[Senate Hearing 109-773]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-773
 
   EXPLORING WAYS TO ELIMINATE PENALTIES FOR MARRIAGE FOR LOW-INCOME 
                                FAMILIES

=======================================================================

                                HEARING

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                            SPECIAL HEARING

                      MAY 3, 2006--WASHINGTON, DC

                               __________

         Printed for the use of the Committee on Appropriations


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                               __________
                      COMMITTEE ON APPROPRIATIONS

                  THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska                  ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico         PATRICK J. LEAHY, Vermont
CHRISTOPHER S. BOND, Missouri        TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky            BARBARA A. MIKULSKI, Maryland
CONRAD BURNS, Montana                HARRY REID, Nevada
RICHARD C. SHELBY, Alabama           HERB KOHL, Wisconsin
JUDD GREGG, New Hampshire            PATTY MURRAY, Washington
ROBERT F. BENNETT, Utah              BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas                MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado
                    J. Keith Kennedy, Staff Director
              Terrence E. Sauvain, Minority Staff Director
                                 ------                                

                Subcommittee on the District of Columbia

                    SAM BROWNBACK, Kansas, Chairman
MIKE DeWINE, Ohio                    MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado               RICHARD J. DURBIN, Illinois
THAD COCHRAN, Mississippi (ex        ROBERT C. BYRD, West Virginia (ex 
    officio)                             officio)

                           Professional Staff

                             Mary Dietrich
                        Kate Eltrich (Minority)

                         Administrative Support

                            LaShawnda Smith


                            C O N T E N T S

                              ----------                              
                                                                   Page

Opening Statement of Senator Sam Brownback.......................     1
Statement of Senator Wayne Allard................................     3
Statement of Hon. Wade F. Horn, Ph.D., Assistant Secretary for 
  Children and Families, Administration for Children and 
  Families, Department of Health and Human Services..............     4
    Prepared Statement...........................................     6
Statement of Ron Haskins, Senior Fellow and Co-Director, Center 
  on Children and Families, The Brookings Institution............     9
    Prepared Statement...........................................    11
Statement of C. Eugene Steuerle, Senior Fellow, The Urban 
  Institute......................................................    20
    Prepared Statement...........................................    23
Statement of Kate Jesberg, Director, Department of Human 
  Services, District of Columbia.................................    42
    Prepared Statement...........................................    43
Statement of Curtis Watkins, President, East Capitol Center for 
  Change, Washington, DC.........................................    45
    Prepared Statement...........................................    46
Statement of Saundra Graham, District of Columbia................    47
    Prepared Statement...........................................    48
Statement of Winston Graham, District of Columbia................    50


   EXPLORING WAYS TO ELIMINATE PENALTIES FOR MARRIAGE FOR LOW-INCOME 
                                FAMILIES

                              ----------                              


                         WEDNESDAY, MAY 3, 2006

                               U.S. Senate,
          Subcommittee on the District of Columbia,
                               Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:07 a.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Sam Brownback (chairman) 
presiding.
    Present: Senators Brownback and Allard.

               OPENING STATEMENT OF SENATOR SAM BROWNBACK

    Senator Brownback. Call the hearing to order.
    Thank you all for joining us this morning. By all accounts, 
and according to all available research, children do best when 
they grow up in homes with their married biological parents. It 
doesn't seem like we should need, or have, to state that, but 
that is what the sociological data says, and it's something of 
importance for us, as policymakers, to see that children, as 
many as possible, grow up in the best possible setting. They 
are generally healthier, happier, and have brighter futures 
than children who grow up with only one parent.
    Statistics tell a compelling story. Children raised by 
married parents are three times less likely to repeat a grade 
in school, five times less likely to have behavioral problems, 
half as likely to be depressed, three times less likely to use 
illicit drugs, half as likely to become sexually active as 
teenagers, and are seven times less likely to live in poverty. 
A compelling picture.
    Given the enormous benefits that accrue to children who are 
reared by their married parents, it is a moral and societal 
imperative that we esteem, support, foster, and, indeed, 
encourage the institution of marriage. But sadly, governmental 
policies have actually conspired to do just the opposite.
    Certain programs created in the 1960s had the unintended 
consequence of discouraging marriage by providing financial 
incentives for low-income parents to never get married. These 
policies made it economically rational for a low-income mother 
to remain single and unemployed, rather than to get married. 
Three decades of these incentives have wrought the significant 
and tragic result for our children. Fully 35 percent of all 
babies born today in America are born to single mothers. This 
compares to just 4 percent in 1960.
    Certainly, there are many single mothers who are heroically 
and successfully raising children on their own. They deserve 
our respect and support. But it also is an indisputable fact 
that a father and a mother bound together in marriage provide 
the best environment in which to raise healthy children. As a 
society, and as a government, we should strive to foster what 
is the very best for our children. But government policies have 
often done just the opposite.
    Although the 1996 Welfare Reform Act attempted to remove 
the incentives for parents to remain unmarried, unwed birth 
rates have continued to increase. In fact, Government policies 
often continue to penalize low-income couples with children who 
decide to get married.
    Today, we're delighted to have Dr. Wade Horn here, 
Assistant Secretary for Children and Families at the U.S. 
Department of Health and Human Services. He will unveil a new 
tool, called a ``marriage calculator,'' which will show low-
income couples with children just how significant the penalties 
are if they decide to get married. This new resource should 
help us examine ways that tax and benefit transfer policies 
could be reformed to eliminate marriage penalties.
    And I want to note here, we've spent quite a bit of time in 
Congress eliminating, and working on eliminating, penalties to 
marriage in the Tax Code. We've spent far too little time in 
Congress working on ways to eliminate the penalties to marriage 
in the transfer code, or in the areas of support. And what I 
hope to start with this hearing is us working more on that side 
of the equation. We've worked on the tax side of it. We need to 
work on the transfer side of it, as well.
    Obviously, there's something wrong with a system that 
penalizes couples for doing the right thing for their children 
and for themselves. Rather than providing financial penalties 
for marriage, I believe that we should help low-income married 
couples gain stronger financial security. Financial security 
can help sustain a healthy marriage.
    As a way to help low-income married couples gain 
appreciable assets here in the District of Columbia, we just 
began a pilot new federally funded marriage development 
accounts (MDAs). I've got a brochure here, ``Saving and 
Prospering Together,'' that was developed by one of the groups, 
and they're launching a campaign here in the District to 
promote this program. There was a nice article in USA Today, 
the Lifestyle section, April 27, on these financial incentives 
to wed.
    As a way to help low-income married couples gain 
appreciable assets, we did start these marriage development 
accounts. They're available to low-income married couples who 
are citizens or legal residents of the District, and who have 
very low net worth. Couples may save money to buy a home, pay 
for job training or education, or start their own businesses. 
They'll have a high incentive to save, because their 
contributions will be matched at a ratio of 3 to 1 by the 
Federal Government and partnering private institutions. As a 
requirement of participation, couples will receive training to 
help them repair their credit, set a budget and savings 
schedule, and manage their money. They'll also receive a bonus 
for receiving marriage counseling.
    Just last Thursday, as I noted, leaders from the faith 
community and nonprofit organizations launched the program 
``Together is Better'' to strengthen marriages here in the 
District, with MDAs offered as an important tool to help low-
income married and engaged couples put their lives on firm 
financial ground.
    MDAs are just one way to help low-income couples get and 
stay married, so that their children can have a brighter 
future. It is certainly not a panacea, but I believe that we 
must take every action we can, and act as quickly as we can, to 
stop the erosion of marriage that's happened in our Nation. We 
cannot just watch and wring our hands as millions of children 
suffer the consequences of growing up without their parents. We 
must act aggressively in providing as many incentives and 
innovative approaches as possible. Our future and our 
children's future, I believe, are at stake.
    Now I would turn to my colleague, Senator Allard, if you 
have an opening statement, and then I'll introduce the panel.


                   STATEMENT OF SENATOR WAYNE ALLARD


    Senator Allard. Well, I do, Mr. Chairman. And thank you for 
holding this important hearing today. I look forward to hearing 
from the witnesses.
    You've continued to be a champion of the institution of 
marriage in this country, and I applaud you for your 
dedication.
    As you know, Mr. Chairman, the Senate will continue the 
lengthy debate on marriages in the United States this year. And 
I believe it to be one of the most important issues facing us 
today. It is no secret that marriage has been the foundation of 
every civilization in human history. It crosses all bounds of 
race, religion, culture, political party, ideology, and 
ethnicity. As an expression of this cultural value, the 
definition ``marriage'' is incorporated into the very fabric of 
civic policy. It is the food from which families and 
communities are grown. Marriage is the one bond in which all 
other bonds are built.
    Unfortunately, we find ourselves awash in Government 
regulations that penalize couples for getting married, 
especially those at the lower end of the economic spectrum. I 
find it hard to reconcile the fact that we can recognize that 
marriages facilitate stable communities and increase the 
quality of life of those involved, yet Government provides 
disincentives for men and women to marry. Government should be 
promoting healthy marriages by easing the regulatory burden on 
couples that want to spend the rest of their lives together.
    Along those lines, Mr. Chairman, you should be applauded 
for the action this subcommittee took last year in creating 
marriage development accounts for low-income District 
residents. Clearly, this is an issue of great concern, and I'm 
glad that we have the opportunity today to talk about these 
items that not only affect those in the District of Columbia, 
but the entire country.
    And I look forward to the witnesses' testimony and thank 
them for appearing here today.
    Senator Brownback. Thanks, Wayne. Appreciate that.
    The first witnesses are all experts in the field of 
marriage research and family stability. The Honorable Wade Horn 
is the Assistant Secretary for Children and Families. He's 
responsible for programs to promote the social and economic 
well-being of families. These include temporary assistance to 
needy families (TANF), foster care, adoption assistance, family 
preservation and support, Head Start, childcare, and child-
support enforcement. Delighted to have Dr. Horn here.
    Dr. Eugene Steuerle is a senior fellow at the Urban 
Institute, co-director of the Urban-Brookings Tax Policy 
Center. His latest book is ``Contemporary Tax Policy.'' He 
serves on the National Committee on Vital and Health Statistics 
and on advisory panels for the Joint Committee on Taxation. Dr. 
Steuerle, delighted to have you here.
    And Dr. Ron Haskins, a senior fellow and co-director of the 
Center for Children and Families at The Brookings Institute. 
Previously, he was senior advisor to the President for welfare 
policy, and spent 14 years on the staff of the House Ways and 
Means Committee, where he helped author the 1996 Welfare Reform 
Act.
    I'm delighted to have this quality of a panel. I'm looking 
forward to your testimony. And I believe this is the first 
hearing on Capitol Hill to talk about the benefit side of the 
equation and what we've done on marriage, or not done, or what 
we've done to marriage. I think this is an outstanding panel to 
discuss this. And I hope we can really get into some of the 
details of what we need to do to change these transfer programs 
so we don't penalize marriage. And I hope you'll feel free to 
speak about that.
    Secretary Horn, delighted to have you here. The floor is 
yours.

STATEMENT OF HON. WADE F. HORN, Ph.D., ASSISTANT 
            SECRETARY FOR CHILDREN AND FAMILIES, 
            ADMINISTRATION FOR CHILDREN AND FAMILIES, 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Dr. Horn. It's my pleasure to be here.
    Mr. Chairman and Senator Allard, thank you for calling 
today's hearing on marriage penalties that are embedded in 
Government policies. I appreciate your interest in supporting 
healthy marriages, and share your commitment to improving the 
well-being of children and families not only in the District of 
Columbia, but also throughout our Nation.
    As you've noted, research shows that healthy and stable 
marriages support children and limit the need for Government 
programs. Whether the problem is abuse, neglect, or poverty, 
the evidence is clear that the best chance a child has of 
avoiding these problems is to grow up with their mother and 
father in a stable, healthy marriage. Research also shows that 
adults in healthy marriages are happier and healthier. And a 
report from the Institute of American Values suggests that 
communities with high rates of healthy marriages evidence fewer 
social problems, such as crime and welfare dependency, compared 
with those with low rates of healthy marriages.
    Unfortunately, certain Government policies result in 
disincentives to marriage. That's because when two adults 
marry, they may face a drop in their net income after taxes and 
loss of public assistance. This phenomenon is referred to as 
the ``marriage penalty.'' A complex combination of Federal and 
State tax and program rules determines the financial 
consequences of marriage. These consequences vary considerably, 
depending upon each couple's specific circumstances, such as 
the couple's total income, the distribution of income between 
the partners, the sources of income, and the relationship of 
the partners to all the children in the family.
    The size of these penalties can be quite large. Consider, 
for example, a woman with two children, ages 1 and 5, living in 
the District of Columbia in 2003. In this example, the woman 
works 20 hours a week for $7 an hour, has no assets, and has 
childcare costs of $200 per month. She receives TANF, food 
stamps, WIC, housing assistance, and a subsidy that offsets 
some childcare costs. The father of her children works 40 hours 
a week for $7 an hour and pays $200 in child support. If they 
were to marry, the father would be able to claim extra 
deductions and credits on his taxes. However, the mother would 
lose her TANF benefits and see reductions in her food stamps, 
childcare subsidy, and housing benefits. The couple's net 
income would, in fact, drop by about $4,300 a year. While their 
living expenses would likely fall also, because it's less 
expensive to maintain one household rather than two, the loss 
of $4,300 a year in income, or 11 percent of their total net 
income, is not insignificant.
    Given these potential impacts, any efforts to assess 
marriage penalties require sound and detailed information about 
the consequences of tax and transfer program policies. I'm 
pleased to report the availability of a new tool for precisely 
this purpose. The Administration for Children and Families 
sponsored the development of a comprehensive web-based tool to 
assess the financial implications facing low-income couples as 
they choose between living separately, cohabiting, or marrying. 
The tool is called the ``marriage calculator,'' and was 
developed in partnership with the Urban Institute, and it is 
now available to the public, policymakers, and analysts.
    The marriage calculator takes information provided by the 
user about a family's income and assets, the number, sex, age, 
and percentage--parentage of the children, and their decisions 
to participate, if eligible, in a variety of public assistance 
programs, and then computes the net income of the family in 
four situations: If the man and the woman, are, one, living 
apart; two, cohabiting, but not reporting their cohabitation; 
three, cohabiting and reporting their cohabitation to 
Government benefit programs; or, four, married. The calculator 
displays the net income of the family after taxes and including 
benefits and subsidies under each living arrangement and in 
each State. It also shows the individual components of that net 
income.
    Of course, decisions about marriage involve more than 
calculations of immediate financial gains or losses. Couples 
also consider the long-term benefits for children of being 
raised by parents in a healthy marriage, regardless of their 
income level, and--as well as the many emotional, physical, and 
financial benefits of marriage for adults, as well.
    President Bush, like members of this subcommittee, is 
focused on family formation and healthy marriages with an 
important purpose in mind, to enhance the well-being of 
children. The dedicated funding for healthy marriage and 
responsible fatherhood grants provided in the Deficit Reduction 
Act, and the continuation of support through other 
discretionary grant programs within my agency, will allow us to 
meet the President's objectives to strengthen the institution 
of marriage and help parents rear their children in positive 
and healthy environments.
    We're excited about the opportunities before us to support 
healthy marriages. We also are excited about the opportunities 
that this new tool, the marriage calculator, presents to 
examine the impact of existing policies and consider 
alternatives to reducing marriage penalties. It's a great new 
tool that complements other efforts to meet President Bush's 
objectives to strengthen the institution of marriage and to 
improve the well-being of children in this country.
    Thank you, again, for inviting me to be part of this 
important hearing, and I look forward to the discussion.
    Senator Brownback. Thank you, Secretary Horn.
    [The statement follows:]

               Prepared Statement of Wade F. Horn, Ph.D.

