POVERTY ANDPUBLIC POLICY WHAT SHOULD BE THE ROLE OF THE FEDERAL GOVERNMENT IN EXTENDING PUBLIC ASSISTANCE TO ALL AMERICANS LIVING IN POVERTY? Hiuh School Dabate Series AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH 1150 - 17th Street, N.W. • Washington, D.C. 20036 THE AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH, established in 1943, is a publicly supported, nonpartisan research and educational organization. Its purpose is to assist policy makers, scholars, businessmen, the press and the public by providing objective analysis of national and international issues. Views expressed in the institute's publications are those of the authors and do not necessarily reflect the views of the staff, officers or trustees of AEI. Institute publications take three major forms: 1. Legislative and Special Analyses-balanced analyses of current legislative proposals and special policy issues prepared with the help of specialists from the academic world and the fields of law and government. 2. Studies-in-depth studies of government programs and major national and international problems, written by independent scholars. 3. Rational Debates and Symposia-proceedings of debates, seminars, and conferences where eminent authorities with contrasting views discuss controversial issues. ADVISORY BOARD Paul W. McCracken, Chairman Edmund Ezra Day University Professor of Business Administration University of Michigan R.H. Coase Paul G. Kauper Professor of Economics Henry M. Butzel Professor ofLaw University of Chicago University of Michigan Milton Friedman George Lenczowski Paul S. Russell Distinguished Service Professor of Political Science Professor of Economics University of California, Berkeley University of Chicago Robert A. Nisbet Gottfried Haberler Professor of Sociology and History Resident Scholar University of Arizona American Enterprise Institute tor James A. Robinson Public Policy Research President, Macalester College C. Lowell Harriss Joseph T. Sneed* Professor of Economics Dean,School ofLaw Columbia University Duke University EXECUTIVE COMMITTEE Herman J. Schmidt, Chairman of the Board Richard J. Farrell William J. Baroody, President Dean Fite William G. McClintock, Treasurer SENIOR STAFF Thomas F. Johnson Sam S. Crutchfield Director of Research Director of Legal Studies Joseph G. Butts Dave M. O'Neill Director ofLegislative Analysis Director of Human Resources Studies Earl H. Voss Anne Brunsdale Assistant to the President Director of Publications for Special Programs Robert J. Pranger Gary Jones Director of Foreign Assistant to the President and Defense Policy Studies for Administration • On leave for government service HIGH SCHOOL DEBATE SERIES July 16, 1973 (ISBN 0-8447-1821-1) TABLE OF CONTENTS PREFACE ... iii INTRODUCTION 1 POVERTY IN AMERICA: FACTS AND CAUSES . 3 Defining and Measuring Poverty . ..... 3 The Incidence of Poverty ...... 7 Causes of Poverty and Excessive Inequality . 12 EXISTING PUBLIC ASSISTANCE PROGRAMS 21 Introduction ........... 21 Social Insurance ......... 22 Public Assistance Programs--Overview • . 23 Public Assistance Programs in Detail . 25 Reforming Public Assistance: Basic Issues . 38 ELIMINATING POVERTY: EXISTING POLICIES AND PROGRAMS . 45 Minimum Wage and Antidiscrimination Laws . , 45 Education and Other Child Development Policies . • . • . 47 Federal Manpower Programs ........ • so Community Action Agencies and Community Action Programs ..... SS A MINIMUM ANNUAL INCOME . 57 The Proposition 57 Why the Federal Government?. 57 What Do We Mean by "Guarantee?". 62 -i- Contents continued What Do We Mean by a Minimum Annual Income? 64 Each Family Unit. 68 Concluding Comments . 69 PUBLIC EMPLOYMENT FOR THE EMPLOYABLE POOR 71 The Proposition . 71 Why the Federal Government? . 71 " ...Should Provide a Program for the Employment ... " . 73 " ... All Employable United States Citizens Living in Poverty ... ". , . 75 " ...United States Citizens ...". 76 "... Living in Poverty." . 76 A FEDERAL PROGRAM OF COMPREHENSIVE WELFARE . 79 Introduction. 79 "... A Program of Comprehensive Welfare ... ". 79 Why the Federal Government? 