    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                          GAO REPORT ON DUPLICATION OF
                         GOVERNMENT PROGRAMS; FOCUS ON
                          WELFARE AND RELATED PROGRAMS

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

                                    HEARING

                                   before the

                        SUBCOMMITTEE ON HUMAN RESOURCES

                                     of the

                          COMMITTEE ON WAYS AND MEANS
                         U.S. HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 APRIL 5, 2011

                                   __________

                               Serial No. 112-HR3

                                   __________

             Printed for the use of the Committee on Ways and Means

                      U.S. GOVERNMENT PRINTING OFFICE
    70-879                    WASHINGTON : 2011
    -----------------------------------------------------------------------
    For sale by the Superintendent of Documents, U.S. Government Printing Office,
    http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, gpo@custhelp.com.

                          COMMITTEE ON WAYS AND MEANS

                        SUBCOMMITTEE ON HUMAN RESOURCES

                        GEOFF DAVIS, Kentucky, Chairman

    ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
    ERIK PAULSEN, Minnesota              JIM McDERMOTT, Washington
    RICK BERG, North Dakota              JOHN LEWIS, Georgia
    TOM PRICE, Georgia                   JOSEPH CROWLEY, New York
    DIANE BLACK, Tennessee
    CHARLES W. BOUSTANY, JR., Louisiana

                           Jon Traub, Staff Director

                      Janice Mays, Minority Staff Director

    Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
    hearing records of the Committee on Ways and Means are also, published
    in electronic form. The printed hearing record remains the official
    version. Because electronic submissions are used to prepare both
    printed and electronic versions of the hearing record, the process of
    converting between various electronic formats may introduce
    unintentional errors or omissions. Such occurrences are inherent in the
    current publication process and should diminish as the process is
    further refined.

                                C O N T E N T S

                                   __________
                                                                       Page

    Advisory of April 5, 2011, announcing the hearing................     2

                                   WITNESSES

    Kay E. Brown, Director, Education, Workforce, and Income
      Security, U.S. Government Accountability Office................     7
    LaDonna Pavetti, Vice President for Family Income Support Policy,
      Center on Budget and Policy Priorities.........................    28
    Robert Rector, Senior Research Fellow, Domestic Policy, The
      Heritage Foundation............................................    38

                           SUBMISSIONS FOR THE RECORD

    Elizabeth Lower-Basch, statement.................................    75
    Harry J. Holzer, statement.......................................    82
    Jim Gibbons, statement...........................................    86
    Members of the New Markets Tax Credit Working Group, letter......    91

                          GAO REPORT ON DUPLICATION OF
                         GOVERNMENT PROGRAMS; FOCUS ON
                          WELFARE AND RELATED PROGRAMS

                                  ----------

                             TUESDAY, APRIL 5, 2011

                 U.S. House of Representatives,
                           Committee on Ways and Means,
                               Subcommittee on Human Resources,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 2:00 p.m., in
    Room B-318, Rayburn House Office Building, the Hon. Geoff Davis
    [chairman of the subcommittee] presiding.
        [The advisory of the hearing follows:]

                                       HEARING ADVISORY

                   FROM THE COMMITTEE ON WAYS AND MEANS

      Davis Announces Hearing on GAO Report on Duplication of Government
                Programs; Focus on Welfare and Related Programs

    Tuesday, March 29, 2011

        Congressman Geoff Davis (R-KY), Chairman of the Subcommittee on
    Human Resources of the Committee on Ways and Means, today announced
    that the Subcommittee will hold a hearing on duplication in welfare and
    related programs under the Subcommittee's jurisdiction. The hearing
    will take place on Tuesday, April 5, 2011, in Room B-318 Rayburn House
    Office Building, beginning at 2:00 P.M.

        In view of the limited time available to hear witnesses, oral
    testimony at this hearing will be from invited witnesses only.
    Witnesses will include the U.S. Government Accountability Office (GAO)
    and other experts on programs under the Subcommittee's jurisdiction.
    However, any individual or organization not scheduled for an oral
    appearance may submit a written statement for consideration by the
    Committee and for inclusion in the printed record of the hearing.

    BACKGROUND:

        In a March 2011 report to Congress, GAO identified opportunities to
    reduce duplication in a broad spectrum of government programs. Their
    report identified 81 separate areas for Congress to review--including
    34 areas in which programs and agencies have overlapping goals or
    provide similar services to the same population, and 47 other areas in
    which Congress may wish to take action to reduce program costs, among
    other goals.

        As a part of this project, GAO reported that in Fiscal Year 2009
    the Federal Government spent $18 billion operating 47 programs
    providing employment and training services, spanning nine agencies. GAO
    determined that 44 of the 47 programs overlapped with at least one
    other program, providing at least one similar service to a similar
    population. The report specifically mentioned overlap between the
    Temporary Assistance for Needy Families program under the
    Subcommittee's jurisdiction, the Employment Service supported by
    Federal unemployment funds, and Workforce Investment Act programs,
    indicating there may be opportunities to streamline the delivery of
    employment services across those and other programs. The report noted
    that overlapping programs may include different eligibility criteria or
    objectives, or that they may provide similar types of services in
    different ways.

        In addition to the duplication GAO found, there are a number of
    income-tested programs and tax credits under the jurisdiction of the
    Committee on Ways and Means that provide similar income, child care,
    and child welfare services and supports to individuals with low or
    modest incomes.

        In announcing the hearing, Chairman Davis stated, ``The Government
    Accountability Office uncovered a tremendous number of Federal programs
    that provide overlapping services. Congress needs to review current
    programs to see how we can reduce that duplication and deliver better
    services to those who need them. This hearing seeks to do just that for
    welfare and related programs in this Subcommittee's jurisdiction, so we
    can ensure that taxpayer funds are well spent, and individuals receive
    the help they need to become self-reliant as efficiently as possible.''

    FOCUS OF THE HEARING:

        The hearing will focus on overlap among welfare and related
    programs under the Subcommittee's jurisdiction, and consider
    recommendations for reducing such duplication and providing more
    effective services to low-income families.

    DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

        Please Note: Any person(s) and/or organization(s) wishing to submit
    for the hearing record must follow the appropriate link on the hearing
    page of the Committee website and complete the informational forms.
    From the Committee homepage, http://waysandmeans.house.gov, select
    ``Hearings.'' Select the hearing for which you would like to submit,
    and click on the link entitled, ``Click here to provide a submission
    for the record.'' Once you have followed the online instructions,
    submit all requested information. ATTACH your submission as a Word
    document, in compliance with the formatting requirements listed below,
    by the close of business on April 19, 2011. Finally, please note that
    due to the change in House mail policy, the U.S. Capitol Police will
    refuse sealed-package deliveries to all House Office Buildings. For
    questions, or if you encounter technical problems, please call (202)
    225-1721 or (202) 225-3625.

    FORMATTING REQUIREMENTS:

        The Committee relies on electronic submissions for printing the
    official hearing record. As always, submissions will be included in the
    record according to the discretion of the Committee. The Committee will
    not alter the content of your submission, but we reserve the right to
    format it according to our guidelines. Any submission provided to the
    Committee by a witness, any supplementary materials submitted for the
    printed record, and any written comments in response to a request for
    written comments must conform to the guidelines listed below. Any
    submission or supplementary item not in compliance with these
    guidelines will not be printed, but will be maintained in the Committee
    files for review and use by the Committee.

        1. All submissions and supplementary materials must be provided in
    Word format and MUST NOT exceed a total of 10 pages, including
    attachments. Witnesses and submitters are advised that the Committee
    relies on electronic submissions for printing the official hearing
    record.

        2. Copies of whole documents submitted as exhibit material will not
    be accepted for printing. Instead, exhibit material should be
    referenced and quoted or paraphrased. All exhibit material not meeting
    these specifications will be maintained in the Committee files for
    review and use by the Committee.

        3. All submissions must include a list of all clients, persons and/
    or organizations on whose behalf the witness appears. A supplemental
    sheet must accompany each submission listing the name, company,
    address, telephone, and fax numbers of each witness.

        The Committee seeks to make its facilities accessible to persons
    with disabilities. If you are in need of special accommodations, please
    call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
    business days notice is requested). Questions with regard to special
    accommodation needs in general (including availability of Committee
    materials in alternative formats) may be directed to the Committee as
    noted above.

        Note: All Committee advisories and news releases are available on
    the World Wide Web at http://www.waysandmeans.house.gov/.