    Mr. Chairman and Members of the Subcommittee, thank you for calling 
today's hearing on marriage penalties embedded in some government 
policies. I appreciate the Subcommittee's interest in supporting 
healthy marriages and share your commitment to improving the well-being 
of children and families not only in the District of Columbia but 
throughout our nation.
    As you know, research shows that healthy and stable marriages 
support children and limit the need for government programs. Whether 
the problem is abuse, neglect, or poverty, the evidence is clear that 
the best chance a child has of avoiding these problems is to grow up 
with their mother and father in a stable, healthy marriage.
    Research also shows that adults in healthy marriages are happier 
and healthier. A report from the Institute for American Values suggests 
that communities with high rates of healthy marriages evidence fewer 
social problems such as crime and welfare dependency, compared to those 
with low rates of healthy marriages.
Marriage Penalties
    Unfortunately, certain government policies result in disincentives 
to marriage. We know that some government policies may financially 
penalize some couples who choose to marry, or discourage some couples 
from marrying despite what they know about the benefits of healthy 
marriage for themselves and, importantly, for their children. For some 
couples marriage would be unwise from a short-term economic perspective 
because they would lose thousands of dollars in assistance and income 
to their families.
    Our efforts aimed at helping low-income couples achieve their goals 
of forming and maintaining healthy marriages may run headlong into the 
financial realities imposed by current rules within federal and state 
tax and public assistance transfer programs. That's because when two 
adults marry, they may face a drop in their net income--after taxes and 
loss of public assistance. This phenomenon is referred to as a marriage 
penalty.
    In some cases marriage penalties occur because tax or transfer 
program rules explicitly differ for married and single people. Many 
marriage penalties, however, are inherent in the nature of means-tested 
programs that are designed to give greater benefits to lower income 
households. Tax rates generally climb and transfer benefits fall as 
income rises. Thus two individuals in the lowest tax bracket may move 
up to a higher tax bracket when they marry because their combined 
income is higher. Similarly, a woman receiving public assistance may 
lose her benefits if she marries a working man. In these cases, if the 
individuals did not marry, the sum of their net incomes would be higher 
than their net income as a married couple--they face a marriage 
penalty.
    A complex combination of federal and state tax and program rules 
determines the financial consequences of marriage. These consequences 
vary considerably depending on each couple's specific circumstances, 
such as the couple's total income, the distribution of income between 
the partners, the sources of income, and the relationship of the 
partners to all the children in the family. Conversely, in some cases, 
a couple's net income can increase after marriage because the couple 
can take advantage of more tax credits and deductions and because they 
become eligible for larger transfer benefits. When neither partner 
receives transfer income or the partners have very different income 
levels, the couple is likely to see increased income when they marry. 
When one partner receives a considerable amount of transfer income or 
the partners have similar income levels, the couple is more likely to 
face a marriage penalty.
    Further, the size of the penalties can be quite large. Consider a 
woman with two children ages 1 and 5 living in District of Columbia in 
2003. In this example, the woman works 20 hours a week for $7 an hour, 
has no assets, and has child care costs of $200 per month. She receives 
TANF, Food Stamps, WIC, housing assistance, and a subsidy that offsets 
some child care costs. The father of her children works 40 hours a week 
for $7 an hour and pays $200 in child support. If they were to marry, 
the father would be able to claim extra deductions and credits on his 
taxes. However, the mother would lose her TANF benefits, and her food 
stamps, child care subsidy, and housing benefits would be reduced. The 
couple's net income would drop by about $4,300 a year. While their 
living expenses would likely fall because it is less expensive to 
maintain one household rather than two, the loss of $4,300 a year in 
income (or eleven percent of their total net income) is not 
insignificant.
    A 2005 study by Adam Carasso and Gene Steuerle of the Urban 
Institute demonstrates that in aggregate, unmarried couples face 
hundreds of billions of dollars in increased taxes or reduced transfer 
benefits if they marry. These penalties potentially present a 
significant disincentive for marriage.
    Given these potential impacts of substantial marriage penalties for 
many couples, any efforts to assess marriage penalties require sound 
and detailed information about the consequences of tax and transfer 
program policies.
    I am pleased to report the availability of a new tool for this 
purpose. The Administration for Children and Families (ACF) sponsored 
the development of a comprehensive, web-based tool to assess the 
financial implications facing low-income couples as they choose between 
living separately, cohabiting, or marrying. The tool is called The 
Marriage Calculator and it is now available to the public, policy 
makers, and analysts.
The Marriage Calculator
    Under a contract from ACF, the Urban Institute developed three 
products that are Internet accessible, including:
  --A database cataloging relevant federal and state tax policies and 
        social service program rules as they relate to marriage.
  --A user-friendly software application, The Marriage Calculator, 
        which can be used over the Internet to calculate the financial 
        implications of marriage across states and under user-generated 
        scenarios about family composition and income.
  --A set of standardized tables highlighting financial implications 
        related to marriage across states and prototypical couples.
    These tools illustrate how multiple public assistance programs and 
tax policies interact to affect marriage penalties and incentives and 
how they differ across states and across different income and family 
structure scenarios.
    The Marriage Calculator takes information provided by the user 
about a family's income and assets, the number, sex, age, and parentage 
of the children, and their decisions to participate (if eligible) in a 
variety of public assistance programs, and computes the net income of 
the family in four situations: if the man and woman are: (1) living 
apart; (2) cohabiting, but not reporting their cohabitation; (3) 
cohabiting and reporting their cohabitation to government benefit 
programs; or (4) married. The calculator applies the tax and transfer 
rules that were in place during 2003, capturing the detailed state-
specific variations in rules and the complex interactions across 
programs and tax policies. The calculator displays the net income of 
the family (after taxes and including benefits and subsidies) under 
each living arrangement and in each state. It also shows the individual 
components of that net income.
    The calculator analyzes Federal and state income taxes and payroll 
taxes as well as the following public assistance programs: Temporary 
Assistance for Needy Families (TANF), Food Stamps, Special Supplemental 
Nutrition Program for Women, Infants, and Children (WIC), public or 
subsidized housing, subsidized child care through the Child Care and 
Development Fund (CCDF), and Medicaid and State Children's Health 
Insurance Program (SCHIP).
    This new resource allows state and Federal policy makers to closely 
examine the financial consequences of tax and transfer policies as a 
basis for possible reforms to reduce marriage penalties.
    Of course, decisions about marriage involve more than calculations 
of immediate financial gains or losses. Couples also consider the long-
term benefits for children of being raised by parents in a healthy 
marriage, regardless of income level, and the many emotional, physical 
and financial benefits of marriage for adults as well. Policy-makers 
should take this larger view as well.
The Healthy Marriage Initiative
    President Bush, like Members of this Subcommittee, is focused on 
family formation and healthy marriages with an important purpose in 
mind: to enhance the well-being of children. The dedicated funding for 
healthy marriage and responsible fatherhood grants provided in the 
Deficit Reduction Act and the continuation of support through other 
discretionary grant programs within my agency will allow us to meet the 
President's objective to strengthen the institution of marriage and 
help parents rear their children in positive and healthy environments.
    The new funding will support a variety of activities that will 
provide interested individuals and couples with the skills and 
knowledge necessary to form and sustain healthy marriages. For example, 
it will allow us to fund programs to:
  --help high school students learn to develop healthy relationships 
        and gain knowledge about the value and benefits of healthy 
        marriage for themselves and their future children, if they 
        desire to marry and have children;
  --offer pre-marital services to help engaged couples focus on topics 
        critical to the long-term health of their relationship and 
        marriage;
  --offer help to married couples who are struggling, to gain skills to 
        revitalize and strengthen their marriage;
  --work with non-married pregnant women and expectant fathers 
        interested in marriage to gain the skills that are necessary to 
        form and sustain healthy marriages and help them with parenting 
        and financial management skills as well as with finding 
        employment or advancing to higher wage jobs; and
  --reduce the disincentives to marriage in means-tested aid if offered 
        in conjunction with any of the above mentioned activities.
    In addition, to expand the initiative provided in the Deficit 
Reduction Act, the Administration's fiscal year 2007 budget proposes to 
establish a competitive matching grant program for family formation and 
marriage. One hundred million dollars in competitive grants would be 
targeted to innovative approaches to promoting healthy marriage and 
reducing out-of-wedlock births.
Conclusion
    We are excited about the opportunities before us to make these 
kinds of services widely available in support of healthy marriages. 
While these services can be beneficial to couples at all income levels, 
I am especially pleased that the new legislation allows us to make 
these services available to low-income couples, for whom these services 
otherwise would not be widely available or affordable.
    We also are excited about the opportunities that this new tool, The 
Marriage Calculator, presents to examine the impact of existing 
policies and consider alternatives to reducing marriage penalties. We 
believe The Marriage Calculator provides an opportunity to explore this 
issue in more detail and specificity than was previously possible. It 
is a great new tool that complements other efforts to meet President 
Bush's objective to strengthen the institution of marriage and the well 
being of children in this country.
    Thank you. I would be pleased to answer your questions.

    Senator Allard. Mr. Chairman, before we go on--and, I'm 
sorry, I have a 10:30 appointment--but is there an Internet 
address for that marriage calculator?
    Dr. Horn. Yes, you can go to our web site, which is 
www.acf.hhs.gov, and click on ``marriage calculator,'' and 
it'll----
    Senator Allard. Okay.
    Dr. Horn [continuing]. Get you to the marriage calculator, 
and you can enter----
    Senator Allard. Very good.
    Dr. Horn [continuing]. Whatever examples might be 
interesting to you.
    Senator Allard. Thank you.
    Senator Brownback. Good. Good. Secretary Horn, thank you.
    Dr. Steuerle.
    Would you rather we go to Mr. Haskins?
    Dr. Steuerle. We just--his charts were just----
    Mr. Haskins. Okay. We're--is someone going to put the 
charts up there?
    Senator Brownback. Mr. Haskins.

STATEMENT OF RON HASKINS, SENIOR FELLOW AND CO-
            DIRECTOR, CENTER ON CHILDREN AND FAMILIES, 
            THE BROOKINGS INSTITUTION

    Mr. Haskins. Thank you, Mr. Chairman, for inviting me 
today. I agree with Wade, this is an extremely important 
hearing. And I'd like to say, at the outset, that I think that 
your intervention program in the District is also extremely 
important. It's potentially the most powerful intervention 
program, because it involves both elements of marriage 
education and a financial incentive to marriage. So, it's an 
extremely important program.
    Senator Brownback. Good. Mr. Haskins, get that microphone a 
little closer to you, if you don't mind.
    Mr. Haskins. Okay. I've been asked to talk about three 
issues, by your staff. I think the first two, primarily for the 
record. The first one is how we got in the situation of having 
so many kids in single-parent families. The second issue is, 
What do we know from research about the effects of single-
parent families on children's development? And then, third, of 
course, What should we do--what should Congress do?
    So, let me dispense with the first two pretty quickly. The 
record is very clear on both these issues. The answer to how we 
got in this situation is, just about every possible way you 
could. And I show, in my testimony, charts that show that the 
divorce rate increased rapidly, that the marriage rates dropped 
off precipitously, especially in the 1970s, and that we have a 
very large nonmarital birthrate. So, almost every way you could 
get to a single-parent family, we figured out how to do it, as 
a culture.
    I would point out to you that both the divorce rate and the 
marriage rate, if they have not stabilized, they have come very 
close. In fact, our--we have problems with the divorce rate, 
because the data is not very good, but it appears to be 
actually declining.
    And the other point I would make to you about all of these 
rates is that they are higher among--so marriage rates are 
lower, nonmarital birth rates are higher, and divorce rates are 
slightly higher among low-income families, among minority 
families, and among families of low education. So, exactly the 
group that we want to help with Government policy is--policy is 
the group that has the most difficult because of the family 
composition. And the outcome, of course, that you can see right 
here in this chart, is that an astounding increase in the 
percentage of our kids in single-parent families. So, now we 
have 28 percent of our children--at any given moment, Mr. 
Chairman; so, over time, this figure is probably more like 50 
percent spend some part of their childhood in a single-parent 
family--but, at any given moment, 28 percent are in a single-
parent family.
    Senator Brownback. That's the figures I'd seen nationwide, 
that we're at 50 percent now. A child under the age of 18 will 
spend a significant part of his or her childhood in a single-
parent household.
    Mr. Haskins. It varies greatly. Some spend their entire 
childhood in a single-parent household, but, yes, that's 
correct.
    So, I just wanted to point out this is a little misleading, 
this 28 percent. Even though that's a huge figure--at any given 
moment, nearly one out of three of our kids.
    And then, so the next question is, Well, so what? And the 
answer is that we now have almost unanimous agreement in the 
social science community that marriage is positive for 
children. The best rearing circumstance for a child is a 
married, two-parent family.
    The academic world was in considerable conflict about this 
issue until 1994, when Sarah McLanahan, of Princeton, and a 
colleague of hers named Gary Sandefur, published a book called 
``Growing Up A Single Parent,'' and they showed very clearly 
that there were deficits suffered by children who were reared 
in single-parent families. And since then, there's been an 
onslaught of the literature. Since you last held a hearing, we 
published a book--we published a journal jointly with Princeton 
University--Brookings does--and Sarah McLanahan, interestingly, 
is one of the editors. She's the senior editor of this journal. 
And this summarizes the social science evidence. And if anybody 
looked at this, they could not help but come away with the 
conclusion that, (a) there are substantial effects, and, (b) 
the social science community, the community that actually does 
the research, thinks that there are substantial effects.
    If you look at the next chart, I'll be able to show you. 
Can you move--can you move the chart there? Thank you.
    This is simply from the--study, and it shows--these are the 
actual number of kids that--adolescents that have these various 
afflictions--repeating a grade, suspend from school, and so 
forth. And then, this is projected. If we could change the 
marriage rate--just equal the marriage rate that we had in 
1980, so not some pie-in-the-sky thing, but the rate that we 
actually had in 1980, which would increase the percentage of 
kids in two-parent families and would have--would reduce 
these--all these negative outcomes for adolescents--and this 
was done by Paul Amato, of Penn State University. It's a very 
creative analysis. And I think it shows you right away not only 
the impacts, but you can immediately imagine the money that we 
spend as a society, and that individual families spend, to deal 
with these problems. So, you can see that we would save a great 
deal of money.
    And, finally, the last part of my testimony is to talk 
about--can you do the next chart?--and I would like to just do 
two things here, in talking about what Congress can do. I think 
there are two broad categories. One, of course, is the Tax 
Code. And I would include the earned income tax credit in that. 
And the other are the transfer programs that you are so 
interested in. This is an actual--this is a study based on 
actual people of random--a nationally representative sample by 
The Urban Institute, by Greg Acs and Elaine Maag. And what I 
want to call your attention to is that the--first of all, it's 
divided into two groups. These are the families that were on 
TANF--only 14 percent--notice that--and 86 percent that were 
not on TANF. These are cohabiting couples with children, under 
200 percent of poverty. So, most of them are not on TANF. Now, 
if you did this for food stamps, many more would be on it, and 
there would be bigger penalties. But for the ones on TANF, they 
really get a whack. They lose--in this group, they lose $1,800 
in benefits; in this group, $2,000 in benefits. But because 
they get a bonus from the EITC, because their income goes up 
when they get married, when you combine their incomes, they 
get--the net impact is that they still do better by getting 
married, but they still get hit, both groups, by TANF. And I 
think if you did this carefully for many other examples, like 
the food stamps, Medicaid, and so forth, even though it's very 
complex, as Wade pointed out, and--you won't get this kind of 
information just from one State. It's a matter of all the 
States.
    So, here's what I would suggest that you do. I would 
suggest that this subcommittee work with the Congressional 
Budget Office, the Congressional Research Service (CRS), using 
this new tool that Wade has come up with, and the Department of 
Health and Human Services, and develop models, perhaps working 
with outside contractors, to get good estimates of what it 
really would cost the Nation to completely remove the marriage 
penalty from TANF, from food stamps, from Medicaid, from 
housing, and from a whole series of benefits. I think the 
numbers are going to be very large. They might be somewhat 
discouraging, but we might be able to take small steps in the 
next, say, decade, to do it, especially in view of the Federal 
deficit.
    So, Mr. Chairman, I would--I think we need a lot more 
information, but I think there's no question, we know now, that 
the--these benefit programs definitely have a major impact, and 
that they will cost families money, and they, therefore, serve 
as a negative incentive for marriage. And the Tax Code 
apparently for these lower-income families, not a higher-income 
family, but for lower-income families, there are lots of tax 
incentives to get married.
    Thank you, Mr. Chairman.
    Senator Brownback. Thank you very much.
    [The statement follows:]

                   Prepared Statement of Ron Haskins

    Chairman Brownback and Members of the Subcommittee: I have been 
asked to testify on three issues that are related to this 
Subcommittee's goal of promoting an environment conducive to marriage 
in the District of Columbia. These issues include a review of trends in 
family composition, a summary of research on the importance of marriage 
to children, and evidence on marriage bonuses and penalties in 
government programs.

                      TRENDS IN FAMILY COMPOSITION

    Children do best when reared by their married parents. From this 
perspective, the trends in family composition in recent decades have 
been disastrous for children. Although most of the trends have 
stabilized in recent years, in previous decades marriage rates fell, 
divorce rates rose, and nonmarital birth rates soared. The basic 
building block of married-couple families, of course, is marriage 
rates. As shown in Chart 1, in the three decades between the 1960s and 
1990s, marriage rates fell dramatically, especially for blacks. Over 
this period, the marriage rate for whites and blacks fell by 11 percent 
and 33 percent respectively. Since then, both rates have been 
relatively stable, although both continue to decline slowly.




    Especially during the 1970s and 1980s, while marriage rates were 
falling, divorce rates were rising. After doubling between 1965 and 
1975, the rate increased slightly until 1980 but has been stable or 
falling since then (Chart 2).




    A third important trend in understanding the living arrangements of 
children is the nonmarital birth rate. Hollywood couples that have 
babies outside marriage, such as the recent case of Tom Cruise and 
Katie Holmes, get widespread attention in the media. This attention to 
celebrity births outside marriage has led many people to believe that 
``everyone is doing it.'' But this conclusion is largely incorrect. 
Nonmarital births occur primarily among poor and minority women. In 
fact, children born to unmarried mothers are likely to live in poverty 
and to require support from the welfare system. Mothers who give birth 
outside marriage are also more likely to be high school dropouts, to 
live in poverty, and to be unemployed, all of which are correlated with 
poor developmental outcomes for children.\1\ Given the consequences of 
nonmarital births, it is alarming to review statistics showing that 
until recently the nonmarital birth rate has been rising relentlessly 
since roughly the 1950s. Chart 3 shows that the percentage of babies 
born outside marriage rose from under 5 percent in the 1950 to about 33 
percent in 1995 before falling for the first time in decades. Since 
1995, the rate has been rising again, but at a greatly reduced pace as 
compared with previous decades. There are enormous differences between 
ethnic groups in the incidence of nonmarital births. In 2000, for 
example, the share of babies born outside marriage for whites, 
Hispanics, and African Americans were 22 percent, 43 percent, and 69 
percent respectively. There is no doubt that the negative consequences 
of nonmarital births fall most heavily on minority groups. Indeed, to 
the extent that marriage rates could be increased, minority groups are 
likely to reap disproportionate advantages.
---------------------------------------------------------------------------
    \1\ Elizabeth Terry-Hunen, Jennifer Manlove, and Kristin A. Moore, 
Playing Catch-Up: How Children Born to Teen Mothers Fare (Washington, 
D.C.: National Campaign to Prevent Teen Pregnancy, January 2005).




    The outcome of all these trends is that a historically high 
percentage of our children live with a single parent. As shown in Chart 
4, the share of children in single-parent families has more than 
doubled since 1970, from 12 percent to about 28 percent. As was the 
case with the trends in marriage and nonmarital births, the trend 
toward single-parent families stopped rising in the mid-1990s and 
actually fell in some years. However, in recent years the trend has 
been rising again, although not as rapidly as during previous decades. 
The bottom line is that the nation is at a historic high in the share 
---------------------------------------------------------------------------
of our children being reared by single mothers.



                     MARRIAGE AND CHILD WELL-BEING

    These trends are of great importance to policymakers and the public 
because social science research now shows strong links between child 
well-being and family composition. A recent issue of the Future of 
Children, published jointly by Brookings and Princeton University, was 
devoted entirely to marriage and child well-being. The editors' 
overview of several decades of social science research on marriage is 
notable:

    ``In the early 1970s the prevailing view among scholars was that, 
aside from the problems of low income, single motherhood was an 
acceptable alternative to marriage. But the empirical evidence compiled 
during the 1980s and 1990s suggested otherwise.'' \2\

    \2\ Sara McLanahan, Elisabeth Donahue, and Ron Haskins, 
``Introducing the Issue,'' The Future of Children, vol. 15, no. 2 (Fall 
2005): 3-12.

    The editors then go on to point out that the ``multiple benefits 
for adults and children [include] better health and greater 
socioeconomic attainment.''

