When President Lyndon Johnson launched the War on Poverty more than 30 year ago, he announced it was an investment that would repay its cost to society many times over. 1 Since that time, the United States has ‘invested’ nearly $7 trillion in programs that provide cash, food, housing, and medical and social services to poor and low-income Americans. But while the nation was pouring this flood of resources into the War on Poverty, most of its social problems got worse, not better. In its wake, a deluge of illegitimacy, crime, drug abuse, and welfare dependency has besieged America. The War on Poverty failed. The bottom line is simple: In welfare, as in most things, we get what we pay for.
For 30 years, the welfare system paid for non-work and non-marriage, and it has achieved massive increases in both. By undermining the work ethic and rewarding illegitimacy, the welfare system has insidiously generated its own clientele. The more money that is spent, the more people in apparent need of aid appear. The American taxpayer has been trapped in a cycle in which spending generates illegitimacy and dependence — which, in turn, generate demands for even greater spending. The American welfare system has bribed individuals into courses of behavior that, in the long run, are self defeating, harmful to children, and increasingly a threat to society. Welfare’s most ominous feature is its corrosive effect on family structure — its policies have driven up illegitimacy, which in turn has been a powerful factor that contributes to almost every other current social problem.
... Vintage Books, 1996 Chappell, Marisa. The War on Welfare: Family, Poverty and Politics in Modern American. Philadelphia: University of Pennsylvania Press, 2010 ... reports that welfare mothers have begun to ... it has failed to address the developing welfare crisis and dissatisfaction of Americans with the system. Peter et al. (24-25) ...
Policymakers must recover the wisdom of traditional charity, which recognizes that ‘one-way handouts’ usually hurt those they are intended to help. True charity must begin by requiring responsible behavior from the beneficiary as a condition of receiving aid. True charity must seek to generate in the recipient the virtues and self-discipline necessary for success in society, rather than passively subsidizing ever-escalating levels of social pathology. By enacting welfare reform, Congress took a substantial first step toward establishing a sane welfare policy. The caseloads in the Aid to Families with Dependent Children (AFDC) program have fallen by nearly one-third since Republicans gained control of Congress in 1995, the first substantial decline in AFDC dependence in 40 years. Several states, including Idaho, Oregon, Wisconsin, and Wyoming, have made remarkable progress in reducing welfare dependency and promoting self-sufficiency.
In Wisconsin, dependence in the AFDC program has been cut by 81 percent. As real as these achievements are, a note of caution is needed. First, the recent declines in AFDC caseloads follow a very rapid growth in dependence in the early 1990 s. Overall, the national AFDC caseload is only 5 percent below its level ten years ago. Second, there is great variation among the states: Although some states are making remarkable progress in promoting self-sufficiency, others have made little or no progress. Third, welfare reform has really affected only one program, AFDC.
The other 75-plus federal welfare programs remain substantially unchanged. Finally, welfare reform has done little to limit the growth of overall welfare spending. Under current law, aggregate federal welfare spending will rise at 5 percent per year over the next half decade. This is well above the rate of inflation. Combined federal and state welfare spending will soar from $407 billion in 1997 to nearly $540 billion in 2003. The new welfare law enacted by Congress in 1996 was the first step in a very long process of reform.
... cut social expenditure, restructure welfare state programs to conform more closely to the residual welfare state model, or alter the ... the extent of welfare state retrenchment, using preliminary data from the Social Citizenship Indicator Program (SCIP). Preliminary ... . (2006). “Trust in the Capability of the Welfare State and General Welfare State Support: Sweden 1997-2002”. Michael K. Brown. ...
New reform efforts must be based on three themes: Limit the growth of welfare spending. Even as AFDC caseloads decline, total welfare spending continues to grow relentlessly. Steps must be taken to help policymakers and the public understand the vast size of the welfare system and to limit its future growth. Reduce illegitimacy and restore marriage.
Restoring marriage must be the paramount social goal for policymakers. The new welfare law, for the first time, makes reducing illegitimacy a formal national objective. But at present, no states have effective programs to deal with this issue. Promoting vigorous state experimentation must be a priority. Reduce dependence and require work and responsible behavior. Currently, President Clinton is attempting to use federal regulations to make it difficult for states to require welfare recipients to work.
The work and dependence reduction standards of the new welfare law must be preserved and strengthened. The principles that have resulted in falling AFDC caseloads should be applied to other programs as well, such as Food Stamps and public housing. THE FACTS Social collapse in America over the past 30 years has coincided with growth in the welfare state. The U. S.
welfare system may be defined as the total set of government programs — federal and state — that are designed explicitly to assist poor and low-income Americans. Current welfare assistance has three ostensible objectives: To sustain living standards through cash and non-cash transfers; To promote self-sufficiency; and To aid economically distressed communities. Most welfare programs are individually means-tested. Means-tested programs restrict eligibility for benefits to persons with non-welfare income below a certain level. Individuals with non-welfare income above a specified cutoff level may not receive aid.
Thus, Food Stamp and AFDC benefits are means-tested and constitute welfare, but Social Security benefits are not. The Size of the Welfare System The federal government currently runs over 75 major interrelated and overlapping welfare programs. Many states operate their own independent programs. This federal and state welfare system now includes cash aid, food, medical aid, housing aid, energy aid, jobs and training, targeted and means-tested education, social services, and urban and community development programs. 2 Consider: Total federal and state spending on welfare programs was $407. 2 billion in FY 1997.
... programs, among others. Under the block grant, states will distribute food assistance to economically disadvantaged individuals more freely. To further reduce welfare spending, welfare ... of welfare to non-citizens saves about $22 billion, the cap on welfare spending saves about $18 billion, the ... The bill requires states to establish paternity in ninety percent of their cases. States are also encouraged ...
Of that total, $296. 3 billion (73 percent) came from federal funding and $110. 9 billion (27 percent) came from state or local funds. In 1997, 51. 1 percent of total welfare spending was devoted to medical programs.
Cash programs took 23. 3 percent. Food, housing, and energy programs comprised 16. 1 percent, and education, job training, social services, and urban and community aid accounted for 9. 3 percent. Welfare spending is so large it is difficult to comprehend.
On average, the cost of the welfare system amounted to around $5, 700 in taxes from each household that paid federal income tax in 1997. How the welfare state Has Grown For the first 150 years of U. S. history, the government played little role in welfare. 3 Charity or welfare was conducted largely by private religious organizations.
As late as 1929, before the onset of the Great Depression, federal, state, and local welfare expenditures were only $90 million. In 1997 dollars, this would be $848 million. Public-sector welfare spending in 1929 amounted to only $6. 89 per person in 1997 dollars. (Unless otherwise noted, all spending figures in this section have been adjusted for inflation into constant 1997 dollars. ) Chart 7.
