by Marlin Fitzwater was pilloried so mercilessly that President Bush had to backpedal away from his own spokesman. But Fitzwater's comments did not come out of a vacuum. Bush has made public assistance -- specifically welfare -- a constant target of his campaign rhetoric. He compared the dole to a "narcotic" in his State of the Union message and regularly peppers his speeches with vows to "change welfare and make the able-bodied work."

This line is not surprising coming from a political heir of Ronald Reagan, who voiced his contempt for public assistance with apocryphal stories of "welfare queens" driving Cadillacs. What is surprising is how many Democrats and liberals are sounding the same themes. Presumptive nominee Bill Clinton insists that "those on welfare move into the workplace" within two years. New Jersey Governor Jim Florio denounces the current welfare system as "morally bankrupt." Many state governments, meanwhile, are slashing benefits and throwing thousands off the rolls. "America has moved from a war on poverty to a war on the poor," says Yale University professor Theodore Marmor, co-author of America's Misunderstood Welfare State.

What's going on here? Has America's traditional compassion for the downtrodden worn thin? Is the country that paid billions to liberate a wealthy oil sheikdom on the other side of the globe suddenly unwilling to feed hungry kids at home?

Not exactly. Americans have always been willing to help the genuinely needy. But there is growing resistance to the notion of giving money unconditionally to able-bodied adults -- and an insistence on mutual obligation as the only fair basis for public aid. "There's a deep-running stream in American life," says Marmor, "that comes out a fundamental belief in individual responsibility, in the concept that you earn your own way."

Welfare has never been popular in the U.S. The word itself has become a politically charged term, one that often conjures up racial stereotypes. When participants in a TIME/CNN poll conducted by Yankelovich Clancy Shulman were asked if the government was spending too much on the "poor," only 17% said yes; asked if too much was being spent on "welfare," 32% said yes. Yet the same poll showed strong support for positive, rather than punitive, reforms. Ninety-three percent said the main goal of such efforts should be to make people self-sufficient; only 3% cited cost cutting as the aim.

The Los Angeles riots have cast a spotlight on the problems of poverty and urban decay. But long before that explosion, the recession put welfare high on the political agenda by swelling public-assistance rolls with legions of unemployed workers. Around 4.7 million households, or 13.6 million individuals, are receiving Aid to Families with Dependent Children (AFDC), the main cash-assistance program. That's an increase of 24% in the past two years. The number of food-stamp recipients shot up from 20.9 million in October 1990 to 24.2 million a year later. The total cost of these two programs alone is more than $40 billion a year.

The reluctance of taxpayers to foot that bill is hardly eased by the stereotype of inner-city welfare mothers having baby after illegitimate baby while their boyfriends sell crack on street corners. Or by the idea that most welfare recipients, preferring idleness to work, remain on the dole for decades. Or by the assumption that welfare costs are ruining the U.S. economy. But much of the popular thinking about welfare is contradicted by the facts. Items:

-- Welfare is not primarily a problem of the urban black underclass. Ninety percent of America's poor live in suburban and rural areas, and 60% of all AFDC recipients are white.

-- The average AFDC family has only 1.9 children, fewer than the average U.S. family.

-- No one is getting rich off the dole: the average monthly grant in 1990 was $377 for a family of three -- less than half the poverty level.

-- Far from spinning out of control, AFDC payments have declined 42% in real terms over the past two decades.

-- Half of all aid recipients get off the rolls within two years. Only 2% remain for more than a decade.

These facts, of course, do not minimize the very real problems associated with life on the dole. The system isolates, stigmatizes and degrades its clients. It gives people few incentives to become productive, self-reliant citizens. Democratic Senator Daniel Moynihan of New York, one of the country's / leading welfare experts, believes that "dependency is becoming the sort of characteristic problem of the postindustrial age, just as unemployment was the absolutely baffling and very destabilizing problem of the industrial age." Moynihan notes that of all American children born in 1980, 1 in 3 -- including 8 out of 10 blacks -- will wind up on welfare.

Another unsettling statistic: more than half of all AFDC children are born out of wedlock -- five times the national average. Some analysts blame the dole itself for the high level of illegitimacy, arguing that it destroys the family structure by giving women a financial incentive not to marry. Yet as Harvard University professor David Ellwood contends in his book Poor Support, there is no statistical evidence that differences in aid levels over time, or from state to state, have any effect on the number of single-parent families.