        Chairman DAVIS. Good afternoon. Thank you for joining us.
        We have three purposes in today's hearing: first, to learn
    about duplication in programs serving low income children and
    families; second, to ask whether, given that duplication,
    current programs are spending taxpayer money wisely; and third,
    to consider how we can better or what we can do better to help
    more of our neighbors in need become self-reliant.
        The most recent data on program duplication came in a well
    publicized report GAO released in March, which found literally
    dozens of programs with similar or overlapping objectives and
    services provided. The report noted that by fixing this
    problem, ``The Federal Government could potentially save
    billions of dollars annually and help agencies provide more
    efficient and effective services.''
        Another GAO report released in January focused on a subset
    of the larger overall problem: how the Federal Government
    spends $18 billion on education and training programs across 47
    different initiatives in nine different Federal agencies. Of
    these programs, GAO found that only one in ten had even been
    evaluated for effectiveness in the last seven years, and almost
    all of them overlapped with one or more programs.
        Since one of the programs in question is the Temporary
    Assistance for Needy Families program under our jurisdiction
    and that program needs to be reauthorized this year, we should
    all take note of those facts.
        Unfortunately, the redundancy does not stop there.
    Depending on how you count, the Ways and Means Committee
    oversees no less than six income support programs, four child
    care programs, and nine child welfare programs. That includes
    both spending and tax programs, which have mushroomed in number
    and expense in recent years.
        One example of that duplication and overlap involves the
    Social Services block grant program, which provides $1.7
    billion each year to States. This program has no eligibility
    criteria and requires no matching funds from States. States use
    almost a third of this money for services provided by other
    programs, such as foster care and child care.
        While States rightly desire flexibility to meet the needs
    of the people they serve, common sense suggests that the
    Federal Government should not operate multiple programs serving
    the same purpose, each with different eligibility, reporting,
    and accounting requirements. Such duplication can create a
    complex labyrinth that States implementing programs, but more
    importantly, real people in need of help, are forced to
    navigate.
        And helping those in need is the real point of this, after
    all. As President Obama stated in his Inaugural Address, ``The
    question we ask today is not whether our government is too big
    or too small, but whether it works. Where the answer is yes, we
    intend to move forward. Where the answer is no, programs will
    end.''
        Our goal today is to review how current programs in our
    jurisdiction work and how they can be made to work better. In
    the current fiscal climate, it is especially important to
    understand where duplication exists, how we minimize that
    duplication and achieve savings, and ultimately how we can
    provide better services in a more timely manner to those in
    need.
        We look forward to all of our testimony on those points,
    and without objection, each member will have the opportunity to
    submit a written statement and have it included in the report
    at this point.
        Mr. Doggett, do you care to make an opening statement?
        Mr. DOGGETT. Yes, Mr. Chairman. Thank you.
        I agree with you regarding the need to find effective
    answers to each of the three important questions that you pose
    for this hearing and stand ready to work with you on proposals
    to make programs more effective and efficient so we can
    maximize the impact of every taxpayer dollar in advancing some
    critical objectives, such as helping those unemployed through
    no fault of their own prepare and find work.
        I do, however, vigorously oppose efforts to use terms such
    as ``efficiency'' and ``streamlining'' as an excuse to
    eliminate help to people that need it most. It is noteworthy
    that of the 34 areas that the Government Accountability Office
    included in its recent report reviewing overlap, duplication
    and fragmentation, only one of the 34 mentions a program within
    this subcommittee's jurisdiction, the appropriate focus of
    today's hearings.
        As to that area, employment and job training services under
    TANF, the GAO suggestion about merging offices sounds to me to
    be constructive, and I look forward to hearing more about it.
    Providing a more unified administrative structure could
    potentially make it easier for clients to access services.
        One initiative that might help the states move more
    forcefully in that direction is the President's Partnership
    Fund for Program Integrity that we have discussed before at a
    prior hearing. GAO focused on a number of areas within the
    jurisdiction of the Ways and Means Committee. One of the most
    important of those is better oversight of our tax revenue.
    Notably, GAO reiterated its longstanding recommendation that
    tax expenditures should be subject to increased scrutiny to
    help identify ineffective and redundant spending through the
    Tax Code.
        I strongly agree with that recommendation and the need to
    take a look at corporate tax loopholes, such as those that
    allow General Electric to avoid paying its fair share for our
    national security.
        In addition, there are several recommendations on tax
    compliance to close the $300 billion tax gap, including
    recommendations to stop tax shelters and abusive transactions,
    and outside the jurisdiction of the Ways and Means Committee,
    of course, some of the biggest savings were to be achieved at
    the Pentagon. GAO identifies six more areas, six areas out
    there where significant savings from program duplication can be
    achieved, and I hope progress can be made there.
        As we look at potential duplication within our
    subcommittee's jurisdiction, it is important to recognize that
    often multiple programs, sometimes providing similar services,
    exist because the level of need far exceeded the limitations of
    the original program. For example, the Workforce Investment Act
    was meant to be the focal point for providing job training
    services to the unemployed and underemployed, but WIA only
    provides training to fewer than 300,000 workers across the
    whole country each year.
        Since we have over 13 million unemployed looking for work,
    it is no surprise that other programs, including TANF, have
    become sources of vocational training. Unfortunately, the
    mindless cutting of a number of these programs under H.R. 1
    that we have under consideration this year would result in the
    closure of two-thirds of the employment centers in my home
    State of Texas and raise other concerns across the country.
        I hope we will avoid that path as we seek legitimate ways
    to achieve efficiency and effective use of taxpayer dollars
    that meet the legitimate needs of many struggling Americans.
        And I thank you, Mr. Chairman.
        Chairman DAVIS. Thank you, Mr. Doggett.
        Before we move on to our testimony, I would like to remind
    the witnesses to limit their oral statements to five minutes.
    However, without objection, all of the written testimony will
    be made part of the permanent record.
        Our distinguished panel this afternoon, we will be hearing
    from Kay Brown, Director of Education, Workforce, and Income
    Security at the U.S. Government Accountability Office; Dr.
    LaDonna Pavetti, Vice President of Family Income Support
    Policy, Center on Budget and Policy Priorities; and Robert
    Rector, Senior Research Fellow, Domestic Policy, The Heritage
    Foundation.
        Ms. Brown, please proceed with your testimony.

    STATEMENT OF KAY E. BROWN, DIRECTOR, EDUCATION, WORKFORCE, AND
         INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

        Ms. BROWN. Chairman Davis, Ranking Member Doggett, and
    Members of the Subcommittee, I am pleased to be here today to
    discuss our work on some of the Nation's key programs, those
    that help low income families, vulnerable children and others
    in need.
        While they are essential, our work has shown that the
    multiplicity of different programs involved may be inefficient
    and unnecessarily costly. Given concerns about fragmentation,
    duplication and overlap in government programs today, I will
    discuss three points: key characteristics of these programs;
    problems in administering them; and actions to address these
    problems.
        First, on the programs, multiple programs and tax credits
    under your jurisdiction provide income support, child care and
    child welfare services to individuals and families in need.
    Additional programs help meet needs in other areas, such as
    housing and nutrition, and are under the jurisdiction of other
    committees.
        Some of these programs are funded by block grants that
    allow States flexibility in how they allocate the funds, while
    others are targeted to specific populations. In some cases, the
    programs are designed to service everyone who is eligible,
    while in others the funding is capped. Several require States
    to provide matching funds.
        Moving on to problems in administering these programs,
    first, they are fragmented. That is, they serve some of the
    same broad areas of need, but are administered by at least six
    different Federal agencies.
        Further, services are provided by numerous State and local
    agencies, as well as for profit and nonprofit organizations. In
    fact, this patchwork of programs is too fragmented and overly
    complex for clients to navigate, for program operators to
    administer efficiently, and for program managers and policy
    makers to assess program performance.
        For example, low income families often receive aid from
    several programs, such as TANF, Child Care and Nutrition
    Assistance. However, the complexity and variation in
    eligibility rules and other requirements among these programs
    contribute to time consuming and duplicative administrative
    processes, complicate the work of case workers, and contribute
    to errors.
        Also, information gaps can hinder program oversight. For
    example, our work on the TANF Program has shown that work
    participation rates, the key performance measure for the
    program, do not appear to be achieving their intended purpose.
        Further, although States have shifted a large share of TANF
    funds from cash assistance to other supports, such as child
    care subsidies and child welfare, not enough is known about how
    these funds are used.
        Moving on to what actions can help address these issues,
    first, simplifying policies and processes could save resources,
    improve productivity, and help insure the accuracy of benefits.
    However, when making this type of change, it is important to
    think about the effect on program benefits. That is, will more
    or fewer people be eligible with the changes?
        Consolidating programs can also help ease Federal rules and
    requirements and save some administrative costs. However, in
    this case, care must be taken to insure that intended target
    groups can still receive benefits.
        Facilitating technology enhancements, such as data sharing
    across programs can streamline eligibility processes and help
    identify fraud.
        And, lastly, fostering innovation and evaluation by States
    and localities can help the Federal Government determine which
    strategies are most effective without investing time and
    resources in unproven strategies.
        In conclusion, because these programs have evolved over
    time to meet various needs, it is not surprising to see some
    fragmentation of administration, overlap in populations served,
    and duplication of services offered. Some of these features
    may, indeed, be warranted, for example, to insure that certain
    populations are served. However, our work indicates that
    further exploration of the extent of fragmentation, overlap and
    duplication could help better identify ways to streamline and
    improve services and programs.
        This concludes my statement. I am happy to respond to any
    questions.
        [The prepared statement of Ms. Brown follows:]

        [GRAPHIC] [TIFF OMITTED] T0879.001

        [GRAPHIC] [TIFF OMITTED] T0879.002

        [GRAPHIC] [TIFF OMITTED] T0879.003

        [GRAPHIC] [TIFF OMITTED] T0879.004

        [GRAPHIC] [TIFF OMITTED] T0879.005

        [GRAPHIC] [TIFF OMITTED] T0879.006

        [GRAPHIC] [TIFF OMITTED] T0879.007

        [GRAPHIC] [TIFF OMITTED] T0879.008

        [GRAPHIC] [TIFF OMITTED] T0879.009

        [GRAPHIC] [TIFF OMITTED] T0879.010

        [GRAPHIC] [TIFF OMITTED] T0879.011

        [GRAPHIC] [TIFF OMITTED] T0879.012

        [GRAPHIC] [TIFF OMITTED] T0879.013

        [GRAPHIC] [TIFF OMITTED] T0879.014

        [GRAPHIC] [TIFF OMITTED] T0879.015

        [GRAPHIC] [TIFF OMITTED] T0879.016

        [GRAPHIC] [TIFF OMITTED] T0879.017

        [GRAPHIC] [TIFF OMITTED] T0879.018

        [GRAPHIC] [TIFF OMITTED] T0879.019

        [GRAPHIC] [TIFF OMITTED] T0879.020

        [GRAPHIC] [TIFF OMITTED] T0879.021

        Chairman DAVIS. Thank you very much, Ms. Brown. Dr.
    Pavetti, if you could give your testimony.

