DESPITE WIDESPREAD unemployment, Americans appear to be edgily engaged in trying to live it up. Moral outrage at the misery in our midst and the reformism of war on poverty are almost nowhere in evidence today. Instead we have created some comfortable slogans to help us forget about the poor, reassuring myths that "government cannot make things work anyway" and "the poor are ripping us off."
Most presidential candidates this time, for example, played to widespread disenchantment with government. More and more, that disenchantment is being given professional and intellectual shape. In lectures at Harvard University a year ago, Charles L. Schultze, shortly to become chairman of the President's Council of Economic Advisers, explained that legislation and government regulation have failed to achieve a wide variety of objectives. He proposed turning away from government attempts at "command and control" to rely on market incentives.
More sociological in tone is an American Enterprise Institute report on the role of "mediating structures" in society. These are the family, the church, the neighborhood and voluntary organizations - institutions standing between the individual and "the large institutions of public life." The report argues that big government and big business bleach meaning and identity from personal life. Therefore government should stop tyring to do its own work and, wherever possible, use these "mediating structures" for its social purposes.
Such arguments call to deep feelings in all of us - disappointed in one government program or another, weary at being regulated, distracted from private activities that should be the most satisfying. The very breath of feelings evoked ought to be a warning: The solution of a return to laissez faire is fundamentally romantic. One does not have to dig into history for evidence; the past decade is filled with attempts to use the private sector for public purposes. It becomes - more clever than those who would seduce them into fulfilling social purposes. Government by Gesture
THE RECORD of Medicaid is one such example, having led to needless consultation, surgery and hospitalization, as well as more conventional fraud and steadily rising costs. Tax incentives intended to produce housing rehabilitation have bailed out mortgage holders and padded the safety deposit boxes of investors and contractors rather more than they have produced standard housing. Once-touted experiments in having private industry take over classroom teaching have faded. And nursing homes under private auspices have led to widely publicized scandals.
It is an irony insufficiently appreciated that all the anti-government arguments, whether economic or sociological, whether for private enterprise or voluntarism, turn on the use of government money. For example, it is proposed that "mediating structures" arrange for day care or primary education with "vouchers" - government money without government control.In place of the President's proposed 1.4 million public jobs, Sen. Howard Baker (R-Tenn.) proposes vouchers which employers would cash in return for providing work. The dubious argument is that the government would provide dead-end "makework" with its own money but private enterprise would provide career-oriented "real" work with someone else's money.
Possibly the most ironic claim for government money turned up in the 1975 report of the Commission on Private Philanthropy and Public Needs. It proposed that low-and middle-income families be given income-tax deductions equivalent to 150 and 200 per cent of their charitable contributions. The extra deduction might increase contributions by $9.8 billion, of which $7.4 billion would be revenue forgone by the government. Thus the government would undertake to foster the charitable impulse by buying it - $3 for $1.
In any event, the argument for passing government money through private hands to fulfill public purposes misses the heart of the problem. Programs fail and public affairs get out of hand not because the government or private enterprise is categorically more effective in administering programs. The failure is more commonly that we are not willing to deal with the complex and powerful forces that cause our problems. Programs may be mounted in the place of deeper measures that need to be taken, and if so cannot but fail.
For example, housing in central cities is destroyed because of a suburban movement - segregated by class and color - that was fostered by quite successful government programs like the Federal Housing Administration and the federal highway program, by an interregional flow of jobs and by the decline of the economies of central cities. It trivializes these problems to argue that public housing or "model cities" go down because public authorities run them.
In these terms, the argument against government administration masks the fact that the government has chosen to make gestures rather than changes. Often gestures do not work. Who thinks they should? While we discover that gestures administered by private enterprise will not work any better, profits will of course be made and institutional interests be served. "Easy Living" on Welfare
THERE ARE similar problems with the argument that "the poor are cheating us." The target of first choice is welfare - the ease with which it may be secured, the easy living it makes possible.
The number of welfare recipients has increased slightly in the 1970s as the population has increased, and the average payment per recipient has been going up at about the rate of the cost of living. Yet, despite unemployment levels rising past 7 and 8 per cent, the proportion of recipients of family welfare has remained stable at 51 or 52 per thousand of population since 1971. In each of the last two years, 2.5 million people used up both regular and special extended unemployment insurance without finding work.
None of this seems to have budged the recipient rate upward. Those who are involved with welfare understand that it has in fact been made harder and harder to get - by law, by regulation, by bureaucratic delay and by extra-legal refusal to provide assistance.
