Box 7, Folder 12, Document 7

Box 7, Folder 12, Document 7

FOR RELEASE UPON
DELIVERY
THURSDAY A.M.

NOVEMBER 13, 1969

Statement of

JOHN W. GARDNER, Chairman
The Urban Coalition Action Council
As Presented By

GEORGE C. McGHEE
Special Representative of the Chairman

before the
Ways and Means Committee

United States House of Representatives

November 13, 1969

Mr. Chairman, your committee is faced with an extraordinary
opportunity. The time has come to discard the existing patch-
work of ineffective and in many ways destructive public assistance
programs. You have the opportunity to replace them with a national
system of income maintenance that will help people to help themselves
but preserve individual dignity in aiding those left behind by
society.

The Need

The need is manifest. This Committee knows all the facts and
statistics of poverty.

You know the cost of welfare, but you know also the great cost
to society of human neglect. The child whose health needs are
denied early medical attention because of poverty may suffer a
lifelong handicap and become a lifelong burden to the community.

The child whose attitudes and motivation are shaped by the pathology

of extreme poverty may become a delinquent or derelict or addict
and end up as a burden on society. The cost to society is not
-to be compared with the human cost. But those who calculate
social costs (and someone must) know that for society the day of
reckoning always comes. It requires a lot of money to maintain
jails, to rehabilitate addicts, to support the victims of early
neglect. We can serve human values and social providence at

the same time by making such casualties less likely.

Many Americans sincerely believe that people living in poverty
are people who don't want to work -- or people who don't want
steady work. In other words, able-bodied loafers. That is a long
way from the truth. Of the 25 million persons living below the
poverty line, 15 million are either under 18 or over 65.

Of the remaining 10 million, 9 million fall within the
scope of the Administration's family assistance proposals (as being
adults in poor families that include children). Let us look at
that 9 million. The Administration estimates that 7.9 million are
already working, but earn too little to bring them above the poverty
level, or are the wives of such men, or are disabled, or are women
who must stay home because of very young children. That leaves
1.1 million adults who the Administration feels can significantly
help themselves and would thus be required to register for jobs
or work training -- 600,000 men and 500,000 mothers of school-aged
children.

I emphasize those facts because they suggest the limits of

what we may expect from the work requirement. Those who cherish
the false notion that the welfare rolls are made up chiefly

of able-bodied loafers could easily imagine that the present
proposals will bring a sharp reduction in the rolls. If they
believe that, they will end up disappointed and angry, because
it won't happen. Most people who now receive welfare or would
receive it under the new proposals are not candidates for the
job market. As the above figures indicate, either they are
already working or they are too old, too young, disabled, or
mothers of young children.

I need not deal at length with the well-know shortcomings of
the present welfare system (or non-system). In 70% of the families
receiving benefits the fathers are absent from the home. To the
degree that the welfare system has helped to create such a situation
it endangers the fabric of our family based society. And clearly a
system in which an American in one state can receive only one
eighth of that which his fellow citizen with the same need receives
in another state falls far short of any reasonable standard of
equity.

The level of welfare benefits paid in most states clearly
will not help any child to escape from poverty. We know, from
official statistics, that in only two of the states do AFDC families
receive aid at the $3,500 a year (for a family of four) poverty
level, and in less than half (21) do they approach 75% of the
poverty threshold. The average for all states and the District of

Columbia is almost $1,200 below the poverty line.
Before we consider how the present system might be improved,
I'd like to comment on what may or may not be expected from a
welfare program.

The poverty that makes a public assistance program necessary
is rooted in a variety of historical and contemporary conditions:
discrimination, the pathology of the urban and rural slum, in-
adequate education, insufficient job opportunities in the locality,
low pay in jobs not covered by the minimum wage, inadequate social
insurance benefits, inadequate provisions for manpower training
and so on.

No welfare program can cure those underlying conditions. It
can only deal humanely with the consequences.

If we are to get to the root of the problem we shall have to do
so through education, health and nutrition programs, the creation of
job opportunities, the elimination of slum conditions and similar
measures.

We must not, for example, imagine that the aid to the working
poor contained in the present proposals is in any sense a substitute
for increases in and extension of the minimum wage. All parts of
the political spectrum would agree, I suppose, that in the long run
an adequate minimum wage is healthier than a Federal wage subsidy.
Legislative Proposals

Now Mr. Chairman, I shall speak to the legislative proposals

before you.
The Urban Coalition Action Council believes that the
President has put forward an extremely important and on the whole
well-designed set of proposals. The Council also believes that
the proposals could be strengthened at several crucial points.

Let me begin by stating very briefly what it is about the
proposals that strike us as valuable.

First, we would offer a general word of praise for the emphasis
on children that is at the heart of the proposals under discussion.
It's about time.