1 shows the growth in welfare since 1929. The Great Depression, which threw nearly a quarter of the labor force out of work, led to a dramatic change in government welfare spending. Expenditures for work relief welfare programs, such as the Civilian Conservation Corps, Works Progress Administration, and Civil Works Administration, grew rapidly. By 1939, welfare spending hit a peak of $48 billion — compared with less than $1 billion in 1929 (in 1997 dollars).
In inflation-adjusted terms, welfare spending would not return to the 1939 peak until the onset of the War on Poverty a quarter-century later. The major Great Depression anti-poverty programs were terminated at the beginning of World War II, and welfare spending again fell to low levels.
... can distinguish between competitive behavior by states and intrinsic regional co variation. We examine welfare programs under state control and exempt from it ... can distinguish between competitive behavior by states and intrinsic regional co variation. We examine welfare programs under state control and exempt from it ...
In 1950, total welfare spending by federal, state, and local governments was $20. 6 billion (in 1997 dollars), less than the cost of the Food Stamp program in 1997. During the 1950 s and early 1960 s, welfare spending grew slowly, reaching $36. 7 billion and 1. 2 percent of gross domestic product (GDP) in 1964 at the onset of the War on Poverty. (Click on Chart 7.
1 to Enlarge) The Explosion in Spending. In his 1964 State of the Union address, President Johnson announced the War on Poverty. New legislation and spending initiatives began to take effect by 1965. Between 1965 and 1970, over two dozen separate federal welfare programs were created. Eligibility for older programs, such as Aid to Families with Dependent Children and Food Stamps, was expanded.
In three years (1965 to 1968), welfare spending in constant dollars more than doubled, rising from $40. 5 billion to $85. 4 billion. In the first decade of the War on Poverty, there was explosive growth in all categories of welfare spending.
Between 1965 and 1975 (measured in constant dollars), cash aid nearly tripled, social service spending tripled, medical aid almost quintupled, food aid did quintuple, housing spending increased sevenfold, and job training funds increased fifteen fold. By 1980, when Ronald Reagan was elected President, total welfare spending had reached $212. 7 billion (in constant 1997 dollars), a more than fivefold increase compared with 1965 levels, after adjusting for inflation. Although total welfare spending absorbed 1.
2 percent of GDP in 1965, just 15 years later, some 4. 0 percent of the economy was devoted to welfare. During the Reagan era, welfare spending was not cut, but the rapid growth in welfare expenditure was slowed. In constant dollars, total welfare spending rose from $224 billion in 1981 when Reagan took office to $241 billion when he left office. For the first time since the beginning of the War on Poverty, welfare grew at a slower rate than the economy. Consequently, welfare spending as a percent of GDP declined from 4.
1 percent in 1981 to 3. 6 percent in 1988. (Click on Chart 7. 2 to Enlarge) During the Bush Administration and the Clinton Administration’s first term, welfare spending resumed its explosive upward course.
... the one hand the country’s burden of poverty is enormous: about 40 percent of its 158 million people live below the ... family planning and population control. Thus, family planning or family welfare programmes should be effectively implemented. Adequate awareness about small family ... last decade, economic growth has been steady at 5-6 percent a year. Income per capita has almost doubled following a sharp ...
Despite a campaign pledge to ‘end welfare as we know it,’ Clinton promoted a rapid expansion of welfare programs during his first three years in office. By 1995 (the year Republicans took control of Congress), Clinton’s policies had earned him the title ‘king of the welfare spenders.’ In 1995, total welfare spending had reached $379 billion and absorbed an historic high of 5. 2 percent of GDP. Clinton energetically expanded welfare on all fronts.
While medical spending grew rapidly, aggregate cash, food, and housing expenditures mushroomed as well, reaching record levels both in absolute terms and as a percent of GDP. In the years since the Republicans took control of Congress, the growth in welfare spending has slowed somewhat. By 1997, federal and state welfare spending had reached $407 billion and absorbed 5 percent of GDP. The Overall Record.
Overall, the growth of the welfare state has been staggering. Since the War on Poverty began: Welfare spending has risen every year but three, after adjusting for inflation; Welfare spending is now ten times greater in constant dollars than in 1965; and Cash, food, housing, and energy aid are, after adjusting for inflation, seven times greater today than in 1965. The growth of welfare spending has been particularly rapid since Ronald Reagan left the White House. After adjusting for inflation, Total welfare spending is now 70 percent higher than in 1988; and Total cash, food, and housing aid increased by almost 50 percent during the same period.
(Click on Chart 7. 3 to Enlarge) Total Cost of the War on Poverty. The financial cost of the War on Poverty has been enormous: Between 1965 and 1997, welfare spending cost taxpayers $6. 98 trillion (in constant 1997 dollars).
Of this total, cash, food, and housing programs absorbed 44 percent. Medical care represented 40 percent. Training, special education, social services, and community development claimed 16 percent. Because the figure $6.
98 trillion is difficult to comprehend, Chart 7. 3 offers some comparisons. The cost to the United States of fighting World War II was $3. 1 trillion (expressed in 1997 dollars).
Thus, the cost of the War on Poverty has been more than twice the price tag for defeating Germany and Japan in World War II, after adjusting for inflation. 4 As Chart 7.
... who head households bear the brunt of poverty. Of all poor families, 54 percent are headed by women with no husband ... home, than black families, 49 percent. Another reason for the racial disparity involves family patterns. African American families with children are three times ... children realize. The remaining twenty percent of our population make up the lower class. A lack of work and little income ...
3 also shows, the $6. 98 trillion cost of the War on Poverty nearly equals the entire cost of the private-sector industrial and business infrastructure of the United States. 5 For the same $6. 98 trillion spent on welfare, one could purchase every factory and all the manufacturing equipment in the nation. With the leftover funds, one could also purchase every airline; every railroad; every trucking firm; the entire commercial maritime fleet; every telephone, television, and radio company; every power company; every hotel; and every retail and wholesale store in the nation. 6 (Click on Chart 7.
4 to Enlarge) Future Spending. The modest slowdown in welfare spending in the past two years does not mean that the growth of the welfare state is under control. Under current law, federal welfare spending will continue to grow at a rapid pace in the future. According to Congressional Budget Office (CBO) figures, aggregate federal welfare spending (including means-tested cash, food, housing, medical care, and social services for low-income persons) will increase by around 5 percent per year for the next half decade, which is roughly twice the rate of inflation. 7 By the year 2003, total federal and state welfare spending will have risen to roughly $540 billion per year, and the United States will be spending almost $2. 00 on welfare for every $1.