    STATEMENT OF LADONNA PAVETTI, VICE PRESIDENT FOR FAMILY INCOME
         SUPPORT POLICY, CENTER ON BUDGET AND POLICY PRIORITIES

        Ms. PAVETTI. Thank you. Thank you for inviting me to
    testify today.
        I have spent my entire professional career assessing the
    implementation of user programs for low income Americans. Since
    the passage of welfare reform, I have visited hundreds of local
    welfare offices and job training programs and I have had the
    privilege in doing that of talking with many program
    participants and observing them as they participate in
    activities that are designed to help them find and sustain
    employment.
        During my work, I have had the opportunity to witness first
    hand the development of a safety net that really is aiming to
    help low income families realize their dreams of bringing home
    a steady paycheck and of supporting their families and creating
    a brighter future for their children. And what I would like to
    do in my testimony today is to share with you some of what I
    have learned over the years of doing that work.
        First of all, when we focus on program duplication, we tend
    to think of program duplication as having a negative
    connotation to it, and something that if we remedied, it could
    save government money, but that is not always the case, and
    that is not the case when program funds are limited. Right now
    States do not have sufficient funding to provide child care
    assistance to all low wage workers, and they do not have
    sufficient funds to adequately fund their child welfare
    programs, especially those programs that provide preventative
    services to at risk families.
        Job training programs, which is one of the areas that is a
    particular interest of mine and where I have spent time because
    of my work on TANF, illustrates, I think, why duplication is
    not always what it seems on the surface. In their analysis, GAO
    identified 47 programs, many of which overlap in some way. But
    based on what I have seen in the field, it is not the case that
    individuals are receiving assistance from multiple employment
    and training programs. Rather, those programs exist to insure
    that people who face special employment needs actually have a
    greater chance of accessing programs and participating in
    programs that are designed to meet their specific needs.
        So we have programs for ex offenders because they face
    special challenges. The same for TANF recipients, who often
    have serious barriers to entering the labor market. So by
    having specific programs, we increase the chance of them
    actually having success.
        I also would like to give an example of what we have seen
    as being one of the most successful innovators in integrating
    programs, and that is Utah. Utah is a State that has one of the
    most integrated work-based network of services, and it provides
    an example of both the opportunities and, I think, the limits
    of reducing program duplication.
        Utah houses all of its safety net programs and its
    employment assistance programs under one agency, and that means
    that individuals coming in who are applying for unemployment
    insurance and individuals coming in to apply for TANF have
    access and come through the same process, and they also have
    access to roughly the same set of services.
        They have made that system work by trying to adopt
    comparable standards sometimes higher than the standards that
    programs require, and regardless of what makes people eligible.
    And what they have done is they have taken funding streams and
    tried to use them for different groups of people.
        However, that system has come at a price, and differences
    in program goals and performance standards have prevented the
    agency from implementing a fully unified system that provides
    services based on individual needs.
        For example, their WIA performance standards focus on
    employment outcomes, while their TANF standards actually focus
    on participation in a set of narrowly defined program
    activities with no real regard for the employment outcomes.
        TANF also requires much stricter verification requirements,
    and if they were to apply those to everyone who came through
    that door, it would cost much more than it costs them now.
        I think that Utah also stands out in the amount of their
    TANF funds that they have used to fund their employment
    training activities. In 2009 they spent about a quarter of
    their Federal and State TANF funds on their program, and if we
    were going to get to that level for all of the states, we would
    have to more than double the investment that we are actually
    making.
        I think there is a number of things that Congress can do to
    make it easier to do what Utah has done and to integrate a
    broad range of programs. One is to develop a common set of
    goals for programs that serve similar services. The other is to
    reduce those cross-program barriers. Another is to increase the
    capacity of programs to serve people who have the greater
    barriers and to revamp the program performance measures so they
    are consistent across programs and so that programs have an
    easier time working together and trying to achieve the same
    thing.
        I know these are difficult economic times, and there are
    real fiscal constraints facing our nation. However, we should
    not think we can solve our fiscal problems by decimating the
    safety net. Cutting funding deeply for programs to help low
    income Americans work, achieve self-sufficiency and secure jobs
    that can support their families would not represent a step
    forward.
        Some of the cuts that have been proposed would make it
    harder for low income Americans to work, while also making it
    less likely that people who need training would actually get
    it.
        I think there would also be risks for the economy. What we
    have seen is that these programs have worked the way we intend
    them to work during the economic downturn--they have increased
    their reach to be able to provide that safety net, and I think
    we want to do that.
        So one more statement. Rethinking programs is important,
    but I think we need to think broadly about what we are trying
    to achieve and how to best achieve that, and make sure that we
    really are thinking not only of low income programs, but across
    the board of how we can make things better for all Americans.
        [The prepared statement of Dr. Pavetti follows:]

        [GRAPHIC] [TIFF OMITTED] T0879.026

        [GRAPHIC] [TIFF OMITTED] T0879.027

        [GRAPHIC] [TIFF OMITTED] T0879.028

        [GRAPHIC] [TIFF OMITTED] T0879.029

        [GRAPHIC] [TIFF OMITTED] T0879.030

        [GRAPHIC] [TIFF OMITTED] T0879.031

        [GRAPHIC] [TIFF OMITTED] T0879.032

        [GRAPHIC] [TIFF OMITTED] T0879.033

        Chairman DAVIS. Thank you, Dr. Pavetti.
        Mr. Rector.

     STATEMENT OF ROBERT RECTOR, SENIOR RESEARCH FELLOW, DOMESTIC
                    POLICY, THE HERITAGE FOUNDATION

        Mr. RECTOR. I want to speak today about what I consider the
    greatest budgetary secret in the Nation and in Washington,
    which is the hidden means tested welfare state. Most people are
    completely unaware that the second largest category of
    Government spending across the nation happens to be spending on
    the poor. If you were to look in total, you find that the
    largest spending is, in fact, on Social Security and Medicare.
    The second largest is spending on more than 69 different
    Federal programs to assist poor people, which with their
    mandatory State contributions now approach about $940 billion a
    year. That is the second largest overall category of Government
    spending in the country. It outstrips spending on public
    education. It vastly dwarfs spending on national defense, but
    people are largely unaware of this.
        They are unaware of this because all discussions about
    spending on the poor basically take these 69 programs and talk
    about them one at a time. It is as if in talking about the
    defense budget you talked about marine logistics and then you
    talked about Air Force personnel, and you never put it together
    to look at the total amount that is being spent.
        This chart shows inflation adjusted spending on the poor on
    these 69 different programs starting back in 1950 and through
    2008. A lot of people, when they think about welfare, think it
    is like a roller coaster: you spend a certain amount, then you
    have a recession, spending goes up, at the end of the recession
    spending comes back down.
        Sorry. I do not see spending ever going back down. What
    happens in our system is that during a recession spending goes
    up. If we were to add the last two years on there, it is a 30
    percent increase in spending, and at the end of the recession
    it never comes back down. What we do is increase spending
    slowly or increase spending rapidly. Spending never goes back
    down.
        We are spending today 13 times as much after adjusting for
    inflation as when Lyndon Johnson launched the War on Poverty.
    About half of this spending goes to families with children,
    which is of particular concern to this committee. Another half
    of it goes to the indigent elderly and to the disabled. But
    that means that we are spending over $450 billion on low income
    families with children.
        No one has any idea of this because you only examine one
    program at a time. You never add it up. Suppose we did the
    whole Federal budget like that. You simply spent on whatever
    seemed desirable, never added up the total amount of spending.
    That is what we do with the welfare state.
        This next chart compares means tested welfare spending over
    the last 20 years compared to other categories, such as Social
    Security and medicare. The dark blue line is the increase in
    means tested welfare, which has grown by, I think, 300 percent
    over that period. This is, in fact, the fastest category of
    spending in the entire government for the last two decades,
    even before the current recession.
        But if you were to talk to, for example, President Obama or
    anyone from the left, they would say that we have actually cut
    this spending. How do they possibly do that? They do that by
    focusing on one program at a time that may not increase as fast
    as inflation and ignoring the growth in the other 68 programs.
        By that gimmick, we continue to have larger and larger
    spending, now approaching $1 trillion a year without the public
    or you as decision makers having any idea how much we are
    spending.
        Now, most people see that over the last two years,
    President Obama has increased the spending by 30 percent in
    these 67 different programs. They say, ``Well, of course. That
    makes sense because we have had a recession. We would expect
    the spending to go up.''
        But when you look at Obama's own budget projections for the
    next ten years, which are shown on the chart, combined Federal
    and State is on red in that chart and yellow is Federal only;
    this spending never goes back down. It goes up during the
    recession, and then it continues to climb. Within a few years,
    we will be spending $1 trillion a year at the same time that as
    a Nation we will be running deficits of roughly $1 trillion a
    year.
        People talk about shredding the safety net. We should focus
    on the initial question. How did you expand the safety net by
    50 percent and why isn't it coming back down after the
    recession?
        Now, I would propose that, in fact, the United States
    running deficits of close to $1 trillion a year simply cannot
    afford this level of spending. It will not benefit poor people
    in the United States if we put this country into bankruptcy,
    which is quite clearly where we are going now and where we are
    going under Obama's proposed budgets, which projects $1
    trillion a year deficits as far as the eye can see. That will
    not help the poor.
        I propose that one of the ways that we can begin to bring
    the deficit down is to simply create some budget constraint in
    the amount that is being spent here. what I would----
        Chairman DAVIS. Excuse me, Mr. Rector. Your time has
    expired.
        Mr. RECTOR. Okay.
        [The prepared statement of Mr. Rector follows:]