Second, we would emphasize that if the proposals are accepted,
the Federal Government will for the first time in history accept
responsibility for providing a minimum level of payment throughout
the nation and for financing it. I would have been very proud had
I been able to establish that principle during my tenure as
Secretary of Health, Education and Welfare. It is a historic step.
All the details of the present proposals fade in significance
compared with that major advance in Federal policy.

Third, the Coalition Action Council regards the uniform national
standards of eligibility and the greatly broadened coverage as
enormously helpful. Of special significance is the inclusion of
the working poor for the first time. The complete ommission of the
working poor is surely one of the strangest anomalies of the present
system. A society which values work should surely make some
provision for the six million adults who work full-time, year round,

and yet cannot earn enough to bring themselves above the poverty line.
Fourth, we welcome improvement and broadening in the incentive
to work. In 1967 your Committee pioneered in the move to correct
the disincentive to work inherent in the welfare system, and I am
sure that further steps to this end must strike you as well-
considered.

Fifth, we applaud the proposed assistance to families with
unemployed fathers living at home. Every critic of the existing
system has commented on the fact that in states without provision
for AFDC-UP, fathers have to leave home to make their families
eligible for welfare.

Mr. Chairman, those strengths of the President's proposals
are great indeed. They could lead us on to an immeasurably sounder
and more equitable system of income maintenance. But if the promise
of the proposals is to be realized, they must be strengthened at
a number of points.

Can a national commitment to help impoverished families be met
by a program which guarantees uniformity throughout the country only
with respect to the first $1,600 of benefits for a family of four,
even with the commendable inclusion of food stamps? No doubt the
level was based primarily on what the Administration believes it
can afford under present budget constraints. I would like to assume
that the President's ultimate goal is to increase that figure until
it reaches the poverty level. But he has made no provision for
such an increase and, even with the proposed state participation,

there is no incentive whatever for states to raise their benefit
levels. Indeed, they are not required to raise them beyond

the July 1969 level. If state supplementation is to be required,
the legislation should provide an incentive for states to increase
the supplementary benefits (e.g. by Federal matching above the
$1,600 floor).

As the best long-term approach, however, I urge the Congress
to make provision for a nation-wide increase in benefits to the
poverty level over a specified period of time. The $1,600 floor
proposed by the President can serve as a sound starting point for
such a phased program.

Adequate provision should be made for "one-stop" administration
of the proposed Federal-state system. The uniform national eligi-
bility standards should help to eliminate the possibility of dis-
parities in administration among the states, which is so clearly a
problem in the present programs. However, under the President's
proposal, if a state chose to cut its supplementary payments or to
disregard Federal standards for such payments, the Federal require-
ments would be very hard to enforce. It may be necessary to find
a more enforceable Federal sanction, such as administrative inter-

vention.

The improved benefits for the aged, disabled and blind are a
welcome step. It may be, however, that our ultimate goal should
be a single income maintenance system which provides for uniform
adequate assistance for alI of our impoverished citizens, including

needy individuals and couples without children.
It should probably be recognized that we are moving toward
Federal assumption of the full cost of welfare programs. At a time
when the nation as a whole is experiencing unprecedented prosperity,
state and local governments are facing fiscal crisis. Largely
dependent upon an inelastic tax base, they face inflation-linked
increases in service expenditures compounded by spiraling welfare
costs. Given the elasticity of its tax base, and the economies of
scale and efficiency offered by Federal administration, a shift of
the welfare burden to the Federal Government is clearly one means
of resolving the fiscal dilemmas of state and local government.

The fiscal relief offered by this shift would enable state and
local governments to direct greater resources to those functions
they are best fitted to finance and administer.

Another point at which the President's proposals must be
strengthened is the part having to do with the work requirement.

The legislation should specify job standards and wage rates for
"Suitable employment". If this is not done, the legislated work
requirement could end up providing a steady supply of forced labor
to employers who provide substandard wages and working conditions.

The possibility of abuse by local employment services should be
minimized by extremely careful definition of what constitutes a
"refusal to work", and perhaps also by some system of Federal inspect-
ion.

The exemption from the work requirement granted to mothers with

children under 6 and to mothers if the fathers are living in the home
should be extended to mothers with children over 6. It may be
quite feasible for such a mother to work, and many do. But the
feasibility depends on factors that she can best judge: her own
health, the health (physical and mental) of her children, the
presence in the home of adequate mother-substitutes (grandmothers,
aunts) and so on. No bureaucracy should want to second-guess a
mother in such matters.

In this connection, provisions for day care should be more
explicit. Federal standards should be set. No work referral should
be made unless adequate day care is provided. Responsibility for
and funds for construction of day care facilities should be specified

in the legislation.

Finally, I would emphasize that there must be provisions for
job creation, so that the training opportunities won't be a revolving
door into continued unemployment. The ideal solution is a public

service employment program.

Mr. Chairman, that concludes my testimony. I am extremely

grateful for the opportunity to appear before you.