00 it spends on national defense. The Impact of the Welfare State on Families and Individuals Huge costs are only part of the problem with welfare. Far more important are the destructive effects on America’s families and individuals. To unravel these effects, policymakers must distinguish between two important concepts: material poverty and behavioral poverty. Material Poverty. Material poverty means, in the simplest sense, having a family income below the official poverty income threshold, which was $16, 036 for a family of four in 1996.
To the average American, saying someone is poor implies that he is malnourished, poorly clothed, and living in filthy, dilapidated, and overcrowded housing. In reality, there is little material poverty in the United States, as the public generally understands the term. 8 In 1995, after adjusting for inflation, per capita expenditures of the lowest-income one-fifth of the U. S. population exceeded the per capita income of the median American household in 1962. 9 There is little or no poverty-induced malnutrition in the United States.
Persons defined as poor by the U. S. government have almost the same average consumption of protein, vitamins, and other nutrients as persons in the upper middle class. 10 Children living in poverty today, far from being malnourished, actually grow up to be one inch taller and ten pounds heavier than the average child of the same age in the general population in the late 1950 s. 11 The principal nutrition-related problem facing the poor in America today is obesity, not hunger; the poor have a higher rate of obesity than other socioeconomic groups. Similarly, poor Americans have more housing space and are less likely to be overcrowded than the average citizen in Western Europe.
12 Nearly all of America’s poor live in housing that is decent and reasonably well-maintained. In fact, nearly 40 percent of the households defined as poor by the U. S. government actually own their own homes. 13 Behavioral Poverty. Behavioral poverty, by contrast, refers to a breakdown in the values and conduct that lead to the formation of healthy families, stable personalities, and self-sufficiency.
Behavioral poverty incorporates a cluster of severe social pathologies, including eroded work ethic and dependency, lack of educational aspiration and achievement, inability or unwillingness to control one’s children, increased single parenthood and illegitimacy, criminal activity, and drug and alcohol abuse. Although material poverty may be rare in the United States, behavioral poverty is abundant and growing at an alarming pace. The core dilemma of the welfare state is that prolific spending intended to alleviate material poverty has led to a dramatic increase in behavioral poverty. The welfare system established by the War on Poverty heavily subsidized illegitimacy, divorce, and non-work. The past 25 years have seen dramatic increases in all three conditions.
The War on Poverty may have raised the material standard of living for a few Americans, but it has done so at the cost of creating whole communities in which traditional two-parent families have vanished, work is rare or nonexistent, and multiple generations have grown up dependent on government transfers. The disintegration of the family encouraged by the current welfare system has led in turn to other severe social problems, particularly a dramatic increase in crime. Welfare: A Pernicious System The anti-marriage and anti-work effects of welfare are simple and profound. The welfare system that has existed for the past 30 years may best be conceptualized as a system that offered each single mother with two children a ‘paycheck’ of combined benefits worth an average of between $8, 500 and $15, 000, depending on the state. 14 The mother had a contract with the government. She would continue to receive her ‘paycheck’ as long as she fulfilled two conditions: She must not work.
She must not marry an employed male. 15 Thus, the liberal welfare system provided heavy incentives for individuals to work less or leave the labor force entirely and to rely on the taxpayers for support. Even worse, welfare made marriage economically irrational for most low-income parents; it converted the low-income working husband from a necessary breadwinner into a net financial handicap. 16 It transformed marriage from a legal institution designed to protect and nurture children into an institution that financially penalizes nearly all low-income parents who enter into it. Conventional welfare also engenders long-term inter generational dependence. Of the 5 million families receiving AFDC assistance (before the recent congressional reforms), well over half would have remained dependent for over ten years, many for 15 years or longer.
17 Moreover, dependence passes between generations; children raised in families that receive welfare assistance are three times more likely to be on welfare when they become adults than other children. 18 This inter generational dependency is a clear indication that the welfare system has failed in its goal to lift the poor from poverty to self-sufficiency, and indeed is trapping many families in a repeating cycle of debilitating and self-destructive behavior. The Anti-Work Effects of Welfare The growth of the welfare state has coincided with a decline in labor force attachment. In 1960, among the lowest-income quintile of the population, nearly two-thirds of households were headed by persons who worked. 19 By 1991, this figure had fallen to around one-third, and only 11 percent were headed by persons who worked full-time throughout the year. 20 Part of this decline in employment can be attributed to the increasing number of retired elderly households in this income group, but an equally important factor is the decline in labor force participation among non-elderly heads of households.
For a growing number of poor Americans, the existence of generous welfare programs has made not working a reasonable alternative to long-term employment. During the late 1960 s and early 1970 s, social scientists at the Office of Economic Opportunity (OEO) conducted a series of controlled experiments to examine the effect of welfare benefits on work effort. The longest running and most comprehensive of these experiments was conducted between 1971 and 1978 in Seattle and Denver and became known as the Seattle/Denver Income Maintenance Experiment, or SIME/DIME. 21 Advocates of expanding welfare had hoped that SIME/DIME and similar experiments conducted in other cities would prove that generous welfare benefits did not adversely affect work effort. Instead, the SIME/DIME experiment found that each $1. 00 of extra welfare given to low-income persons reduced labor and earnings by an average of $0.
80. 22 The significant anti-work effects of welfare benefits were shown in all social groups, including married women, single mothers, and husbands. The results of the SIME/DIME study apply directly to existing welfare programs: Nearly all have strong anti-work effects like those studied in this experiment. Research by June O’Neill of New York’s Baruch College, now Director of the Congressional Budget Office, confirms that higher welfare benefits increase the number of individuals who leave the labor force and enroll in welfare. A 50 percent increase in monthly AFDC and Food Stamp benefit levels was found to lead to a 75 percent increase both in the number of women enrolling in AFDC and in the number of years spent on AFDC. 23 In other words, increases in benefit value caused a dramatic expansion in welfare caseloads.
The Negative Effects of Welfare Dependence Clearly, the traditional welfare system has led to high levels of welfare dependence. Dependence, in turn, has profound negative effects on the well-being of children. June O’Neill and Anne Hill, in comparing children who were identical in social and economic factors such as race, family structure, mothers’ IQ and education, family income, and neighborhood, found that the longer a child spent in the welfare system, the lower the child’s IQ. The authors make it clear that it is not poverty but welfare itself that has a damaging effect on the child. In examining young children (with an average age of five-and-a-half), O’Neill and Hill found that those who spent at least two months of each year, since birth, on AFDC had cognitive abilities 20 percent below the cognitive abilities of those who had received no welfare, even after holding constant such variables as family income, race, and parental IQ. 24 A similar study by Mary Corcoran and Roger Gordon of the University of Michigan shows that receipt of welfare income has negative effects on the long-term employment and earnings capacity of young boys.
