Address to the Nation on Domestic Programs.

Good evening my fellow Americans:

As you know, I returned last Sunday night from a trip around the world--a trip that took me to eight countries in 9 days.

The purpose of this trip was to help lay the basis for a lasting peace, once the war in Vietnam is ended. In the course of it, I also saw once again the vigorous efforts so many new nations are making to leap the centuries into the modern world.

Every time I return to the United States after such a trip, I realize how fortunate we are to live in this rich land. We have the world's most advanced industrial economy, the greatest wealth ever known to man, the fullest measure of freedom ever enjoyed by any people, anywhere.

Yet we, too, have an urgent need to modernize our institutions--and our need is no less than theirs.

We face an urban crisis, a social crisis-and at the same time, a crisis of confidence in the capacity of government to do its job.

A third of a century of centralizing power and responsibility in Washington has produced a bureaucratic monstrosity, cumbersome, unresponsive, ineffective.

A third of a century of social experiment has left us a legacy of entrenched programs that have outlived their time or outgrown their purposes.

A third of a century of unprecedented growth and change has strained our institutions, and raised serious questions about whether they are still adequate to the times.

It is no accident, therefore, that we find increasing skepticism--and not only among our young people, but among citizens everywhere--about the continuing capacity of government to master the challenges we face.

Nowhere has the failure of government been more tragically apparent than in its efforts to help the poor and especially in its system of public welfare.

TARGET: REFORMS

Since taking office, one of my first priorities has been to repair the machinery of government, to put it in shape for the 1970's. I have made many changes designed to improve the functioning of the executive branch. And I have asked Congress for a number of important structural reforms; among others, a wide-ranging postal reform, a comprehensive reform of the draft, a reform of unemployment insurance, a reform of our hunger programs, a reform of the present confusing hodge-podge of Federal grants-in-aid.

Last April 21, I sent Congress a message asking for a package of major tax reforms, including both the closing of loopholes and the removal of more than 2 million low-income families from the tax rolls altogether. I am glad that Congress is now acting on tax reform, and I hope the Congress will begin to act on the other reforms that I have requested.

The purpose of all these reforms is to eliminate unfairness; to make government more effective as well as more efficient; and to bring an end to its chronic failure to deliver the service that it promises.

My purpose tonight, however, is not to review the past record, but to present a new set of reforms--a new set of proposals--a new and drastically different approach to the way in which government cares for those in need, and to the way the responsibilities are shared between the State and the Federal Government.

I have chosen to do so in a direct report to the people because these proposals call for public decisions of the first importance; because they represent a fundamental change in the Nation's approach to one of its most pressing social problems; and because, quite deliberately, they also represent the first major reversal of the trend toward ever more centralization of government in Washington, D.C. After a third of a century of power flowing from the people and the States to Washington it is time for a New Federalism in which power, funds, and responsibility will flow from Washington to the States and to the people.

During last year's election campaign, I often made a point that touched a responsive chord wherever I traveled.

I said that this Nation became great not because of what government did for people, but because of what people did for themselves.

This new approach aims at helping the American people do more for themselves. It aims at getting everyone able to work off welfare rolls and onto payrolls.

It aims at ending the unfairness in a system that has become unfair to the welfare recipient, unfair to the working poor, and unfair to the taxpayer.

This new approach aims to make it possible for people--wherever in America they live--to receive their fair share of opportunity. It aims to ensure that people receiving aid, and who are able to work, contribute their fair share of productivity.

This new approach is embodied in a package of four measures: First, a complete replacement of the present welfare system; second, a comprehensive new job training and placement program; third, a revamping of the Office of Economic Opportunity; and fourth, a start on the sharing of Federal tax revenues with the States.

Next week in three messages to the Congress and one statement--I will spell out in detail what these measures contain. Tonight I want to explain what they mean, what they are intended to achieve, and how they are related.

WELFARE

Whether measured by the anguish of the poor themselves, or by the drastically mounting burden on the taxpayer, the present welfare system has to be judged a colossal failure.

Our States and cities find themselves sinking in a welfare quagmire, as caseloads increase, as costs escalate, and as the welfare system stagnates enterprise and perpetuates dependency.

What began on a small scale in the depression 30's has become a huge monster in the prosperous 60's. And the tragedy is not only that it is bringing States and cities to the brink of financial disaster, but also that it is failing to meet the elementary human, social, and financial needs of the poor.

It breaks up homes. It often penalizes work. It robs recipients of dignity. And it grows.

Benefit levels are grossly unequal--for a mother with three children, they range from an average of $263 a month in one State, down to an average of only $39 in another State. Now such an inequality as this is wrong; no child is "worth" more in one State than in another State. One result of this inequality is to lure thousands more into already overcrowded inner cities, as unprepared for city life as they are for city jobs.

