Special Message to the Congress on Welfare Reform.

To the Congress of the United States:

The American welfare system is a national disgrace.

Thirty-one months ago, I first proposed to the Congress my plan for total reform of that system.

Since that time, the welfare situation has continued to worsen, and sweeping changes have become even more imperative.

There can be absolutely no excuse for delaying those changes any further. The present system must be reformed.

Its shocking inequities continue to drain incentive from the many poor who work but who see some families making as much or more on welfare.

Its widely varying, discriminatory benefits continue to force needy families, millions of children, and the needy aged, blind and disabled into a web of inefficient rules and economic contradictions.

Its vast costs have continued to escalate, undermining State and local governments and threatening to erode taxpayer support for a welfare system of any kind.

The present system continues to contribute to the breakup of poor families, rather than reenforcing the role of the family in our national life. The welfare life-style continues to dehumanize those who are caught in it, and threatens now to create yet another "welfare generation."

NOW IS THE TIME FOR ACTION

This year must be the year in which we raze the ramshackle welfare system, patched up so many times in the past but still basically unchanged since it was first enacted as emergency legislation in the mid-1930s. In its place, we must build a new system, taking a new direction. We must create an environment that will draw forth and support--rather than smother--the innate ambitions and personal obligations of all needy Americans.

Last December, the Congress did pass transitional legislation which took parts of my welfare reform package--- certain of the workfare provisions for job training and work requirements for all employable welfare recipients--and applied them to the present system of welfare. These actions will become effective later this year.

Acceptance of those workfare provisions by the Congress was a step in the right direction, as I said when I signed the measure. But it is still part of the patchwork approach. Now something far better than a patchwork approach is required if the needy are to receive rational assistance, if waste and inefficiency are to be abolished, and if America's work incentive-job reward system is to be placed within reach of every citizen.

We should never forget that it is precisely this system that has enabled us to develop the highest standard of living-with the most widely shared advantages-in the history of the world. We should continue to rely on it as we drive to close the final gaps between economic promise and economic reality.

On June 22 of last year the House of Representatives, for the second time, passed by a wide majority omnibus legislation which would implement my overall welfare reform. This legislation is now being closely scrutinized by the Senate Finance Committee, whose able Chairman, Senator Long, has assured me that the committee will report H.R. x to the Senate floor as soon as possible. H.R. 1 continues to have my full support, and I hope that it will be enacted into law this year in the basic form approved by the House of Representatives.

We need reform this year so that, instead of pouring billions more into a system universally recognized as a failure, we can make a new start.

We must not forget that H.R. 1 contains basic reforms in social security and medical benefits, as well as welfare reform.

These benefits, by themselves, are pathbreaking in scope and impact--including a further 5 percent benefit increase in social security, the automatic adjustment of social security benefits in the future to make them inflation proof, and a host of additional reforms discussed in my recent message to the Congress on older Americans. As I said in that message, even one more year of delay in the passage of H.R. 1 would cost older Americans some $5 1/2 billion in annual benefits.

H.R. 1 clearly lies at the heart of economic progress of millions of Americans in 1972--and into the future. It is the most important single piece of social legislation to come before the Congress in several decades. I strongly urge the Congress to pass it as soon as possible this year. No legislation should have a higher priority.

THE WELFARE MESS WORSENS

When I first presented my welfare reform proposal to the Congress on August 11, 1969, I declared that "America's welfare system is a failure that grows worse every day."

Nine hundred and fifty eight days have passed since that message and that comment. The welfare landscape today is a greater fiscal and ethical wasteland than ever:

--Injustice and inequities are widespread: There are glaring differences between welfare benefits paid in various parts of the country--they can range from $60 a month to $326 a month for a woman with three children, depending on in which State she happens to live. Moreover, too many Americans can get more money by going on welfare than by going to work. There is no real requirement that a recipient seek, much less accept, a job.

--The basic immorality of the system still prevails: In most States welfare still offers a man a bounty to desert his family.

--Incentive continues to be penalized: A man working hard for low wages can see neighboring families on welfare that are better off than his own family.

--Millions of children suffer: They are forced to live in degrading and deplorable conditions because the present system precludes their families from any benefits.