25 The Corcoran and Gordon study shows that, holding constant race, parental education, family structure, and a range of other social variables, higher non-welfare income obtained by the family during a boy’s childhood was associated with higher earnings when the boy became an adult (over age 25).
However, welfare income had the opposite effect: The more welfare income received by a family while a boy was growing up, the lower the boy’s earnings as an adult. Typically, liberals would dismiss this finding, arguing that families receiving a lot of welfare payments have lower total incomes than other families in society, and that it is the low overall family income, not welfare, that had a negative effect on the young boys. But the Corcoran and Gordon study compares families whose average non-welfare incomes were identical.
In such cases, each extra dollar in welfare represented a net increase in overall financial resources available to the family. This extra income, according to conventional liberal welfare theory, should have positive effects on the well-being of the children. But the study shows that the extra welfare income, even though it produced a net increase in resources available to the family, had a negative impact on the development of young boys within the family. The higher the welfare income of the family, the lower the earnings obtained by the boys upon reaching adulthood. The study suggests that an increase of $1, 000 per year in welfare received by a family decreased a boy’s future earnings by as much as 10 percent.
26 Other studies have confirmed the negative effects of welfare on the development of children. For example, young women raised in families dependent on welfare are two to three times more likely to drop out and fail to graduate from high school than young women of similar race and socioeconomic background who were not raised on welfare. 27 Similarly, single mothers raised as children in families receiving welfare remain on AFDC longer as adult parents than single mothers who were not raised in welfare families, even when all other social and economic variables are held constant. 28 The Anti-Marriage Effects of Welfare The War on Poverty not only has led to high levels of dependence, but also has promoted the disintegration of the family. When the War on Poverty began, 7. 7 percent of American children were born out of wedlock.
Today, that figure is 32 percent. The collapse of marriage among blacks has been particularly disturbing: At the outset of World War II, the black illegitimate birth rate was slightly less than 19 percent. Between 1955 and 1965, it rose slowly from 22 percent in 1955 to 28 percent in 1965. Beginning in the late 1960 s, however, the rate of black illegitimate births skyrocketed, reaching 49 percent in 1975 and 70 percent in 1995. Rapid increases in illegitimacy are also occurring among whites. The illegitimate birth rate among whites is 25 percent; among white high school dropouts, it is 48 percent.
Across the nation, the conventional welfare system has all but destroyed family structure in low-income communities. Welfare establishes strong financial disincentives that effectively block the formation of intact two-parent families. Suppose, for example, that a young man has fathered a child out of wedlock with his girlfriend. If this young father abandons his responsibilities to the mother and child, government steps in and supports the mother and child with welfare. If the mother has a second child out of wedlock, as is common, average combined benefits will reach around $13, 000 per year. If, on the other hand, the young man does what society believes is morally correct (marries the mother and takes a job to support his family), government policy takes the opposite course.
Welfare benefits are almost completely eliminated, and if the young father makes more than a modest salary, the federal government begins taking away his income through taxes. 29 Largely because of welfare, illegitimacy and single parenthood have become the conventional lifestyle option for raising children in many low-income communities. As Washington Post reporter Leon Dash has shown in his book, When Children Want Children, most unwed teen mothers conceive and deliver their babies deliberately rather than accidentally. 30 Although young women do not bear unwanted children in order to reap windfall profits from welfare, they are very much aware of the role welfare will play in supporting them once a child is born.
Thus, the availability of welfare plays an important role in influencing a woman’s decision to have a child out of wedlock. President Clinton himself has asserted that the idea that welfare actively promotes illegitimacy is ‘essentially right.’ In a 1993 television interview, he provided the following anecdote: I once polled a hundred children in an alternative school in Atlanta, many of whom had had babies out of wedlock. And I said if we didn’t give any AFDC to people… after they had their first child, how many of you think it would reduce the number of out-of-wedlock births? Over 80 percent of the kids raised their hands. 31 Clinton added that the ‘rising wave of crime and violence’ was tied to the collapse of marriage.
Scientific research confirms his insight that welfare benefits to single mothers contribute directly to the rise in illegitimate births. 32 Research by C. R. Wine garden of the University of Toledo found that half of the increases in black illegitimacy in recent decades could be attributed to the effects of welfare. 33 Research by Mikhail Bern stam of the Hoover Institution at Stanford University shows that childbearing by young unmarried women may increase by 6 percent in response to a 10 percent increase in monthly welfare benefits; among blacks, the increase may be as high as 10 percent.
34 A study of black Americans by Mark Fossette and Jill Kie colt finds that higher welfare benefits lead to lower rates of marriage and greater numbers of children living in single-parent homes. In general, an increase of roughly $100 in the average monthly AFDC benefit per recipient child was found to lead to a drop of more than 15 percent in births within wedlock among black women ages 20 to 24. 35 Research by June O’Neill shows that, holding constant a wide range of other variables such as income, parental education, and urban and neighborhood setting, a 50 percent increase in the monthly value of AFDC and Food Stamp benefits leads to a 43 percent increase in out-of-wedlock births. 36 The Effects of Rising Illegitimacy The most obvious consequences of the rising tide of illegitimacy and declining marriage are welfare dependence and child poverty. Charts 7. 5 and 7.
6 show data from the National Longitudinal Survey of Youth (NLS Y) which contain a national representative sample of young mothers and their children. The charts divide children into four groups: Out-of-Wedlock, Never Married (children born out of wedlock whose mothers never married after their birth); Out-of-Wedlock, Subsequent Marriage (children born out of wedlock whose mothers married subsequent to their birth); Within Wedlock, Divorced (children born to married parents who later divorced); Within Wedlock, Marriage Intact (children born to parents who were married at the time of birth and remained married).
As Chart 7. 5 illustrates, the data show that: Children born out of wedlock whose mothers did not marry received AFDC benefits for 50 percent of the time since birth.
Children born in wedlock whose parents remained married received AFDC benefits only 3 percent of the time since birth. Thus, receipt of AFDC benefits is 17 times (or 1, 700 percent) more frequent among illegitimate children of never-married mothers than among legitimate children raised by intact married couples. If a woman gives birth out of wedlock and subsequently marries, then the average length of time spent on AFDC is cut in half, falling from 50 percent (for children of never-married mothers) to 23 percent. Marriage, even after an out-of-wedlock birth, is thus quite effective in reducing welfare dependence.