88 NOTES TO TEXT. 91 BIBLIOGRAPHY . ..............101 -ii- PREFACE This special analysis is concerned with the issues presented in the 1973- 74 high school debate question: "What Should the Role of the Federal Government Be in Extending Public Assistance to All Americans Living in Poverty?" It is published by the American Enterprise Institute in re­ sponse to many requests from high school debaters and coaches for back­ ground materials and references on the subject of the debate. The anal­ ysis was prepared by Professor John A. Lynch, director of debate, St. Anselm's College, Manchester, New Hampshire, and Dr. Dave M. O'Neill, director of human resources studies at the American Enterprise Institute. The authors have tried to assemble, organize, and present factual and authoritative material in such a way as to assist debaters seeking to delineate and explore the central issues raised by the national debate propositions. The format of the chapters is designed so that the analysis can serve both debaters and others interested in the area of poverty policy. The Introduction and Chapters 1 through 3 present a general survey of facts, issues, and research findings relating to poverty and existing policies toward poverty. Chapters 4 through 6 contain detailed analyses of each of the three debate propositions. This analysis is not intended to provide a complete manual nor an end to the debater's research but is designed rather to serve as a guide to the start of research and a stimu­ lus to its continuation. To this end, a bibliography lists references in addition to those directly quoted or cited in the footnotes. The analysis should not be construed as reflecting any policy position on the part of the staff, officers, or trustees of the American Enterprise Institute. -iii- INTRODUCTION Although there have been periodic fluctuations in the other dir�ction, the long-tenn trend in public attitudes toward poverty and helping the poor has been in the direction of becoming more humanitarian and generous. One happy result of this trend is that with regard to the very extreme fonns of poverty--hunger, malnutrition, lack of shelter--there is really no longer any serious public debate about whether government should play a role. It seems to be generally agreed that government should assure that people in these situations be helped and as rapidly as possible. However, the trend in attitudes has had another effect that is difficult to evaluate. The effect of this trend is that over time the public keeps revising upward what it considers to be the minimum income required to avoid a life of poverty. Thus, although general economic progress has by now almost eliminated the very low standards of life that were widespread in the nineteenth century, public concern over poverty has not diminished since that time. As the standard of living has increased for most people, they have updated their view of the minimum income required to avoid the deprivations of poverty. What this implies, from a very long-run point of view, is that concern over poverty is related closely to concern over excessive inequality in income. It is likely that as long as general economic progress continues and significant inequality persists each new generation will reopen the debate as to what should be considered the minimal acceptable standard of life and what the proper approach of pub­ lic policy should be toward the individuals whose incomes are below this level. The current public debates over welfare reform and antipoverty policy are part of this recurrent process. Currently there are heated arguments over how much should be provided to certain categories of public assis­ tance recipients and over how eligibility and work requirements should be administered. There has been a hardening of public attitudes toward wel­ fare recipients in recent years that represents a deviation from the long-run trend. This hardening of attitudes is related to the strikingly rapid growth during the 1960s in one of the most controversial of the federally aided public assistance categories--Aid to Families with Depen­ dent Children (AFDC). This has resulted in widespread concern over the possible effect of existing welfare programs on family stability and has generated numerous proposals for comprehensive welfare reform. In connection with policies designed to reduce the causes of poverty, there is growing public concern over the mounting evidence that many of the Great Society programs for this purpose have not achieved their ex­ pected objectives. Overcoming the effects that deprived environments -1- have on the subsequent life chances of children has proven to be a formi­ dable task. Many people advocate having the government create public em­ ployment jobs that would guarantee an income above the poverty line. The current National High School Debate topic involves proposals 'that re­ late to both comprehensive welfare reform and to particular antipoverty proposals. Indeed, two of the debate resolutions--that relate to guaran­ teeing a minimum income to all families and to guaranteeing public employ­ ment for all employable poor--have been debated at length in the United States Congress. In the past four years a number of bills have been intro­ duced that sought to implement federal guaranteed minimum income standards for all families with children and to implement large-scale public service employment programs. However, despite extensive