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National Jewish Community
Relations Advisory Council Guide to Program Planning Of the Constituent Organizations |
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Equal Opportunity and Social Justice |
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Poverty & Welfare Reform Changing Conditions A greater percent of people in the United States live below the poverty line today than at anytime in the past thirty years. In attempting to address part of the problem of poverty, President Clinton fulfilled a campaign promise by initiating a re-examination of the welfare system. Anti-poverty programs authorized during the President's first year in office may be cut to meet budget reduction promises and welfare reform is likely to face similar fiscal constraints. Background Poverty Efforts by the Clinton Administration and the 103rd Congress to address poverty have been limited by budgetary constrictions and the underlying pressures to address the federal deficit. The Omnibus Budget Reconciliation Act of August 1993 nevertheless contained several programs designed to help poor people. These include expansions of the Earned Income Tax Credit (EITC), food stamps and childhood immunization programs, all strongly supported by the NJCRAC. Expansion of the EITC should enable families with one member working full-time year-round in a minimum wage job to be able to live above the poverty line. While these programs are certainly helpful to people living in poverty, the process of passing this budget reconciliation package revealed the formidable obstacles to reversing the growing poverty rate, which in late 1993 reached a 30-year high of 36.9 million people. Among single-parent families, whose numbers have grown dramatically over the past 30 years, wage erosion has made their situation particularly acute. The budget reconciliation package, which included small increases in discretionary programs as well as a modest tax increase, passed by one vote, and only with concessions to lawmakers that discretionary (non-entitlement) social programs will be cut to pay for any new programs. Despite the Administration's promise to cut discretionary spending, there have been further proposals in Congress to force the federal government to reduce spending on discretionary programs in order to stay within the mandated spending ceiling. Support for such proposals has come from both Republicans and prominent Democrats in the House and Senate. It also has been proposed by some members that savings from cut programs be "locked in" to deficit reduction by prohibiting the use of such money for new programs. The President's Fiscal Year 1995 budget builds on the fiscal and economic policies initiated last year, promising continued budgetary restraint. However, while last year's deficit reduction allowed for some expansion of low-income programs, the next phase involves an overall limit on discretionary funding, making it difficult simply to maintain current spending levels. The low-income portion of the budget will contain as many cuts as increases, with about 30 programs scheduled for reduction. Additionally, bipartisan action in mid-March led the Senate Budget Committee to amend the FY 1995 budget by cutting $26 billion more in discretionary spending over the next five years. Although efforts by the deficit conscious Congress to pass a balanced budget amendment did not succeed in 1994, the amendment is likely to be reintroduced in 1995. Passage could make the task of finding money to alleviate poverty even more difficult. Believing that amending the Constitution is a serious matter not to be entered into lightly, the NJCRAC strongly opposes the balanced budget amendment because it could result in deep cuts in current social programs such as Head Start, housing, and services to the disabled, and would curtail other programs of importance to the Jewish community. Cuts in federal programs also would require the transfer of additional financial responsibility for social programs to already overburdened states. It would impede the government's ability to respond to the needs of the poor, particularly in recessionary times, or to respond in times of natural disasters or other unforeseen crises affecting our country. Furthermore, this amendment would debilitate the President's health care reform plan by using money from cuts to existing programs to help balance the budget rather than to finance much needed reform of the health care system. While the NJCRAC agrees that there is an urgent need to curb the huge federal deficit, the Congress and the Executive branch already are empowered to take action without tampering with the Constitution. Welfare Reform Following up on his campaign pledge to "end welfare as we know it," President Clinton created a welfare reform working group to examine the existing system and propose legislation for reform. The working group held five regional hearings between August and November 1993. Testimony was presented by welfare recipients, academics and representatives of government and not-for-profit agencies. The working group presented its draft proposal in late January 1994, and a final bill was introduced in late spring, based on the four principles enunciated in his bid for public office: making work pay; improving child support enforcement; providing education, training and other services to help people get off and stay off welfare; and, time-limited transitional financial support followed by work. Making work pay involves, among other policies and programs, enhancing the EITC and raising the minimum wage so that a full-time, year-round employee can support a family above the poverty standard. The NJCRAC strongly supports these two initiatives and supported the Clinton Administration's effort to expand the EITC. Another initiative strongly supported by the NJCRAC would improve the child support system through enforcement of child support payments on the part of the non-custodial parent. Proposed strategies include creating a paternity registry and transferring the collection and distribution of child support to the Internal Revenue Service. An alternative proposal would "assure" payment of child support by the government and transfer the responsibility of enforcing payment by the non-custodial parent from the custodial parent to the government. Advocates of a child support assurance system assert that it would offer the single-parent family the financial