Conversely, if the parents of a legitimate child divorce, the length of time on AFDC rises from 3 percent (for intact married couples) to 13 percent for divorced families. Chart 7. 5 also shows the portion of time that children in the four different categories received any of the following means-tested welfare benefits: AFDC, Food Stamps, Medicaid, SSI, and Women’s, Infants, and Children (WIC).
On average, children in the Out-of-Wedlock, Never Married group received some form of welfare benefit for 71 percent of the months since birth. By contrast, legitimate children whose parents remained married received some welfare for 12 percent of the time. Welfare receipt is seven times greater among the never-married group.
Chart 7. 6 shows the amount of time since birth that a child lived in poverty for the four categories of children. Children born out of wedlock to never-married women live in poverty 51 percent of the time. By contrast, children born within a marriage that remains intact are poor 7 percent of the time. Thus, the absence of marriage increases the frequency of child poverty 700 percent.
However, marriage after an illegitimate birth is again relatively effective, cutting the child poverty rate in half. Additional Social Consequences of Rising Illegitimacy Children raised by never-married mothers have significantly more behavior problems than children raised by both biological parents. When comparisons are made between families that are identical in race, income, number of children, and mother’s education, the behavioral differences between illegitimate and legitimate children actually widen. Compared with children living with both biological parents in similar socioeconomic circumstances, children of never-married mothers have three times more behavioral problems than children raised in comparable intact families. 37 Children born out of wedlock have less ability to delay gratification and poorer impulse control (such as control over anger and sexual gratification).
They have a weaker conscience or sense of right and wrong.
38 Adding to this is the sad fact that the incidence of child abuse and neglect is higher among single-parent families. 39 Being born out of wedlock also increases the probability of teen sexual activity. Boys and girls born out of wedlock and raised by never-married mothers are two-and-a-half times more likely to be sexually active as teenagers than legitimate children raised in intact married-couple families. 40 The absence of married parents also relates to poor academic performance during school years: The longer a child lives in a single-parent family, the lower the education attained.
In general, a boy’s educational attainment is lowered by one-tenth of a year for each year spent as a child in a single-parent home. Controlling for family income does not reduce the magnitude of this effect noticeably. 41 Perhaps the worse feature of illegitimacy is that it is passed, like a virus, between generations. Being born outside of marriage significantly reduces the chances the child will grow up to have an intact marriage. 42 Daughters of single mothers are twice as likely to be single mothers themselves if they are black, and only slightly less so if they are white. 43 And boys living in a single-parent family are twice as likely to father a child out of wedlock as are boys from a two-parent home.
44 Children born outside of marriage themselves are three times more likely to be on welfare when they grow up. 45 Illegitimacy is a major factor in America’s crime wave. Lack of married parents, rather than race or poverty, is the principal factor behind the crime rate. It has been known for some time that high rates of welfare dependency correlate with high crime rates among young men in a neighborhood. 46 But the key factor appears to be illegitimacy and single parenthood. A major 1988 study by Douglas Smith and G.
Roger Jajoura of 11, 000 individuals found that ‘the percentage of single-parent households with children between the ages of 12 and 20 is significantly associated with rates of violent crime and burglary.’ The same study makes it clear that the widespread popular assumption that there is an association between race and crime is false. Illegitimacy is the key factor. The absence of marriage, and the failure to form and maintain intact families, explains the incidence of high crime in a neighborhood among whites as well as blacks. This study also concluded that poverty does not explain the incidence of crime. 47 Research on underclass behavior by June O’Neill confirms the linkage between crime and single-parent families. Using data from the National Longitudinal Survey of Youth, O’Neill found that: Young black men raised in single-parent families were twice as likely to engage in criminal activity compared with black men raised in two-parent families, even after holding constant a wide range of variables, such as family income, urban residence, neighborhood environment, and parents’ education.
Growing up in a single-parent family in a neighborhood with many other single-parent families on welfare triples the probability that a young black man will engage in criminal activity. 48 The Flawed Foundation of the Liberal Welfare State The War on Poverty has wreaked social havoc because it was based on faulty logic. This flawed logic, embedded in nearly all liberal thinking about welfare, runs something like this: Premise #1: Children in families with higher income seem to do better in life. Premise #2: Welfare can easily raise family income. Conclusion: Therefore, welfare is good for kids. From this logic has sprung a relentless 30-year effort to raise welfare benefits, expand welfare eligibility, create new welfare programs, and increase welfare spending.
The welfare reform law recently passed by Congress violates these cardinal tenets of the liberal welfare system, and thus has led to cries of alarm from the welfare establishment. In fact, each of the central tenets of modern welfare is misleading and deeply flawed. Together, they become a recipe for a disastrous system of aid that harms rather than helps and aggressively crushes the hopes and future of an increasing number of young Americans. It is useful to examine each of these liberal tenets individually.
The first is that raising incomes is crucial to the well-being and success of children. The common liberal corollary to this premise is that poverty ’causes’s uch problems as crime, school failure, low cognitive ability, illegitimacy, low work ethic and skills, and drug use. Hence, reducing poverty through greater welfare spending will reduce most social problems. History refutes this belief.
In 1950, nearly a third of the U. S. population was poor (twice the current rate).
In the 1920 s, roughly half of the population was poor by today’s standard. If the theory that poverty causes social problems were true, there should have been far more social problems in those earlier periods than most Americans see today.
But crime and most other social problems have increased, rather than fallen, since these earlier periods. History and common sense both show that values and abilities within families, not family income, lead to children’s success. Families with higher incomes tend to have sound values concerning self-control, deferred gratification, work, education, and marriage which they pass on to their children. It is those values, rather than family income, that are critical to children’s life outcomes.
Attempting to raise the family income artificially through welfare is not likely to do much to benefit the child, but it is likely to destroy the very values that are key to the child’s success. The second flawed liberal premise is that it is very easy to raise family income through welfare. This also is untrue. Because welfare reduces work effort and promotes both illegitimacy and poverty-prone single-parent families, it actually may cause an overall decrease in family incomes.
Welfare is extremely efficient at replacing self-sufficiency with dependence, but relatively ineffective in raising incomes and eliminating poverty. The third liberal tenet is that higher welfare benefits and broadened eligibility will help children and improve their success in later life. In certain limited cases, such as when welfare is needed to eliminate serious malnutrition, welfare can help. But there is no evidence that enlarging benefits and expanding enrollments in most U. S. welfare programs will improve children’s lives.
