WELFARE AND ILLFARE: THE ALTERNATIVES TO POVERTY

In Toledo, 150 women and children invaded welfare-department headquarters last month, tumbling workers from their chairs and tossing mounds of paper work onto the floor. In Boston, 50 others staged a raucous sit in at the Massachusetts Statehouse, refusing to budge until police carted them away. Forty-four more were arrested last week in Cleveland when they took over the big welfare offices on St. Clair Avenue. Such demonstrations by the welfare poor have become commonplace. Even as politicians and taxpayers bitterly complain about spiraling welfare budgets, those on the receiving end are demanding--and receiving--far more.

In the past, hugely prosperous decade, no fewer than 2,900,000 people have been added to the dole, so that today, 9,000,000 Americans are receiving welfare. The bill has risen even faster: excluding social security and other Government insurance plans, the cost of welfare to all levels of government is $5.5 billion a year. Of this, the Federal Government pays a little more than half, the cities about 12%, and the states a third. Many of the cities, including local government in the suburbs, are discovering that welfare is threatening them with bankruptcy. In a little more than two years, New York City has added enough people to the rolls to constitute another Miami. Some 20,000 more are added each month, and by the end of next month, 1,000,000 people--one of every eight New Yorkers--will be on welfare. Other cities have shown similar increases. There is only one consolation. The huge expenditures are at long last forcing a re-examination of the system that Economist Milton Friedman aptly dubs "illfare."

A Welter of Programs

Though the Federal Government follows its contribution with overall guidelines, rules and benefits vary enormously from state to state, city to city. In Cleveland, 80% of those who apply for welfare are accepted; in Houston, only 30%. In one important program, Aid to Families with Dependent Children, New York State offers benefits of $71.75 per person, as compared with $8.50 in Mississippi. No one knows how much the wide welfare gap between North and South has contributed to the migration of poor Southern Negroes to big-city ghettos--but it must have been a factor.

The welfare label covers a welter of programs, with differing aims and benefits. Aid to dependent children is the largest (5,609,000 recipients, $41.85 a month average per person), but there are also the programs of old-age assistance (2,019,000, $67.70 per person), aid to the blind (81,200, $91.05 per person), aid to the permanently and totally disabled (670,000, $81.10 per person), and general assistance (737,000, $44.65 per person). The system's methods are aimless, and have been an important factor in the breakup of slum families. So as not to encourage able-bodied men to stay around the house, long-standing rules in many states have barred aid to families that had a father at home. It was all right, the reasoning went, to give money to widowed or abandoned mothers and their children, but not to fathers and their children. The results: an unemployed or low-paid father could either see his family starve or he could desert. Many deserted. To make sure that wives and husbands--or women and their lovers--were not breaking the rules, welfare departments adopted the secret-police practice of knocking on the door in the middle of the night to see who was sharing the mother's bed. The Supreme Court effectively outlawed- that unsavory custom only last June. Until last July, Welfare laws refused even to recognize the psychological motive of incentive: every penny of every dol lar earned by a welfare recipient was deducted from his benefits. Welfare, in effect, imposed a confiscatory 100% tax on initiative.

The system is, in short, almost totally pernicious. Not trusting the poor to spend their own money, most departments figure their needs down to the shoestrings and hairpins. New York City, for example, will allow a family enough money for such items of furniture as a $30 couch, a $12 dinette table, and a $33 bed (single). A woman is budgeted enough each year for only one lipstick --two if she is employed--two pairs of nylons (750 a pair), and a $3 hat. She can have a $5 raincoat every two years, and a $5 bathrobe every three. The cost of calculating and checking on such items is huge; administrative expenses account nationwide for 100 out of every welfare dollar. For the poor, the psychological cost of this paternalism is almost as bad as the large P that was sewed on the clothes of everyone receiving relief money in colonial Pennsylvania.

Filling the Gaps

Yet the most damning indictment of welfare is not that it is inefficient or costs too much. Enormous as the expenditures are, they provide help for only a third of the 26,900,000 Americans who suffer from poverty. The rest must make do by themselves. "The gaps are too many," says Charles Schottland, dean of Brandeis' school of social welfare. "The system has failed because there are too many people falling into the cracks." A concerted attempt to fill the gaps has been one of the prime causes of today's welfare problem. People who have always been eligible for welfare are now signing up, while many who are already on welfare are asking for benefits that were always available but rarely requested.

A score of organizations--not least of which is the Federal Government's Office of Economic Opportunity--have encouraged the poor to drop whatever inhibitions they had about welfare. Sharp-eyed lawyers and organizers are discovering hidden benefits that scarcely anyone knew existed. Welfare officials, in turn, are being pressured to grant new benefits, such as money for telephones and Christmas gifts, so that life on welfare can more closely approximate life in the rest of America. Yet the welfare militants have more in mind than just getting a little more. By stretching the current system to its farthest limit, they reason, they will make it so expensive that the nation will have to search for an alternative.

And the alternative--some form of automatic income supplement, such as the negative income tax or family allowance--is what they are really after.