        [GRAPHIC] [TIFF OMITTED] T0879.034

        [GRAPHIC] [TIFF OMITTED] T0879.035

        [GRAPHIC] [TIFF OMITTED] T0879.036

        [GRAPHIC] [TIFF OMITTED] T0879.037

        [GRAPHIC] [TIFF OMITTED] T0879.038

        [GRAPHIC] [TIFF OMITTED] T0879.039

        [GRAPHIC] [TIFF OMITTED] T0879.040

        [GRAPHIC] [TIFF OMITTED] T0879.041

        [GRAPHIC] [TIFF OMITTED] T0879.042

        [GRAPHIC] [TIFF OMITTED] T0879.043

        [GRAPHIC] [TIFF OMITTED] T0879.044

        [GRAPHIC] [TIFF OMITTED] T0879.045

        [GRAPHIC] [TIFF OMITTED] T0879.046

        Chairman DAVIS. I think we will have a chance to get into
    this a little bit more as we move to questions, which we are
    going to do now.
        I will go ahead and open. First, for Ms. Brown, based on
    your March report and today's testimony thus far, what can you
    tell us about the current number of welfare and related
    programs this subcommittee oversees, along with complementary
    tax credit programs?
        Is the current number of such programs at an all time high?
        Ms. BROWN. When we prepared the testimony for today, we
    looked at a selected number of programs under this committee,
    and we actually are considering right now what our next steps
    will be for the next round of our mandatory reporting next
    year, and as we do that, one of the things that we are
    considering is whether we should be looking at the full gamut
    of programs in this committee.
        Because I know there are certain programs at HHS, I have
    not mentioned, such as Runaway and Homeless Youth and Tribal
    TANF and a lot of smaller programs that we did not include in
    our testimony today.
        Chairman DAVIS. Hopefully, we will be able to receive some
    more information on that as we continue on this dialogue.
        How about spending on those programs? Have we ever spent
    more on those programs than in the past two years?
        Ms. BROWN. Than in the past two years? We did not do a
    spending analysis, but I would assume that with the Recovery
    Act funds the spending was higher than it has been, and----
        Chairman DAVIS. So you would say we are spending higher. We
    are at the highest all time level now.
        Ms. BROWN. I do not know where the spending level is now,
    after the end of the Recovery Act funding or the partial end.
        Chairman DAVIS. Okay, and finally, what do we know about
    current deficits? Have they ever been greater?
        Ms. BROWN. GAO is on record as saying that we are very
    concerned about the deficit, and that we think there needs to
    be a serious effort to look at what changes need to be done in
    order to bring the deficit back in line.
        Chairman DAVIS. But would you say that this is an all time
    high?
        Ms. BROWN. I am not the budget expert either at GAO. Sorry.
        Chairman DAVIS. Okay. Well, I think the numbers are fairly
    straightforward. We have some fairly substantial deficits.
        Just in closing, Mr. Rector, would you care to comment
    specifically about welfare and related programs, their number
    and amounts spent and contributions to the deficit and debt?
        Mr. RECTOR. Well, I only look at major welfare programs
    which spend more than, say, $15 million a year. Those are at a
    record high. The level of spending after adjustment for
    inflation is also at a record high.
        I would also comment that it was at a record high before
    the recession began, and again, the trick about this is if you
    look at that pattern of spending, when you have a recession,
    this aggregate spending tends to jump up by 20, 30, 40 percent,
    and then it never comes back down.
        So we are now at a record high, but each year in the
    future, it is going to continue to go up. We cannot afford that
    level of spending. We are basically borrowing from the Chinese
    in order to spend $1 trillion a year on means tested welfare
    here.
        Chairman DAVIS. As we move forward in continuing
    discussions on reforms of the process and just looking at this
    from an engineering perspective in my professional background,
    I see so many of the challenges really have to do with not
    simply spending, but also the processes that do not communicate
    between the agencies and the lack of interlinkage. Integration
    done right could be a very powerful tool.
        The challenge that we sometimes face in this is thinking
    that we will just keep pouring water into the swamp without
    actually addressing the issue of the obstacles that we face
    inside of that. I am hopeful that we can talk about integrated
    information systems, process improvements that would have a
    natural effect of removing redundancy as we continue the
    dialogue and working closely with my friend Mr. Doggett.
        Would you like to inquire?
        Mr. DOGGETT. I certainly would.
        Thank each of you for your testimony.
        Mr. Rector, your testimony refers to 69 means tested
    programs. Would it be convenient for you this week to supply
    the committee with the specific identity you described? You
    categorize them in your written testimony, of those 69
    programs?
        Mr. RECTOR. They are in the back of my testimony.
        Mr. DOGGETT. Oh, okay. I just did not look far enough.
        Mr. RECTOR. Okay.
        Mr. DOGGETT. And you do note in your written testimony that
    over half of this money spent in these programs relates to
    health care and over half of it is spending devoted to the
    disabled and the elderly.
        Mr. RECTOR. Yes.
        Mr. DOGGETT. Dr. Pavetti, looking at the initiative of the
    Republican Study Committee, they include, and I will check here
    in the back to see if they are included in Mr. Rector's
    testimony, the Pell Grants, Head Start, among others. What will
    be the effect of the kind of reductions that the Republican
    Study Committee proposed in those programs on the folks that
    rely on them now?
        Ms. PAVETTI. We estimate that you would see over $2
    trillion in cuts for the low income people in six years from
    what is proposed, and they would have a disproportionate impact
    on elderly and disabled individuals, as well children who are
    the primary beneficiaries.
        I think both what Mr. Rector presented and what is in the
    Republican Study Committee does something that I think we have
    never seen before, which is to apply the term ``welfare'' to
    programs that nobody really thinks of as welfare.
        Mr. DOGGETT. Yes. Now that I have made it to the appendix
    to his testimony, the largest one in education, over half of
    the education expenditures of which he complains is in Pell
    grants.
        Ms. PAVETTI. Pell grants is one.
        Mr. DOGGETT. I do not think most students, most Americans
    view that student financial assistance so that someone can get
    all the education they are willing to work for as welfare.
        Ms. PAVETTI. Right, and if you look at the income support
    ones, SSI is on there, and SSI is the way in which we provide
    assistance to people who go through a very lengthy process of
    demonstrating that they are disabled and not able to work and
    have not been able to enter the labor market.
        So I think that, again, it lumps together a lot of things
    that I think have very different purposes, and I think rather
    than making clearer what we are spending, it actually muddies
    the waters and makes it harder to have a very informed
    discussion about what our priorities should be and how we want
    to try and help to make a difference in people's lives.
        Mr. DOGGETT. As to the job training programs within this
    subcommittee's jurisdiction, you referenced Utah as an example
    of how we can, and we have actually had some testimony
    previously from Utah in the subcommittee, but you reference
    them as an example of what we can do and what the limits of
    what we can do in eliminating duplication might be.
        To the extent that there are continued challenges in Utah
    with developing common goals for these different programs, is
    that something that you think we should be addressing at the
    Federal level or is this a matter of the States needing to do a
    better job?
        Ms. PAVETTI. Well, the States can do a better job, but
    there are also constraints that are Federal constraints, and
    within this committee's jurisdiction is TANF, and that is up
    for reauthorization, and the TANF rules are incredibly
    restrictive, and they really do create huge constraints at the
    State level. So if those are not changed and if States are not
    given more flexibility to be able to make some changes so that
    they can be consistent with other programs, States really
    cannot come up with completely integrated systems and treat all
    people the same who come in their door based on their needs
    rather than whether they are eligible for one program or for
    another.
        Mr. DOGGETT. Do you have some specific recommendations that
    you might supplement your testimony to the committee for what
    we should be doing in the reauthorization of TANF to accomplish
    that objective?
        Ms. PAVETTI. Sure, I can do that. I can definitely do that.
        Mr. DOGGETT. And, Ms. Brown, you mentioned that one of
    these areas for further study relates to not really being able
    to determine how the States are using their TANF money, and
    that is something we hopefully will get more information on
    this year, isn't it?
        Ms. BROWN. Correct. We are concerned about the fact that
    the one major performance measure for TANF is focused on work,
    and work activities, and that is perfectly appropriate, but the
    fact that the other uses for the funding for TANF are not
    tracked is a concern. We would like to know how those funds are
    being used.
        It is important because they have increased significantly
    over time.
        Mr. DOGGETT. Thank you.
        Chairman DAVIS. Thank you very much. The gentleman's time
    has expired.
        Mr. Paulsen.
        Mr. PAULSEN. Thank you, Mr. Chairman, and also thanks for
    holding this hearing and for our witnesses for being here
    today.
        Mr. Rector, maybe you can just comment real quickly, just
    to follow up on Dr. Pavetti's statement, but would you clarify
    from your perspective? Is the definition of welfare that you
    use any different than the standard definition of welfare?
        Mr. RECTOR. No, it is pretty much the same. For example,
    right here, this document in my hand is the Congressional
    Research Service. ``Cash and non-cash benefits for persons with
    limited income.'' It lists means tested welfare.
        There is a 98.5 percent overlap between the programs that I
    have in my list and what are in this CRS report. This other
    book is the most common book written on welfare. You would find
    various versions of this book in every college library for the
    last 30 years. It is titled, ``Programs in Aid of the Poor.''
    Every single program that is on my list is in this book. This
    is the standard text.
        In fact, what she is talking about, which is what the
    center has done for 20 years, is any time you try to talk about
    massive total spending close to $1 trillion, they will pull out
    one or two programs and quibble. They used to pull out veterans
    programs that are about one percent of this total and try to
    obscure the issue by that.
        The fact of the matter is 90 percent of this spending is
    cash, food, housing, medical care for low income people.
    Agreed, half of it does go to the elderly and disabled. Roughly
    the other half goes to families with children, but the bottom
    line is the public is totally unaware that we are spending
    virtually any of this money. People think we ended welfare aid
    to the poor back in the 1990s. When I tell them that we are
    spending close to $1 trillion a year, everyone is simply
    astonished. We do not report it.
        Mr. PAULSEN. Thank you.
        And I know beyond the wasted funds that, you know, we are
    talking about with this hearing and all of the duplicative
    programs, and I cannot imagine how confusing it must be for
    families to have to navigate some of these programs that they
    are applying for, but, Ms. Brown, can you comment?
        I think maybe one of the most discouraging parts of your
    testimony that you mentioned is when you stated that the need
    for improving the administration of these programs has actually
    been voiced recurrently for several decades, and you talked
    about some of the changes in, I guess, the 1996 welfare reforms
    and what States have been going through in terms of granting,
    using more flexibility in implementing new programs would need
    to be looked at, and simpler policies, better technologies are
    available.
        Knowing that that is the case and there is more innovation
    out there, and as you have looked at the evaluation, what can
    this subcommittee do or what should we be doing to improve the
    way these programs operate or the way they are administered so
    that we can actually reduce these inefficiencies and save
    taxpayer money?
        Ms. BROWN. I think regardless of how many programs you want
    to consider, the most important thing is to be clear on what we
    want these programs to achieve and who we want to be served and
    how we are going to measure that.
        And to the extent that there are barriers that were
    discussed as far as different kinds of performance measures or
    constraints in sharing data, those are the kinds of things that
    you could help with.
        Mr. PAULSEN. Okay. Mr. Rector, do you have any follow-up to
    that in terms of measuring for this subcommittee to actually
    look at and dive into?
        Mr. RECTOR. Well, the bottom line is you really have to
    have some awareness of how much is being spent. When I look at
    these numbers, it clearly suggests to me that you are spending
    close to $30,000 for each low income family with children. I
    cannot imagine where that money goes, but if you just take the
    total amount that is going out the door, which is over 400
    billion, divide it by any measure of low income households, you
    come up with this very, very large number.
        We have to begin to understand this, and we do not
    understand it because effectively the entire discussion about
    the welfare state is as if you had a jigsaw puzzle with 69
    pieces. You threw them all over the room, and then you have
    hearings about one piece at a time.
        I have been doing this for 25 years. When you have that
    hearing, you pretend that that single piece, that single
    program is the only thing that affects low income people. In
    fact it would be very difficult to find a family that receives
    assistance from only one program. They receive assistance from
    a half a dozen, a dozen programs piled on top of each other,
    and we have no idea what they are getting. We have no idea of
    basically how much we are spending, and we are spending
    ourselves into bankruptcy here. We have to get this under
    control.
        Mr. PAULSEN. Well, obviously, if we were starting a brand
    new Government from scratch, I mean, do any of you think that
    we would have 47 education and training programs, nine child
    welfare programs, four child care programs, and six income
    support programs if we established a Government or set it up?
        I mean, given where we are, I guess we are trying the task
    now of what is the best path forward. Any thoughts on that? I
    cannot imagine that we would have all of these duplicative
    programs if we were starting from scratch.
        Ms. PAVETTI. I think we probably would not have those if we
    were starting from scratch, but I think what I tried to say in
    my testimony, and I think it is important is part of why we
    have multiple programs is because of limited funding that is
    not sufficient to serve all those in need. Targeted programs
    are created so that people who do not get access, have a
    greater chance of being served.
        Chairman DAVIS. Thank you.
        Ms. PAVETTI. If you had one program, you would have the
    issue of trying to make sure that there is equity in who gets
    access.
        Chairman DAVIS. The gentleman's time has expired.
        I think the gentleman raised a compelling question. Perhaps
    each of you would submit comments for the record.