--Waste continues unabated: State quality control surveys indicate that as many as one in 20 welfare recipients may actually be ineligible for benefits, and that inaccurate payments are being given to as many as one case in every four--a potential total annual waste of more than $500 million.

--Administration remains a quagmire of red tape: There are 1,152 separate State and local welfare jurisdictions, with separate eligibility determinations and administrative procedures--making program integrity a virtual impossibility.

What we have in short, is a crazy quilt of injustice and contradiction that has developed in bits and pieces over the years with little serious thought of basic reform. I believe that H.R. 1 is the best and most comprehensive answer yet devised to meet this challenge.

FISCAL CRISIS: WASHINGTON AND THE

STATES

The present welfare system is not only morally bankrupt but is a significant factor in driving the States toward fiscal bankruptcy.

Since I first proposed reform in 1969, the costs of maintaining the present system have mounted at an alarming rate. Each day of delay means further costs-without any offsetting benefits. For example:

--Welfare costs have skyrocketed from $6.2 billion in 1969 to an estimated $9.4 billion in 1971, a 51 percent increase in just two years.

--The overall welfare caseload has risen from 9.6 million people in 1969 to 13.5 million today. It has been estimated that, if no changes are made, 17.3 million people will be on welfare in 1974, an 80 percent rise in just five years.

What we have on our hands is nothing less than a social and political time bomb. And, in a development of concern to all of us, the patience and support of the American public for welfare programs has been slipping dangerously. Those who are truly needy are becoming scapegoats in the eyes of taxpayers understandably angered about waste and inconsistency.

What we are seeking is an end to the need for public support for people who are essentially employable, but have not been able to work for reasons beyond their control, just will not work, or will not even make themselves available for work-related training--and this is what H.R. 1 would cure.

We also need to establish a nationally uniform system of efficient aid for totally needy families and the old and infirm-and H.R. 1 would achieve that goal, too.

OUTLINE OF REFORM

My program, as embodied in H.R. 1, would place a floor beneath the income of all American families not able to adequately support themselves. Its payments would vary, according to family size and resources, from a minimum of $ 1,600 to a maximum of $3,600. The basic benefit for a family of four with no other income would be $2,400.

Employable adult members of such families would have to register with the Department of Labor in its Opportunities for Families Program for manpower services, work training and employment availability before any benefits were paid to such persons. Exceptions would include mothers of children younger than 6, and mothers whose husbands were either working or registered for work.

Families without employable adult members would not be subject to registration requirements but would receive the same basic benefits under the Department of Health, Education, and Welfare's Family Assistance Program.

For the first time in our history, national wage supplements would be paid to the working poor on a proportionate sliding scale designed to spur, rather than kill, the incentive to start working and keep on earning.

Eligible persons would be able to keep the first $720 earned during the year without reduction in their supplements. As job income rose beyond that, supplements would be reduced by two-thirds of job income until a cut-off point were reached and the recipient had attained a degree of self-sufficiency.

A family of four thus could earn $720 and receive a benefit of $2,400--for a total income of $3,120. When such a family's earnings reached $3,600, it still would be eligible for a supplement of $480 for a total income of $4,080.

When such a family reached earnings of $4,320 it would move completely out of the Federal assistance program.

Under the terms of H.R. 1, the Opportunities for Families program, the Family Assistance Plan and programs for the needy, aged, blind and disabled would be totally financed by the Federal Government-thereby providing much-needed financial relief for the States, which now share welfare costs.

In several respects, the proposed payments to the working poor constitute the basic conceptual foundation of my new approach.

These payments would encourage those who are working to keep on working, rather than sliding into welfare dependency. And they would motivate welfare recipients to start work.

We must hit head-on the cruel fallacy that any income, no matter how low, is sufficient for an American family merely because that money comes from full-time work.

We must establish the more humane and relevant principle that the total income of each American family must reach a certain minimum standard.

Another foundation of my approach is the strong work requirement and the provisions which would help implement that requirement, including child care benefits, manpower services, job training and job locating, and a program of 200,000 transitional public service jobs.

Recipients, with very few exceptions, would have to register for training and accept jobs which were offered, or benefits would be terminated for that recipient.

An entirely separate new Federal program would be established for needy aged, blind and disabled individuals and couples. While no work requirements would be included, of course, those who could work would be provided with strong incentives for doing so.