    One effect of marriage has never been doubted. Marriage reduces 
poverty and increases financial stability. In 2002, the median income 
of married-couple households was about $61,000 as compared with less 
than $26,500 for female-headed households.\3\ Even more important for 
policymakers interested in policy for poor and low-income families, as 
shown in Chart 5 children in female-headed families have much higher 
poverty rates than children in married-couple families. In most years, 
children in female-headed families have poverty rates that exceed those 
of children in married-couple families by a factor of five or more.
---------------------------------------------------------------------------
    \3\ U.S. Census Bureau, Statistical Abstract of the United States: 
2005-2005, 124th edition (Washington, D.C.: Author, 2004), p. 448, No. 
674.




    Economists Isabel Sawhill of Brookings and Adam Thomas of Harvard 
have conducted a fascinating analysis of whether higher marriage rates 
would reduce poverty in the United States.\4\ Employing statistical 
modeling, they analyzed data from the Census Bureau to determine how 
poverty would be affected if poor people behaved differently. In 
particular, they modeled the effect on poverty rates of more work, more 
marriage, more education, and fewer children by poor adults. In the 
case of marriage, they simply matched unmarried people by age, 
education, and race until the marriage rate for the nation equaled the 
marriage rate in 1970. This exercise showed that if we could turn back 
the clock and achieve the marriage rate that prevailed in 1970, poverty 
would be reduced by well over 25 percent. This remarkable reduction of 
the national poverty rate by one-quarter would be achieved without any 
government action and without the expenditure of any public funds. In 
the Sawhill and Thomas analysis, only work was more effective in 
reducing poverty than marriage. By way of comparison, doubling cash 
welfare would reduce poverty by less than one-third as much as 
increasing marriage rates.
---------------------------------------------------------------------------
    \4\ Adam Thomas and Isabel V. Sawhill, ``For Richer or for Poorer: 
Marriage as an Antipoverty Strategy,'' Journal of Policy Analysis and 
Management, vol. 21, no. 4 (2002): 587-599; and Ron Haskins and Isabel 
Sawhill, ``Work and Marriage: The Way to End Poverty and Welfare,'' 
Welfare Reform & Beyond Policy Brief, Brookings Institution, 2003.
---------------------------------------------------------------------------
    But the effects of marriage on children go beyond just reducing 
their poverty rate. Although a host of studies, reviewed in several of 
the chapters in the Future of Children volume referred to above, show 
that children reared by one parent have high levels of problems related 
to growth and development, an analysis by Professor Paul Amato of 
Pennsylvania State University illustrates marriage effects in an 
especially graphic way. Using data from the National Study of 
Adolescent Health, Amato examined the number of adolescents that had 
one or more of eight behavioral problems and then, based on a 
comparison of the occurrence of each problem in married-parent and 
single-parent families, calculated the number that would have the 
problem if marriage rates were increased.\5\ As shown in Chart 6, 
adolescent well-being would be greatly improved if more children were 
living with their married parents. If the same share of adolescents 
were living with their married parents in 2002 as in 1980, nearly 
300,000 fewer would have repeated a grade in school, 216,000 fewer 
would have been delinquents, and nearly 29,000 fewer would have 
attempted suicide. Again, it is worth emphasizing that these highly 
desirable effects would be achieved without government action and 
without use of tax dollars. Indeed, a moment's reflection on the 
numbers in Chart 6 shows that reducing the incidence of these problems 
among adolescents would have the effect of substantially reducing 
public expenditures.
---------------------------------------------------------------------------
    \5\ Paul R. Amato, ``The Impact of Family Formation Change on the 
Cognitive, Social, and Emotional Well-Being of the Next Generation,'' 
The Future of Children, vol. 15, no. 2 (Fall 2005): 89, Table 2.

  CHART 6.--WELL-BEING OF ADOLESCENTS IF MORE LIVED WITH THEIR MARRIED
                                 PARENTS
------------------------------------------------------------------------
           Behavioral Problem              Actual (2002)     Projected
------------------------------------------------------------------------
Repeated grade..........................       6,948,530        -299,968
Suspended from school...................       8,570,096        -485,165
Delinquency.............................      11,632,086        -216,498
Violence................................      11,490,072        -211,282
Therapy.................................       3,412,678        -247,799
Smoked in last month....................       5,083,513        -239,974
Thought of suicide......................       3,692,358         -83,469
Attempted suicide.......................         636,164         -28,693
------------------------------------------------------------------------
Note: Based on comparison of rates of behavioral problems in married-
  couple families and single-parent families from the National
  Longitudinal Study of Adolescent Health, 2002. The ``Projected''
  column extrapolates the incidence of each behavioral problem if the
  same percentages of adolescents had lived in married-couple families
  as in 1980.

Source: Paul Amatory, Future of Children, p. 89 (See footnote 5).

                       MARRIAGE AND PUBLIC POLICY

    Given the benefits of marriage to children, adults, and society, it 
would seem wise for policymakers to focus their attention on the impact 
of public policy on the troubling trends in family composition. In this 
regard, passage of the 1996 welfare reform law was something of a 
landmark. Prior to 1996, the design of both tax provisions and welfare 
programs contained incentives that rewarded and punished marriage. But 
as Gene Steele and Adam Carcass of the Urban Institute have pointed 
out, these incentives were unintentional and occurred primarily because 
policymakers enacted both tax laws and transfer programs in piecemeal 
fashion and seldom stopped to determine whether the programs were 
creating incentives or disincentives for marriage.\6\ On the other 
hand, there was nothing unintentional about the pro-marriage goals of 
the 1996 welfare reform law. The centerpiece of the law was the 
Temporary Assistance for Needy Families (TANF) program that provided 
states with a block grant of $16.5 billion per year to achieve four 
goals. One of the goals was to provide financial support to needy 
families to rear their children at home, but the other three goals 
addressed family composition. More specifically, states were to spend 
block grant funds to reduce non marital births, encourage marriage, and 
increase the share of children in families headed by married parents.
---------------------------------------------------------------------------
    \6\ Adam Carcass and C. Eugene Steele, ``The Hefty Penalty on 
Marriage Facing Many Households with Children,'' The Future of 
Children, vol. 15, no. 2 (Fall 2005): 157-175.
---------------------------------------------------------------------------
    Thus, as a nation, we are already a decade into an era in which 
policymakers and administrators at the federal, state, and local level 
have been encouraged by federal policy to search for ways to increase 
the share of children in married-couple families. Moreover, the TANF 
block grant provides states and localities with the resources to 
implement policy initiatives to achieve the family composition goals. 
Although several states have taken advantage of these resources to 
launch marriage initiatives,\7\ some might wish that policymakers and 
administrators had been more aggressive in taking up the federal 
challenge to reduce non marital births and promote marriage. But if the 
gradual move toward work rather than welfare, which was initiated by 
the federal Work Incentive (WIN) program in 1967, is taken as an 
example, it may take decades before the goal of promoting marriage is 
widely accepted and practiced.
---------------------------------------------------------------------------
    \7\ Theodora Booms, Stacey Boucher, and Mary Parker, Beyond 
Marriage Licenses: Efforts in States to Strengthen Marriage and Two-
Parent Families (Washington, D.C.: Center for Law and Social Policy, 
April 2004).
---------------------------------------------------------------------------
    For federal policymakers who wish to push the envelope and take 
actions to promote marriage, I would say that three broad types of 
policies should be their focus. First, as pointed out above, they 
should attempt to reduce the negative incentives for marriage in 
federal tax and transfer policy. Second, they should provide states 
with funds to experiment with a wide variety of programs that could 
reduce non marital births, promote marriage, and increase the 
involvement of fathers with their children. Third, they should provide 
funds to evaluate programs that show promise. In recent years, federal 
policymakers have taken actions in all three of these areas.
    As Adam Carcass and Gene Steele of the Urban Institute point out in 
a recent article, marriage penalties and subsidies arise in the tax 
code because tax rates vary in accord with income and because married 
couples file jointly for both transfer programs and taxes.\8\ Pursuing 
the worthy goal of promoting equity, policymakers enact higher income 
tax rates for workers with higher incomes and provide welfare benefits 
for destitute families. Thus, as income rises, taxpayers often move 
into higher tax brackets and are subjected to a higher tax rate. 
Similarly, as income rises families on welfare see their benefits 
reduced and eventually terminated. If the tax code had a single rate 
and if all transfer programs were universal, there would be no marriage 
penalties. But in the real world created by the nation's tax and 
transfer system, marriage requires couples to combine their income, 
thereby occasionally moving them into a higher tax bracket. Further, 
combining income can cause low-income families to lose cash from the 
Earned Income Tax Credit (EITC) and to experience reduced or even 
terminated benefits from transfer programs. Consider an extreme case. 
If a mother with two children earning $15,000 lives with a man who 
earns $25,000, she would lose her entire EITC of over $4,500 if she 
married the man. With combined income of $40,000, the couple would be 
beyond the phase-out range of the EITC. Similarly, if this mother 
earned just $5,000 and still qualified for welfare benefits and food 
stamps of $3,000, her marriage to the $25,000 earner would eliminate 
all her welfare benefits, and would be close to losing Medicaid for the 
parents in some states. By contrast, if the mother had no earnings and 
married the man with $25,000 in earning, she would lose welfare 
benefits but would gain over $4,500 in cash from the EITC.
---------------------------------------------------------------------------
    \8\ Carasso and Steele, ``The Hefty Penalty on Marriage.''
---------------------------------------------------------------------------
    As these examples suggest, the actual marriage penalties in the tax 
code and the transfer system depend on the particulars of each family's 
or couple's situation. Moreover, unless we know how many couples have 
characteristics that would result in specific levels of penalties and 
incentives, we cannot make judgments about the extent of these 
penalties and incentives nor can we make judgments about needed 
policies. Fortunately, the Urban Institute, with support from the Annie 
E. Casey Foundation and other sources, has collected data from a 
nationally-representative sample of households that contains this 
information plus extensive information on taxes and transfers.\9\ The 
2002 sample from the Urban Institute survey contained 744 cohabiting 
couples with income below 200 percent of poverty (about $40,000 for a 
family of four in 2005), most of whom were participating in either 
transfer programs or the EITC or both. Economists Gregory Acts and 
Elaine Mag conducted extensive analyses on these couples to determine 
the extent to which they would be subject to tax or transfer penalties 
or incentives if they decided to marry.\10\ They conducted their 
analyses separately for families receiving and not receiving benefits 
from the TANF cash welfare program.
---------------------------------------------------------------------------
    \9\ Alan Wail and Kenneth Fine gold, editors, Welfare Reform: The 
Next Act (Washington, D.C.: Urban Institute, 2002).
    \10\ Gregory Acts and Elaine Mag, ``Irreconcilable Differences? The 
Conflict between Marriage Promotion Initiatives for Cohabiting Couples 
with Children and Marriage Penalties in Tax and Transfer Programs'' 
Series B, No. B-66, (Washington, D.C.: Urban Institute, April 2005).
---------------------------------------------------------------------------
    The Acts and Mag results are summarized in Chart 7. A first 
surprise is that so few cohabiting couples with children are on TANF. 
But for the 14 percent that are on TANF (see top panel of Chart 7), 
virtually all suffer a steep penalty from TANF transfer payments. As 
shown in the second column of figures, regardless of whether the 
couples receive a tax penalty or tax bonus, on average they lose 
considerable sums in TANF cash payments ($1,800 for those with tax 
penalties; $2,096 for those with tax bonuses). By contrast with the 
predominance of TANF penalties, notice the prevalence of tax bonuses. 
Only 3.7 percent of families receiving TANF experience a tax penalty; 
the penalties average $1,511. But over 71 percent of families receiving 
TANF experience a tax bonus, and the average bonus is a whopping 
$3,390. Similarly, most couples not receiving TANF (see bottom panel of 
Chart 7) also enjoy a tax bonus. In this case, only a little under 12 
percent of families experience a loss (averaging $1,754) while more 
than 75 percent of families experience a tax bonus that averages 
$2,271.

 CHART 7.--MARRIAGE PENALTIES AND BONUSES FROM THE TAX AND TRANSFER SYSTEMS FOR LOW-INCOME COHABITATING COUPLES
                                                  WITH CHILDREN
----------------------------------------------------------------------------------------------------------------
                                                                     Change in
                                                                    Income from    Loss in TANF
                   Group and Penalty or Bonus                       Penalty or         Cash         Net Change
                                                                       Bonus
----------------------------------------------------------------------------------------------------------------
TANF Families (14 percent):
    Tax Penalty (3.7 percent)...................................         -$1,511         -$1,800         -$3,311
    Tax Bonus (71.1 percent)....................................           3,390          -2,096          +1,294
Non-TANF Families (86 percent):
    Tax Penalty (11.6 percent)..................................          -1,754  ..............          -1,754
    Tax Bonus (75.4 percent)....................................           2,271  ..............          +2,271
----------------------------------------------------------------------------------------------------------------
Note: Figures based on representative sample of 744 cohabitating couples with children under 200 percent of
  poverty. Based on tax law when fully implemented in 2008. Percentages in parentheses indicate the share of
  cohabitating couples fitting each category.

Source: Modified from Table 2, p. 6 in Gregory Acs and Elaine Maag, Irreconcilable Differences? The Conflict
  between Marriage Promotion Initiatives for Cohabiting Couples with Children and Marriage Penalties in Tax and
  Transfer Programs. Washington, D.C.: Urban Institute, April 2005.

    The Acs and Maag work is one of the first studies to estimate tax 
and transfer incentives for low-income couples based on a nationally-
representative sample. Two obvious conclusions from the study are that 
TANF marriage penalties are substantial but occur infrequently because 
so few families receive TANF and that the EITC is much more likely to 
provide marriage bonuses than penalties for this group of families. 
Given that cohabiting couples with children are a major target group 
for marriage initiatives, we can take heart from the frequent and 
substantial bonuses provided by the EITC.
    A related lesson for policymakers is that in the case of low-income 
couples contemplating marriage, the most serious marriage penalties are 
likely to occur in transfer programs. Although there are exceptions to 
almost any generalization, for couples with combined earnings of around 
$30,000 or so, it seems clear that the biggest problem is penalties in 
transfer programs and not the tax system. For higher-income couples, 
the opposite is likely to be true.
    To the extent that the most serious penalties for low-income 
couples are in the transfer programs, and that a major goal of public 
policy is now to encourage marriage among precisely this group of young 
couples, it follows that policymakers intent on increasing marriage 
rates among this group should focus their attention on transfer 
programs. The Urban Institute has examined the effects of the TANF 
program as a disincentive to marriage, but other transfer programs 
undoubtedly provide disincentives as well. Three of the important 
transfer programs that need further study are food stamps, housing, and 
Medicaid. Millions of families participate in these programs, with 
single mothers overrepresented. Even without carrying around a 
calculator to compute the precise impacts of marriage on her transfer 
benefits, a young mother receiving food stamps, housing, and Medicaid 
can know that marrying a man with even a modest income of $15,000 or 
$20,000 can have substantial impacts on her benefits. The housing 
program alone would impose an immediate 30 percent ``tax'' on the 
earnings of a potential spouse for this mother because the family would 
be required to pay 30 percent of its income toward the cost of rent.
    The marriage calculator that the Department of Health and Human 
Services (HHS) plans to release today will provide every state with a 
reliable method of calculating marriage penalties in their transfer 
programs. Given that both Medicaid and TANF vary substantially from 
state to state, a method of calculating marriage penalties that 
accounts for the specifics of the transfer programs in each state is a 
must. My guess is that by using the marriage calculator, states are 
going to discover what the Acs and Maag research showed so clearly; 
namely, that their transfer programs create substantial disincentives 
to marriage.
    Thus, an important goal of both federal and state policymakers 
should be to reduce these marriage penalties in transfer programs. This 
goal can be achieved in at least three ways: making all transfer 
programs universal, increasing the income at which the phase out range 
begins, and reducing the rate at which payments phase out. The first 
approach I take to be impractical because taxpayers would not support, 
nor can the government afford, making all transfer payments universal. 
The annual cost of providing TANF cash, food stamps, housing, Medicaid 
and so forth to every family would be in the hundreds of billions of 
dollars. It follows that policymakers should focus their attention on 
raising the point at phase outs begin and reducing the rate at which 
transfers phase out for couples who marry. Costs could be somewhat 
contained by allowing couples who marry to enjoy the more generous 
phase out for a year or two after they marry.
    Even so, the costs of these changes in transfer programs are likely 
to be great. The Congressional Budget Office can provide the 
Subcommittee with estimates of costs of various approaches to reducing 
the marriage penalty in transfer programs, but I believe that with the 
information at hand their estimates might be somewhat rough. In this 
regard, I would recommend that the committee encourage HHS to fund 
research like that conducted by Acs and Maag of the Urban Institute to 
provide better estimates of how many couples who are contemplating 
marriage would experience penalties in food stamps, housing, Medicaid, 
and perhaps other programs. This research would provide a basis for 
producing much more accurate estimates of the costs of various 
approaches to reducing marriage penalties in the nation's transfer 
programs. The research would also provide a basis for examining the 
nature and extent of marriage penalties in the various transfer 
programs as well as the cumulative penalties in families receiving 
benefits from more than one program.
    In addition to reducing marriage disincentives in transfer 
programs, a second approach policymakers can take to encouraging 
marriage is to invest funds in demonstration programs aimed at 
increasing marriage rates, especially among low-income couples. Last 
year, Congress took two commendable actions to advance this agenda. The 
first was the provision in the budget reconciliation bill that 
appropriated $100 million a year for five years to fund programs 
designed to encouraging healthy marriage. HHS is now writing the 
regulations for a competitive grants program that will ultimately award 
most of this money to model healthy marriage programs. It is 
anticipated that state and local governments, private non-profit 
organizations, and faith-based organizations will compete for these 
funds. The result will be a mosaic of innovative programs conducted by 
a wide range of organizations that, taken together, hold promise to 
greatly increase our knowledge about marriage promotion.
    The second important provision enacted last year to advance the 
marriage agenda was the marriage encouragement program established in 
the District of Columbia by this subcommittee. I have had the 
opportunity to meet with the fine team of program operators that 
planned and is now implementing this program. In effect, the team is 
conducting three intervention programs designed to encourage healthy 
marriage. These include a community-wide initiative that attempts to 
make citizens of the District aware of the importance of marriage, 
especially for the healthy development of children; a marriage 
education program that aims to equip married couples and couples 
contemplating marriage with the skills necessary to negotiate a 
permanent and loving relationship; and a highly innovative program that 
provides couples with matching funds to encourage savings. In the case 
of participating couples who are engaged, the matched savings program 
serves as a marriage incentive because the couple does not get the 
accumulated matching funds unless they marry. In addition to these 
three distinct programs, the planners are taking the wise step of 
working directly with fathers on a host of issues--including employment 
problems and child support--having to do with meeting their commitments 
to their family.
    These new programs promise to augment what I see as a growing 
nation-wide movement to encourage and support marriage. But if we are 
to reap the full benefit of what these various programs can achieve, we 
must conduct careful evaluations of as many of the programs as 
possible. HHS has already set a high standard with its funding of gold 
standard evaluations, being conducted by the leading program evaluation 
organizations in the nation, on a wide variety of marriage education 
and community-wide programs. Similarly, I know the team running the 
marriage programs in the District has devoted a great deal of attention 
to evaluation and anticipates hiring a first-rate organization to 
conduct its evaluation in the near future. I hope that the subcommittee 
will continue to encourage strong evaluation of its remarkable marriage 
program for the District.
    As a nation, we are at the beginning of a growing movement to 
reduce nonmarital births, encourage marriage, and increase the share of 
our children being reared by their married parents. The goals of 
Congress now should be to study and then take action to reduce marriage 
penalties, to ensure the aggressive implementation of the marriage 
programs being supported by the money from this subcommittee and from 
last year's reconciliation bill, and to insist that as many of these 
programs as possible be subjected to the kind of gold standard 
evaluations that will increase our knowledge of what works. Nothing on 
the public agenda will contribute more to the nation's future than 
ensuring that more and more of our children live with their married 
parents.