    [GRAPHIC] [TIFF OMITTED] T0879.047

    [GRAPHIC] [TIFF OMITTED] T0879.048

    [GRAPHIC] [TIFF OMITTED] T0879.049

    [GRAPHIC] [TIFF OMITTED] T0879.050

    [GRAPHIC] [TIFF OMITTED] T0879.051

        Just from my own professional experience, oftentimes we
    will create a program around a program that is a work-around to
    a systemic flaw, and our hope, and Mr. Doggett and I have
    talked about this before, is looking at ways to integrate
    rather than simply create more overhead in the long run.
        The efficient use of taxpayer dollars is a very important
    and germane discussion that members care about on both sides.
        With that, I would like to recognize Ms. Black from
    Tennessee.
        Mrs. BLACK. Thank you, Mr. Chairman.
        And thank you, panel, for being here today.
        I want to go to you, Mr. Rector, and your written comment
    and I think you also shared it with us verbally, is that since
    the beginning of the War on Poverty, spending on the poor has
    increased 13 fold after adjusting for inflation, and yet
    throughout the steady 40-year climb in spending there is still
    this shrill claim that the poor are being slashed.
        What I have seen in my nursing days over the last 40 years
    is that we have these programs, and I have worked with people
    in these program, and yet I do not see that the programs really
    are doing what we want them to do. If our goal is to get people
    out of poverty and move them on, it does not appear that these
    programs are working.
        So we seem to be doing the same things over and over and
    over again, and you are not getting results.
        What I would like each of the panelists to talk a little
    bit about is about the measurement. I think, Ms. Brown, you
    just mentioned it, about measuring, and there is one particular
    program for infant mortality back in the State of Tennessee
    that we adopted, and the thing that excited me so much about
    that is it actually is evidence based. It has measurements. It
    can show through metrics that it does work. It is worth the
    dollars that we are putting into the program
        And yet when we looked at this program on infant mortality,
    we had like 37 different programs that were addressing infant
    mortality in our state, and none of them had metric tools to
    really say they were being effective.
        And so what I would like to know is moving forward, as we
    look at these programs and we certainly see in all of these
    testimonies we have duplications of programs, what do you think
    we need to do in order to, first of all, put measurement tools
    on them and then to narrow them down so we can find best
    practices and find those that are really working where it will
    be value on our dollar?
        Mr. RECTOR. If I can take the first part of this question:
    how can you increase spending 13 fold and spend over $16
    trillion and still have press reports and the President saying
    that you slashed spending?
        You just saw an example of it here. Since 2007, aggregate
    means tested spending has been increased by 50 percent, but did
    you see that in the New York Times? Did you see that in the
    Washington Post? Did you see that on CBS News? No.
        The spending went up 50 percent. Now, the Republican Study
    Committee bill simply says why don't we take that spending,
    adjust it for inflation and bring it back down to where it was
    before the recession, and what was that? It is slashing the
    safety net.
        So when spending goes up, it is invisible. It is off the
    screen. No one acknowledges it. We hide it in Washington. Then
    a few people try to say, hey, let's take it back to where we
    were before the recession, oh, my gosh, kids will be dying.
        You know, I have watched this for 20 years. It happens over
    and over again. When spending goes up, it is invisible. If you
    try to apply the slightest constraint, then you are victimizing
    the poor and slashing the safety net.
        Basically what we are doing here is flim-flamming the
    American taxpayer.
        Ms. PAVETTI. Just on the measurement issue, I think we have
    made major progress measuring poverty in a way that actually
    captures what the safety net does. So if you look at
    Supplemental Nutrition Assistance, health care, those do not
    get counted in our standard poverty measure, and when they are
    counted you see that they have reduced poverty.
        And in 2005, if you take a group of means tested programs,
    the EITC, SNAP, SSI and TANF, they kept 14 million people out
    of poverty and six million of those were kids. So if we did not
    have those programs, we would have much higher rates of poverty
    than we have now.
        The other thing that is important, there are two other
    points that I think are important of what is going on. One is
    that because income inequality has increased and the labor
    market is very sluggish, low income programs have to work much
    harder to help people to stay above the poverty line. So part
    of it is a labor market issue.
        The other is that health care costs across the economy, not
    only those that are targeted to the poor, are also increasing
    at faster rates than other programs, and that gets counted in
    what is going on in the overall spending.
        Mrs. BLACK. Doctor, in all of these programs that you have
    looked at over your years of investigating these, do all of
    these programs have measurement tools to say at the end of the
    day this is what we want to achieve and this is what is being
    achieved and when it is not being achieved, that we go back and
    revisit it and either get rid of it or bring in a better
    program that does work?
        Ms. PAVETTI. They do not, but some of them do, and I would
    say it is a credit to welfare reform----
        Mrs. BLACK. What percentage?
        Ms. PAVETTI. Pardon?
        Mrs. BLACK. What percentage?
        Ms. PAVETTI. I cannot tell you the percentage, but in
    welfare reform we invested a lot of money to identify what
    works best for whom, and so we need to, I think, continue to do
    that. And I think you are right. We do need to be able to do
    more measurement and to be able to make those choices about
    what works and what does not.
        Mrs. BLACK. I can only say that in the State of Tennessee,
    in the programs that we looked at on the health care and the
    family programs, very, very few of them actually had metrics
    tools, and they were around for a number of years where they
    never went away because somebody had a stake in them, and they
    did not want to get rid of them because they belonged to
    someone.
        Chairman DAVIS. Thank you very much. The gentlewoman's time
    has expired.
        Mr. McDermott.
        Mr. MCDERMOTT. Thank you, Mr. Chairman.
        Program duplication is obviously a concern, but we know
    that only one out of four poor children in this country is
    covered. We have got 15 million kids in poverty. So there is a
    gap. There is not an overlap. It is a gap really that you are
    talking about here.
        You have got 13 million people unemployed, and the Work
    Investment Program only covers 300,000 of the 13 million. So it
    is hard for me to know what in the world this hearing is all
    about. It really ought to be about the gaps in the safety net
    that we have.
        I was interested in listening to you, and I was thinking. I
    saw on television on 60 Minutes a program about a couple. She
    was 40 years old and he is about 45, and they had two jobs and
    they were making about $70,000 between them and they lost that.
    They lost their jobs. And then they ran out of their
    unemployment insurance, and they lost their home, and they
    moved into their car with their three kids. So they are living
    in their car.
        And then they got a little money. They found a little job
    and they got a little bit of money. So they moved up. The kids
    said it was a lot better now that we are living in a motel
    room, five people living in a motel room.
        Now tell me what programs they are eligible for. These are
    middle class people making $75,000 a year and suddenly go to
    nothing. Their unemployment runs out. What do they have
    available to them to keep their family together and keep their
    kids from being hungry?
        The kids talked about taking their bath in the morning in
    the Walmart bathroom. They were parked in the Walmart parking
    lot. So they went in to use the bathroom, right?
        What is available to them? What is available to somebody in
    these programs?
        Ms. PAVETTI. Well, in every state they would be eligible
    for food stamps.
        Mr. MCDERMOTT. Ah, food stamps. How much do they get in
    food stamps?
        Ms. PAVETTI. It depends on their family size, but for a
    family of three, the maximum benefit is $526. The actual amount
    a family receives depends on their income and expenses.
        Mr. MCDERMOTT. Okay. So they would be eligible for $300 a
    month worth of food.
        Ms. PAVETTI. And then depending on their circumstances and
    what State they are in, they may or may not be eligible for
    TANF benefits, and that in the median State is $429 for the
    month.
        Mr. MCDERMOTT. Depending on what State they're in. You mean
    it is different from State to State?
        Ms. PAVETTI. It is. It is very different from State to
    State.
        Mr. MCDERMOTT. You mean we allow the States to have
    different standards for people?
        Ms. PAVETTI. Completely. In TANF, yes.
        Mr. MCDERMOTT. So you have got to be careful where you are
    poor is what you are saying.
        Ms. PAVETTI. Yes, and what we saw in the recession was some
    States actually responded to the recession quite well and
    others did not respond at all, and their case loads actually
    went down.
        Mr. MCDERMOTT. Like Michigan that just reduced its
    unemployment benefits.
        Ms. PAVETTI. Right, and in Michigan, their TANF case load
    did not go up even though their unemployment rate was very
    high. Their case load did not respond much to the recession.
        Mr. MCDERMOTT. Now, I mean, we hear this testimony that all
    of these people are welfare cases, and I have never heard the
    elderly and the disabled called welfare cases before. That is a
    kind of pejorative term related to people who do not try,
    right?
        Ms. PAVETTI. Right, and also Mr. Rector pointed to the
    books, but those say for the poor and not welfare. I think that
    term ``welfare'' is what is very misleading. It is often used
    as a very pejorative term for people who are not working and
    receiving public benefits, and I think that is the problem.
        When you start talking about child care, which many people
    believe we should be providing to help people go to work, that
    we should be providing extra help to low income schools to help
    kids bridge the gap--those are not what people think about when
    they think about welfare programs, and that is what is
    included.
        Yes, they are programs for the poor, but they are not what
    we think of as welfare.
        Mr. MCDERMOTT. If I can get one other question here, the
    inflated figure he uses, this huge number, God, it just blows
    your socks off. Is any of that health care?
        Ms. PAVETTI. A huge portion of that is health care. In
    fact, not only is it health care, but one of the problems is
    that Medicaid is actually a very lean program, and what we have
    seen in Medicaid is that about a quarter of the beneficiaries
    incurs about two-thirds of the cost because it includes elderly
    and disabled who have much higher Medicaid costs.
        Mr. MCDERMOTT. In Medicaid?
        Ms. PAVETTI. In Medicaid, yes.
        Mr. MCDERMOTT. Okay. So the solution would be to get rid of
    the Medicaid program and just let people kind of go out and
    figure out whatever they can do, right? You could save a lot of
