MR. H. WAS ANGRY.

"Uncle Sam, keep your lousy raise," he wrote. I'm much better off without it!"

The irate constituent, a 56-year-old disbled construction worker, explained that his problems started in July when his social security disability benefits increased by $14 a month. "First, they took away my Medicaid, then the price of food stamps went up, and also my rent in the high-rise. The final blow came when my veteran's pension was cut.

"They took away the increase and much more!"

Mrs. S., a 67-year-old widow, used less harsh terms when she wrote to complain about the same problem. "I had to get recertified for food stamps in May," she explained. "I was told: 'You'll be getting an increase in your social security in July, so we will have to raise the cost of the food stamps by $5. Then a letter came to reduce my [state welfare] supplement by $2.10. Then a letter from the housing authority raising my rent by $2."

"So after a social security raise of $12.20, I came out with a $3.10 'profit'. Sometimes you wonder just who is getting the increase!"

Mr. H. and Mrs. S. are two of the millions of Americans caught up in the complex interactions of a vast array of federal programs providing cash payments and "in-kind" services for those with special needs. Because they receive assistance from multiple sources, these people often find that an increase in benefits from one program triggers reductions and/or loss of aid from other sources. Mr. H. and Mrs. S. receive their main source of income from social security. Their other benefits are "income tested," meaning that eligibility is contingent on limited income and assets. As their income rises, these benefits are reduced and eventually eliminated.

The lives of these two recipients are not as complicated as some. The Federal Council on the Aging in its 1975 report determined that the federal government funds 34 separate programs that directly aid older people. These programs, the council reported, are characterized by "administrative complexity and expense, inequalities in the distribution of benefits and requirements for eligibility, and confusion among potential recipients."

"The situation has been made even more complicated and confusing," the council added, "by the tangled mix of benefits which include cash, food, housing and medical care as well as a long list of services." A Sprawl of Programs

THE STUDY was limited to aid for the elderly, but the same fragmentation affects benefits for all age groups.A recent Library of Congress report listed 55 separate programs providing government payments of cash or services to various groups of people with limited incomes.

These 55 programs have grown haphazardly over the years. Programs have been piled on top of programs with little regard for uniformity or equity.

A landmark congressional study of the welfare system, directed by former Rep. Martha Griffiths, looked at the causes of this chaotic development and found:

"Our income security programs are shaped by at least 21 committees of the Congress and by 50 state legislatures, by six Cabinet departments and three federal agencies, by 54 state and territorial welfare agencies and by more than 1,500 county welfare departments, by the U.S. Supreme Court and by many lesser courts.

"Each of the congressional committees typically deals only with its own subject area, although changes in one benefit program, such as cash welfare or social security, commonly affect another, such as food stamps or veterans' pensions. Because of the categorial nature of the 'system' and the restricted viewpoint of the executive agencies and congressional committees, attempts to remedy one program tend to creat another."

In an effort to cut through the "tangled mix" of federal programs, Martha Griffiths and others have proposed building a national welfare system around a uniform, federally administered program that provides a minimum income for those who cannot support themselves for one reason or another. Under this approach, the state-administered Aid to Families with Dependent Children (AFDC) program would be eliminated. Certain non-cash benefits such as food stamps, housing assistance and social services would be "cashed out." Recipients would get the full or partial cash value of these various "in-kind" benefits.

This approach brings uniformity and administrative simplicity to the current fragmented welfare system, but it also raises some difficult fiscal political problems. Varying State Stadards

TO BEGIN WITH, current benefit levels vary greatly from one state to another. In Minnesota, for example, a family of four can receive the cash equivalent of roughly $7,000 a year in various welfare benefits, while the same family in Alabama or Mississippi can receive only about half as much in benefits.

If Minnesota's standard is adopted for the entire country on a cash basis, the cost to the federal government would be in excess of $120 billion a year.

Some will argue, of course, that Minnesota's standard is too generous. They will maintain that the federal government should set a lower standard and permit states like Minnesota to supplement the federal benefit a complicated two-tier system of federal and state benefits.

"Cashing out," moreover, poses some broad policy questions: How do we determine what the federal benefit level should be? Do we merely calculate the average benefit now being paid by the various states and set the national benefit at that level? What about regional variations in the cost of living? And, finally, how much more federal money can we afford to devote to income maintenance?

When we start looking for the answers, we run into the realities of congressional politics.Welfare reform is a relatively simple political issue for representatives from the smaller states with low benefit levels. Any new federal program which replaces AFDC is likely to means a reduction in state spending and at least a slight increase in benefits for recipients. But House and Senate members from the larger states, particularly those in the Northeast, will find that welfare reform does little to help their recipients or to lighten their financail load unless substantial new federal money is injected into the system.