    Senator Brownback. Dr. Steuerle.

STATEMENT OF C. EUGENE STEUERLE, SENIOR FELLOW, THE 
            URBAN INSTITUTE

    Dr. Steuerle. Thank you, Mr. Chairman, Mr. Allard.
    Let me add that I have--privileged to have worked with both 
the gentlemen at this table, both currently and in past 
occupations or professional lives, on this subject. And I 
really appreciate working with them.
    And I'd also like to mention two of my colleagues who--from 
whom I've still learned a great deal, Mr. Carasso, who was a 
co-author of the study that I did, and Mr. Acs, whose name has 
been mentioned several times, with respect to mentioning this--
developing this marriage calculator and with respect to the 
study that Ron just mentioned.
    For several decades now, policymakers have created public 
tax and transfer programs, really with very little attention to 
this--severe marriage penalties that they're--are being 
created. That's actually one of the primary reasons, Mr. 
Brownback--you asked this question--why these penalties have 
arisen. As a consequences, couples today really face literally 
hundreds of billions of dollars of increased taxes or reduced 
benefits if they marry. Cohabitating or not getting married has 
become the tax shelter of the poor.
    Now, these developments are in no small part the 
consequence of a half century of social policy enactments of 
roughly similar design. Liberals wishing to keep programs very 
progressive, and conservatives wishing to constrain budget 
costs, have, together, put together a substantial portion of 
household subsidies and assistance programs and tax programs 
onto a platform that creates very high effective marginal tax 
rates--that is, tax rates on additional earnings--for low-to 
moderate-income families.
    Now, if you look at this first graph here--may I borrow 
this?--you'll actually see one way that this works. Let me just 
take the graph on the left here. A family with very low income 
starts achieving or having eligibility for a number of 
benefits. Dr. Haskins pointed out how at certain income ranges 
you actually get an increase in benefits because of the earned 
income credit growing here. But as soon as you get to about 
$10,000 of income, what happens, you start earning more when 
you go from about $10,000 to $40,000, and your income--or 
benefits start falling off quite dramatically. Not only do you 
start losing food stamps, in several cases you can, just for 
earning one more dollar, lost Medicaid or the State children's 
health insurance program (SCHIP) which is a health program for 
low-income people.
    Now, if you add all programs together--and that's the 
right-hand graph here--and this is--would be a very unusual 
circumstance to find households in this--if you start adding in 
households that not only get these benefit programs, but start 
getting TANF, start getting housing assistance, and even get 
the child benefits that are often associated with TANF, and you 
see what happens above $10,000, you can--you can, from--a range 
from about $10,000 to $40,000, you can start off with about--
close to $30,000 of benefits and end up with about $5,000 
quickly, just by falling off all--basically falling off this 
cliff, in terms of--in terms of the benefits that you get.
    Let me turn to figure 2. Taking an average from that 
$10,000 to $40,000 range here, this shows you what happens, in 
terms of what you have left. If you had earned $30,000--if you 
would marry--say, you moved from a $10,000 household to 
basically a $40,000 household, your tax rate--essentially, this 
is the tax rate and the phase-out rate from losing benefits--is 
roughly about 36 percent. You lose about--whatever you earn, 
you lose about 36 percent of it, if you go in that income 
range.
    If you're on food stamps, Medicaid, and SCHIP--and, by the 
way, these are fairly universal programs; these are programs 
that households--almost all are eligible for if they're in this 
income range, so this is not just people who might qualify for 
welfare or for housing assistance, which are queued programs, 
these are programs that are fairly universal--if you take their 
tax rate in this income range, it goes up to about 60 percent. 
So, in a sense, all of us, as households, if we--since we could 
fall in this income range, face this average tax rate. If you 
happen to get into TANF and public assistance programs, your 
average tax rate for--in this range goes up to about 90 
percent. You might compare that, by the way, with people making 
more than $90,000 of income, for whom the average tax rate, 33 
percent, is lower than we apply to all these low- to middle-
income----
    Senator Brownback. Let me----
    Dr. Steuerle [continuing]. Households.
    Senator Brownback. I want to make sure I'm following you. 
You're saying, if you're in these assistance programs, and you 
go from $10,000 to $40,000 income, you're effectively being 
taxed at nearly a 90 percent rate by going from $10,000 to 
$40,000? Is that----
    Dr. Steuerle. That's right.
    Senator Brownback [continuing]. Correct?
    Dr. Steuerle. That's right. If you look back at--if you--do 
you mind putting back--figure 1 back up?
    Senator Brownback. I thought we did away with 90-percent 
tax rates under President Reagan.
    I guess that was on one end of the income chart, huh?
    Dr. Steuerle. I mean, this partly has to do with the whole 
way we----
    Senator Brownback. I see what you're saying.
    Dr. Steuerle [continuing]. We----
    Senator Brownback. That's when you hit the cliff, isn't it?
    Dr. Steuerle. Right. But we've built this social welfare 
structure by just stacking one program after another on top of 
each other, with--often with little coordination. In this 
extreme case, the 90-percent rate, which is an extreme case, 
because most households are not in this category, you start 
losing everything. And among the big things you lose, by the 
way, is the Medicaid and the SCHIP, which we've put a value on, 
at Government cost. Some people might want to put a different 
value on it. And also the child benefits--I mean, even the 
question of whether you get child benefits for being in 
welfare--you get childcare if you work--and, in some cases, you 
basically just--you just lose the stuff. So, it's sort of 
losing all these programs that sort of fall--has you falling 
off of this cliff, and effectively gives you this tax rate.
    Now, the question you might ask is, okay, well, I've got 
this tax rate. How does that then create marriage penalties? 
Because I'm talking about this tax rate being there, even 
without marriage penalties. Well, take a case of a single male 
who's working and roughly paying income taxes and Social 
Security taxes of about 30 percent. That's roughly--crudely--
for an additional dollar of earnings--what essentially happens 
is, if this male happens to marry--and I'm using this as an 
example--would happen to marry, say, a female who's on 
different welfare programs, his tax rate will rise up to those 
50, 60 to 80 percent tax rates that you just saw. So, that's 
the marriage penalty. The tax rate he faces when single jumps 
up by 10, 20, 30, 50, 60 percentage points just for marrying, 
not for doing anything else other than marrying.
    And what Adam Carasso and I have done, in a variety of 
different ways--and we can provide you many more examples--is, 
we show what the various penalties are. This is for a 
household, combined income of 30 percent. And it's somewhat 
complicated, because a lot depends upon whether the income is 
split evenly between the two partners getting married or 
whether the income is very unevenly split. So, the tax system 
alone doesn't really create marriage penalties until you get 
essentially well above $10,000. And that's, again, because of 
the earned income credit phasing in. However, if you're on--and 
this is the example using these more universal programs--if you 
happen to be on food stamps, Medicaid, and SCHIP, you're going 
to lose roughly $2,500 to, you know, $4,500 in income simply 
for marrying. And that's because you're going to start losing a 
lot of these various benefits. So, that's what essentially 
causes the marriage penalties.
    Now, your staff also asked me to just spend a minute--I'm 
slightly over time here, Senator. I----
    Senator Brownback. Please keep going.
    Dr. Steuerle [continuing]. Asked me to spend a minute just 
saying what--how we can reduce these various penalties. And 
I'll just mention them here, and then we can--we can spend time 
discussing them in the questions and the answers.
    Most promising, in my view, are two strategies. First, I 
think Congress could try to set some maximum tax rate--marginal 
tax rate for low- and moderate-income families closer to the 
rate that we apply to richest individuals in society. 
Typically, middle- and upper-income families no longer face 
much in the way of marriage penalties--in part, because you 
removed them for that group of people----
    Senator Brownback. Right.
    Dr. Steuerle [continuing]. In the tax reform. So, that's 
one way, is to cut that maximum tax rate.
    Senator Brownback. Almost a reverse alternative minimum tax 
(AMT).
    Dr. Steuerle. Well, I could give the details. It's quite--
if you reduce the tax rate, you've got the question of, are you 
going to make the program more universal and spend more, or are 
you going to reduce benefits? As I mentioned, this is a--this 
is sort of a liberal/conservative compromise that's got us 
here. So, if you go in the opposite direction, you face the 
dilemma that liberals will say, ``Wait a second, if you make 
the program more universal, it's not going to be as 
progressive.'' And conservatives are going to say, ``If you 
make the program more universal, it's going to cost more, or 
you reduce the size of the program.'' So, I don't want to say 
that this is an easy issue to deal with, but----
    Senator Brownback. Right.
    Dr. Steuerle. I think we could start at least by trying to 
cut the very top rates, that doesn't cost much.
    Now, a second innovative strategy I should mention, and one 
that I think really has a lot of promise, has to do with trying 
to create a wage subsidy that would not be based on the 
household income, but on the individual income. And this would 
be, by the way, a backdoor way, or perhaps a frontdoor way, of 
confronting another issue, which is that we--and many people, 
including the First Lady, have been raising questions as to 
what's been happening to essentially the forgotten young male 
in our welfare system, who essentially typically only has 
access to a social welfare structure or support if they--if 
they're in the justice system.
    Now, two other approaches, both of which have been tried 
somewhat successfully on a smaller scale, would be to make 
programs more universal, as I discussed, as with the child 
credit, we did in the Tax Code, and as we have with public 
education, which doesn't create a marriage penalty, or 
Medicare, which doesn't create a marriage penalty. And a final 
option is to move more toward optional individual filing rather 
than requiring returns to be basically be filed on a joint 
basis, because it's the requirement you have to file on a joint 
basis that creates the marriage penalties.
    Let me stop there, Mr. Chairman, because I would like to 
open it up to time to questions.
    [The statement follows:]

                Prepared Statement of C. Eugene Steuerle

    Mr. Chairman and members of the Subcommittee: Thank you for the 
opportunity to testify today on marriage penalties and bonuses in 
government programs. Today, literally hundreds of billions of dollars 
in government taxes and social welfare benefits are at stake for tens 
of millions of couples depending on whether they are married. While my 
primary focus today will be on tax and social welfare programs for low- 
to moderate-income households with working parents and children, 
penalties and subsidies are also writ large in other programs such as 
educational grants and Social Security and affect most Americans at 
different points in their lives.

How the Penalties and Subsidies Work
    Citizens pay an overall marriage penalty when their combined social 
welfare benefits less taxes are lower when they are a married couple 
than when they are two single individuals. Because marriage is 
optional, marriage penalties or subsidies are assessed primarily for 
taking wedding vows, not for living together with other adults 
(although there are some exceptions).\1\
---------------------------------------------------------------------------
    \1\ By law, some transfer programs would treat a couple that admits 
to cohabiting (for an appreciable period of time) just as they treat a 
couple that marries. In practice, however, administrators seldom go 
knocking on doors to check on cohabitation, often cannot find proof of 
round-the-clock cohabitation, as opposed to several days or nights a 
week, and are unlikely to require joint filing unless the couple has 
been together a long time. In the few cases where officials do 
determine that a couple is cohabiting, many of the same issues arise 
anyway: what we describe as ``marriage penalties'' then become 
``marriage and admitted cohabitation penalties.''
---------------------------------------------------------------------------
    How much tax and transfer program penalties and bonuses are worth 
and the rate at which their value falls as family income rises varies 
by state, by family size, by the age of the children, by additional 
factors like the cost of rent and child care, and by what other 
transfer programs the family may be enrolled in.
  --Example 1: An EITC penalty. A single parent with two children who 
        earns $15,000 enjoys an EITC benefit of about $4,100. The 
        credit decreases 21.06 cents for every dollar a married couple 
        earns above $15,040. Based on that phase-out rate, if the 
        single parent marries someone earning $10,000, for a combined 
        income of $25,000, their EITC benefit will drop to about 
        $2,200. They face an EITC marriage tax penalty of $4,100 minus 
        $2,200, or $1,900.
  --Example 2: A Medicaid penalty. A mother of two children in 
        Pennsylvania in 2004 who earns $20,000 qualifies for Medicaid 
        (with an insurance value estimated at $3,424). If she marries 
        someone making just $6,000, resulting in a combined income of 
        $26,000, her children lose their Medicaid. Unlike tax programs 
        like the child credit and EITC, which contain marriage 
        subsidies for some couples, most transfer programs for low-
        income families with children contain mainly marriage 
        penalties--the additional income introduced by a spouse 
        generally reduces or even cuts off benefits received before the 
        marriage.
  --Example 3: An EITC bonus. A nonworking mother with two children in 
        Pennsylvania on TANF marries someone without children who earns 
        $5,000. Their marriage bonus derives mainly from an increase in 
        EITC of about $2,000 and no loss of TANF or Medicaid benefits.

Penalties and Subsidies: A Policy Accident
    Today, most households with children who earn low or moderate 
incomes (say, under $40,000) are significantly penalized for getting 
married. Elected officials seldom engage the issue consistently or 
rigorously, primarily because they typically enact programs piecemeal, 
with little coordination or thought to how each new program affects 
married couples. Congress enacted Social Security, Aid to Families with 
Dependent Children (AFDC), and various housing programs in 1935; the 
Food Stamp Act in 1964; Medicare and Medicaid in 1965; the EITC in 1975 
(and subsequent expansions of the credit in 1987, 1990, 1993, and 
2001); the Child Care Development Block Grant in 1990; welfare reform 
in 1996 (which replaced AFDC with TANF); the State Children's Health 
Insurance Program (SCHIP) in 1997; and the child tax credit in 1997 
(expanded and made refundable in 2001). The list could go on. Because 
the programs were put into place one by one over many years, lawmakers 
who now wish to rationalize the way government treats marriage must 
radically restructure much of the modern social welfare state.
    Why should we care about marriage in the first place? Many findings 
imply that ``intrinsic'' benefits accrue to the spouses and children in 
a marriage regardless of a couple's employment and education. In 
fairness, these findings are inconclusive as to whether the penalties 
had a large impact on marriage rates. Both quantitative and 
ethnographic research suggest that people's decisions to marry or 
divorce are governed much more by such considerations as a potential 
spouse's suitability as a partner and as a parent, the desire for a 
fulfilling relationship, and the risk of infidelity, than by the tax 
and transfer program consequences. Still, a very large difficulty is 
determining how group effects unfold over time. For example, if 
incentives change the behavior of a few households, and other 
households follow suit, then a group effect like ``copycat'' behavior 
may wind up playing a big role in this jerry-rigged system. Finally, 
whether couples figure out marriage penalties before they marry offers 
only limited evidence about the effect of the penalties on decisions to 
marry. People may react to incentives even when they do not calculate 
them, as when partners choose to cohabit or people remain single simply 
by observing that unmarried couples have a higher standard of living 
than those who marry--without necessarily understanding how rules in 
public programs create this result.
    Finally, a warning is in order. Most current proposals to deal with 
health care for the non-elderly would impose very large marriage 
penalties on much of the population, expanding dramatically the 
penalties already demonstrated in this testimony.

Reducing Marriage Penalties
    In recent years lawmakers have tried to reduce marriage penalties 
in various ways, primarily by reforming welfare and cutting taxes. 
Although the penalties and subsidies that remain are huge, at least 
policymakers have taken note of the problem and taken some initial 
steps to address it. The jury is still out on whether welfare reform 
has reduced the marriage penalty. To the extent that fewer families are 
on welfare, fewer face its marriage penalties, but combined benefit 
levels are higher for some recipients, which means their marriage 
penalties likely increased. Recent tax cuts also significantly reduced 
marriage penalties (or increased marriage subsidies) for most middle-
income families that filed taxes. My research with Adam Carasso shows 
that the expansion of the child credit itself had a particularly strong 
effect on reducing marriage penalties for low- to middle-income 
families. For higher-income families, marriage bonuses were increased 
by the ways that the tax brackets were adjusted for joint returns. 
These various provisions are scheduled to expire, and the child credit 
erodes every year, as it is not indexed for inflation.

How Marriage Penalties and Subsidies Arise
    Two conditions are necessary to cause marriage penalties and 
subsidies, and neither is sufficient by itself: variable tax rates and 
joint (or household, rather than single) filing. Understanding the 
conditions helps us understand what steps are necessary to reduce or 
eliminate these penalties.

    ----------------------------------------------------------------

            Dual Conditions Required for Marriage Penalties
    Tax rates or phase-out rates that vary based on income.
    Joint filing by married couples for benefits or taxes.