    money that way, right?
        Ms. PAVETTI. Well, actually because Medicaid is a lean
    program, if you look at Medicaid per beneficiary cost in
    comparison to the private market, it actually is a lower cost.
    So if you put it into the private market, it would actually
    have increased costs, not lowered cost.
        Mr. MCDERMOTT. Thank you.
        Chairman DAVIS. Thank you. The gentleman's time is expired.
        I would like to recognize Mr. Berg from North Dakota.
        Mr. BERG. Thank you, Mr. Chairman. Thank you for being here
    to present.
        I just enjoy some of this perspective. Certainly
    Representative Paulsen said, you know, if we are going to start
    over we would not start this way. You know, it is kind of
    interesting. You look at how did we get here. Well, we get here
    because of Government.
        I mean, how do you get more money? You do not get more
    money by increasing a program. You get more money by having a
    new program, and so it mushrooms out and mushrooms out.
        I mean, I am sitting here, and I looked at Mr. Rector's
    chart, and I assumed it was a roller coaster, and I am sitting
    here just stunned that it is not, that it keeps going up, it
    keeps going up, it keeps going up.
        I mean, I think our goal has been in North Dakota where we
    have three and a half percent unemployment; each State is
    different. There is on questions about it, and I think the
    ability to have a safety net that helps empower people, helps
    them be on their own is huge.
        I think what has not been said is one of the biggest
    problems in this whole situation is if you have 69 different
    programs, think of the beneficiary. How do they maneuver from
    program to program to program? It seems to me that the benefit
    of having this more consolidated and uniform would prevent
    people from falling through the cracks and falling through the
    gaps.
        So a couple of questions. One question is you had
    mentioned, Mr. Rector, about the $30,000 per family. When you
    just take the top line, here is the number.
        Mr. RECTOR. Right.
        Mr. BERG. And here are the people. Could you just restate
    that? Then, Doctor, I would like you to respond to that.
        Mr. RECTOR. Well, the bottom line is I have written a
    fairly long monograph about this. If you do not want to call
    this spending ``welfare,'' which liberals do not, okay. You can
    call it aid to the poor, but the fact to the matter is that we
    are spending about $940 billion on means tested aid, which are
    programs targeted toward poor and low income people. Basically
    any document would show.
        And all of this discussion is usually one program at a
    time. We just heard Mr. McDermott say one out of four children
    are covered. Covered by what? It would be very difficult to
    find any poor child in the United States who is not covered by
    multiple programs. But if you look at one program at a time,
    you can always discover, oh, look. Somebody is not covered. It
    is just ridiculous.
        But the bottom line is that roughly half of this spending,
    over $400 billion a year, clearly goes to families with
    children, say $450 billion a year. Now, there are only 44
    million families with children in the whole United States. So
    if you gave every single family this money just in cash it
    would come to $10,000 a family.
        Now, this spending is concentrated on the poor. So if you
    take this money and give it to the bottom third, the lowest
    income third of families with children, that is about 14
    million families. Okay? You divide 450 million by that amount;
    you come up to something that is a very, very large number per
    family.
        The problem is not so much duplication in my mind as the
    simple massive fragmentation of spending which makes it
    impossible for you as decision makers to even understand where
    this money is going. And I have been doing this for 30 years. I
    do not know where this money is going, but it is an amazing
    amount of money.
        When it goes up, it is off the charts. If you try to bring
    it down, it is----
        Mr. BERG. Dr. Pavetti.
        Ms. PAVETTI. I think that Mr. Rector does not provide
    enough detail to know what is included, what he includes when
    he talks about money going to children with families, but as I
    said, you know, if you think about what the amount of cash that
    is going to families, it is very low. The amount of food stamps
    is very low. So the amount of money that low income families
    actually have in their hands is actually quite small.
        But I think that what gets counted is community development
    block grants. What gets counted is Title I money that goes to
    schools. So that is going to pay teacher. You are getting
    health care in there. That is going to pay doctors and
    hospitals. So a lot of that money is going to pay for services,
    and it is not actually going directly to poor people.
        So I think it is a misleading number of what it actually
    means, and I think that if we had more detail we could have a
    better conversation about----
        Mr. BERG. It is kind of a stark contrast to look at that
    big number and say what could you do if that were really
    focused on a family. It seems huge.
        But I have another question. Earlier this week we had Dr.
    Lazera who was in, and he really talked about as the size of
    Government grows, it put a damper on the private sector, and
    really that is kind of what we are talking about here. How do
    we reverse that?
        And really to cut to the quick, Mr. Rector, looking at this
    report, which programs would you recommend that we look into
    first in terms of consolidating?
        Mr. RECTOR. The first thing you need to do is just what a
    family would do. The way that you have been running the welfare
    system for 40 years is as if you are a supermarket and you go
    down the aisle and say, ``Oh, that looks good and that looks
    good,'' and you put it in the cart and you never add up the
    total amount of the cost in the cart.
        Would you be spending too much money then? Of course you
    would. Suppose you ran the entire Federal budget that way. Just
    we identify this problem; we identify that problem; and we
    spend money. We never add it up.
        You have got to get this total package under control or you
    will bankrupt the country. Just roll back this spending to
    where it was before the recession began.
        Chairman DAVIS. Thank you, Mr. Rector. The gentleman's time
    has expired.
        Mr. Boustany, you are recognized for five minutes.
        Mr. BOUSTANY. Thank you, Mr. Chairman.
        Dr. Pavetti, Mr. Rector has testified that we currently
    spend $940 billion on means tested programs. A simple question:
    is that amount enough?
        Ms. PAVETTI. I think it goes back to what we were talking
    about. I think that is a question that needs to be answered by
    what are we trying to accomplish, and are we accomplishing it.
    So I think it is just the wrong way to start with that
    question. I think we want to ask what do we want to accomplish
    for our country for low income Americans to help them move up
    the economic ladder, and then think about are we spending money
    in the right ways, and where can we get better savings so that
    we can achieve our goals.
        Mr. BOUSTANY. So I was thinking about this, and just
    listening to the discussion. You know we talk about defining
    poverty, and I was thinking about the distinction between
    poverty and being poor, and then the whole idea of dependency
    on these programs, which is what leads to the cost.
        If we say, okay, we are going to put people of limited
    means on these programs to take them out of poverty, yet they
    are still dependent, we are still spending money and we are not
    helping them move up the ladder to get off of the rolls of the
    dependency.
        Mrs. BLACK. was talking about having the proper metrics in
    place, and so let's have a little discussion about that. I am
    asking all of the panel this question. Should we take each of
    these programs and devise metrics with an eye toward designing
    the program to get people off these programs? Is that what we
    should be doing?
        I would like all of you to comment on that.
        Ms. PAVETTI. I think that we need to think about what has
    happened in recent years. Our safety net is very different now
    than it was before, and we have much of our safety net that is
    really going to support low income working families because
    they cannot make enough to be able to meet their basic needs.
        So what happened with welfare reform is that we saw the
    case loads decline and people move into the labor market, and
    the belief was that if people got on the first rung of the
    ladder they would move up, and that has not been borne out.
    There has been lots of research.
        Mr. BOUSTANY. Mr. Rector, could you comment on that?
        Mr. RECTOR. Sure. I would like to quote from my favorite
    welfare expert, President Lyndon Johnson. When Lyndon Johnson
    launched the War on Poverty back in 1964, he said (and we spent
    over $16 trillion on this, four times the amount we spent on
    all other wars in U.S. history after adjusting for inflation),
    he wanted a War on Poverty that would strike at ``the causes,
    not just the consequences of poverty.'' He said, ``Our aim is
    not only to relieve the symptoms of poverty but to, above all,
    prevent it.''
        I was just looking at the 1964 President's economic report
    where they said, you know, we could just take $25 billion and
    give it to the poor people and eliminate poverty, but that
    would be wrong. We do not want to do that. What we want to do
    is make the poor prosperous and self-sufficient.
        Now, I would say we put $16 trillion into the War on
    Poverty, and everything is dramatically worse today than it was
    when we started out. The poor have less capacity for self-
    support than they ever have primarily because the poor do not
    work very much, even in good economic times. Able bodied heads
    of households work very little. Moreover, when Lyndon Johnson
    launched this War on Poverty, six percent of children were born
    outside of marriage. Today that number is 42 percent. About 75
    percent of the welfare assistance for families with children is
    going to single mothers. The welfare system has enabled that
    decline of the family. The family's capacity for self-support
    has plummeted, and the taxpayer is stuck with the tab.
        Mr. BOUSTANY. So you mentioned a couple of the factors that
    cause an increase in dependence and poverty. Are there others?
    Could you mention some others? Those are the big ones,
    obviously.
        Mr. RECTOR. Those are the two biggest ones. The two major
    reasons that families are poor and on welfare are low levels of
    parental work and the high levels of single parenthood
    primarily among poorly educated mothers.
        A third problem is immigration. We basically have imported
    vast numbers of poor people from abroad. We have about ten
    million immigrants in this country who do not have a high
    school degree. About 15 to 20 percent of total welfare spending
    goes to those individuals.
        If you bring people in from abroad who are high school
    dropouts, guess what. They cost a fortune. Those families cost
    about $10,000 a year in means tested welfare through their
    entire lives. Overall, they get about $30,000 a year in
    Government benefits, pay maybe eight, $10,000 in taxes. Every
    one of those families' is a net cost of $20,000 a year.
        If you keep importing people who cannot support themselves,
    both poverty and welfare have to go up.
        Chairman DAVIS. Thank you. The gentleman's time has
    expired.
        Mr. Crowley.
        Mr. CROWLEY. My grandfather came here without a high school