A Considerable Consensus

As it happens, so are many economists and Government officials, together with surprising numbers of business and political leaders. Milton Friedman, Barry Goldwater's conservative economist in 1964, has long called for what he terms the negative income tax. Yale's James Tobin, a leading liberal economist, has been an effective proponent of what is sometimes called the guaranteed annual income. Though the plans vary considerably in detail, the principle is the same: everyone is entitled to a basic income as a matter of right. Under Tobin's plan, the most carefully thought out, no family of four would receive less than $2,600 a year. As income rises, the payment from the Government would drop, until a breakeven point of $5,200 is reached. At $6,144, the family would start paying full taxes (see chart, following page). According to Tobin's arithmetic, no family would ever be better or as well off not working--as is often the case with today's welfare program--and work would always be encouraged with dollars.

While economists tend to favor the negative-income-tax principle, sociologists, most notably Daniel Patrick Moynihan, tend to prefer another kind of income supplement: family or children's allowances. Under this scheme, every family in the country, rich or poor, would receive a certain amount of money for each child. The affluent would return it with their income taxes, but those who really need it would keep it for basic needs. The main beneficiaries would be the children. No fewer than 62 nations, including Canada and all the countries of Europe, already give family allowances. The family allowance, unlike the negative income tax, could be sold politically as a program for children rather than the poor, and thus would probably be more acceptable to Congress and the public. A "negative income tax," on the other hand, sounds like what it is, an economist's conceit, while a "guaranteed annual income" suggests featherbedding on a grand scale.

The advantages of either concept over the present welfare system are numerous. Either would leave people poor by just about any definition--no plan offers more than a meager subsistence--but the most brutal poverty would be eliminated. Most of the 17 million not covered by welfare now would be included for the first time: with a floor under them, many families would begin to break the cycle of poverty that has kept them on welfare for, in some cases, three generations.

There are, to be sure, difficulties as well. The family allowance would still not take care of the childless poor, while the negative income tax could not really be administered, as its proponents sometimes claim, with only a small addition to the staff of the Internal Revenue Service. For one thing, money would have to be handed out monthly or weekly, a big chore that would cause rather substantial changes in the IRS bureaucracy. The negative income tax would have a further practical drawback. Middle-income workers would not benefit at all, as they would with family allowances, and they would undoubtedly balk at paying taxes to subsidize people who earn only a few hundred dollars less than they themselves make. However, the objections, big as they are, diminish when they are placed next to the welfare monstrosity that now exists.

Deserving and Undeserving

The major, perhaps insurmountable, obstacle to reform is the American belief that no one should get something for nothing. In fact, there are relatively few able bodied men on welfare (.7% of the total), and there is little evidence that very many men would stay on welfare if they could get a decent job. Yet proponents of income supplements ought to concede that the plans might indeed make things easier for the lazy. A potentially superior system ought not to be rejected because of possible or even likely abuses; but the whole idea is likely to run counter to the American ethos for a long time to come--at least until the idea becomes established that every citizen has an inherent right to share in the national abundance. Perhaps that notion will be accepted only when the nation is very much richer than it is today.

The costs of most income-maintenance schemes Would be vast--another formidable handicap. The most modest plan would cost about $4 billion more than today's welfare; the most ambitious would cost $30 billion more. Neither calculation, however, reckons the present system's potential cost, which, without any modifications, might continue to expand indefinitely. Eventually, even the most generous supplement plan might seem cheap by comparison. As it is, the U.S. spends less proportionally on social welfare than almost any other industrial country.

A Little Progress

To measure in terms only of dollars and cents, however, is deceptive. An income supplement would not cure the illness of American cities, but the illness may not be curable without it. All the poverty programs that are now in existence and all of those talked about still reach indirectly for the same goal that income supplements would reach directly--to put money into the hands of the poor. The argument that no one should get something for nothing is not easily dismissed, but it is simply not as valid as it used to be, in a society that has potentially overcome scarcity and made a state of plenty possible for all. Ideally, of course, income supplements

ought to be considered only part of the cure for poverty --merely one-half of an equation that would include education and equal opportunities enabling almost everyone to work for a decent living.

Though the roadblocks are many, the U.S. may, in fact, already be moving toward income supplements.

Some social scientists are encouraged by the discussion that has already made the concept respectable, and predict that income supplements will be adopted within the next decade, or at least before the end of the century. In the meantime, a handful of welfare agencies are making a little progress toward humanizing the present system. In a few places, the degrading means test has been abolished in favor of a simple affadavit of need;

if a recipient lies about his income, he is subject to prosecution, just as if he lied to the tax collector. Some departments, prodded by Congress, are also discovering incentive, letting their clients keep a percentage of the money the clients earn themselves.

Other even more important changes could be made by the 91st Congress. Since poverty is basically a national problem, the Federal Government should probably assume all of the welfare expenses. At a relatively minor cost to the Federal Treasury ($3 billion out of a $186 billion budget), cities could be greatly helped. At the same time, rules and benefits could be standardized across the country so that no one would be tempted to move for the higher benefits of another state. New York's Governor Nelson Rockefeller suggested both proposals to President-elect Nixon only last week, and Robert Finch, Nixon's Secretary of Health, Education and Welfare, must consider these, as well as other welfare changes, priority items. None of the measures proposed would create a perfect system. Indeed, it is doubtful that a fully satisfactory method of helping the poor will ever be found. The U.S., however, has at least one assurance: almost any change from the present system will be an improvement.

This file is automatically generated by a robot program, so reader's discretion is required.