    ----------------------------------------------------------------

    In many ways, high marriage penalties are the result of several 
decades of liberal-conservative compromise. Policymakers have pursued 
the dual objectives of progressivity--giving greater tax and welfare 
benefits to those with lower incomes--and cost containment. As a 
result, programs like the earned income tax credit or food stamps 
restrict benefits to lower-income citizens by reducing or ``phasing 
out'' the benefits at steep rates as households earn more income. A 
household's loss of means-tested transfer benefits as earnings increase 
affects it in much the same way that higher direct tax rates do--both 
are losses of income. Indeed, economists commonly apply the term ``tax 
rates'' to transfer programs to identify how much benefit is lost 
(effectively taxed away) as a family's income rises. Benefits from some 
programs, like Medicaid and the State Children's Health Insurance 
Program (SCHIP), do not phase out gradually but instead fall swiftly 
(as off of a cliff) or end altogether as soon as a household's income 
exceeds some dollar threshold. In these cases, receiving one more 
dollar of earnings can strip a household of several thousand dollars of 
benefits.
    As evidenced by some examples above, the effective marginal tax 
rate--the rate created by steep benefit phase-out rates combined with 
Social Security and income tax rates--moves up and down a lot as income 
increases, but it is usually highest for low- to moderate-income 
families. This reality runs counter to the notion that marginal rates 
rise progressively with income, as one would be led to believe by 
looking only at the statutory rate schedule in the income tax.
    These variable tax rates do not by themselves penalize marriage. A 
second, simultaneous condition is necessary to create marriage 
penalties and bonuses--joint filing by married couples for taxes or 
benefits. Policymakers often look to the household unit, or joint tax 
return income, rather than to each individual's income separately, to 
measure the need for transfer benefits or the ability to pay taxes. 
Their aim is to treat households with equal incomes equally, but in a 
system with variable rates, individuals with equal incomes will then 
not be treated equally. If graduated or variable tax rates were 
accompanied by individual filing, there would be no marriage penalties. 
Marriage would have no effect on any benefit received or tax paid by 
the individual. Alternatively, if everything were taxed at a flat rate 
(including zero, as in the case of a universal grant such as Medicare 
or public education), there would also be no marriage penalties.

Mapping the High Effective Marginal Tax Rates
    Although our ultimate focus remains on penalties and subsidies 
related to marriage, it is best to begin by examining the tax situation 
of selected single parents before moving on to see in detail how the 
high tax rates contribute to marriage penalties when a single parent 
marries. Figure 1 tracks select tax and transfer benefits for a single 
head of household with two children, showing how these benefits 
generally decline as household income increases. The exact size of 
benefits and the rate at which they decline depends on the mix of 
programs in which the family is enrolled and the way these programs 
interact with one another.




    Panel 1 includes federal income taxes, exemptions, and credits, 
employer and employee portions of the Social Security tax, and state 
taxes, plus food stamps, Medicaid, and SCHIP. A focus on this set of 
programs is important because, in theory, every household with children 
is eligible for these programs if its income is low enough. The 
benefits are generally not restricted by waiting lists and are 
universally available as long as recipients meet certain eligibility 
criteria, which can vary by state. In a sense, then, the high tax rates 
levied by these programs apply to all households except those with 
annual earned incomes higher than $40,000, which have moved beyond the 
income cut-offs for all or most transfer programs. Put in terms of 
panel 1, these latter households have moved to the right along the 
horizontal axis beyond, first, the high-benefit regime (which applies 
to earnings of roughly $0 to $10,000) and, then, the high-tax rate 
regime (which applies to incomes of roughly $10,000 to $40,000).
    Panel 2 includes the same programs as panel 1 but also assumes the 
single-parent family of three is receiving welfare cash assistance 
(TANF), housing assistance, and child care benefits (direct 
expenditures for child care from the Child Care and Development Fund or 
deductions through the tax system from the Child and Dependent Care Tax 
Credit). As a general rule, these additional programs are not 
universal, like those in panel 1. Rather, they are parceled out either 
through time limits for years of eligibility or through queues as to 
who may participate (the modest child and dependent care tax credit is 
not queued, but costs of child care must be incurred). Households are 
much less likely to receive the programs in panel 2 than those in panel 
1.\2\
---------------------------------------------------------------------------
    \2\ This example still omits some income-conditioned programs, such 
as school lunch and a variety of forms of college aid. Participation in 
multiple programs (say, four or more), although rare for the general 
low-income population, is not so rare for single-parent households.
---------------------------------------------------------------------------
    In both panels, the single-parent family receives the most benefits 
between about $5,000 and $10,000 of earnings--mostly because the EITC 
is about fully phased at the higher end of that range, while most other 
benefits are either still phasing in or have not yet phased out. 
Thereafter, benefits drop off steeply as earnings exceed $20,000.
    Figure 2 compares the average effective marginal tax rates of 
various low- to middle-income single-parent families with two young 
children with the rate of more well-to-do families. The first three 
bars focus on the average effective marginal tax rates of single-parent 
families with income (including benefits) averaging between $10,000 and 
$40,000. The rate in the first bar--35.9 percent--is based simply on 
federal and state direct taxes, including Social Security and the EITC. 
The rate rises appreciably as the family enrolls in additional transfer 
programs in bars 2 and 3. For a family enrolled in more universal, non-
waitlisted programs like food stamps, Medicaid, and SCHIP, the average 
effective marginal tax rate would be 58.8 percent. Enrolling the family 
in additional, waitlisted programs like housing assistance and child 
care ratchets up that rate to 88.6 percent. The fourth bar, by way of 
comparison, shows that the average effective marginal rate affecting 
families (lumping one- and two-parent families together) earning 
$90,000 or more is 33.2 percent--lower than that applying to all the 
other groupings of lower-earning families.



From High Tax Rates to Marriage Penalties
    The extremely high effective marginal tax rates faced by low- to 
moderate-income adults with children, combined with the current U.S. 
practice of assessing taxes and benefits on the basis of household 
rather than individual income, lead directly to the marriage penalties. 
What triggers the penalty is that one spouse has his or her earnings 
subject to ``tax'' at a different rate simply because of marriage. In a 
very common example, a man facing combined income and Social Security 
tax rates of about 30 cents for every additional dollar he earns 
discovers that upon marrying a woman with EITC and food stamp benefits, 
the introduction of his income into the household also reduces those 
benefits, as well as causes her to lose eligibility for Medicaid.




    Figure 3 graphs one scenario showing (in dollars) the penalties and 
subsidies that would face a single earner and a single-parent head of 
household with two children and a combined income of $30,000 if they 
were to marry. (The penalties are much higher in the less common 
example when two single people, both with children, contemplate 
marriage.) To take into account the various ways in which those 
earnings can be distributed within the couple, each scenario shows the 
single parent, as the secondary earner, earning between zero percent 
and 100 percent (in 10 percent increments) of the couple's total 
income. Generally, as the figure shows, when spouses have similar 
earnings, penalties are higher (subsidies are lower). When one spouse 
earns significantly more than the other, penalties are lower or 
subsidies are higher. In the figure, the curve with solid square 
markers shows the marriage penalties in the tax system alone; the curve 
with the diamond markers shows combined penalties in the tax system and 
in the transfer system programs of food stamps, Medicaid, and SCHIP. 
Because these three programs, as noted, are almost universally 
available, effectively all families in these income ranges face these 
penalties, unless they fail to apply for the benefits. We have not 
included an even wider set of programs such as housing and TANF, where 
the penalties become very large.
    In the tax system by itself low-income families generally enjoy 
marriage subsidies, regardless of how earnings are divided, thanks 
largely to the generous phase-in of the EITC, which pays 40 cents for 
every dollar earned up to $10,750 for households with two children. At 
modest earnings of $20,000 and above, however, both tax and transfer 
marriage penalties loom large, primarily because of the high phase-out 
of the EITC and the decline of food stamps, which fall several hundred 
dollars for every additional thousand dollars of earnings. For families 
not on TANF, as in this example, Medicaid becomes unavailable to 
parents after around $5,000 of income, though children are covered as 
long as parental income is relatively low. SCHIP, meanwhile, replaces 
Medicaid's coverage of children at incomes between 185 and 235 percent 
of poverty (that is, for a family of four, between $36,000 and $45,000) 
in Pennsylvania. In other words, in Pennsylvania, these health programs 
contribute substantially to marriage penalties first at very low 
incomes (below $10,000) and then again at moderate incomes (above 
$36,000).

Possibilities for Reform
    Given the hundreds of billions of dollars in marriage penalties and 
subsidies processed each year through the nation's social welfare 
system, the prospects for reform may seem remote. But as recent tax 
legislation makes clear, elected officials are occasionally prepared to 
take sweeping action--even if their attention so far has focused mainly 
on those with incomes above the median.
    In my work with Adam Carasso, we offer four options for reform. The 
first two, in our opinion, deserve special consideration as newer, 
although untried, approaches. The latter two options have been applied 
in specific circumstances, but both would require major adjustments in 
benefit and tax structures if carried out on a wider scale. A 
combination of these approaches, nonetheless, could be used to lessen 
and, for many, remove current marriage penalties.
  --A Maximum Tax Rate for Low- and Moderate-Income Families.--For 
        high-income taxpayers, the maximum marginal tax rate has been 
        reduced from about 70 percent to a range of 28 percent to 39 
        percent since 1986. Yet the maximum effective marginal tax rate 
        for lower- to moderate-income households is often far higher--
        often 50, 60, 80, or even 100 percent when they earn more or 
        marry. To implement a maximum rate would require coordination 
        and one-stop shopping for many of the nation's social welfare 
        programs--but this action would go far to reduce marriage 
        penalties.
  --Individual Wage Subsidies.--The EITC is not a true wage subsidy. 
        Many workers with very low wages become ineligible for the EITC 
        when their income is combined with that of a spouse. A wage 
        subsidy based on individual wages, whether hourly or annual, 
        would avoid this problem. Recent comments by many members of 
        both political parties have focused renewed attention on the 
        plight of many men, who can receive costly ``public support'' 
        only if they break the law and enter the corrections system. 
        Otherwise, most of the contact these men have with the social 
        welfare system involves facing huge marriage penalties. Rather 
        than being family breadwinners, many find themselves able to 
        help their children financially only by moving out or never 
        marrying. Individual wage subsidies would help make it possible 
        for a low-wage man or woman to marry someone with children 
        without losing substantial income and welfare, as now happens.
  --Universal Programs.--A universal program or tax credit--one that 
        goes to households with children without diminishment of 
        benefits regardless of marital status or income--would clearly 
        avoid a marriage penalty. Many government spending programs 
        such as public education and Medicare fall into this category 
        because they are not means-tested. The recent adoption of a 
        more universal child credit in the tax code reduced marriage 
        penalties in exactly this manner.
  --Mandatory Individual Filing or Choice of Filing.--If married 
        individuals were either required or given the option to file as 
        single individuals, they could avoid marriage penalties. Many 
        other nations, such as Canada, Australia, Italy, and Japan, 
        allow or require individual filing for married couples for 
        income tax purposes.

Conclusion
    For several decades now, policymakers have created public tax and 
transfer programs with little if any attention to the sometimes-severe 
marriage penalties that they inadvertently impose. The expanded public 
subsidies thus put in place by lawmakers came at the expense of higher 
effective marginal tax rates, as program benefits often had to be 
phased out beginning at fairly low incomes to keep overall program 
costs in check. The combined effective marginal tax rates from these 
phase-outs and from regular taxes are very high--sometimes causing 
households to lose a dollar or more for every dollar earned and 
severely penalizing marriage. In aggregate, couples today face hundreds 
of billions of dollars in increased taxes or reduced benefits if they 
marry. Cohabitating or not getting married has become the tax shelter 
of the poor.
    These developments are in no small part the consequence of a half-
century of social policy enactments of roughly similar design. Liberals 
wishing to keep programs very progressive and conservatives wishing to 
keep budget costs low have together put a substantial portion of 
household subsidies and assistance onto this platform.
    These penalties can be reduced in various ways. Most promising, in 
our view, is to establish a combined maximum marginal tax rate for low- 
and moderate-income households similar to the rates applying to the 
richest individuals in society. Another innovative strategy would be to 
provide a wage subsidy on an individual rather than family basis for 
low-wage workers. Two other approaches, both of which have already been 
tried successfully on a smaller scale, would be to make some programs 
more universal, as with the child credit and public education, and to 
move toward mandatory or optional individual filing for benefits and 
taxes.
    In recent years, couples in the United States have increasingly 
regarded marriage as an option, one among many ways of creating a 
household. This declining regard for marriage calls into question 
government's continued use of marriage vows as the primary mechanism by 
which to enforce household filing for benefits and to raise taxes or 
lower benefits. Whether Americans' changing views on marriage 
eventually lead to the radical restructuring required to reduce the 
very high level of marriage penalty facing most low- and moderate-
income individuals remains to be seen.

    Senator Brownback. Let me ask you, just on that last point, 
optional individual filing. That might be one of the simpler 
ways, actually, of doing it--where you'd allow people to get 
married, but they wouldn't have to file jointly if they're 
below a certain income level, to keep away from this sort of 
penalty that we're talking about. Is that what you're----
    Dr. Steuerle. Well, again, I want to point out, these are 
big, big dilemmas we're facing. But if you think about the way 
society has gone, the marriage penalty is essentially a tax on 
the marriage vow. In some ways, it's not even a tax on living 
as a married couple, it's a tax on taking a vow. That's 
administratively, for the most part, how the welfare and tax 
systems determine that they're going to require you to file as 
a joint return or as a household. Now, technically, some of 
these systems say, if you're cohabitating, you have to file 
jointly, as well. But we really have very little in the way of 
enforcement to be able to achieve that, except in some cases. 
So, the taking of the marriage vow is an optional system 
already. So, for people for whom vows are not important, 
they're already in an optional system. They can essentially 
behave as single individuals. What we do is----
    Senator Brownback. That's what's happening.
    Dr. Steuerle. Right. We force people, who believe in taking 
vows, to live in an alternative system, where they're not in an 
optional system. We say, ``You take that vow, we've got you. 
You don't get this particular set of benefits.'' In some 
countries around the world, on the tax system, not necessarily 
on the welfare system, they've already gone this direction with 
respect to how they assess taxes. They've actually thrown in 
the towel, and they've said, ``We'll basically allow people to 
opt to file as individuals rather than to file as joint 
returns.'' But, again, I want to be clear, to go in this 
direction disrupts a lot of systems. I mean, there's a lot of 
other changes one would have to think about doing at the same 
time. It's not quite so simple. If you have--if you just allow, 
say, a middle-income couple to file individually, and a 
nonworking spouse all of a sudden can become eligible for food 
stamps, because her income--or his income is low, and the 
working spouse is making substantial money, you would end up 
having to pay a lot of money. So, you'd have to make a lot of 
other changes at the same time to move in that direction.
    Senator Brownback. Some of the press accounts on the 
marriage issue are saying, ``Hey, look, a lot of couples don't 
pay attention to this benefit or this tax rate. That's not 
impacting their decision whether or not to get married.'' 
What's your experience with that? Is this impacting people's 
decisions on whether to get married or not?
    Dr. Horn. Well, if you look at the welfare system 
historically, the welfare system sent a message to mothers. 
They said, ``We'll give you cash, as long as you don't do two 
things, as long as you don't go to work and you don't marry 
somebody who's working.'' And that was part of the aid to 
families with dependent children (AFDC) system for a long time. 
And it--I don't think it's any coincidence--mere coincidence 
that you see, with the advent of a welfare State--particularly 
a means-tested welfare State that had those kind of messages, 
that you also saw a retreat from marriage in low-income 
communities.
    So, I don't think that you have a whole bunch of mini-
economists in low-income communities calculating precisely how 
much benefits they would lose if they got married. But I do 
think that in low-income communities they have a sense that you 
``lose stuff'' if you get married, that it's not a good deal to 
get married. And so--and even if they're not, why should they 
be surprised, because they've done something that society says 
we want them to do--that is, to get married--to suddenly 
discover that they've lost all these welfare benefits?
    It seems to me that what we ought to do is pay attention to 
what I think Ronald Reagan talked about--that is, you get less 
of what you tax and more of what you subsidize. And what we've 
been taxing is marriage and subsidizing is single parenthood. 
And what the calculator is meant to do is to be a starting 
point for us to see just precisely where these marriage 
penalties are and how they interact, how these various benefit 
and tax programs interact with each other, so we can start to 
formulate effective ways to try to reduce that marriage 
penalty.
    Senator Brownback. Mr. Haskins, you were involved in the 
welfare reform of 1996--deeply involved in that. And I thought 
that was a very successful reform: getting more people working, 
getting fewer people on public assistance, putting more dignity 
into the system. Did you look at this issue at that point in 
time, about the impact of public assistance on welfare and the 
taxing of marriage?
    Mr. Haskins. Not so much that, although family--I believe 
it was the first major debate in Congress where family 
composition was a huge issue. In fact, if you look at the goals 
of the welfare reform, the TANF--the title 1 of the welfare 
reform bill is the temporary assistance for needy family 
programs. It has four goals, gives the States a block grant of 
$16.5 million and says, ``Figure out how to achieve these four 
goals.'' Three of the four have to do with family composition, 
including marriage, reducing single-parent families, and 
increasing the percentage of kids in two-parent families. And, 
in addition to that, we had a huge fight, including on the 
Senate floor, where the fight was really lost by conservatives, 
to try to do something to the welfare system to address the 
issue that Wade just described, of actually removing the 
incentive for young moms to have babies outside marriage. We 
were going to completely end the cash benefit. The House did 
that for moms under age 18, and the Senate--it was defeated on 
the Senate floor, so it was taken out.
    So, the answer is, yes, we had this debate. We were--I 
think there's no question it was the first major national 
debate, provoked by Republicans primarily, that family 
composition is really the biggest problem in the country, and 
welfare causes the problems of family composition, so we need 
to change the nature of welfare.
    I would point out to you, Senator, that since the welfare 
reform bill passed, I think it's good we have made some 
progress, especially on nonmarital births. I think their 
messages are changing, the kind of messages that Wade talked 
about. The mothers have to work, that it's more difficult now 
to get welfare. You saw it in the actual data of how many 
people get TANF who are cohabiting. Only 14 percent of 
cohabiting couples below 200 percent of the poverty level even 
get TANF. So, there's some--I think there may--we may have re-
stigmatized welfare.
    In any case, those nonmarital birthrates that increase 
every year, and, for blacks, reach 70 percent, for the country 
as a whole, reached 33 percent, leveled off. If you look at the 
graph in my testimony, you can just see, it levels right off in 
1995. It's increased a little bit, so we haven't solved the 
problem. We need to get it to go the other way.
    Senator Brownback. But it just seems like the real success 
was that people left welfare and went to work.
    Mr. Haskins. Right.
    Senator Brownback. But I can't track in the system any 
change in family formation.
    Mr. Haskins. There is some. And I will be happy to send it 
to you.
    [The information follows:]
                                 The Brookings Institution,
                                 Washington, DC, December 13, 2006.
The Honorable Sam Brownback,
United States Senate, 303 Hart Senate Office Building, Washington, DC 
        20510.
    Dear Senator Brownback: This letter responds to your request for 
information on changes in family composition since the welfare reform 
law was enacted in 1996. Before getting into the data on changes in 
family composition, I would call your attention to two points. First, 
nothing in this letter is intended to claim that welfare reform was the 
cause of any changes in family composition. At most, examining trends 
before and after 1996 might be thought of as suggestive, but without 
more careful work it is unwise to conclude that any particular event 
caused any of the observed changes in family composition trends. 
Second, in order to examine trends, it is best to start long before the 
welfare law passed in 1996.
    Let me clarify my biases. I believe that strong scientific evidence 
shows that children raised by their married parents do better on a wide 
variety of measures of growth and development than children reared in 
other family or household forms. I do not condemn single parents (I was 
a single parent for five years), but the evidence is very strong that 
children, adults, and society benefit if children are raised by their 
married parents.\1\
---------------------------------------------------------------------------
    \1\ ``Marriage and Child Wellbeing,'' Future of Children, vol. 15, 
no. 2 (Fall 2005).
---------------------------------------------------------------------------
    If we could raise the share of American children reared by their 
married parents, poverty would fall, children would complete more years 
of schooling, teen pregnancy would drop, juvenile delinquency would 
decline, and several other child outcomes would be improved. Based on 
research by Adam Thomas and Isabel Sawhill at Brookings, it could even 
be claimed that increasing marriage rates would be more effective than 
increasing welfare payments in reducing poverty.\2\ For all these 
reasons, I'm a fan of anything that would increase the share of our 
nation's children being reared by their married parents.
---------------------------------------------------------------------------
    \2\ Isabel Sawhill and Adam Thomas, ``A Hand Up for the Bottom 
Third: Toward a New Agenda for Low-Income Working Families,'' Working 
Paper, Brookings Institution, May 2001; Ron Haskins and Isabel Sawhill, 
``Work and Marriage: The Way to End Poverty and Welfare,'' Welfare 
Reform & Beyond Brief, No. 28, Brookings Institution, September 2003.