49 Although children from higher income families do tend to do better in life, the source of the family income is critically important. Efforts to boost family income artificially through welfare transfers do not have the expected benign effects. Moreover, as stated, it is the values and skills which children pick up inside well-functioning families (which also have higher incomes) rather than the family’s income that really makes the difference in the child’s future success. In her book, What Money Can’t Buy: Family Income and Children’s Life Chances, Professor Susan Mayer of the University of Chicago puts it well: ‘We…
have little reason to expect that policies to increase the income of poor families alone will substantially improve their children’s life chances. Instead, parental characteristics associated with their income influence children’s well-being.’ 50 Ironically, it is precisely those vital characteristics and values that welfare tends to destroy. Once the faulty assumptions of the liberal welfare state are stripped away, the reality of welfare’s impact is as follows: Family income per se does not have a particularly strong effect on a child’s success. Except in very limited cases, such as those involving serious malnutrition, attempting to raise family income artificially through conventional welfare payments does not yield fewer problems and better life outcomes for children. But welfare transfers do significantly increase dependence, illegitimacy, and single parenthood, which in turn have dramatic negative effects on children’s development and success later in life. By focusing on boosting family incomes artificially through welfare payments and ignoring the negative behavioral side effects of welfare, liberals have harmed those they sought to help.
Beating Dependence: The Wisconsin Example The War on Poverty created an expensive welfare system that encouraged dependence and penalized work and marriage. Until very recently, most liberal ‘welfare experts’ argued that the flaws of the welfare system were unavoidable: Employment for most welfare recipients was seen as impossible; swollen welfare budgets and high levels of dependence were inevitable. Even the most aggressive reforms, it was argued, could reduce welfare by only a few percentage points and would cost more than the existing system. In recent years, these liberal myths about the impossibility of reducing dependence have been shattered in a number of states, most notably in Wisconsin. 51 The story of Wisconsin reform begins more than a decade ago in 1987, a year notable in welfare for two reasons: passage of the Family Support Act (FSA), which was touted as another ‘end of welfare,’ and an unheralded event with far greater significance to the future of welfare — the election of Tommy Thompson as governor of Wisconsin.
Following a gubernatorial campaign largely about welfare, Thompson entered office with a firm commitment to reform. (Click on Chart 7. 7 to Enlarge) Chart 7. 7 tells the rest of the story.
Despite the rhetorical promises of the Family Support Act, the nationwide AFDC caseload remained constant in the late 1980 s and grew by more that a third between 1990 and 1994. In the past three years, the national caseload has fallen significantly, but this recent decline has merely offset the steep increases in the early 1990 s. By September 1997, the national AFDC caseload was only 6 percent below the January 1987 level. Wisconsin stands out as an early and clear exception to this national pattern. The general thrust of welfare reform in Wisconsin has been to require responsible behavior on the part of welfare recipients as a condition of receiving aid.
By ending the ‘one-way handout’ nature of AFDC and demanding work or other constructive activity of recipients, Wisconsin dramatically reduced dependence. 52 For example: In the past 11 years, the Wisconsin AFDC caseload has dropped by 81 percent, compared with a drop of only 6 percent for the nation as a whole. In inner-city Milwaukee, the caseload has fallen by 60 percent. For the rest of the state (outside Milwaukee), the caseload has fallen by 95 percent. In 57 of Wisconsin’s 77 counties, the welfare caseload has dropped by 95 percent or more. The Wisconsin experience offers a cornucopia of lessons for the rest of the nation.
Thompson’s reforms are based on three policy principles: (1) reducing unnecessary new entries into AFDC, (2) establishing real work requirements, and (3) erecting bureaucratic incentives to ensure faithful implementation of reform. 53 In developing his first principle of reform, Thompson rediscovered one of the key ideas of traditional charity: A rational welfare system must have a gate keeping mechanism that separates those who truly need aid from a much larger population of people who do not, but who are willing to take a free handout if one is offered. Recognizing that the surest way to break the habit of dependence was to prevent it from forming in the first place, Wisconsin’s reform team established a new program, Self Sufficiency First (SSF), with the goal of dissuading unnecessary new entries into AFDC. Self Sufficiency First provides counseling to new welfare applicants on the negative effects of dependence.
It offers short-term aid (such as auto repairs) that may help to eliminate the individual’s need to receive AFDC, and requires applicants to complete several weeks in a supervised job search before their first welfare check is issued. Finally, applicants are warned that they will be required to work in exchange for benefits within a few weeks after entry into the AFDC program. The results have been impressive: Since the implementation of SSF, the number of new AFDC enrollments has been cut nearly in half. The second reform principle is requiring recipients to work. All politicians speak glibly about work and welfare, but Governor Thompson was the first to move beyond the press releases and translate rhetoric into reality. The initial step in the process was a realization that government education and training had a long and unsuccessful history, failing either to reduce dependence or to raise the earnings capacity of trainees.
For example, a recent Labor Department study of the government’s largest training program, the Job Training Partnership Act (JTPA), found that the JTPA program increased hourly wage rates by only 3. 4 percent for female trainees, and not at all for males. 54 Thus, Thompson’s staff de-emphasized classroom training and stressed activities leading to immediate employment. In seeking to move recipients quickly into private-sector jobs, however, they faced a classic dilemma: When welfare recipients are required to look for employment, most return claiming they cannot find work. As long as such ‘unsuccessful job seekers’ are allowed to remain idle on the welfare rolls, any work requirement becomes a sham and dependence will not be reduced.
Consequently, Wisconsin reformers used community service work as an enforcement mechanism. Under the Wisconsin reforms, most AFDC recipients were required to undertake an organized job search immediately before and after enrolling in welfare. If they had not obtained a private-sector job after some six weeks of continuous supervised job search, they were then required to perform community service work in exchange for ongoing AFDC benefits. Here, as always, the key to success is in the details.
In a typical state, AFDC recipients may be required to perform community service work, but they will receive only a fiscal slap on the wrist if the work is not done. In Wisconsin, all AFDC recipients were subject to a Pay for Performance (PFP) rule. If they failed to perform the specified number of hours of work or other activity, their AFDC and Food Stamp benefits were reduced pro rata. Thus, if the recipient was required to perform 30 hours of work but completed only 15, welfare benefits were cut in half. By establishing Pay for Performance, Governor Thompson eliminated the option to receive a free income from welfare, making Wisconsin the first state to impose a serious requirement that AFDC recipients earn their welfare checks. Once the rule is established that welfare benefits must be earned, the economic utility or attractiveness of welfare shrivels, and the number of people entering or remaining on AFDC shrinks dramatically.
This lesson is critical. Until recently, much of the political debate about reform has envisioned creating millions of make-work jobs for welfare recipients. But the Wisconsin example shows that, although mandatory community service work drives down the caseload, relatively few recipients actually end up in community service positions. Instead, the prospect of being forced to do community service work reduces new welfare enrollments and propels current recipients quickly into private-sector employment. Finally, Thompson realized that the best designed reforms could be rendered impotent by a hostile or indifferent welfare bureaucracy.