As for easy living on welfare, maximum attainable income from welfare and food stamps together exceeds the poverty level in only six high-cost states, and generally by only a few dollars. The studies to which the public has now widely been exposed deal with hypothetical recipients who have food stamps, live in public housing, receive subsidized child care, benefit from incentive provisions intended to encourage work, and so on. One can construct a theoretical welfare family with cash and in-kind income taken together of $10,000 or $12,000, but finding such families in the real world is another matter.
Commissioned to assess the actual income of welfare families in New York City, the Rand Corporation arrived at an average for 1974 of $4,482. Only a select number if welfare families receive income from all the sources that may be counted, and larger families receive larger grants. The most favored welfare families with six or more members and income from every source averaged total annual income a bit over $7,000 - still less than the large-family poverty level.
In that report, Rank introduced a technical innovation to the statistics of poverty: It calculated the total cost of Medicaid and averaged it as income among welfare recipients. That made their family income $1,600 higher and was included in the figure that newspapers carried. By 1977 the Congressional Budget Office (CBO) was issuing a revisionist count of poor people that credited them with various kinds of non-cash income, including Medicaid and now Medicare.
The CBO report acknowledges that it is technically arguable whether income like food stamps should be treated in this way: Economists regard goods that are not freely chosen as not equivalent to cash income. Counting Medicaid and Medicare is a more egregious error. That medical care costs more this year than last does not relieve a poor patient's poverty, no matter how anyone sums up his income. Moreover, these large medical expenditures tend to be concentrated in a small portion of the poor population. Averaged, they add substantially to apparent income for people who have not even had medical care.
An appreciation of irony, once again, might have given pause. As the last year of life absorbs a large part of Medicare expenditures, the effect of this Rand-CBO innovation may be that, however people live, they do not any longer die poor in the United States. Robbing Peter to Pay Paul
DUBIOUS THOUGH all these hypothetical cases and redefinitions of poverty are, they have lent a technical gloss to the view that the poor and those on welfare in particular are well off.
The New York Times has asked, "Has the United States almost abolished poverty and just failed to realize that fact? "The National Observer reported the Rand and CBO studies under a single headline, "We're Winning the War on Poverty." It may be the first war won by statisticians.
The view that the poor are living better than seems reasonable is now widespread and is reflected in congressional proceedings. Recently Reps. William M. Ketchum (R-Calif.) and Andrew Jacobs (D-Ind.) used terms in the course of debate like "ripoff," "unjust enrichment" and robbing the poor box." They were discussing a proposal, now passed by Congress, to "freeze" the minimum social security benefit while other benefit levels rise with the cost of living. The argument is that the poor get more than they have paid for; and the minimum benefit merely adds income for people who have other pensions.
In fact, only 6 or 7 per cent of those who receive a minimum benefit also get a federal or state annuity. Minimum beneficiaries are retired women workers, widows, and women and children dependent on retired and disabled workers. Fewer than 1 in 5 are men. It is a notably low-income population and it was a women's and poor people's issue, but general assent to the proposition of "ripoff" kept anyone from noticing.
This cost-saving measure is taken against the background of anxiety about the financial of social security, and the question remains whether people should get benefits for which they have not paid. It is therefore interesting that Congress has undertaken to be more liberal with retired people who work, giving them social security benefits for which they also have not paid.
Congress has now passed a measure that will ultimately increase the number of retirees who receive full benefits even though they earn more than $6,000 a year. It was introduced by the same Rep. Ketchum who originally proposed to pay benefits without any limit on earnings. Who are the people who benefit? Of aged men who worked in 1974, 1 in 7 earned over $6,000, and their average income from all sources exceeded $17,000.
Even in the welfare program, Congress now takes from Peter to pay Paul. Peter in this matter is working welfare recipients, whose assistance levels are to be reduced despite the rising cost of living, for a saving of about $230 million each in federal and state funds. Such a provision has been passed by the Senate and awaits further congressional action. Paul is the states: The Social Security bill just passed gives them $187 million to relieve their costs for welfare. Taking the Paul and Peter transactions together - states will be getting fiscal relief not from the federal government but from their own indigent residents.
If this trade-off is ruthless with poor people, it may also signal trouble for the President, for it will save reducing the amount of money that welfare recipients may retain from earnings. That feature was once introduced into welfare to provide an incentive to work. It is one of two or three key concepts of the President's proposed welfare reform.
These ideas about government not working and the poor cheating us accord with the self-seeking temper of the times, so professionals and academics do not deal critically with them. We taxpayers and non-poor are given license to live high, however others live. We dismantle programs that serve the poor; we reduce their benefits for the rest of us or is funneled through private enterprise or voluntary institutions. In these pipelines, a hefty tax is paid. It is a new greed - technocratic model.