    I begin with teen births because over 80 percent of teen births are 
outside marriage and thereby create a single-parent family. In 
addition, good evidence shows that teen births reduce the likelihood 
that the mother will ever marry. Fortunately, perhaps the clearest and 
most hopeful trend in measures of family composition is the trend in 
teen births. As shown in figure 1, teen births began declining in 1991 
and have declined every year since then. Over the period between 1991 
and 2004, teen births declined by one-third, a truly remarkable 
development.
    Although the causes of these declines are not well understood, a 
recent study, based on the National Survey of Family Growth, concludes 
that the fall in teen births is attributable, at least in part, to both 
increased abstinence among teens and more effective use of 
contraception.\3\ There have also been a few quality studies of 
programs designed to reduce teen pregnancy that show good, although 
modest, results.\4\ It seems reasonable to conclude that if we want 
teen births to continue falling, we should continue programs that 
emphasize abstinence, we should make birth control available to 
sexually active teens, and we should encourage programs that aim to 
involve youth in constructive activities, especially mentoring, during 
after school and weekend hours.
---------------------------------------------------------------------------
    \3\ John S. Santelli and others, ``Can Changes in Sexual Behaviors 
Among High School Students Explain the Decline in Teen Pregnancy Rates 
in the 1990s?'' Journal of Adolescent Health 25 (2004): 80-90.
    \4\ Julia B. Isaacs, ``Cost-Effective Investments in Children,'' 
Unpublished Working Paper, Brookings Institution, September 2006; 
Douglas Kirby, Emerging Answers: Research Findings on Programs to 
Reduce Teen Pregnancy (Washington, D.C.: National Campaign to Prevent 
Teen Pregnancy, 2001).



    If we broaden the scope and consider nonmarital births among women 
of all ages, the picture is not as positive. Figure 2 shows the 
dramatic rise in nonmarital births both as a rate per 1,000 women of 
child-bearing age and as a percentage of all births. These data show 
that after several decades of rising rates, during which the share of 
all births outside marriage rose to about one in three, both measures 
either stabilized or increased at a much slower rate beginning in the 
mid-1990s. Some people have interpreted this welcome development to be 
a result of welfare reform, but the fact that the two measures changed 
course at about the time the welfare reform law passed is only weak 
evidence of a causal relationship. It also appears that both measures 
have started to increase somewhat in the last few years.
    Figure 2 does not show the remarkable differences between ethnic 
groups in both measures. For example, in 1995 about 70 percent of black 
babies, 45 percent of Hispanic babies, and 25 percent of white babies 
were born outside marriage. These differences are correlated with 
ethnic differences in poverty and many measures of child development, 
and some scholars believe that nonmarital births are causally related 
both to the negative outcomes that characterize individual children as 
they grow older and to the substantial differences in development 
between children from these three ethnic groups.



    Another trend bearing directly on family composition is the change 
in marriage rates. Figure 3 shows marriage rates for white and black 
women since 1950. Marriage rates for both blacks and whites declined 
from the 1960s until roughly the mid-1990s, although the decline for 
blacks was steeper than the decline for whites. By the mid-1990s, about 
40 percent of black women, as compared with over 60 percent of white 
women, were married. The decline in marriage rates plays a role in the 
rise of nonmarital births because more women are ``at risk'' for more 
years of having a baby outside marriage.



    The combination of these trends leads to what is arguably the most 
important trend for the nation's future; namely, the percentage of 
children living in single-parent families (figure 4). Between 1960 (not 
shown in figure 4) and the mid-1990s, the percentage of children in 
single-parent families at a point in time rose almost every year and by 
1995 had nearly tripled, rising from 9.4 percent to 27 percent. Over 
the next decade, however, the trend slowed dramatically, increasing 
only 1 percentage point over the period and actually declining in some 
years.
    Although trends since the mid-1990s are more favorable, all the 
measures of trends that contribute to single-parent families are at 
historically high levels. If we think of investments in children as the 
key to the nation's future, it is doubtful that any action taken by 
public officials could have as much impact on the well-being of 
children or the nation's future as substantially increasing the share 
of children being reared by their married parents.
    I would be happy to respond to any additional requests for 
information or for clarification of information summarized in this 
letter. Thanks for the opportunity to expand on a major point of my 
testimony.
            Respectfully,
                                               Ron Haskins,
Senior Fellow and Co-Director, Center on Children and Families, The 
                                             Brookings Institution.

    Mr. Haskins. In fact, there are actually studies that--
we're making Maag famous here, Greg Maag, who happens to be in 
the audience. You could ask him some of these questions? What?
    Dr. Steuerle. Greg Acs.
    Mr. Haskins. I mean, Greg Acs and Elaine Maag. The same Acs 
that did this study that I showed you before on the chart also 
did a study looking specifically at the impacts on family 
composition. And he shows that, for low-income families, that 
there was a--somewhat of an increase, about a percentage point, 
in the--in the percentage of kids who were in two-parent 
families. He--and some people think that's because of marriage, 
some think it's because of cohabitation. But it was focused on 
low-income families, the kind of families that would be 
affected by welfare. So, there's----
    Senator Brownback. Okay.
    Mr. Haskins [continuing]. Some evidence.
    Senator Brownback. We cut the welfare rolls in half by 
people working, and if we only increased the marriage rates by 
1 percent, it seems like, there was one major success, and 
there was one that was left undone.
    Mr. Haskins. But I would point out to you, Senator, that 
Congress started passing work legislation----
    Senator Brownback. I voted for this change. I'm not casting 
aspersions on you, I'm just saying it looks like we got only 
part of it right. And we got a big part of it wrong.
    Mr. Haskins. Okay.
    Senator Brownback. Or we didn't address a big part of it, 
would be a better way to put it. And, to me, that's the real 
next step. If we're concerned about family formation, we've got 
to really go at this issue of penalties. And I would be one 
that would be willing to say, ``If you're willing to get 
married, I'll give you more benefits, not take them away,'' to 
try to encourage this, because it's such a critical issue.
    Dr. Horn. Senator, I agree with you. I think that the 
unfinished business of welfare reform is, in fact, tackling the 
problem of family formation. Congress made a really big step in 
this regard in the Deficit Reduction Act by appropriating, for 
the first time, a dedicated funding stream for healthy marriage 
initiatives. And I know that you were a strong supporter of 
that. But one of the things that this calculator does is, it 
adds clarity to this policy discussion.
    Senator Brownback. Yes.
    Dr. Horn. In West Virginia, up until 2004, they used to 
give an extra hundred dollars, for a limited period of time, to 
couples who previously had qualified for welfare--they added a 
$100 benefit to their--what they now were getting under the 
fact--under the--their eligibility now that--based on the fact 
that they're married. Many people labeled that a ``marriage 
bonus.'' And the--and what that gave is the impression that 
somehow the couple got $100 more than they would have gotten if 
they didn't get married. That is completely false.
    What the calculator shows is that, in 2003, for example, in 
the example that I gave in my opening statement, that couple in 
West Virginia, even the $100 extra money in their TANF benefit, 
actually had a reduction, in their overall benefits, of $343 a 
month.
    Now, I daresay that if one of your staffers came into your 
office, and you said, ``I--hey, I've got good news and bad 
news. Good news is, I'm giving you a $5,000 bonus. Bad news is, 
I'm giving you a $10,000 pay cut,'' they wouldn't go home and 
brag about the additional money they got. And that's precisely 
what was happening in West Virginia, is that we were pretending 
as if this was a bonus for marriage, when, in fact, I would 
label it a marriage penalty rebate system.
    Senator Brownback. Dr. Steuerle and Mr. Haskins both point 
out the difficulty in correcting this situation. And I 
appreciate that. And I like your idea, Mr. Haskins, of a CRS 
study. Let's really dig into this. And we'll request one. We'll 
do that. But I'm sitting here, as a policymaker, thinking we 
all agree that we need more family formation among low-income 
persons. I can see why West Virginia would do something like 
that, and that they're just trying to say, ``All right, let's 
put some up-front cash here, because we know that if you get 
married, our long-term costs go down. So, we'll put up-front 
money to do something like that''. I mean, I don't think the 
$100 is anywhere near sufficient. But what about that type of 
an idea, ``If you'll get married, and you're a couple in this 
category, over a period of 5 years we'll make this level of 
cash payments to the two of you?''
    Dr. Horn. The States actually have the flexibility under 
the TANF program to do that now if they want to.
    Senator Brownback. Do some of them do it?
    Dr. Horn. West Virginia used to. And, in 2004, because 
people labeled it a ``marriage bonus,'' they cut it out in 
2004. They terminated the program. But what a State could do 
with this calculator is say to a couple, ``If you can 
demonstrate that you are going to lose benefits, we--what we--
because you got married--what we will do is, we will provide, 
for this limited period of time, some additional cash 
supplements, so that you are not completely disadvantaged 
because you've done something that we say, as a culture, we 
value--that is, to get married.'' And States have the 
flexibility to do that right now, under the TANF program. And 
my hope is that some might entertain that, once States start to 
look at these calculations in--using the marriage calculator, 
so that they, in fact, are reinforcing, as opposed to 
punishing, as my friend Dr. Steuerle says----
    Senator Brownback. Yes.
    Dr. Horn [continuing]. The marriage vow.
    Dr. Steuerle. Senator, this is very close to what--the--
when I listed the four ways of tackling this issue, in some 
ways they were logical ways, they weren't necessarily the 
ways--necessarily favored one over the other. But what Dr. Horn 
is referring to is very close to the--what I said is setting a 
maximum tax rate. You can say, ``Okay, if you marry, we're not 
going to reduce your benefits as much as we might, otherwise.''
    And let me add that even while we're in the midst of this 
discussion, Congress, on both the Republican and the Democratic 
side, is constantly dealing with new programs they want to add 
to this system. Individual development accounts, not the 
marriage accounts you have, but separately, have----
    Senator Brownback. Right.
    Dr. Steuerle [continuing]. Phase-outs. A great many 
proposals on healthcare, some of which I even like, like in 
terms of vouchers, perhaps tackling some of the difficulties of 
the existing tax benefits, some of those proposals have phase-
outs. Every time these phase-outs get added, whether it's by 
the Federal Government or by the State government, they tend to 
add these marriage penalties. And almost no one has been 
calculating them. And so, what Dr. Horn's calculator, developed 
by Dr. Acs and others, is doing is allowing us to actually look 
at--when people enact these programs and say, ``Let's at least 
look at the marriage penalties that are being created,'' as 
opposed to leaving it as a nonissue.
    Senator Brownback. Right. Dr. Horn, Dr. Steuerle has made a 
series of policy recommendations for ways we can tackle this. 
Mr. Haskins has suggested some more in-depth study on this. Do 
you have policy recommendations to make to us on how to address 
this topic?
    Dr. Horn. Well, first of all, thankfully most people don't 
make decisions about whether to get married not solely based 
upon short-term economic gain or penalty. Most people make 
decisions about marriage for other reasons, because they want 
to be with this person for the rest of their lives, and they 
want to give their children a healthy, stable, married 
household. And so, there are other calculations, including the 
long-term financial benefits of being married, that clearly are 
reflected in the research literature.
    Having said that, I do think that we should begin to 
explore ways to reduce the marriage penalty. One way would be--
as I've suggested--is for States to use the calculator to say, 
``Hey, look, if you can demonstrate to us, through this 
calculator, that the fact of you getting married is going to 
reduce your benefits, then we will provide a certain amount of 
extra cash for a certain limited period of time to offset that 
reduction in the benefits.'' I think that would----
    Senator Brownback. And that's available to do now.
    Dr. Horn. They could do that now under the flex plan in the 
TANF program. And, you know, we've got 60 percent less people 
on the caseloads than we used to have, and we have the same 
amount of money in the TANF block grant. We've got $2 billion 
in unspent carryover funds. There's a lot of money out there in 
the system. And I think an innovative State could even do this 
in some jurisdictions just to try it out to see if we can get 
higher marriage rates, more stable marriages.
    Senator Brownback. We could try it in the District of 
Columbia.
    Dr. Horn. Sure. Absolutely.
    Senator Brownback. What kind of bonus could we provide 
under TANF, if we wanted a 3- or 5-year cash bonus? How big 
could this be? Do you know that number?
    Dr. Horn. I don't. I do know West Virginia used to give 
$100, and it didn't bankrupt them. The bigger problem for West 
Virginia was using the word ``bonus.'' It suggested we were 
paying people to get married.
    Senator Brownback. Yes. But can you get up above $1,000, 
$2,000, $3,000?
    Dr. Horn. Oh, that was--I'm sorry, to be clear, that was 
$100 a month, not $100 a year.
    Senator Brownback. Oh, was it? Okay.
    Dr. Horn. So, it was worth $1,200.
    Senator Brownback. All right. I thought you were just 
talking about $100, and I was thinking, ``Ah, that seems like 
not very much, to get married.''
    Mr. Haskins. Mr. Chairman, can I make a point about this?
    Senator Brownback. Yes. I'm sorry, let me finish with Wade.
    Do you know the maximum amount we could get under the TANF 
proposal of what you're saying is currently available?
    Dr. Horn. I don't. And that would depend a little bit upon 
the amount of money that a State has in its TANF block grant 
and the other benefits that are provided through that TANF 
block grant, both cash and noncash benefits. What----
    Senator Brownback. Could we ask your office, if it's not 
too hard to come up with this, what would be the maximum amount 
a State could come up with on this--because I would like to be 
able to get that number out, if it's not too difficult to 
achieve.
    Dr. Horn. We could work on that.
    [The information follows:]

    TANF is a block grant that gives States considerable 
flexibility. States have broad discretion in deciding whether 
and how much of their TANF funds to use for cash bonuses for 
low-income couples to get and stay married. The actual amounts 
that States spend on such bonuses are not available from 
information that States report to ACF. The following web site 
provides the latest available information on how States spend 
their TANF grants.

    Dr. Horn. And often in the calculations of the total cost, 
the assumption is, once you implement something, everybody gets 
married. That's not true. And so, when you talk about the 
hundreds of billions of dollars that it would cost to have 
every single person married that has low income, the reality 
is, not every single person on welfare is going to get married 
because you eliminate the marriage penalties.
    Senator Brownback. Right.
    Regarding the District, I want to work with you and your 
office and the current Mayor, who's retiring, who I think's 
done an outstanding job as Mayor here in the District of 
Columbia, and has been very supportive of marriage. It would be 
interesting if we could start a pilot here in the District of 
Columbia, because people have been very supportive of the 
marriage development accounts. They want more family formations 
taking place here. It's a nice coalition from the left and the 
right, and would be a good place to take a stab at that. So, we 
will be working with you to see if we can do that here.
    Dr. Steuerle. Senator, if I could just add a footnote--when 
I said there were hundreds of billions of dollars of penalties, 
it's partly because couples who don't apply to be in these 
systems, technically, do face these penalties. In some sense, 
they've moved out of the systems, or they don't file as 
separate individuals. They don't divorce. And you do face this 
dilemma when you only try to take this existing structure and 
try to deal with it just by doing some things to get people out 
of it, because you're only, then--you're only, then, basically 
applying it to the people that are sort of--say, if you apply 
it to TANF parents, you're only applying it to that group, but 
you've got all these people who haven't applied----
    Senator Brownback. Right.
    Dr. Steuerle [continuing]. For TANF who technically may 
face the same penalties. They just live with them. So, in the 
longer term, I think you have to deal with the broader question 
of how you want this welfare structure to operate. Do you 
really want to have these huge phase-outs, and do you want to--
basically basing it on the family circumstances, rather than, 
in some cases, the individual circumstances. And I think those 
issues still have to be addressed, long run.
    And I will say that I do think that there's more hope here 
than meets the eye. If you go back from 1981 to--say, to the 
current day, 25 years, in terms of domestic policy per 
household, we're spending, you know, perhaps, you know, $5,000 
to $10,000 more per household than we did even when Ronald 
Reagan came to office. Basically, Government, over time, 
increases the amount it spends, just because the economy gets 
richer. And if you take those increased resources and think 
about how you want to direct them, and don't direct them in 
ways that create so many marriage penalties, over time you can 
often reduce them in the ways that you can't just by trying to 
just get at these programs one little nick at a time.
    Senator Brownback. I think it was Mr. Haskins that said the 
two greatest tools we've got to reduce poverty are work and 
marriage, if I'm correctly quoting you. And I think we've made 
some real progress on the work, and I don't think we've made 
much on marriage. And so, to me, that's our real challenge, 
because I think it is the long-term way to really reduce 
poverty in this country.
    Mr. Haskins. Could I go back for just a moment to the idea 
of getting the States to do more here? The first thing is, in 
the TANF program, the States are complaining loudly know, as 
Wade knows very well, that they're going to soon run out of 
money; they don't have enough money, because they have all 
these new work standards that Congress just passed. So, this--
don't be surprised if you approach States and they respond that 
way.
    But the second thing is that I think a way to do this is to 
engage in cost sharing with the States. I think they should 
spend the TANF reserves, and they should spend TANF money to do 
this, but, in the long run, if you make changes in programs 
like Medicaid, where we share the costs, or food stamps, where 
it's--the benefit's 100 percent Federal, the Federal Government 
will have to subsidize some of the cost. We should try to get 
the States to share us--share the costs with us, point one; 
and, point two, in some of the programs, we can use the Federal 
share and say, ``If you do the right thing, then we'll pay our 
share of it.'' That gives the States at least some incentive to 
move in the direction that you want them to move. So, for 
example, giving bonuses for marriage.
    Senator Brownback. Well, this has been very good. And I 
invite you and your groups to work on this with us, because I 
do think that there would be a broad basis of support that we 
could galvanize around this topic. An outstanding job from each 
of you. Thank you for being here.
    Call up the second panel: Ms. Kate Jesberg, Director of the 
Department of Human Services, District of Columbia, Mr. Curtis 
Watkins, Executive Director of the East Capitol Center for 
Change in the District of Columbia, and Mr. and Mrs. Winston 
Graham, recently married residents of the District of Columbia.
    We do have a vote scheduled at 11 o'clock. What I'd like to 
do is to get this panel started and going as much as we can and 
see how far we can get this moving along.
    Ms. Jesberg, thank you for being here. Each of your written 
testimonies will be submitted into the record. I would actually 
appreciate it, if you would summarize your thoughts.