The present system creates an incentive for desertion. In most States a family is denied welfare payments if a father is present--even though he is unable to support his family. Now, in practice, this is what often happens: A father is unable to find a job at all or one that will support his children. And so, to make the children eligible for welfare, he leaves home--and the children are denied the authority, the discipline, the love that come with having a father in the home. This is wrong.

The present system often makes it possible to receive more money on welfare than on a low-paying job. This creates an incentive not to work, and it also is unfair to the working poor. It is morally wrong for a family that is working to try to make ends meet to receive less than a family across the street on welfare. This has been bitterly resented by the man who works, and rightly so--the rewards are just the opposite of what they should be. Its effect is to draw people off payrolls and onto welfare rolls--just the opposite of what government should be doing. To put it bluntly and simply--any system which makes it more profitable for a man not to work than to work, or which encourages a man to desert his family rather than to stay with his family, is wrong and indefensible.

We cannot simply ignore the failures of welfare, or expect them to go away. In the past 8 years, 3 million more people have been added to the welfare rolls--and this in a period of low unemployment. If the present trend continues, another 4 million will join the welfare rolls by 1975. The financial cost will be crushing; and the human cost will be suffocating.

That is why tonight I, therefore, propose that we will abolish the present welfare system and that we adopt in its place a new family assistance system. Initially, this new system will cost more than welfare. But, unlike welfare, it is designed to correct the condition it deals with and, thus, to lessen the long-range burden and cost.

Under this plan, the so-called "adult categories" of aid--aid to the aged, the blind, the disabled--would be continued, and a national minimum standard for benefits would be set, with the Federal Government contributing to its cost and also sharing the cost of additional State payments above that amount.

But the program now called "Aid to Families with Dependent Children"--the program we all normally think of when we think of "welfare"--would be done away with completely. The new family assistance system I propose in its place rests essentially on these three principles: equality of treatment across the Nation, a work requirement, and a work incentive.

Its benefits would go to the working poor, as well as the nonworking; to families with dependent children headed by a father, as well as to those headed by a mother; and a basic Federal minimum would be provided, the same in every State.

What I am proposing is that the Federal Government build a foundation under the income of every American family with dependent children that cannot care for itself--and wherever in America that family may live.

For a family of four now on welfare, with no outside income, the basic Federal payment would be $1,600 a year. States could add to that amount and most States would add to it. In no case would anyone's present level of benefits be lowered. At the same time, this foundation would be one on which the family itself could build. Outside earnings would be encouraged, not discouraged. The new worker could keep the first $60 a month of outside earnings with no reduction in his benefits; and beyond that, his benefits would be reduced by only 50 cents for each dollar earned.

By the same token, a family head already employed at low wages could get a family assistance supplement; those who work would no longer be discriminated against. For example, a family of five in which the father earns $2,000 a year-which is the hard fact of life for many families in America today--would get family assistance payments of $1,260, so that they would have a total income of $3,260. A family of seven earning $3,000 a year would have its income raised to $4,360.

Thus, for the first time, the government would recognize that it has no less an obligation to the working poor than to the nonworking poor; and for the first time, benefits would be scaled in such a way that it would always pay to work.

With such incentives, most recipients who can work will want to work. This is part of the American character.

But what of the others--those who can work but choose not to?

Well, the answer is very simple. Under this proposal, everyone who accepts benefits must also accept work or training provided suitable jobs are available either locally or at some distance if transportation is provided. The only exceptions would be those unable to work and mothers of preschool children.

Even mothers of preschool children, however, would have the opportunity to work, because I am also proposing along with this a major expansion of day-care centers to make it possible for mothers to take jobs by which they can support themselves and their children.

This national floor under incomes for working or dependent families is not a "guaranteed income." Under the guaranteed income proposal, everyone would be assured a minimum income, regardless of how much he was capable of earning, regardless of what his need was, regardless of whether or not he was willing to work.

Now, during the presidential campaign last year, I opposed such a plan. I oppose it now and I will continue to oppose it, and this is the reason: A guaranteed income would undermine the incentive to work; the family assistance plan that I propose increases the incentive to work.

A guaranteed income establishes a right without any responsibilities; family assistance recognizes a need and establishes a responsibility. It provides help to those in need and, in turn, requires that those who receive help work to the extent of their capabilities. There is no reason why one person should be taxed so that another can choose to live idly.

In States that now have benefit levels above the Federal floor, family assistance would help ease the State's financial burdens. But in 20 States--those in which poverty is most widespread--the new Federal floor would be above present average benefits and would mean a leap upward for many thousands of families that cannot care for themselves.

MANPOWER TRAINING

Now I would like to turn to the job training proposals that are part of our full opportunity concept. America prides itself on being a "land of opportunity." I deeply believe in this ideal, as I am sure everyone listening to me also believes in this ideal.