Thus, he created powerful incentives to guide and motivate the state’s welfare establishment. County welfare offices were forced to earn day-care and training funds by increasing the number of recipients placed in community service or private-sector employment. Moreover, welfare offices that failed to reduce their caseloads dramatically faced an unprecedented penalty: They could be replaced by outside contractors. Wisconsin’s bureaucracy responded well to this incentive system, implementing reforms with unusual efficiency and zeal. In radically reducing Wisconsin’s welfare caseload, Governor Thompson has demolished most of the myths buttressing the liberal welfare state. These include such common myths as ‘welfare recipients want to work but no jobs are available,’ ‘the shortages of day care and transportation make work impossible,’ ‘education and training are the key to cutting dependence,’ and ‘sharp reductions in welfare caseload will lead to severe economic deprivation.’ Desperate to find some pretext for dismissing Wisconsin’s victory over dependence, liberals claim the drop in caseload is due to a ‘hot’ economy.
This is ridiculous; despite prior economic booms, the most robust economy has never had a fraction of Wisconsin’s impact on AFDC dependence. Moreover, when Wisconsin is compared with other states that have lower levels of unemployment, one finds that none of them has experienced a large drop in dependence. Another liberal ploy is to claim that Thompson’s reforms have raised welfare costs. This is simply untrue. During Thompson’s tenure, aggregate welfare spending on AFDC benefits, administration, day care, and training has fallen some 15 percent in nominal dollars while nearly doubling in the rest of the nation. Adjusted for inflation, Wisconsin’s total costs have fallen by more than a third.
Declining Dependence in Other States Wisconsin is clearly the precursor and long-term leader in dependency reduction. Its reforms have succeeded in dramatically reducing dependence, both in rural areas and in inner-city Milwaukee. However, in recent years, other states also have succeeded in greatly reducing welfare dependence, most notably Idaho and Wyoming. (Click on Table 7.
1 to Enlarge) Table 7. 1 shows AFDC caseload reduction in the 50 states. Most states have reduced their caseloads significantly over the past two years. 55 This is commendable, but two caveats are in order. First, nearly all states that succeeded in reducing their welfare caseloads during the past few years experienced a large and rapid increase in dependence in the early 1990 s. Thus, viewed in a longer-term perspective, the picture is less optimistic.
The national AFDC caseload today is only 5 percent below the level of ten years ago. Second, and most important, the great variation between the states is striking. For example, during the most recent 12 months for which data are available (September 1996 to September 1997), the AFDC caseload fell by 75 percent in Idaho while rising 7. 5 percent in Hawaii.
In general, states with very rapid declines in caseload tend to require a very large portion of their AFDC caseload to engage in some constructive supervised activity, such as job search teams, on-the-job training, or community service work. In addition, most successful states have strong ‘full check’s action systems. In effect, these states require AFDC recipients to ‘earn’ their entire AFDC checks through constructive behavior. If recipients fail to perform the activities required by the state, the AFDC check for the entire household can be reduced to zero. By contrast, states with less caseload decline tend to have weak sanctions for non-compliant behavior, affecting only the adult portion of the AFDC check. Since the adult portion on average is around $60 per month, sanctioning in these states is little more than a slap on the wrist.
These states permit welfare recipients to continue to receive the bulk of their AFDC grant even after they have refused to perform community service work or other required activities. Overall, states such as Idaho, Oregon, Wisconsin, and Wyoming have demonstrated how to reduce welfare dependence dramatically and rapidly and promote self-sufficiency. It is crucial to apply their lessons to welfare throughout the rest of the nation. THE RECORD THE CLINTON ADMINISTRATION When Bill Clinton was campaigning as a presidential candidate in 1992, he promised to ‘end welfare as we know it.’ But Clinton’s record since then demonstrates that he never regarded welfare reform as more than a public relations gimmick.
In reality, Clinton has sought to preserve and extend welfare ‘as we know it’ throughout his tenure in the White House. Rather than facilitate the reforms that are dramatically reducing welfare dependence in various states, Clinton has fought to delay or block real change at both the state and federal levels. Specifically, Clinton has sought to greatly expand an already bloated welfare budget, eliminate existing work requirements for welfare recipients, restrict state reform experiments, and make it difficult for states to require recipients to work. Clinton took office following a period of rapid growth in welfare spending. During the four years of the Bush presidency, welfare spending nearly doubled, rising from $183 billion in 1988 to $303 billion in 1992.
Despite this spending boom, and despite his pledge to end welfare, Clinton entered the White House with a clear aim of sharply increasing the already rapid growth of welfare spending. In his first budget, Clinton requested an extra $100 billion over the next five years, to be added on top of an already burgeoning federal welfare baseline. 56 Clinton quickly made himself ‘king of the welfare spenders.’ By 1995 (the year Republicans took control of Congress), he had boosted welfare spending to $379 billion — a record level both in absolute terms and as a percent of GDP. During his election campaign in 1992, candidate Clinton claimed that he would ‘require those [welfare recipients] who can work to go to work, either in the private sector or in community service’ He argued that work programs in the past had been crippled by funding shortages. Yet during his first two years in office, Clinton demanded over $100 billion for new welfare spending but requested not one extra dime to expand work programs for welfare recipients. Clinton even went so far as to seek to abolish the minimal work requirements contained in the existing welfare law.
57 Clinton also promised to foster welfare reform experiments by granting the states ‘waivers’ from the labyrinth of existing federal welfare regulation, including waivers for welfare policies he ‘might not personally approve of.’ Again, Clinton’s deeds contradicted his promises. The Administration blocked or sought to water down conservative waiver requests. Far from being a vehicle that promoted reform, Clinton’s waiver policy was little more than a rearguard strategy aimed at delaying and limiting innovation at the state level. States were forced to seek federal approval of waiver requests precisely because Clinton deliberately maintained the maze of federal anti-work rules and regulations that made state reforms difficult. After Republicans took control of Congress in 1995, they quickly pushed real reform by seeking to abolish most of the restrictions that forced states to seek waivers in the first place. They thereby made Clinton’s waiver policy irrelevant and obsolete.
Finally, in 1994, the White House unveiled its Work and Responsibility Act, which was designed ostensibly to carry out Clinton’s pledge to end welfare. However, despite Clinton’s rhetoric about ‘ending cash welfare after two years,’ his bill contained no welfare time limits. Only 7 percent of the caseload would be required to work for benefits by the end of the century, and those recipients would only be required to work a few hours per day at an effective wage rate of $16 per hour. And for each recipient required to work, an additional $4, 000 in new spending was provided to cover ‘administrative costs.’ 58 The President’s bill was so weak and left-leaning that Democrats in Congress did not bother to advance it in subsequent debates on welfare reform. Clinton was finally forced to admit to columnist Ben Wittenberg that he ‘wasn’t pleased with [his own bill].’ 59 After 1995, Clinton played a limited defensive role on welfare.