STATEMENT OF KATE JESBERG, DIRECTOR, DEPARTMENT OF 
            HUMAN SERVICES, DISTRICT OF COLUMBIA

    Ms. Jesberg. Yes, I'd be happy to summarize. Thank you for 
having us here today, Senator.
    The District of Columbia is extremely supportive of your 
efforts, and very thankful that you have pioneered the use of 
marriage development accounts. And my colleagues here, Mr. 
Curtis Watkins and Mr. and Mrs. Graham were very happy about 
that.
    I wanted to give you some background on the District of 
Columbia. The department of human services runs all the major 
benefit programs that you just heard the prior panel 
discussing--food stamps, Medicaid, TANF, a wide array of social 
service programs. And we began funding a number of marriage 
initiatives and other programs that really strengthen family 
formation approximately 5 years ago. We started with some small 
grants. Someone who's prominent in the field, especially in 
African-American marriage is Nisa Muhammad, of Wedded Bliss; 
and she, in turn, led to other efforts. We currently fund a 
fairly large fatherhood initiative, which we find is closely 
linked to marriage. And we also fund what we call a family-to-
family program, which is a mentor program where stable families 
mentor families that really need that assistance. And one of 
the goals is, of course, marriage. But--that's not always a 
goal for every family, but we believe strongly that increasing 
family formation is critical.
    In my former position, before I was the director at human 
services, I actually ran the welfare programs, so I'd be happy 
to offer some of my thoughts on program design that you just 
heard the last panel discuss and where, really, some of those 
notch effects are.
    But, at this point, I would like to simply reiterate my 
thanks, and I'm sure you want to hear from our newly married 
couple and Mr. Watkins, so, let be brief.
    Thank you.
    Senator Brownback. Thank you. And I will, if we've got 
time, want to go through some more of those notches.
    [The statement follows:]

                   Prepared Statement of Kate Jesberg

    Good morning Senator Brownback and members of the Committee on 
Appropriations. I am Kate Jesberg, Interim Director of the District of 
Columbia (D.C.) Department of Human Services. I am pleased to appear 
before you today to discuss the programmatic infrastructure the 
Department of Human Services has developed to support family formation 
as means of improving child well-being and reducing poverty. The 
Department of Human Services is responsible for the administration of a 
wide range of social service programs in the District including 
determining eligibility for cash assistance through the Temporary 
Assistance for Needy Families (TANF) program, Food Stamps, and 
Medicaid, the provision of subsidized child care, rehabilitation, 
homeless, and adult protective services, and administration of the 
Social Services Block Grant program. DHS also administers the TANF 
Employment Program and an array of community and faith-based efforts 
under the TANF program.
    As you are well aware, the District faces among the highest poverty 
and child poverty rates in the nation, as well as one of the highest 
unemployment rates in the nation. The District government is committed 
to improving the lives of residents and addressing the challenges 
brought about by poverty and single-parenting. D.C. has long been 
involved in programs to promote stable families and, where appropriate, 
marriage. Through our TANF-funded Social Service Grants program, the 
Department supported its first marriage-focused program through 
Abundantly Living Services in 2002. These grants often provide a 
starting place for small, community-based organizations attempting to 
leverage other funds. This was the case in 2006 when the Wedded Bliss 
Foundation, led by Nisa Muhammed, received a DHS grant which allowed 
them to provide a weekend retreat for couples and also to train staff 
of other community organizations, thus serving as a springboard for the 
provision of additional services. We are very appreciative of your 
leadership and support of family formation in the District and the 
Department of Human Services looks forward to collaborating with the 
East Capital Center for Change and the Capital Area Asset Building 
Corporation as we all work to strengthen families and reduce poverty in 
the District.
    The Department's efforts to encourage and support family formation 
are primarily supported by the TANF and early childhood assistance 
programs. The District's TANF program has been recognized thirteen 
times for its performance in achieving the goals of welfare reform 
under the Personal Responsibility and Work Opportunity Reconciliation 
Act of 1996 (PRWORA). This recognition was in the form of high 
performance and out-of-wedlock birth reduction bonuses totaling more 
than $168 million since the inception of this bonus structure. With 
these additional resources, the District was able to fully embrace it's 
commitments to the third and fourth legislative purposes of TANF--
reducing out-of-wedlock births and encouraging the formation and 
maintenance of two-parent families. In addition to the grants mentioned 
above, I would like to specifically highlight two TANF-funded 
initiatives which are most directly related to encouraging family 
formation, the Family-to-Family program and the D.C. Fatherhood 
Initiative.
    With recognition that moving beyond welfare dependency requires 
personal commitment and supportive relationships, including strong and 
stable family ties to help individuals address the challenges 
associated with making major changes in lifestyle, DHS funded the 
Family-to-Family mentoring program. This program offers a family 
centered approach to mentoring with the goals of encouraging and 
promoting the development of individuals within strong families, and 
within a framework that builds upon family strengths, including 
marriage.
    There is little question that marriage contributes to and promotes 
child well-being, family economic stability, and stability of 
communities. However, marriage conveys the full range of these benefits 
only if it is a healthy union based on mutual love, respect and shared 
goals. Family-to-Family is designed to fill what is often a void of 
family connections and community support which are, unfortunately, no 
longer the staple of many District families. Family-to-Family seeks to 
address challenges within the family unit by illustrating, through 
face-to-face modeling, a more productive way to organize and conduct 
family life. Thus, for the mentee family this is real-time support that 
offers immediate and long term benefits for both the adults and 
children of the unit. For the mentors, the experience reinforces life 
choices already made, and allows them to promote healthy relationships 
for the benefit of their community.
    Not surprisingly, the Family-to-Family program is widely supported 
by our faith-based partners. Family-to-Family is a grant opportunity 
that touches upon all four TANF program goals. At the same time, 
messages of the faith community may be communicated to both the mentee 
family and mentor family in fulfilling the mentoring objectives. Each 
Family-to-Family project must be structured to maximize personal 
decision making that would help sustain and fortify the individual 
while pursuing employment and training, and long after securing 
employment. We believe Family-to-Family connects the individual to the 
true path to an end to dependency--strong functioning families, 
partnerships through healthy marriage, and a support network of friends 
and associates who reinforce positive behaviors, provide outlets to 
express frustration, uncertainties, and celebrate triumphs. With TANF 
funding of approximately $500,000, four grants were awarded in late 
fiscal year 2005 and have already provided services to 66 families and 
involved 47 mentors.
    The other initiative I am pleased to share with you today is the 
D.C. Fatherhood Initiative. Support of non-custodial fathers is 
critical to not only their ability to support their children, but to 
efforts to unite families and encourage marriage. The D.C. Fatherhood 
Initiative builds on best practice models employed nationwide, the 
resources of government partners, and the service commitment of 
community-based organizations to provide an array of services including 
educational assistance, job placement assistance, and the life skills 
necessary to promote family re-unification. Among the seven grantees 
providing direct services two, the Hope Foundation and Reintegrating 
Alternatives Personal Program, provide specialized services to assist 
ex-offenders as they reintegrate with the community and their families. 
Funded at approximately $1.3 million in fiscal year 2006, these 
community organizations have served more than 2,300 fathers since it 
began providing services in fiscal year 2004.
    The Department of Human Services is proud of our efforts to support 
family formation and marriage, and looks forward to partnering with 
other efforts in the community, including those of the East Capital 
Center for Change. I believe our program infrastructure provides a 
sound platform from which to facilitate usage of Marriage Development 
Accounts (MDAs) and pre-Marriage Development Accounts (PMDAs). I also 
look forward to helping our service delivery structure utilize the full 
range of resources at its disposal, such as the marriage calculator 
presented by Dr. Horn. The combination of these community and faith-
based programs, tools such as the calculator, and financial support 
provided through MDAs, offer a comprehensive approach to supporting 
healthy relationships, fostering supportive families, and developing 
strong communities that can overcome the challenges of poverty and 
ensure the well-being of children. In closing I also want to mention 
that the District has taken great strides to mitigate the marriage 
penalty through our income tax structure. By offering more filing 
status alternatives than the federal system, District residents can 
choose a status that minimizes any marriage penalty. While this 
structure does not eliminate all penalties in the city's tax system, it 
does reduce the disincentive to marriage inherent in the tax structure.
    Thank you for the opportunity to appear before you today. I would 
be please to respond to any questions you may have.

    Senator Brownback. Mr. Watkins, thank you for joining us.

STATEMENT OF CURTIS WATKINS, PRESIDENT, EAST CAPITOL 
            CENTER FOR CHANGE, WASHINGTON, DC

    Mr. Watkins. Thank you, Senator Brownback.
    I'm the president of East Capitol Center for Change (ECCC), 
and we're a youth and family development agency serving wards 7 
and 8 in the District of Columbia.
    Since my last appearance before the subcommittee, in 
October 2005, my organization has partnered with the National 
Center for Fathering, the Capital Area Asset Building 
Corporation, and the DC Metropolitan Healthy Marriage and 
Relationship Coalition, and I have been very busy launching 
``Together is Better,'' the campaign to strengthen D.C. 
families, marriages, and communities. Over 350 people, 
including D.C. area residents, clergy, public officials, and 
civic leaders, attended a launching event last week in ward 7. 
I will tell you more about the progress of the campaign in a 
few minutes, but, in the meantime, our new web site, for 
everybody here, is www.TogetherIsBetter.org. You'll find this a 
handy tool as a reference point for activities that will 
continue and multiply in the future.
    When we last met with you, I told you about how over the 
last four decades of the 20th century there's been a very large 
increase in nonmarital and childbearing cohabitation, as well 
as a higher rate of divorce and separation. This has had a 
direct impact, and profound impact, on the well-being of 
American children. As I told you how the marriage gap among 
American families, and particularly pronounced in the low-
income African-American community who resides in the distressed 
communities, those in ward 7 and ward 8, where I grew up, and 
ECCC serves today.
    A great deal of the reason for this public policy, from the 
national level on down, has discouraged the formation of a two-
parent, low-income family, although the original architects of 
aid for family and dependent children and other public programs 
never intended to discourage the family formation, it's a 
intended consequence we have still living in the effects of 
today. As I grew up in the East Capitol dwellings, a large 
public housing complex that has been redeveloped under HOPE VI, 
I saw fathers frequently make the choice to remain unattached 
to mothers of their children, even when a strong bond of love 
was present. As any economist will tell you, people generally 
make rational decisions when it comes to maximizing their 
income. Sadly, under policies of the past, and even the 
present, those choices have not always been in harmony with the 
maintenance of strong married coupled headed families. This 
truly needs to change, and change needs to happen.
    The purpose of Together is Better Campaign and the marriage 
development accounts we promote, which matches low-income 
engaged and married couples savings by three to one, up to a 
nest egg of $12,000 to purchase an asset, is an encouraging 
healthy relationships of marriages in the District families. 
Besides organizing this very successful launch event, the 
campaign has already begun monthly marriage development account 
orientations for couples, set in motion married and 
relationship education workshops, we have established a tight 
protocol for the prevention of domestic violence and abuse, 
we've sparked a high-quality fatherhood training at our 
affiliates across the city, and we're offering WAIT abstinence 
and pro-marriage training for youth. And this is beginning with 
the very teens that we serve through our after-school programs 
at ECCC.
    Over the next few months, we will spread this movement by 
offering a small grant program to residents and citywide 
community-based organizations who wish to join the campaign 
with their own workshops and innovative ideas for promoting 
healthy marriages in the District of Columbia.
    In my testimony, I have referenced Congresswoman Norton. 
She made a note in reference to the institute of the black 
family, including that both father and mother, as the head, 
that have gotten American--African-American family through the 
unjust period of U.S. history. She also noted that even through 
the unfortunate public policies that have helped to make 
marriage less and less the norm obviously must change. Only 
through the dogged determination of members of the D.C. 
African-American community can this ultimately turn this 
situation around fully and restore the healthy families to its 
proper place in our culture.
    As the son on this very community, and in solidarity with 
folks like Sandy and Winston, who are here today, and you'll 
hear from them shortly, as well as partners in Together is 
Better Campaign, I look forward to continuing the work that all 
of you here on Capitol Hill to strengthen the institute of 
marriage for the District residents and all races. You do your 
part, and we'll do ours, and together is better.
    And I also would like to offer the members of the panel, 
and also the audience, to sign our panel here as a solidarity 
movement of saying that together we can change some of the 
cultures in our community, but it's going to take us, as a 
village, to do this together.
    Thank you, Senator.
    [The statement follows:]

                  Prepared Statement of Curtis Watkins

    Hello, my name is Curtis Watkins. I am the President of the East 
Capitol Center for Change, a youth and family development agency that 
serves Wards 7 and 8 of the District of Columbia.
    Since my last appearance before this committee in October of 2005, 
my organization and partners like the National Center on Fathering, the 
Capital Area Asset Building Corporation, and the D.C. Metropolitan 
Healthy Marriage and Relationships Coalition have been very busy 
launching ``Together is Better: The Campaign to Strengthen D.C. 
Families, Marriages, & Communities.'' Over 350 people--including D.C. 
area residents, clergy, public officials, and civic leaders--attended 
the formal launch of our campaign last week in Ward 7. I will tell you 
more about the progress of the Campaign in a few moments, but in the 
meantime, write down www.togetherisbetter.org for a handy way to 
reference our activities, which will continue to multiply, in the 
future.
    When I last met with you, I told you about how, over the last four 
decades of the 20th century, very large increases in non-marital 
childbearing and cohabitation, as well as higher rates of divorce and 
separation--have had a direct and profound impact on the well-being of 
American children. I also told you how the ``marriage gap'' among 
American families is particularly pronounced for low-income African-
Americans who reside in distressed communities like those found in Ward 
7 and 8 where I grew up and in which ECCC serves today. A great deal of 
the reason for this is that public policies from the national level on 
down have discouraged the formation of two-parent low-income families. 
Although the original architects of Aid for Families with Dependent 
Children (AFDC) and other public programs never intended to discourage 
family formation, it is an unintended consequence we are still living 
with the effects of today. As I grew up in the East Capitol Dwellings, 
a huge public housing complex that has been redeveloped under Hope VI, 
I saw fathers frequently make the choice to remain unattached to the 
mothers of their children even when a strong bond of love was present. 
As any economist will tell you, people generally make rational 
decisions when it comes to maximizing their income. Sadly, under the 
policies of the past and even of the present, those choices have not 
always been in harmony with the maintenance of strong married-couple-
headed families. This has got to change.
    The purpose of the ``Together is Better'' Campaign and the marriage 
development accounts we promote, which match low-income engaged and 
married couple savings by 3 to 1 up to a total nest egg of $12,000 for 
the purchase of an asset, is to encourage healthy relationships and 
marriage for D.C. families. Besides organizing our very successful 
launch event, the Campaign has already begun monthly marriage 
development account orientations for couples, set in motion marriage 
and relationship education workshops, established tight protocols for 
the prevention of domestic violence and abuse, sparked high-quality 
fatherhood training at our affiliates across the city, and offered WAIT 
abstinence and pro-marriage trainings for youth--beginning with the 
very teens we serve through our after-school programming at ECCC. Over 
the next few months, we will spread this movement by offering small 
grants to residents and citywide community-based organizations who wish 
to join the Campaign with their own workshops and innovative ideas for 
promoting healthy marriage for District residents.
    During her inspiring keynote address to the attendees at the 
``Together is Better'' kick-off last week, Congresswoman Eleanor Holmes 
Norton noted that it has been the institution of the Black family--
including both the father and the mother at its head--that has gotten 
African Americans through the unjust periods in U.S. history. She also 
noted that--even though the unfortunate public policies that have 
helped to make marriage less and less the norm absolutely must change--
only the dogged determination of members of D.C.'s African-American 
community can ultimately turn the situation around fully and restore 
healthy marriage to its proper place in our culture. As a son of that 
very community and in solidarity with folks like Saundra and Winston 
Graham, who you have heard from today, as well as the other partners in 
the ``Together is Better'' campaign, I look forward to continuing to 
work with all of you here on Capitol Hill to strengthen the institution 
of marriage for District residents of all races. You do your part and 
we'll do ours. ``Together Is Better''

