‘Income Inequality?’ How Reagan Handled It
This column by ACRU Senior Fellow Robert Knight was published January 31, 2014 on The American Thinker website.
Now that we’ve solved the “healthcare crisis” with a government healthcare takeover, another bad idea — the guaranteed income — has resurfaced, and Republicans who should know better are flirting with it.
The guaranteed income, by which the government provides cash subsidies to people below a certain income level, is an unrealized scheme floating on the vapors of the Great Society. It’s a recipe for disaster for the very people who have already suffered their share of well-meant disasters — the poor.
Forty-two years ago, on Feb. 1, then-California Gov. Ronald Reagan explained why to Congress. More on that, but first, some background.
On Jan. 8, 1964, Lyndon Johnson declared the “War on Poverty.” Some 20 trillion tax dollars later, the poor are still with us, and their lot in many ways is far worse. The Great Society and the sexual revolution’s war on marriage shattered the black urban family, spawning crime, permanent dependency, addictions, and inner city areas that look like war zones.
Even in California, America’s agricultural and high-tech cornucopia, it took only six years for the War on Poverty to nearly bankrupt the state.
The unfortunate embrace of destructive welfare policies has been bipartisan. On Aug. 8, 1969, Republican President Richard Nixon unveiled his Family Assistance Plan (FAP), the brainchild of Democrat Daniel Patrick Moynihan, his Assistant for Urban Affairs, who wrote a book, The Politics of a Guaranteed Income.
In April 1970, the FAP bill easily passed the House Ways and Means Committee, drawing 21 yes votes. The only three nays came from conservative Democrats, back then when there was such a creature. Despite the usual media hoopla of progressive inevitability, Senate conservatives, along with some liberals who wanted the bill to go even further in redistributing income, rallied to kill it.
But the bill kept coming back, even as the Great Society began wreaking havoc on the social structure in minority neighborhoods.
Into the breach stepped Ronald Reagan. The California governor and his aide, Robert B. Carleson, the architect of modern welfare reform, gave a blueprint for turning the tide and for avoiding the welfare state’s seductive siren song. Their reforms, beginning in 1970, helped save California from bankruptcy while channeling more aid to the truly needy.
On Feb. 1, 1972, in his only testimony before Congress, Reagan opposed HR 1, which would have established, among other things, a guaranteed income.
Before the Senate Finance Committee, Mr. Reagan offered a blunt counter proposition:
“We should measure welfare’s success by how many people leave welfare, not by how many more are added.”
Mr. Reagan explained how California succeeded in reducing welfare rolls and costs:
“We insured adequate aid to the aged, the blind, the disabled, and children who are deprived of parental support and reduced aid to the non-needy with realistic work incentives so that funds could be redirected to the truly needy. Our program requires employable recipients to accept work if offered, and that if jobs are not available, to work in the community in order to remain eligible. Absent fathers are now legally indebted to the county for benefits paid to their families with a provision for wage attachments and property liens, if necessary…
“But maybe most important is the fact that the California plan retains most of the administration and responsibility for an effective and efficient welfare program at the level closest to those who benefit and those who must pay the bill.”
At the heart of the Reagan/Carleson reforms was the idea of human dignity, as Mr. Reagan testified:
“It doesn’t seem right to reduce a man’s take-home pay with taxes and then send him a government dole which robs him of the feeling of accomplishment and dignity which comes from providing for his family by his own efforts. By the same token, we feel that the able-bodied recipient should be given the maximum opportunity to support his family by doing work in his community which will benefit the community.”
The future president also explained what became the key strategy behind the success of the 1996 national welfare reform — decentralization. States received block grants, while perverse incentives to increase their own welfare rolls were removed. It was the first time that welfare rolls decreased nationally.
Mr. Reagan told Congress why states needed more autonomy from the federal government:
“It is almost impossible to hold a state accountable for effective administrative practices and policies under the present straight jacket of federal statutes, court interpretations, regulations, and abuses of administrative discretion. Give the states the broadest authority to administer the system with proper goals and objectives and then hold us accountable for our effectiveness in meeting these goals and objectives.”
Confronted with Barack Obama’s increasingly shrill redistributionist “income inequality” rhetoric, amplified through a servile media, conservatives need to remember Ronald Reagan’s example and fight back with common sense and documented successes.
The Carleson Center Welfare Reform Action Fund has a comprehensive plan for overhauling welfare entitled “Secure the Safety Net.”Before Republicans fall for the Democrats’ signs inviting them into new pools of policy quicksand, they would do well to give it a read.