He twice vetoed the reform legislation passed by Congress, but finally signed the legislation in the summer of 1996 because he could not risk a third veto of welfare reform immediately before the presidential election. Clinton is now claiming credit for this reform even though, in reality, he opposed or was silent on nearly all of its elements. Clinton has also claimed credit for the large declines in AFDC caseloads that have occurred in many states in recent years. But caseloads have declined despite, rather than because of, the Clinton Administration.
As noted, Clinton’s waiver policy slowed rather than facilitated reform; waivers were needed precisely because Clinton desired to preserve the cumbersome restrictions of the old welfare system. If Clinton’s own model legislation had become law, the very state policies that are now rapidly reducing dependence would be impossible to implement. Finally, in the spring of 1997, Clinton’s Labor Department issued regulations that will make it difficult and expensive for states to follow the successful Wisconsin model of requiring AFDC recipients to work in exchange for benefits. 60 Clinton has worked consistently to thwart real reform. CONGRESS In 1996, Congress enacted welfare reform through the Personal Responsibility and Welfare Reform Act. This legislation represents the first significant conservative victory in welfare policy in the postwar period.
The act provides five basic changes in the Aid to Families with Dependent Children program, which was renamed Temporary Assistance to Needy Families (TANF).
None of the legislation’s significant changes had the support of President Clinton. Specifically, the Personal Responsibility and Welfare Reform Act of 1996: Eliminated perverse incentives for state governments. Prior to the reform, the AFDC program was funded on an entitlement basis — the more persons a state enrolled in AFDC, the more funds it received from the federal government.
Conversely, if a governor reduced the number of persons on welfare, federal funding to his state was reduced proportionally. The entitlement funding structure of AFDC created perverse incentives for state governments, penalizing states that reduced dependency and rewarding states that allowed their caseloads to grow. The new law eliminated these perverse incentives by creating a new funding system: Each state will be given a fixed dollar grant, which will be increased gradually each year. In the future, if a state reduces its AFDC /TANF caseload, its federal grant will not be cut. Instead, the state will be permitted to keep any surplus federal funds generated by caseload reduction to apply to other efforts to aid the poor.
On the other hand, if a state permits its AFDC/TANF caseload to grow rapidly, the state, not the federal government, will bear the added cost. Required dependence reduction and work. The 1996 act established the clear goal of reducing welfare dependence. States are required to reduce AFDC/TANF caseloads by specified amounts in future years. If a state fails to shrink its caseload by the required level, the residual numbers must be engaged in work. For example, the law requires states to reduce caseloads by some 30 percent by the year 2000.
61 If a state reduces its caseload by only 10 percent by 2000, then an additional 20 percent of its recipients must be engaged in work. Provided greater state flexibility. The act also eliminated vast numbers of federal rules and restrictions on the use of federal AFDC funds, particularly rules that made it difficult to require welfare recipients to work. Made reducing illegitimacy a national goal. Currently, one-third of all American children are born out of wedlock. The collapse of marriage and the rise in out-of-wedlock births have led to growing dependence on welfare, as well as increases in crime and many other societal problems.
The new law contains three provisions to combat illegitimacy. First, it sets a national policy goal of reducing illegitimacy and focuses the attention of state governments on this objective by requiring them to set numerical goals for reducing illegitimacy in their states over the next ten years. Second, it provides bonus funding for states that reduce illegitimacy without increasing abortion. Third, it creates a new program for abstinence education. Established five-year time limits. The law limits to five years the length of time a household may receive federal AFDC/TANF funds.
The time limit began prospectively in 1997. The five-year limit sends a clear message to welfare recipients that they are expected to support themselves. However, in practical terms, the time limit is symbolic: Each state may exempt 20 percent of its caseload from this limit. In addition, states are free to use non-federal funds to support any additional families that exceed the limit. WHAT TO DO IN 1999 Cap the growth of welfare spending.
No matter how frequently policymakers speak of ending welfare, the costs continue to rise. Welfare absorbed around 1. 2 percent of GDP when President Lyndon Johnson launched the War on Poverty in 1965; it rose to 5. 2 percent by 1995. With a $407 billion price tag, welfare spending now amounts to around $11, 100 for each poor person in the United States.
To the Clinton Administration, ending welfare has meant spending even more. Although the recently enacted welfare reform law has led to a dramatic initial decline in AFDC dependence, it failed to limit significantly the growth of overall welfare spending. CBO figures show total future welfare costs growing at roughly 5 percent per year and reaching nearly $540 billion by 2003. After expenditures of $7 trillion, it is time to put the War on Poverty on a diet. The entitlement funding structure of most federal means-tested programs should be eliminated. 62 The future growth of aggregate means-tested welfare spending by the federal government should be limited to the rate of inflation, or about 2.
5 percent per year. The 2. 5 percent annual spending growth cap would set the limit for overall federal welfare spending rather than specific programs. Congress would be free to increase funding for individual programs by more or less than 2. 5 percent, as long as the welfare spending total remained within the cap. Capping the growth of welfare spending is consistent with the goal of having fewer, not more, people on welfare in the future.
The spending cap would save $120 billion in extra federal spending over the next five years. Provide greater state flexibility in the allocation of welfare funds. The federal government runs over 75 major means-tested welfare programs. The entitlement nature of Food Stamps, Medicaid, Supplemental Security Income, and other welfare programs should be ended, and states should be given greater authority to target funds to the specific needs of their low-income populations. States should continue to be required to spend federal welfare funds to aid low-income persons, but they should be given greater flexibility to shift funds between spending categories to meet specific state needs. For example, states should be permitted to shift some funds from housing to education, or from cash to medical programs, or vice versa.
Replace Food Stamps with commodities. A major historic expansion of the welfare state occurred when the Food Stamp program replaced older aid programs that distributed food commodities directly to the poor. The current Food Stamp program gives individuals coupons to purchase food in stores. Unlike food commodities, food coupons can be sold on the black market and converted into cash.
Replacing the older food commodities program with coupons was a serious mistake and further encouraged increases in welfare dependence and illegitimacy. Congress should correct this mistake. Families on AFDC and others receiving Food Stamps (excluding the elderly and disabled) should be given a carefully selected basket of food commodities in lieu of coupons. Each basket should be carefully balanced to provide the proper levels of proteins, calories, vitamins, and minerals for the fam.