    Senator Brownback. Thank you. I love the campaign. I love 
the logo. And it's very encouraging and uplifting.
    Mr. and Mrs. Graham, I'm seeing a beautiful picture here. I 
hope you got a lot of people that were supportive of that. You 
might want to think about running for public office with a 
family that looks like that.
    That's nice.
    Mr. Graham. Thank you.
    Senator Brownback. Let me hear your testimony.
STATEMENT OF SAUNDRA GRAHAM, DISTRICT OF COLUMBIA
    Mrs. Graham. Okay. Good morning.
    Senator Brownback. Get that microphone closer to you, if 
you don't mind. Thank you.
    Mrs. Graham. Good morning, Senator Brownback.
    Senator Brownback. Good morning.
    Mrs. Graham. My name is Saundra Graham, and I am here to 
share why my family and I are participating in Together is 
Better, the campaign to strengthen D.C. families, marriages, 
and communities and why I applaud any efforts you might make to 
reduce barriers to marriage for low-income families.
    My husband and I have been together for nearly 20 years, 
but we just got married November 26 of last year. We live with 
our four children in Benning Terrace housing complex in ward 7. 
We have been living in Benning Terrace for 6 years this coming 
August.
    My husband and I have always dreamed of getting married one 
day. For those of you who might be wondering why we waited so 
long, and why we got married at all after nearly 20 years, 
well, there are a few reasons.
    First, we started going to church, a church that we 
absolutely fell in love with. Peace Fellowship, located at 1601 
Kenilworth Avenue, Northeast, awakened our spirit. Just seeing 
how husbands and wives treated each other and responded and 
interacted with their children was wonderful. Some of you may 
see healthy relationships on a regular basis and find them 
pretty normal, but for two people like my husband and myself, 
this was very abnormal. We both are--we both were raised in a 
dysfunctional household.
    Where we live, we see single moms who are doing the very 
best they can, and I applaud them, because raising children is 
the hardest job out there. But there are few families with 
married parents in Benning Terrace.
    Second, another reality that contributed to our delay in 
getting married was fear over what would happen to the public 
benefits we need to support our family. We live in a low-income 
housing project, where rent is based on our family's income. 
The majority of income for families in Benning Terrace comes 
from TANF or Social Security. In the District of Columbia, if 
an unmarried woman has a child, and has no income, then TANF 
qualifies her to receive financial assistance, which becomes 
her income. It is the experience of people in my community that 
if a woman gets married, her income from TANF and other public 
benefits will decrease. This is a disincentive----
    Senator Brownback. Do people talk about that disincentive?
    Mrs. Graham. It's rarely talked about, but it's just a 
known. It's a--it's a known. We--it's a fear that's there. It 
comes up every now and then, but the--but the thought is----
    Senator Brownback. It's just a given. People say, ``Okay, 
you get married, you're going to lose benefits.''
    Mrs. Graham. Exactly.
    Senator Brownback. Okay.
    Mrs. Graham. Exactly.
    Senator Brownback. I'm sorry. Please go ahead.
    Mrs. Graham. This is a disincentive to marriage, and I 
understand why. As a mother of four, the possibility of losing 
income I desperately needed to support my children altered my 
own judgment about marriage for so long. But with the support 
of my church, Peace Fellowship, and partnering organizations 
like East Capitol Center for Change, the Southeast Whitehouse, 
and, of course, the organization which I am presently employed 
East of the River Clergy Police Community Partnership, or 
ERCPCP, I am truly stepping out on my faith. God has put some 
amazing people in my life who have given so much of themselves, 
making this journey a life-altering experience. Words cannot 
express the impact that this season has made in my life.
    At this time, I would like to acknowledge some of those 
people: My pastor, Dennis and Susan Edwards; from ERCPCP, Deann 
Ayer, Derek Ravenell, Reverend Donald Isaac and his wife; from 
East Capitol Center for Change, Curtis Watkins; from DHS, Rufus 
Mayfield, Anthony Dialos, and Lenore Hall; from the Southeast 
Whitehouse, Tina Henderson; and the body of Peace Fellowship. 
Thank you. I applaud you today. I have had the opportunity to 
see what you all do in a day--day in and day out in our 
community. The love and the support you offer, the ways that 
you unselfishly give of yourself and your time, time that you 
don't necessarily have, but you make, thank you. Each one of 
you have, at one time or another, shared encouraging words, 
supportive suggestions, or your presence when I needed someone 
just to be there and listen. Again, thank you.
    Now, I spoke earlier about stepping out on my faith. Well, 
in my community, getting married is an abnormal behavior. Folks 
in our community think we are crazy. They shared their thoughts 
with us from time to time, so we have stepped out in our faith 
by getting married, and we are trusting that marriage is just 
the first step in a better life for us, especially for our 
children.
    In closing, there are many reasons I support Together is 
Better Campaign and the marriage development accounts that is 
offered to the District residents. Namely, I would like--I 
would like, one day, for my husband and I to be homeowners. 
Also, one day we would like to start our own business. These 
are our dreams. At the beginning of this journey, we didn't 
know whether our dreams were possible. But it is our hope that 
through the support from Together is Better and marriage 
development accounts program and a lot of hard work and 
continued growth on our part, we can realize these dreams, and 
many more.
    Thank you.
    Senator Brownback. Thank you, Mrs. Graham. That's powerful 
testimony.
    [The statement follows:]

              Prepared Statement of Saundra Corley Graham

    Good Morning, ladies and gentlemen. My name is Saundra Graham. I am 
here to share why my family and I are participating in ``Together is 
Better: The Campaign to Strengthen D.C. Families, Marriages & 
Communities'' and why I applaud any efforts you might make to reduce 
barriers to marriage for low-income families.
    My husband and I have been together for nearly 20 years, but we 
just got married November 26th of last year. We live with our four 
children in the Benning Terrace housing complex in Ward 7. We have been 
living in Benning Terrace for 6 years this coming August.
    My husband and I had always dreamed of getting married one day. For 
those of you who might be wondering why we waited so long and why we 
got married at all after nearly 20 years, well, there are a few 
reasons.
    First, we started going to a church that we absolutely fell in love 
with. Peace Fellowship, located at 1601 Kenilworth Ave. NE, awakened 
our spirits. Just seeing how husbands treated their wives and how wives 
responded to their husbands and how both husbands and wives interacted 
with their children was wonderful. Some of you may see healthy 
relationships on a regular basis and find them pretty normal, but for 
two people like my husband and me who were raised in dysfunctional 
households, this was very abnormal. Where we live, we see single moms 
who are doing the very best they can, and I applaud them because 
raising children is the hardest job out there, but there are few 
families with married parents in Benning Terrace.
    Second, another reality that contributed to our delay in getting 
married was fear over what would happen to the public benefits we need 
to support our family. We live in a low-income housing project where 
rent is based on a family's income. The majority of income for families 
in Benning comes from TANF or Social Security. In the District of 
Columbia, if an unmarried woman has a child and has no income, then 
TANF qualifies her to receive financial assistance, which becomes her 
income. It is the experience of people in my community that, if a woman 
gets married, her income from TANF and other public benefits will 
decrease. This is a disincentive to marriage and I understand why. 
Ladies and gentlemen, as a mother of four, the possibility of losing 
income I desperately needed to support my children altered my own 
judgment about marriage for so long, but with the support of my church, 
Peace Fellowship--located at 1601 Kenilworth Avenue NE--and partnering 
organizations like East Capitol Center for Change, the Southeast 
Whitehouse, and, of course, the organization with which I am presently 
employed--East of the River Clergy, Police, Community Partnership or 
ERCPCP, I am truly stepping out on faith.
    God has put some amazing people in my life who have given so much 
of themselves, making this journey a life altering experience. Words 
just cannot express the impact that this season has made in my life. At 
this time I would like to acknowledge some of these people:
  --My pastor and his wife, Dennis and Susan Edwards,
  --From ERCPCP, Deann Ayer, Derek Ravenell, Rev. Donald Isaac, and 
        Mrs. Isaac,
  --From East Capitol Center for Change, Curtis Watkins,
  --From the Southeast Whitehouse, Tina Henderson, and
  --the body of Peace Fellowship. Thank you! I applaud you today.
    I have had the opportunity to see what you all do day in and day 
out in our community--the love and support that you offer, the ways 
that you unselfishly give of yourselves and your time, time that you 
don't necessarily have, but you make--Thank you! Each one of you have 
at one time or another shared encouraging words, supportive 
suggestions, or your presence when I needed someone to just be there 
and listen. Again, thank you!
    Now I spoke earlier about stepping out on faith. Well, in my 
community, getting married is abnormal behavior. Folks in our community 
think we are crazy, and they share their thoughts with us from time to 
time. So we have stepped out in faith by getting married, and we are 
trusting that marriage is just the first step in a better life for us 
and, especially, for our children. In closing, there are many reasons I 
support the ``Together is Better'' Campaign and the marriage 
development accounts that it offers to District residents--namely, I 
would like my husband and I to become homeowners. Also, one day we 
would like to start our own business. These are our dreams. At the 
beginning of this journey we didn't know whether our dreams were 
possible, but it is our hope that, through support from ``Together is 
Better'' and marriage development accounts program it offers--and a lot 
of hard work and continued growth on our part--we can realize these 
dreams and many more. Thank you!

    Senator Brownback. Mr. Graham.

STATEMENT OF WINSTON GRAHAM, DISTRICT OF COLUMBIA

    Mr. Graham. Well, how're you doing, Senator?
    Senator Brownback. Good. Good. Pull that microphone a 
little closer there.
    Mr. Graham. Hello? Oh. How're you doing, Senator?
    Senator Brownback. I'm doing well, thank you.
    Mr. Graham. Well, I agree with my wife.
    Senator Brownback. Always a safe place to be. You're 
getting used to this marriage thing pretty fast, aren't you?
    Mr. Graham. But--it's been a trying experience, but the 
together--the Better Together Program is something we both 
talked about, and we really like it, and we thank the Lord 
we're here to be able to speak on it.
    Senator Brownback. Mrs. Graham, you're a mother of four 
children, and you talked about stepping out in faith to get 
married. I could sense in your voice what you were saying then 
is, ``Look, I know how I can have the money to raise these 
children if I stay on the public benefits and don't get 
married.''
    Mrs. Graham. Uh-huh.
    Senator Brownback. ``I know that. I know that path. I'm not 
sure about this other one.''
    Mrs. Graham. Exactly.
    Senator Brownback. Is that the mental calculation you were 
making--between what you knew you could do----
    Mrs. Graham. Exactly.
    Senator Brownback [continuing]. And what you are just not 
certain about can really happen?
    Mrs. Graham. There--at this point, financially, I am 
uncertain of how I am--our income is going to end up. But 
family is so important, Senator. Family is so important. I 
mean, I think that's what gave us a change. That's what wanted 
us--made us want better and want to start different lives and 
start anew. When we got in our church, we saw the families. 
This is something that--we saw healthy families, something that 
we had no idea even existed. I mean, we saw it on television, 
but we didn't have a piece of that. And once we got to our 
church, we saw the husbands and the wives, and we just really 
wanted some of that. We wanted some of that, and we wanted to 
give that to our children. And that's why I started by saying 
families is so important. That's why this is so important, 
because a lot of the families in Benning Terrace don't see 
healthy families. They don't see--and I think it starts there. 
It starts with healthy families. So, I am definitely excited 
about this program, and I hope that we all partner together and 
come together and make this happen.
    Senator Brownback. But, still, there must be a number of 
single mothers in a position like you were who know this path, 
they know the public assistance path----
    Mrs. Graham. Uh-huh.
    Senator Brownback [continuing]. They know it's secure, 
relatively secure for them, for a period of time, anyway.
    Mrs. Graham. Uh-huh.
    Senator Brownback. And the other route just seems like a 
gamble.
    Mrs. Graham. Exactly.
    Senator Brownback And they're not willing to gamble their 
children on this working. Would that be accurate?
    Mrs. Graham. Very accurate. But I think it's more of 
starting to see that they can have the same thing, too. Just in 
our neighborhood, now that we've been married--at the beginning 
of all of this, you know, people said, ``Oh, you guys are 
crazy,'' you know, ``You're not going to go through with 
this.'' But now when they see us, they're like, ``Family of the 
year.'' They're really excited.
    And I can--I see the change. They're starting to make the 
change, you know, of what they feel and what they think about 
it. So, it's just seeing it. Seeing it is a big part of it.
    So, I think if they--if they realize that, yeah, there are 
disincentives to do this, and it's a big gamble, but, ``Hey, 
look at them, they're doing it, they're happy,'' and maybe 
this--you know, this here--this--they--they're constantly 
asking us, you know, ``What are you guys thinking about? What 
are you guys talking about?'' And we're telling them about the 
marriage development accounts and how it could help--possibly 
help. And they want to know more about it. They want to see it 
happen. So, I think by just seeing it happen, it could take 
some of that gamble away from what they're thinking--from what 
they're thinking, that, ``It's going to be hard. We're not 
going to do it.'' It could take some of that away.
    Senator Brownback. What if other people in the position 
that you were in were told: ``Okay, if you get married, we're 
not going to take any of your benefits away for 5 years--
maximum of 5 years.''
    Mrs. Graham. Wow, that would be great. That would be great.
    Senator Brownback. Would that change the calculation, do 
you think, other single moms might be making?
    Mrs. Graham. I think so. I can tell you definitely, from my 
standpoint, if that was in place, I probably would have done 
this a long time ago. I think we would have gotten married a 
long time ago, because it was always a thought, it was always 
wanted, but it was just too many things to have to think about. 
I mean, just knowing that financially it was going to hurt in 
some way, it just wasn't even--I didn't even want to think 
about it or encounter it. So, yeah, if that was in place, we 
probably would have gotten married a long time ago.
    Senator Brownback. Because I know the power of a mother and 
her child and the mother's desire to take care of her children. 
And fathers care for their children, as well, but there's just 
nothing a mom won't do for that child, or put herself through 
for that child. And if she's risking losing some benefit for 
that child, most moms will back up from that, because they're 
just not going to put their children at risk in any way.
    Mrs. Graham. Yeah. Well, that's why--that's why I say, when 
I got to my church, the--my decision changed a lot, because I 
felt like I had family now. I had something that we had never 
experienced: Family--total support of a family that was going 
to be there with us no matter what. So, just knowing that just 
gave us the extra push of going on.
    Senator Brownback. What if the single moms were presented 
with, ``Okay, if you get married, we will make a cash 
contribution to you for each of the next 3 to 5 years of a 
certain amount of money, and we're not going to make any 
guarantees regarding the benefits, because that's going to 
depend upon your income and your spouse's income, but we will 
put into a marriage development account $5,000 a year for the 
next 3 years.''
    Mrs. Graham. Again, that sounds terrific. I mean, because 
before, the thought--the initial thought was, ``What will be 
taken away?'' So, yeah, that would be----
    Senator Brownback. Instead of, ``What would be''----
    Mrs. Graham. Exactly.
    Senator Brownback. Received?
    Mrs. Graham. Exactly.
    Senator Brownback. Mr. Watkins, how should we restructure 
these welfare programs to encourage marriage rather than 
penalize it? I think Mrs. Graham was making a very rational 
thought. We want to encourage marriage. She wanted to get 
married, but was considering her own children in that 
circumstance. What should we change in the welfare programs to 
make it rational for people in Mrs. Graham's position to 
decide, ``I want to get married?''
    Mr. Watkins. Well, I think that's a twofold question, 
Senator. I'd look at the Grahams as the model, because the 
incentives are important, but if people don't see people just 
like them doing this, they don't have any models to reference 
to. So, I think finding individuals more like Sandy and 
Winston, who are in the community, to really say, ``Okay, this 
is what I'm going go to do,'' which--Sandy and Winston have 
shared stories with me about individuals who were the harshest 
critics of them getting married, and now they're talking about 
getting married. And it's only because of the steps in the walk 
they're taking, because they're really on a fast track, just in 
reference to them advancing as a productive family. And this is 
something they've prayed for and they have received a portion 
of that, and there's more to come. But I also think we need to 
look at how we're penalizing individuals related to--not 
necessarily the TANF money, but when it comes to the healthcare 
and things of that nature--one thing I know that TANF does do 
is provide the childcare, but we have to look at some of those 
other benefits that they're losing by becoming married couples, 
and make some adjustments in that area, also. And that would be 
also--I mean, we have to have a public awareness campaign that 
really puts this out to the community in a way that it comes 
from individuals such as Winston and Sandy.
    Senator Brownback. I want to thank the panel. Ms. Jesberg, 
I want to invite you to work with us on where those penalties 
come in the system, and about the possibility of using TANF 
benefits like Dr. Horn was talking about. We'd like to work 
closely with you to see if there are things there that you, the 
Mayor, would be interested in pursuing and doing.
    This is very encouraging. I've quoted you all in a number 
of places around the country, Mr. and Mrs. Graham, because I do 
think one of the things that we've really failed in is the area 
of marriage, and particularly for low-income couples, that we 
have discouraged it in the system. And I think that's a 
horrific public sin on our part, to have a system that works 
that way. And so what I want to do is to see us change that 
around.
    You've got my nomination for family of the year. I'll join 
the people in your community there that support you for that. I 
remember you being here last fall and saying that a number of 
people were telling you, ``Well, you're crazy for doing this.'' 
And I sit here and think, we're the ones that are crazy, for 
having a system like this, that so discourages marriage. So, 
I'm just delighted to see you doing this, and I'm delighted for 
your role-model status.
    I do want to tell you, there are always bumps in the road. 
And the higher you're up the mountain, the bigger the bumps.
    So, you'll probably have more difficulties coming along, 
but just hang in there, and you've got a community of people, 
and you've got a strong faith, and the church around you, and 
others that are there to help, too, and to support you as you 
move forward.
    We're going to continue this discussion. As I mentioned, 
we'll probably try to get a CRS study on it. We'd like to work 
with you, Ms. Jesberg----
    Ms. Jesberg. Thank you.
    Senator Brownback [continuing]. On seeing what we could do 
on modeling some of this in the TANF program. And as you have 
other thoughts of things that we ought to be doing, Mr. Watkins 
or others, as you're working with people, I hope I can be there 
to work with you.
    I would like to come out sometime, to a meeting that you 
have, to talk with people directly, particularly single moms 
with children, about what is it that keeps them where they are, 
when they probably all want to be married in a stable family in 
a house and a white picket fence. But what's the problem here? 
What's the disincentive? I mean, I think I've got a feel for it 
here, but it would be nice to hear it from more people, and 
what particular situations are. So, I'm going to try to work 
with you, see if I can do some individual meetings like that.
    Mr. Watkins. We would love to have you out in the 
community. That would be an interesting conversation for you, 
very enlightening.

                         CONCLUSION OF HEARING

    Senator Brownback. This farm kid from Kansas to be here and 
saying, ``Okay, straighten me out here. Tell me what--tell me 
what's right and what's wrong.''
    Thank you all for being here.
    The hearing is recessed.
    [Whereupon, at 11:22 a.m., Wednesday, May 3, the hearing 
was concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]

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