The current State payments to such individuals and couples, varying widely across the Nation, would be replaced by a Federal benefit of $130 a month for an aged, blind, or disabled individual, rising to $150 in two steps. For a couple in these categories, $195 a month would be provided, rising to $200. Such benefits now can be as low as $70 a month for an individual and $97 a month for a couple.

In all, some $2 billion in new money would go directly into the hands of the aged, blind and disabled in the first full year.

TIGHT ADMINISTRATION AND PROGRAM

INTEGRITY

Those who receive welfare, while they are the most visible victims, are not the only ones who suffer because of the myriad confusions and contradictions of the present welfare mess. The taxpayers are victims as well, for they are paying for a program that not only falls to accomplish its objectives, but is virtually impossible to administer.

Welfare administration is woefully outmoded in this country, with its 1,152 separate State and local welfare jurisdictions. Although virtually all have the same basic programs--Aid to the Blind, Aid to the Disabled, Aid to the Aged, and Aid to Families with Dependent Children--each operates with its own eligibility determination and administrative methods.

In the administrative area, especially, there is nearly an incomprehensible variety of management philosophies, operating policies and methods, and personnel arrangements. Only 20 percent of these jurisdictions have automated management techniques.

Under such conditions, it is not surprising that there are major management problems which exacerbate the skyrocketing costs and add to the growing public concern about welfare. Moreover, because of current open end financing arrangements, States and localities have what amounts to a blank check on the Federal treasury for this activity.

Thousands of dedicated people are doing their best to operate this ponderous machinery. But this system has been patched and repaired too many times. The frustration of current State program managers has resulted in very substantial support among Governors and State welfare administrators for Federal administration of the benefit payments function.

In recent months we have documented the failings of the current system, including the absence of cross-checks of records in adjacent areas, inadequate verification of income and benefits from a variety of benefit programs, and rapid turnover of personnel.

While decentralized management is highly desirable in many fields and is indeed central to my philosophy of government, I believe that many of these problems in welfare administration can best be solved by using a national automated payments system, which would produce economies and considerably increase both equity of treatment and tightened administration.

Such a unified system--partially modeled on the Social Security system--would reduce errors and provide greater controls for fraud and duplicate payments.

H.R. 1 would require each recipient to have a social security number for identification to prevent duplicate benefits and to facilitate the receiving of recipient income information from such sources as the Social Security Administration, the Internal Revenue Service, the Veterans Administration, and other units.

National administration and standards would also ensure equitable treatment for individuals: they would no longer be subject to conflicting rules in different areas, to delays caused by back-ups, and to the confusing tangle of red tape.

Under such a system, States and counties would be freed to concentrate on social services to recipients, making use of their closer understanding of the needs of local residents.

AN INVESTMENT IN THE FUTURE

Because we want a better system--not just a new one--welfare reform will cost more in the early years and cover more needy people.

Against the increased initial costs of my proposals in H.R. 1, however, we must weigh the unknown future costs--both human and fiscal if the present chaotic system, with its present soaring growth rates, is continued. The new system combined in H.R. 1 would be far less costly in the long run--both in terms of dollars and in terms of people.

Historians of the future no doubt will focus on America's 200th birthday--and the years leading up to that significant anniversary--as one important point for measuring the progress of our Republic.

They will find, of course, that over 200 years America's mastery of the industrial revolution, its bountiful economic system, its military might and its technological triumphs helped to make it preeminent in the family of nations.

They will rightfully highlight our moon landings, our deep space probes, our satellite communications, our electronic innovations, and our extraordinary gross national product.

Penetrating observers, however, will also ask other questions:

What did all of this mean to the average American?

What was the quality of the daily life and the basic spirit of all the American people in the 1970's?

How, in particular, did our great Nation provide for those citizens who--through no fault of their own--were unable from time to time to provide for themselves and their families?

I believe that the program contained in H.R. 1 will stand us in good stead when such historical evaluations are considered, for this is a program which has grown out of a fundamental concern for our least fortunate citizens.

The enactment of H.R. 1 would demonstrate both our concern for what is responsible and our concern for what is compassionate.

RICHARD NIXON

THE WHITE HOUSE,

March 27, 1972.