    diploma. So did all of my grandmothers.
        Mr. RECTOR. Would you like me to comment?
        Mr. CROWLEY. I am not asking you a question, sir, and the
    point I am making is that but for them coming to this country
    and working hard, I would not be a member of Congress today.
        So I do not like the way in which people are being broadly
    disparaged based upon their immigration status in this country.
        But thank you, Mr. Chairman, for holding this hearing
    today, and while I appreciate your focus on reducing
    unnecessary duplication and waste, I think we need to take a
    careful look at what we consider unnecessary duplication. I am
    concerned that some of the proposals we have heard would
    consider any programs that help families to be unnecessary
    duplicates, even if they are as widely different as heating
    assistance and job training.
        It is not unnecessary to help American families; in fact,
    very necessary that we help American families, especially
    during these very difficult times.
        Dr. Pavetti, we have heard a lot about increases in what
    some call welfare spending, and you have spoken about the
    Republicans' Welfare Act of 2011. This legislation would take a
    variety of Federal programs that provide benefit especially to
    low and middle income Americans and combine them into one
    program and cap funding for that program.
        Is it correct that this bill includes Pell grants as so-
    called welfare spending?
        Ms. PAVETTI. Yes, it does.
        Mr. CROWLEY. Pell grants, as you know, provide a critical
    financial aid to students attending college. In many cases,
    they are the primary piece of the financial aid package that
    makes it possible for students in lower income and middle
    income families to attend college, to help make college
    affordable, especially private college, more affordable, not
    affordable, more affordable.
        Sacrifice goes into that; working on the side to support a
    family and to also pursue your dreams. At a time when it became
    more difficult for families to afford a college education for
    their children, Democrats in Congress raised the amount of Pell
    grants and insured that more students can benefit from this
    assistance. So over 22,000 students in my district have been
    benefitted from Pell grants, and I think most of them would be
    shocked to see this counted as welfare, particularly since by
    going to college, they are working towards a better future
    where they hope to be self-sufficient.
        We have even seen new data from the Department of Education
    that says Pell grant recipients are more likely to stay in
    school and complete their college education than their non-Pell
    receiving counterparts. I would even wonder how many of my
    colleagues on the other side of the aisle used Pell grants to
    make college affordable for themselves or for their families.
        Maybe that is something for the Fourth Estate to
    investigate or to ask.
        In your experience though, Doctor, have you found that Pell
    grants and a college education help sustain and allow students
    to improve their lives?
        Ms. PAVETTI. Actually I have not done work on Pell grants,
    but I think one thing that is important is that one thing that
    we do know is that when people have the opportunity to get even
    short-term training that prepares them for better jobs, they
    have a better trajectory which allows them to go into higher
    paying jobs, which means they become less dependent.
        Mr. CROWLEY. So would you suggest possibly that a lot of
    the talk about people in poverty being poor, wouldn't a college
    education help lift these individuals out of poverty?
        Ms. PAVETTI. Yes, it would.
        Mr. CROWLEY. Would you consider this excessive welfare
    spending that needs to be cut?
        Ms. PAVETTI. No, not at all.
        Mr. CROWLEY. The Republicans' proposal would combine the
    Pell grant program with other valuable but unrelated programs,
    such as Foster Care Assistance and Community Health Centers.
    Would you consider these programs to be duplicates or do they
    serve different goals?
        Ms. PAVETTI. They serve very different goals.
        Mr. CROWLEY. Let me delve further into this issue of
    funding for each of these programs under the Republican
    proposal. Would funding for Pell grants likely increase or
    decrease under this proposal?
        Ms. PAVETTI. They would be almost certain to decrease.
        Mr. CROWLEY. What about Community Health Care Centers?
        Ms. PAVETTI. Same, they would almost certainly decrease.
        Mr. CROWLEY. Thank you, Doctor.
        We are already seeing Republican plans to cut Pell grants
    in their budget resolution released today which would cut the
    annual Federal allocation for Pell grants by about half,
    reducing the amount of the grant for those who do receive it
    and deny the grant completely to many American families today.
        It seems to me the Republican target is not duplicative
    programming, but vital lifelines for millions of struggling
    American families today.
        And with that I yield back the balance of my time.
        Chairman DAVIS. I thank the gentleman, and I just remind
    him that Pell grants and Community Health Centers are not in
    our jurisdiction, nor are they a primary focus of our hearing
    today.
        Mr. CROWLEY. I am sorry about that, Mr. Chairman.
        Chairman DAVIS. But they are a worthy point for discussion
    at another moment.
        Having the last word and not the least today will be the
    gentleman from Nebraska, Mr. Smith.
        Mr. SMITH. Thank you, Mr. Chairman, and our witnesses.
        Dr. Pavetti, could you speak to how efficient the
    technology has been in terms of delivering some of the
    services? Have we been able to achieve any savings?
        Ms. PAVETTI. You know, there are some States that have
    definitely achieved savings, and in my written testimony I have
    an example of Arizona that was facing increases in their case
    loads for public benefits because of the recession and they
    have lower staff available to do that because of budget cuts.
    And so what they did was to really re-engineer their process to
    do much more efficient services.
        The other thing, there are a number of States that are
    really interested in trying to figure out how can they use
    technology better. How can they really avoid the duplication?
        So there is a lot going on in States around this effort.
    The Ford Foundation has a major initiative. There are, I think,
    27 States that applied to be part of that, to, again, try and
    really bring those programs together and make them much more
    efficient and particularly for working families, again, who
    really do not often make enough to make ends meet and need
    those supports to be able to continue to work.
        Mr. SMITH. And I speak as a former State legislator, that
    sometimes these Federal mandates that have occurred over the
    last several years have been met with some consternation at the
    State level or at, say, the retail level as well.
        I mean, can you speak to how necessary it has been for the
    Federal Government to mandate or how that has been leveraged?
        Ms. PAVETTI. I think sort of ``mandate'' is the wrong word.
    I think one of the things that we have learned over the years
    is that States do not really understand how much flexibility
    they have to coordinate programs. So I think there is a lot
    that can be accomplished by really trying to create an
    environment where that is promoted, and the Obama
    administration has done that.
        We saw that particularly with the TANF Emergency Fund where
    they worked very hard to make sure the Department of Labor and
    the Department of Agriculture and HHS were working together to
    provide guidance. So they really did work together, and there
    are agencies that said they had never worked together before
    and that really did bring them together.
        So I think there are things that they can do, and they need
    sort of some guidance on how to actually do that.
        Mr. SMITH. Now I hear you saying that there might be some
    situations where or there are some situations where the request
    for assistance did not follow the same trend lines as the
    economy itself. Is that accurate?
        Ms. PAVETTI. That is very true, and I can provide you with
    a paper we did that shows State by State where we look at what
    happened where States did have increases and people did have
    access to assistance and where they did not. So you do see
    this. It really is a 50-State story, where some States, really
    their programs were very responsive, and there are other States
    that were not responsive at all.
        Mr. SMITH. So is it fair to say that even in unprecedented
    times of economic growth there was still increasing requests
    for public assistance?
        Ms. PAVETTI. There was not. In fact, what you see is that
    the case loads, and I can provide this to the committee as
    well; you see what happened is that the increase in employment
    was really quite striking shortly after welfare reform was
    implemented, and that really tracked the economy and what was
    going on.
        When the economy started to falter, we see that increase
    going down, and we saw very slight increases in the TANF case
    load, but in general the trend of the TANF case load has been
    going down.
        Food stamps tend to track much more the economy. So it goes
    up when the economy is very weak and it comes back down when
    the economy recovers. So that there are people who really turn
    to it when they have no other sources of income.
        And one thing we have seen in both of those programs is
    there are a very large fraction of people who use those
    programs who either are employed or have been previously
    employed and have lost their employment.
        Mr. SMITH. Okay. So reflecting on Mr. McDermott's scenario
    where I believe he knows of an actual family who was living out
    of their car, I mean was that more a function of no programs or
    services available or what needs to be done to address
    something like that?
        Ms. PAVETTI. Well, I think that one of the issues is that
    for a family, the resources are so low that it's hard to find
    even a--you know, when you get a median of $426, to find a
    place to live on that so that even if they did get the
    benefits, it does not mean that it could help them to get out
    of that situation. They probably would have needed more
    assistance at least at the initial to be able to figure out how
    to make that initial transition.
        They could have gotten food assistance to be able to at
    least have food to be able to feed their family. But, again, it
    depends on what State they were in, and there are half of the
    States that they would have gotten less than $426.
        Mr. SMITH. They were from Florida.
        Ms. PAVETTI. They were from Florida. I do not know exactly
    off the top of my head, but I think Florida's benefit is around
    $300. So I do not know if you can find a place to live in
    florida for $300 a month, but my guess is it would be quite
    difficult.
        Chairman DAVIS. I thank the gentleman. His time has
    expired.
        And I would like to thank all of you for taking the time to
    come in and appear today. These are very complex issues. It
    would be nice if we had an unlimited amount of time.
    Unfortunately, we do not on this day, but we look forward to a
    continuing dialogue and we look forward to your continued
    comments.
        If members have any additional questions, they will submit
    them to you in writing directly, and we would appreciate your
    responses back to the committee for the record.
        With that, thank you, and the committee stands adjourned.
        [Whereupon, at 3:29 p.m., the subcommittee was adjourned.]

