THERE IS A striking inconsistency between what the administration apparently considers appropriate government policy for most people--the middle class and on up--and the way it proposes to deal with others, that is the almost-poor and on down. Most people, it seems, need the stimulus of ample reward to encourage them to work and save. Not the poor. Their motivation-- judging from the new welfare rules issued by the Department of Health and Human Services this week--is to spring from other sources.
Under the new rules, which spell out the welfare changes made law as part of the budget cuts, about one in every five welfare families with children will lose all or part of their benefits. The biggest losers will be recipients who are trying to get off welfare, or at least supplement their generally meager grants, by working in low-paying jobs. The details are complicated, but the effect is not. Starting Oct. 1--or as soon thereafter as local welfare offices can interpret the rules and process the cases--welfare families that have working members will be substantially worse off than before, and many will be worse off than if they quit their jobs. Not only welfare aid, but food stamps and Medicaid as well may be lost.
More than work will be penalized. Saving will be penalized too. Welfare families that have managed to hold on to a few dollars or keep some possessions deemed not necessary by their caseworkers may now find themselves without either welfare or Medicaid help. If you were a welfare mother with two or three children and the sort of low-paying, unsteady job that is typical for this group, what would you now do? Common sense says that you'd squander your nest egg on a few "essentials," throw over your menial job and settle down to a life on welfare.
Perhaps you doubt that welfare recipients have the common sense or whatever else it takes to adjust their behavior to the incentives that the law provides. Then you might want to consult the well- documented findings of the income maintenance experiments that studied this very question of incentives among the poor--findings that have been much used by supply-side advocates in justifying better tax incentives for the rich. The studies found that even when the work disincentives offered by welfare law were far less clear than those provided by the new HHS rules, low-income people figured them out in practice and adjusted their work effort accordingly.
Not all working welfare mothers will quit their jobs. Some with a clear chance for advancement may press on despite their losses. It is very likely, however, that many will opt for the security--and now higher income--of staying at home on welfare. This is a situation in which everyone loses--taxpayers because welfare costs will go up, not down; welfare families because their incomes will be lower than before and their chances for future independence greatly reduced.
If you believe the things that the administration says it believes, you can justify making a lot of moves that many people don't like. But unless you are prepared to argue that only the rich should have a sense of possibility or an opportunity for gain, the new welfare policy is not to be believed--in every sense of that phrase.