[Congressional Record Volume 141, Number 138 (Thursday, September 7, 1995)]
[Extensions of Remarks]
[Pages E1718-E1719]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                           REFORMING WELFARE

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                      Wednesday, September 6, 1995
  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, August 23, 1995, into the Congressional Record.
                           Reforming Welfare

       Hoosiers do not like the current welfare system. They think 
     it is anti-work and anti-

[[Page E 1719]]
     family, and encourages out-of-marriage births. They think it is 
     degrading and demoralizing for welfare recipients who would 
     prefer work. They think it is too bureaucratic and does not 
     provide sufficient flexibility. They also think it has done 
     little to reduce poverty. Welfare reform is one of the major 
     issues before Congress this year, and several aspects of it 
     are being examined.


                            the federal role

       The current welfare system as most people think of it 
     consists of Aid to Families with Dependent Children (AFDC), 
     an entitlement under which cash benefits flow to all eligible 
     individuals on the basis of need. The federal government pays 
     from 50% to 80% of the cost depending on the state. In 
     Indiana the federal share is about 63%. Reform proposals 
     before Congress would provide that individuals are not 
     automatically entitled to such assistance. States would be 
     given a fixed amount of money--or block grant--that would no 
     longer vary with the number of families needing assistance.
       Shifting to block grants would give states more flexibility 
     to develop innovative ways to deliver assistance. But there 
     would be 50 state experiments in welfare with no systematic 
     evaluation of the results. Furthermore, use of the block 
     grant without requiring states to maintain their own effort 
     would invite welfare cutbacks. States, always fearful of 
     becoming a magnet for the disadvantaged, would likely end up 
     competing to cut benefits and limit eligibility, and a ``race 
     to the bottom'' could occur.
       Several of the proposals would freeze federal funding for 
     five years without adjusting for inflation or growth in the 
     number of poor people. The theory is that block grants will 
     achieve administrative savings, but studies show that 5% in 
     such savings may be about the best that can be expected. If 
     poverty in a state increases, it would have to bear the 
     additional cost of serving more poor people. States already 
     cut budgets in a recession because revenues fall.
       Block grants are sometimes quite useful, but I think they 
     make much less sense for programs for which the poor are 
     eligible on an entitlement basis and the federal government 
     shares some or all of the costs. I worry that using the block 
     grants means that the poor would have to compete against 
     other claimants--like teachers, road builders, and law 
     enforcement--for scarce state dollars. The lack of clout of 
     poor people was a principal reason why the welfare program 
     was federalized in the first place--to assure a minimum level 
     of protection for the voiceless poor who would lose out in 
     political competition for limited funds at the state and 
     local levels.
       A key issue is whether assisting the poor is seen primarily 
     as a national or state responsibility. There is a strong case 
     for giving the states more flexibility in reforming welfare. 
     But if the federal government uses block grants it gives up 
     its role in helping the needy and easing regional economic 
     disparities. Giving states more flexibility in running 
     welfare programs can be done without necessarily converting 
     them to block grants. For example, many states, including 
     Indiana, have received exemptions from some federal 
     requirements to allow them to experiment with improvements in 
     welfare assistance.


                            encouraging work

       An essential yet often elusive goal in welfare reform is to 
     encourage work. Tools to increase work include financial 
     incentives, education and training, and work requirements.
       Financial incentives allow recipients to keep more of their 
     welfare check after they go to work. Past attempts to reduce 
     welfare dependency through financial incentives have proved 
     disappointing. Education and training produce positive 
     results, but they are expensive. Much attention has to be 
     paid to the quality of training provided and the availability 
     of child care for welfare recipients moving into jobs. Many 
     reform proposals require states to enroll 50% of all welfare 
     parents--some three times the current proportion--in work 
     programs, but these proposals provide no funding for the 
     additional work slots. Likewise, if more welfare mothers are 
     moved into work, more child care will be needed; but under 
     some proposals child care funds from the federal government 
     are cut below current levels.
                               Time Limit

       Most of the proposals favor time limits for welfare 
     recipients. Today about one-third of the recipients stay on 
     welfare for more than five years. They are usually a 
     particularly disadvantaged group. The critical issue is, what 
     happens to the recipients who lose all eligibility for 
     welfare because of the time limits? Only about one-third of 
     them are likely to be employed two years later.


                         Preventing Dependency

       Everybody agrees that more effort should be devoted to 
     preventing dependency on welfare. That means education and 
     jobs have to be emphasized, especially for the unskilled. It 
     also means that much more attention has to be paid to out-of-
     marriage childbirth and to the low levels of child support 
     from fathers of children on welfare.
       Early childbearing is a major factor in poverty and welfare 
     dependency. Overall the teenage birth rate is now lower than 
     it was 30 years ago, but the proportion of such births that 
     occur outside of marriage has increased dramatically. Many 
     welfare proposals today deny benefits to young unwed mothers 
     or cap benefits to those who have additional children on 
     welfare, but overall the evidence is not clear about the 
     impact of these proposals. Some state experimentation may be 
     in order.
       Requiring more fathers to pay child support would almost 
     certainly mean the number of poor individuals would drop and 
     the number of families on welfare would also drop. Billions 
     of dollars could be saved. The current proposals make the 
     penalties for avoiding child support obligations tougher.


                               Conclusion

       I am impressed that the issues in welfare reform are much 
     more complex--and reform itself much more difficult--than the 
     debate in Congress now recognizes. Congress is going to have 
     to be more modest in what it can achieve in a single bill 
     this year. The system is broken, but serious people have 
     serious disagreements over precisely what needs to be fixed 
     and how in the welfare system.
       (Newsletter based on the Urban Institute Welfare Reform 
     report.)
     

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