        [Submissions for the Record follow:]

                        Elizabeth Lower-Basch, statement

    [GRAPHIC] [TIFF OMITTED] T0879.052

    [GRAPHIC] [TIFF OMITTED] T0879.053

    [GRAPHIC] [TIFF OMITTED] T0879.054

    [GRAPHIC] [TIFF OMITTED] T0879.055

    [GRAPHIC] [TIFF OMITTED] T0879.056

    [GRAPHIC] [TIFF OMITTED] T0879.057

    [GRAPHIC] [TIFF OMITTED] T0879.058

                           Harry J. Holzer, statement

    [GRAPHIC] [TIFF OMITTED] T0879.059

    [GRAPHIC] [TIFF OMITTED] T0879.060

    [GRAPHIC] [TIFF OMITTED] T0879.061

    [GRAPHIC] [TIFF OMITTED] T0879.062

                             Jim Gibbons, statement

    [GRAPHIC] [TIFF OMITTED] T0879.063

    [GRAPHIC] [TIFF OMITTED] T0879.064

    [GRAPHIC] [TIFF OMITTED] T0879.065

    [GRAPHIC] [TIFF OMITTED] T0879.066

    [GRAPHIC] [TIFF OMITTED] T0879.067

          Members of the New Markets Tax Credit Working Group, letter

    [GRAPHIC] [TIFF OMITTED] T0879.068

    [GRAPHIC] [TIFF OMITTED] T0879.069

    [GRAPHIC] [TIFF OMITTED] T0879.070

    [GRAPHIC] [TIFF OMITTED] T0879.071

    [GRAPHIC] [TIFF OMITTED] T0879.072

    [GRAPHIC] [TIFF OMITTED] T0879.073

    [GRAPHIC] [TIFF OMITTED] T0879.074