What most Americans mean by welfare is AFDC, which provides cash benefits to single parents and their children. Yet AFDC, funded roughly half-and-half by federal and state governments, is only a small stone in the edifice known as the welfare state. The big-ticket entitlements are Social Security and Medicare, which provide retirement pensions and health services to virtually all elderly Americans; together they gobble up 51% of all federal spending on social programs. Medicaid, the means-tested medical plan for the poor and disabled, accounts for 10%; it is the fastest-growing component of the social- spending package, with costs soaring 36% between 1989 and 1991. But AFDC accounts for less than 4% of all federal social spending. It amounts to 1% of the federal budget and 3.4% of the average state budget. "If you're talking about saving big dollars, AFDC is the last place you would start," says Philip Harvey, co-author with Marmor and Jerry Mashaw of America's Misunderstood Welfare State.

Yet financially strapped states, required by law to balance their budget, have taken the ax to welfare. In the past year, about 40 states have reduced or frozen benefits, and many have tightened eligibility requirements. Among them, Michigan and Ohio have cut off all payments to 170,000 recipients of general assistance, which provides aid to impoverished single adults, and California Governor Pete Wilson has proposed to reduce AFDC payments as much as 25%.

But there is more to this movement than budget trimming. Many states are attaching strings to welfare benefits, in an attempt to modify behavior, provide job training and prod recipients into the labor force through what is known as "workfare" programs. New York University professor Lawrence Mead, a conservative advocate of welfare reform, has dubbed this approach the "New Paternalism." New Jersey, for example, has passed a carrot-and-stick bill that denies extra payments to single mothers who bear children while on the dole; on the other hand, it allows them to keep their benefits if they marry, and it contains incentives for them to earn outside income and continue their education. Wisconsin's Republican Governor Tommy Thompson has pushed through a program that docks payments to teenage parents who quit school; he has also proposed to pay single mothers an extra $77 a month to marry the fathers of their children. Many of these innovations violate federal rules, but Bush has made it clear that he will grant waivers to encourage the states to take the lead in reform.

There is some irony in this, since Congress four years ago passed what was supposed to be the welfare blueprint for the rest of the century. Drawing on dozens of state workfare experiments during the previous decade, the Family Support Act of 1988 was designed to channel able-bodied AFDC parents into the work force. Among other things, it requires every state to provide education and job-training programs and offers Medicaid coverage and child-care payments for up to one year after parents leave the welfare rolls to take jobs.

Few experts, however, expect the 1988 legislation to solve the welfare mess -- or even to come close. First of all, it will affect only a fraction of the welfare population: the act requires 20% of the eligible case load to enroll in the program by 1995; since parents with disabilities and preschool children are exempted, only an estimated 1 in 10 recipients will ever take part.

Second, it is underfunded: the job-training programs necessary to get recipients back into the work force are costly, but Congress provided only a billion dollars a year over a five-year period, which works out to just $250 annually per adult AFDC recipient. Challenging the Bush Administration "to put up or, please, to shut up," Senator Moynihan last month introduced a bill to increase federal funding to $5 billion a year -- a nonstarter in the current fiscal climate. Meanwhile, many financially strapped states have been backing out of the deal, preferring to forfeit their share of federal matching grants rather than fully fund the programs. A report published by the State University of New York in March found that states had qualified for only 48% of the available federal money.

Finally, the 1988 reforms are based on a workfare approach -- education, training, job search -- that produced only modest improvements in employment and earnings when tried by various states during the '80s. The chances of large-scale gains are especially dim at a time when more than 7% of all U.S. workers are jobless. "If you are going to have a workfare program in a slack economy, the whole program will collapse," says William Julius Wilson, a sociologist at the University of Chicago and an expert on poverty. "People will get training for employment, but if there aren't jobs out there, in the long term, it is just going to be self-defeating."

There is a growing consensus among policy experts that tinkering with the existing system will not fix its fundamental problems. Some, like conservative Charles Murray, say the solution is to abolish welfare altogether and force its clients to fend for themselves. In his influential 1984 book, Losing Ground, Murray claimed that AFDC actually increases poverty by serving as a disincentive to work and encouraging women to have illegitimate children they cannot support. Others argue that the dole should give way to an entirely new system based on social insurance and jobs.

Solving the welfare problem will require providing a whole support structure for moving people into the workplace: national health insurance, reliable child-care networks, a public-education system worthy of the name and, above all, good jobs at living wages. Achieving all that is a tall, perhaps impossible order. But if Americans are serious about fixing the welfare mess, they will have to start with some bold, far-reaching steps.