How can we ease the fiscal pressure facing the high-benefit states at a time when voters are clamoring for a clean-up of the welfare "mess" and a tight federal budget permits little in the way of new initiatives? Obviously, this central question will not be answered easily or quickly by political decision-makers. Needed: a Policy

WHILE WE ARE looking at the "tangled mix" of federal AFDC and "cashing out" the "in-kind" benefits represent only one approach to the issue of welfare reform.

Some have proposed that we leave the current programs in place and concentrate instead on helping the needy by giving them jobs and tax credits. Many welfare experts advocate a "three-track" system which deals in different ways with those who can work but are unemployed, those who are working but at low-paying jobs and those who are unable to work outside the home. Under this plan, public jobs would be found for the able-bodied in the public sector if no jobs could be found for them in the private sector. These people could obtain benefits at least temporarily through the unemployment compensation system if they could find work in neither the public nor the private sectors. The working poor would be aided through the tax system by expanding the earned income credit now providing a kind of negative income tax for those earning less than $8,000 a year. Welfare would be retained for the elderly, the disbled and single parents with small children at home.

Congress and the Carter administration will have to explore the various approaches to welfare reform and develop a plan that is humane, cost-effective, administratively efficient and politically salable. Obviously, this is not a task that can be completed in the first hundred days of any new administration or Congress.

Our first task will be to develop a framework within which the work of welfare reform can go forward. We will have to look at the broad policy questions: What are we trying to accomplish through the welfare system? How do we deal with the needs of the working poor? How do we divide our resources between this group and the unemployed? What kinds of work requirements and work incentives do we build into the system? Which "in-kind" programs should be "cashed-out?" A Role for Congress

AS WE LOOK for the answers, we may find that the solution to the welfare "problem" does not lie in major new federal initiatives. Rather, we may find that current programs can be adjusted to function more adequately within a coherent, intergrated framework.

Congress has contributed in large part to the fragmented development of existing programs, as the Griffiths study notes. With 21 committees in the House and Senate each shaping its own legislation, it's understandable that a more integrated welfare policy has not emerged from Congress.

Clearly, any major welfare reorganization effort will need the active support of the administration if it is to succeed. President-elect Carter has indicated strong support for the goal of welfare reform and is likely to send a legislative package to Capitol Hill sometimes this year.

But Congress need not wait for the administration to prepare the legislative blueprints. There are steps the legislative branch can take early in the new session to overcome structural roadblocks to comprehensive policy-making. New rules in the House, for example, enable the Speaker to establish temporary committees to handle those issues that cut across existing committee jurisdictions. This procedure might be used to deal with the question of welfare reform. Members of a Temporary Committee on Welfare Reorganization could come from Ways and Means, Agriculture, Veterans Affairs and other House units with jurisdiction over the various cash and "in-kind" benefit programs.

This committee, working together with the administration, could begin the task of national goal-setting that must proceed before we can start overhauling programmatic machinery. The committee could spend the early months of the new session examining the current programs and formulating an approach to those broad issues that Congress has not been able to address because of jurisdictional fragmentation. The new House unit could then begin developing reorganization proposals that the 95th Congress could consider and act upon during its second session. Given the timetable required by the Congressional Budget. Act, these proposals, if adopted, probably could not take effect until the fiscal year beginning Oct. 1, 1978. Some Interim Steps

MAJOR WELFARE reorganization may be at least two years away, but there are interim steps that Congress can and should take. In the short run, the new House Welfare Committee could deal with certain program interaction issues that cause such problems for recipients and administrators.

For example, the Committee could examine the impact of the automatic cost-of-living increases built into the social security and supplemental security income (SSI) programs for the elderly, blind and disabled. These yearly increases have caused many recipients to lose other benefits, since eligibility standards for food stamps, Medicaid and other "in-kind" benefits have not been adjusted at the same time that social security and SSI payments have risen. More standardized eligibility limits, adjusted for increases in the cost of living, could help resolve this interaction problem.

The committee might also examine the automatic linkage between certain cash and "in-kind" benefits. Currently, an AFDC recipient is automatically eligible to receive Medicaid while his or her nextdoor neighbor, who is not a recipient but whose income is the same, may not be eligible for this "in-kind" benefit. The same linkage exists between the cash grant programs and food stamps. These arrangements clearly discriminate against those of the working poor who do not receive cash benefits. The automatic linkages could be eliminated by making all peope at the same income level eligible for the same benefits, regardless of income sources.

Streamlining the fragmented welfare system will not be an easy task, but it is a task that should not be put off. By developing a coherent policy framework within which the federal programs can operate and by helping to make these programs mesh more smoothly, we can lay the groundwork for a more integrated national income maintenance system.In doing so, moreover, we can deal in a tangible way with the very real problems that confront Mr. H., Mrs. S. and millions like them.