The new welfare budget cuts that President Reagan has proposed to Congress this year would affect not just the working poor, as last year's did, but for the first time would reach "truly needy" households with no other income, a new study says.
The Reagan proposals would also leave working-poor families in 24 states better off if they quit their jobs and relied entirely on welfare, the study found.
The study was done by the Center for the Study of Social Policy, which calculated the combined impact of Reagan's proposed fiscal 1983 cuts in Aid to Families with Dependent Children, food stamps, and low-income energy assistance.
The largest effects are from the new food stamp proposals. Non-working recipients of food stamps would be affected because all their energy assistance and more of their AFDC benefits than in the past would be counted as income in figuring their eligibility for stamps. The higher a household's income, the fewer stamps it gets.
The study did not take into account the additional cuts Reagan has proposed in the two other main federal programs for the poor, housing assistance and Medicaid.
The center is headed by Tom Joe, a welfare expert who served in the Nixon administration. The study, the most comprehensive of its kind to date, was funded by the Field Foundation. Here are the major findings:
The average combined monthly AFDC, food stamp and fuel-aid benefit for a mother with two small children who has no job and no other income would drop from $450 nationwide (based on 1981 welfare figures) to $423 in 1983. In the District of Columbia, according to the study, such a benefit would drop from $450 to $427; in Maryland from $432 to $408; and in Virginia from $417 to $398.
Nationwide, the typical non-working welfare family of three, whose income now stands at 76 percent of the federal poverty line, would drop to 72 percent. That poverty level for such a family of three was $7,070 in 1981. These non-working welfare families make up 85 percent of the 10.3 million people on AFDC.
For "working poor" families on AFDC the cuts would be even sharper. The center said that in 1981 a working AFDC family of three with average earnings had a combined after-tax disposable income--from the job, AFDC, food stamps, fuel aid and the earned income tax credit--of $595 a month, or 101 percent of the poverty line. The first Reagan changes, passed last year, cut the figure to $476. The fiscal 1983 proposals would cut it to $432, or 73 percent of the poverty line. In the District, the study said, combined disposable income was $616 in 1981, or 104 percent of poverty, and the 1983 figure would be $453 (77 percent). The figure in Maryland would drop from $590 in 1981 to $443 (75 percent), and in Virginia from $549 in 1981 to $407 (69 percent).
If the Reagan proposals go through, the cuts for the working poor would provide a clear disincentive to work; in 24 states, a welfare mother with two children would end up getting more disposable income if she depended solely on welfare than if she went out and took (or kept) an average job. In other states, the increased income from working would be almost inconsequential. In the District, Maryland and Virginia, families would be slightly better off working. But in Connecticut the non-working family would get $509, the working poor family $470; in Minnesota, $522 if the family stayed on welfare, $472 if it worked; in New York, $508 as against $468; in California $561 versus $479. Nationwide, the average family that worked would be only $9 a month better off than the one that did not ($432 vs. $423).
In 33 states, including the District, Maryland and Virginia, working families could lose their entire AFDC cash benefit and, as a result, their automatic eligibility for Medicaid, through the combined impact of this year's Reagan proposals, the study says. However, in many of these states families could regain Medicaid eligibility if the state has special provisions for the "medically needy," as three-fifths do.
The center estimated that overall federal savings would not be nearly as large as a result of the cuts as the Department of Health and Human Services has estimated, because as working AFDC families stopped working, their AFDC and food stamp benefits would rise somewhat, though not as much as under current law.