1. GUARANTEE JOBS. The current welfare program could be replaced with a system of government jobs modeled on the Works Progress Administration that employed more than 8 million American workers during the Depression. In his forthcoming book, The End of Equality, Washington-based journalist Mickey Kaus outlines a stark and simple plan that would replace welfare with a guaranteed- employment program: he would prohibit new people from being added to the welfare rolls, eliminating handouts and offering instead day care and WPA- type jobs on useful public projects -- sweeping streets, building roads and parks, doing clerical work and the like. David Ellwood's scheme, which has strongly influenced Clinton's proposals, would convert welfare into a system of short-term, transitional support lasting no more than three years, after which minimum-wage government jobs would be offered to those who couldn't find work in the private sector.

Some of these ideas are being picked up on Capitol Hill. Democratic Senator David Boren of Oklahoma last March proposed a bill to create a modern-day version of the WPA. In the wake of the Los Angeles riots, bipartisan momentum seems to be building behind Housing Secretary Jack Kemp's "empowerment" approach. By offering tax breaks to entrepreneurs investing in 50 inner-city "enterprise zones," Kemp hopes to generate new jobs and wean welfare recipients off the dole. That trickle-down solution seems problematic: it will take more than fiscal lures to bring major investment into rubble-strewn areas like South Central L.A., downtown Detroit and the South Bronx.

2. ENFORCE CHILD SUPPORT. AFDC could be drastically reduced if absent fathers were forced to support their children. Of the $16.3 billion in annual child support ordered by courts in 1989, only $11.2 billion was paid and only 11% of those receiving support were AFDC mothers. Under current law, welfare recipients are allowed to keep only $50 in child support. The Family Support Act bolstered efforts to collect the money by requiring automatic withholding from the wages of absent parents. A plan proposed by Ellwood would expand those efforts and add a new twist: collection insurance. In cases in which the absent father could not be tracked down or did not have the money to pay up, the government would pay the mother a fixed amount per child each year. This approach is the basis for a bipartisan plan, announced in the House last week by Democrat Thomas Downey and Republican Henry Hyde, that would guarantee a single mother a minimum of $2,000 a year and would collect payments from the father through the Internal Revenue Service.

3. MAKE WORK PAY. Even for those who want to work, the current welfare system is full of perverse disincentives. In most states, a single mother who earns, say, $700 a month has that amount deducted from AFDC benefits; she also loses Medicaid and food stamps and often has to pay for child care as well as payroll taxes. In many cases, her increased income is so marginal that it literally does not pay for her to work. "For a very large proportion of single mothers, it's impossible to find a job that pays as well as being on welfare," says Northwestern University professor Christopher Jencks, author of Rethinking Social Policy.

The problem is that the American economy no longer provides enough decent jobs for low-skilled workers. A full-time minimum-wage job doesn't support a family of four at the poverty line. Even two-parent working families have a hard time making it at the low end of the pay scale.

There have been numerous proposals to supplement the wages of poor working parents with combinations of refundable tax credits, medical benefits, housing allowances and food stamps -- what Gary Burtless of the Washington-based Brookings Institution calls "aid to breadwinners with dependent children." Some of this is being done already. New Jersey's reform, for example, would allow working AFDC parents to earn up to 50% of their grant levels without losing benefits. In 1975 Congress enacted the Earned Income Tax Credit (EIC), which currently offers cash supplements of up to $1,192 to working parents with incomes under $21,250. A number of recent congressional initiatives would vastly expand such efforts. Bills introduced by Congressman Downey and Democratic Senator Jay Rockefeller would use a combination of tax breaks and increased eic payments to beef up the revenues of working families.

The estimated cost for these plans ranges from $20 billion to $50 billion a year. Such an ambitious project cannot be carried through without a major fiscal and political effort -- the kind of all-out drive that has rarely been seen in the U.S. except in times of great national crises or foreign challenges. "I think we know that small interventions won't work," says Brookings economist Henry Aaron, "and therefore we have to decide whether this is a problem like going to the moon or winning World War II or Operation Desert Storm, where we say we're going to pour in the resources we think are necessary to do the job." In Aaron's pessimistic view, there is currently "no evidence of that kind of commitment in the nation."

He may be right. But in that case, Americans will just have to accept more of what they almost universally decry: more dependency, more wasted national and human resources, more generations of children growing up in poverty, more unproductive and unskilled citizens, more racial tension and, finally, a more polarized society in which haves and have-nots glare at each other across a widening economic and social chasm. And if that's not a national crisis, what is?

With reporting by Sylvester Monroe/Los Angeles, Andrea Sachs/ New York and Elizabeth Taylor/Minneapolis