Full opportunity means the chance for upward mobility on every rung of the economic ladder--and for every American, no matter what the handicaps of birth.

The cold, hard truth is that a child born to a poor family has far less chance to make a good living than a child born to a middle-income family.

He is born poor; he is fed poorly; and if his family is on welfare, he starts life in an atmosphere of handout and dependency; often he receives little preparation for work and less inspiration. The wonder of the American character is that so many have the spark and the drive to fight their way up. But for millions of others, the burdens of poverty in early life snuff out that spark.

The new family assistance would provide aid for needy families. It would establish a work requirement and a work incentive, but these in turn require effective programs of job training and job placement--including a chance to qualify not just for any jobs, but for good jobs, that provide both additional self-respect and full self-support.

Therefore, I am also sending a message to Congress calling for a complete overhaul of the Nation's manpower training services.

The Federal Government's job training programs have been a terrible tangle of confusion and waste.

To remedy the confusion, arbitrariness, and rigidity of the present system, the new Manpower Training Act would basically do three things.

--It would pull together the jumble of programs that presently exist, and equalize standards of eligibility.

--It would provide flexible funding-so that Federal money would follow the demands of labor and industry, and flow into those programs that people most want and most need.

--It would decentralize administration, gradually moving it away from the Washington bureaucracy and turning it over to States and localities.

In terms of its symbolic importance, I can hardly overemphasize this last point. For the first time, applying the principles of the New Federalism, administration of a major established Federal program would be turned over to the States and local governments, recognizing that they are in a position to do the job better.

For years, thoughtful Americans have talked of the need to decentralize Government. The time has come to begin.

Federal job training programs have grown to vast proportions, costing more than a billion dollars a year. Yet they are essentially local in character. As long as the Federal Government continues to bear the cost, they can perfectly well be run by States and local governments, and that way they can be better adapted to specific State and local needs.

The Manpower Training Act will have other provisions specifically designed to help move people off welfare rolls and onto payrolls:

--A computerized job bank would be established to match job seekers with job vacancies.

--For those on welfare, a $30 a month bonus would be offered as an incentive to go into job training.

--For heads of families now on welfare, 150,000 new training slots would be opened.

--As I mentioned previously, greatly expanded day-care center facilities would be provided for the children of welfare mothers who choose to work. However, these would be day-care centers with a difference. There is no single ideal to which this administration is more firmly committed than to the enriching of a child's first 5 years of life, and thus, helping lift the poor out of misery at a time when a lift can help the most. Therefore, these day-care centers would offer more than custodial care; they would also be devoted to the development of vigorous young minds and bodies. As a further dividend, the day-care centers would offer employment to many welfare mothers themselves.

OFFICE OF ECONOMIC OPPORTUNITY

One common theme running through my proposals tonight is that of providing full opportunity for every American. A second theme is that of trying to equip every American to play a productive role and a third is the need to make Government itself workable--which means reshaping, reforming, innovating.

The Office of Economic Opportunity is basically an innovative agency, and thus it has a vital place in our efforts to develop new programs and apply new knowledge. But in order to do so effectively what it can do best, OEO itself needs reorganization.

This administration has completed a thorough study of OEO. We have assigned it a leading role in the effort to develop and test new approaches to the solving of social problems. OEO is to be a laboratory agency where new ideas for helping people are tried on a pilot basis. When they prove successful, they can be spun off to operating departments or agencies--just as the space agency, for example, spun off the weather satellite and the communications satellite when these proved successful. Then OEO will be free to concentrate on breaking even newer ground.

The OEO reorganization to be announced next week will stress this innovative role. It also will stress accountability, a clear separation of functions, and a tighter more effective organization of field operations.

REVENUE SHARING

We come now to a proposal which I consider profoundly important to the future of our Federal system of shared responsibilities. When we speak of poverty or jobs or opportunity or making government more effective or getting it closer to the people, it brings us directly to the financial plight of our States and cities.

We can no longer have effective government at any level unless we have it at all levels. There is too much to be done for the cities to do it alone, for Washington to do it alone, or for the States to do it alone.

For a third of a century, power and responsibility have flowed toward Washington, and Washington has taken for its own the best sources of revenue.

We intend to reverse this tide, and to turn back to the States a greater measure of responsibility--not as a way of avoiding problems, but as a better way of solving problems.

Along with this would go a share of Federal revenues. I shall propose to the Congress next week that a set portion of the revenues from Federal income taxes be remitted directly to the States, with a minimum of Federal restrictions on how those dollars are to be used, and with a requirement that a percentage of them be channeled through for the use of local governments. The funds provided under this program will not be great in the first year. But the principle will have been established, and the amounts will increase as our budgetary situation improves.

This start on revenue sharing is a step toward what I call the New Federalism. It is a gesture of faith in America's State and local governments and in the principle of democratic self-government.