stability needed to escape poverty. President Clinton has yet to endorse an assured benefit program. The more controversial component of the Clinton welfare plan involves time-limited cash assistance coupled with education, training programs and jobs. Mr. Clinton has proposed a program that limits cash assistance to two years, after which time the recipient must find a job or take government-provided employment. During the two-year period, qualified recipients must participate in education and training programs. Advocates of time-limits assert that the training and education sequence will empower recipients to find jobs that will enable them to leave welfare. However, questions have arisen regarding the government's ability to provide adequate job opportunities as well as to fund adequately all segments of the program. Opponents of time-limits argue that a time-limited welfare system, without housing, affordable child care and other support services as well as a guaranteed job that enables people to support themselves and their families, would ultimately be a way of removing people from welfare without providing the needed ladders out of poverty. A 1993 Center for Law and Social Policy report claims that a time-limited program is based on an erroneous understanding of how people use Aid to Families with Dependent Children (AFDC). Because over 75 percent AFDC recipients at any one time le AFDC within two years, less than one-quarter of the recipients would able to take full advantage of the training and education programs. Furthermore, imposing a two-year limit from the moment AFDC begins would for recipients to make unreasonable an inefficient decisions about whether and when to initiate education and training activities. It would force families make major decisions about education and training for one of the worst reasons: that due to a federally-imposed bureaucratic rule, there is only on chance for access to income support order to further one's education. 0pponents also argue that administrators and recipients alike will become preoccupied with making choice based on the two-year limit as oppose to the client's individual need. A major obstacle facing the President' welfare reform and any effort to alleviate poverty is the deficit-conscious mood of Congress. At a time when many lawmakers insist that new spending must come from money saved from cuts in other social programs, it is highly unlikely that any ambitious new services will emerge. Legislators may be tempted to adopt time-limited cash assistance as a way to cut welfare roles and thus reduce government spending. Republican legislators have introduced a plan that calls for a two-year cut-off followed by a work-for-benefits program. This plan would offer no additional funding if a mother has another child and reduce benefits if the recipient does not find "real" job within three years. Efforts such as these would indeed reduce spending, but without the attendant non-welfare support services many more people will join the ranks of the very poor. Funding concerns have, in fact, convinced the Administration that its plan should initially restrict eligibility for transitional benefits, vocational training and job placement, to recipients 25 years or younger, as a means of gradually phasing in the program. By limiting the program to the youngest and newest recipients, the government would have to find jobs for about 300,000 people, a figure the Administration views as within its ability to finance. Recently, new concerns have emerged regarding sources of funding for welfare reform. While the President has pledged "to change welfare as we know it," he also has promised that his reform package will be budget-neutral, meaning that no additional funds will be raised to enact his program. Since the money, an estimated $15 billion over five years, must come from other discretionary programs, the White House plan calls for cutting benefits to legal permanent residents of the United States in order to finance welfare reform. (See section on Immigration and Refugees.) While concerns mount regarding how the government will finally decide to finance welfare reform, a group of 90 moderate and conservative House Democrats known as the Mainstream Democratic Forum has developed its own plan which contains some elements of the Clinton plan and would be funded by denying legal residents Medicare as well as SSI. A welfare bill introduced by House Republicans (H.R. 3500) also proposes cutting benefits to legal residents and includes over 60 programs for which they are currently eligible. With pressures from these Republicans and Mainstream Democrats, who, taken together comprise a majority in the House, the Administration may find it difficult to resist pressures to fund welfare reform on the backs of permanent residents. The NJCRAC believes strongly that funding for expanded services, to help people move from welfare to work, should not be at the expense of established government benefit programs which currently serve low-income, disabled, permanent resident populations, or other needy groups. In the meantime, states have begun to experiment with various welfare reform initiatives with the encouragement of the President, who, in fall 1993, approved a time-limit plan in Wisconsin. Beginning in 1995, welfare parents in Wisconsin will receive cash benefits for only two years and will be required to work. After the two years, recipients will not be eligible for cash benefits for 36 months, though they still can receive food stamps and medical assistance. Colorado won federal approval recently to remove welfare recipients from the rolls after two years if they refuse to take a job or training. Oregon has a proposal awaiting federal approval that would take all the money now spent on welfare, food stamps and a few other small social service programs and combine them into a work program. New York, Massachusetts, Virginia and several other states are developing plans as well. It is possible that action in the Congress will be deferred until there is sufficient time to evaluate some of the state experiments in welfare reform. [NOTE: For additional background on poverty issues, the underlying causes of poverty in the United States, and welfare reform, see Joint Program Plans for 1988-93, and the report of the Conference on Poverty, co-sponsored by the NJCRAC, October 1992.] The Jewish community relations field should
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