With this revenue sharing proposal we follow through on a commitment I made in the last campaign. We follow through on a mandate which the electorate gave us last November.

In recent years, we all have concentrated a great deal of attention on what we commonly call the "crisis of the cities." These proposals I have made are addressed in part to that, but they also are focused much more broadly.

They are addressed to the crisis of government--to adapting its structures and making it manageable.

They are addressed to the crisis of poverty and need, which is rural as well as urban. This administration is committed to full opportunity on the farm as well as in the city; to a better life for rural America; to ensuring that government is responsive to the needs of rural America as well as urban America. These proposals will advance these goals.

I have discussed these four matters together because together they make both a package and a pattern. They should be studied together, debated together, and seen in perspective.

Now these proposals will be controversial, just as any new program is controversial. They also are expensive. Let us face that fact frankly and directly.

The first-year costs of the new family assistance program, including the child care centers and job training, would be $4 billion. I deliberated long and hard over whether we could afford such an outlay. I decided in favor of it for two reasons: First, because the costs will not begin until fiscal year 1971, when I expect the funds to be available within the budget; and second, because I concluded that this is a reform we cannot afford not to undertake. The cost of continuing the present system, in financial as well as human terms, is staggering if projected into the 1970's.

Revenue sharing would begin in the middle of fiscal 1971, at a half-year cost of a half billion dollars. This cuts into the Federal budget, but it represents relief for the equally hard-pressed States. It would help curb the rise in State and local taxes which are such a burden to millions of American families.

Overall, we would be spending more-in the short run--to help people who now are poor and who now are unready for work or unable to find work.

But I see it this way: Every businessman, every workingman knows what "start-up costs" are. They are a heavy investment made in early years in the expectation that they will more than pay for themselves in future years.

The investment in these proposals is a human investment; it also is a "start-up cost" in turning around our dangerous decline into welfarism in America. We cannot produce productive people with the antiquated, wheezing, overloaded machine we now call the welfare system.

If we fail to make this investment in work incentives now, if we merely try to patch up the system here and there, we will only be pouring good money after bad in ever-increasing amounts.

If we do invest in this modernization, the heavily burdened taxpayer at least will have the chance to see the end of the tunnel. And the man who now only looks ahead only to a lifetime of dependency will see hope--hope for a life of work and pride and dignity.

In the final analysis, we cannot talk our way out of poverty; we cannot legislate our way out of poverty; but this Nation can work its way out of poverty. What America needs now is not more welfare, but more "workfare."

The task of this Government, the great task of our people, is to provide the training for work, the incentive to work, the opportunity to work, and the reward for work. Together these measures are a first long step in that direction.

For those in the welfare system today who are struggling to fight their way out of poverty, these measures offer a way to independence through the dignity of work.

For those able to work, these measures provide new opportunities to learn work, to find work.

For the working poor--the forgotten poor--these measures offer a fair share in the assistance given to the poor.

This new system establishes a direct link between the Government's willingness to help the needy and the willingness of the needy to help themselves.

It removes the present incentive not to work and substitutes an incentive to work; it removes the present incentive for families to break apart and substitutes an incentive for families to stay together.

It removes the blatant inequities and injustices and indignities of the welfare system.

It establishes a basic Federal floor so that children in any State can have at least the minimum essentials of life.

Together, these measures cushion the impact of welfare costs on States and localities, many of which have found themselves in fiscal crisis as costs have escalated.

They bring reason, order, and purpose into a tangle of overlapping programs, and show that Government can be made to work.

Poverty will not be defeated by a stroke of a pen signing a check, and it will not be reduced to nothing overnight with slogans or ringing exhortations.

Poverty is not only a state of income. It is also a state of mind, a state of health. Poverty must be conquered without sacrificing the will to work, for if we take the route of the permanent handout, the American character will itself be impoverished.

In my recent trip around the world, I visited countries in all stages of economic development; countries with different social systems, different economic systems, different political systems.

In all of them, however, I found that one event had caught the imagination of the people and lifted their spirits almost beyond measure: the trip of Apollo 11 to the moon and back. On that historic day, when the astronauts set foot on the moon, the spirit of Apollo truly swept through this world. It was a spirit of peace and brotherhood and adventure, a spirit that thrilled to the knowledge that man had dreamed the impossible, dared the impossible, and done the impossible.

Abolishing poverty, putting an end to dependency--like reaching the moon a generation ago--may seem to be impossible. But in the spirit of Apollo, we can lift our sights and marshal our best efforts. We can resolve to make this the year not that we reached the goal, but that we turned the corner--turned the corner from a dismal cycle of dependency toward a new birth of independence; from despair toward hope; from an ominously mounting impotence of government toward a new effectiveness of government, and toward a full opportunity for every American to share the bounty of this rich land. Thank you and goodnight.