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Squabbling puts welfare plan on hold


WASHINGTON -- For five months, the juggernaut that would transform the U.S. welfare system moved inexorably through Congress, fueled by solidarity among the new majority Republicans. But in recent weeks, it has slowed to a crawl as Senate Republicans have fallen to squabbling among themselves.

The fight turns on several issues, the most intractable of which is the formula for handing federal welfare money to the states. Whatever happens, Maryland is likely to lose.

Conservatives also insist that any Senate bill have provisions, already adopted by the House, to impose tough work requirements on welfare recipients and discourage illegitimacy. The main welfare bill in the Senate doesn't include those provisions.

Finally, presidential politics looms as two major Republican candidates square off over welfare.

"The Senate bill fails on every major count," says Sen. Phil Gramm of Texas, a leader of the conservative Republican revolt and a presidential rival of Senate Majority Leader Bob Dole of Kansas.

Mr. Dole is a member of the Finance Committee, which approved a less stringent bill than the one adopted by the House. The majority leader had planned on Senate passage in June but has delayed the floor debate as he tries to work out differences among Republicans.

Sen. Lauch Faircloth, a North Carolina Republican, is threatening to filibuster the Finance Committee bill if it doesn't include a ban on welfare payments to teen-age mothers and on additional money for welfare mothers who have more children.

Nevertheless, many Democrats and Republicans believe the fight over money for the states is the toughest nut to crack. Ideological fault lines usually disappear when federal money for home states is involved. This fight is no exception.

Some liberal Democrats who oppose the GOP on most welfare issues have joined Republicans, either to preserve money for their states or to get more.

At issue is the method for slicing up a finite federal pie. The current welfare system guarantees benefits to anyone who qualifies, regardless of the cost to the government.

Separate bills approved by the House and the Senate Finance Committee would end that guarantee. Instead, they would give each state a fixed portion of the pie. The bills would also end the requirement that each state pay a portion of the welfare benefit -- the amount varies from 20 percent to 50 percent, depending on a state's wealth.

During the next five years, the bills would give each state essentially the same amount annually it got in 1994, along with wide discretion in running its own program.

Opponents of that formula say it perpetuates a system that gives widely varying amounts to poor children, depending on where they live. Children in New York, they say, get six times as much as do children in Mississippi.

Those variations result from decisions made by the states, which set their own benefit levels and eligibility criteria. Some states have been reluctant to increase benefit levels because that would require them to spend more of their own money.

But Republicans and Democrats from fast-growing states have decided they don't like the Finance Committee's formula. It would give them only a fixed amount of federal money for a rising welfare population.

"The formula is a rotten formula," Senator Gramm says.

Sensing a windfall for his state, he has joined his Texas Republican colleague, Sen. Kay Bailey Hutchison, to promote a formula that would shift billions of dollars from California and the Northeast to mainly Southern and Western states.

L They argue that the federal government should spend the same

amount of money on each poor child in the country, no matter where that child lives.

"That will allow for the dollars to follow the need," says Sen. Carol Moseley-Braun, a liberal Democrat from Illinois, which would benefit from the formula change.

Florida Democratic Sen. Bob Graham, a Finance Committee member whose proposal to change the formula was rejected by the committee, is also part of the effort.

"In the District of Columbia, a poor child receives three times as much federal money per year -- three times -- as does the same poor child a few hundred yards across the Potomac in Virginia," he told the committee.

Generally, the states that now pay the highest welfare benefits stand to lose the most.

"States that have been putting up their money . . . they would be savaged," says Sen. Alfonse M. D'Amato, a Republican from New York.

The stakes are enormous. Under the Hutchison proposal, New York would lose $749 million -- 32 percent of what it would get under the Finance Committee bill -- in the first year and nearly $1 billion annually within a few years. Its ultimate annual loss would amount to nearly 6 percent of the total national pie of $16.8 billion.

Texas, by contrast, would gain $254 million -- 50 percent -- in the first year and almost $1 billion annually -- a 187 percent increase in federal money -- within a few years. And Florida ultimately would see its allotment rise by 71 percent -- more than $400 million.

Maryland would lose dearly under any proposal. The House bill, state officials say, would give Maryland $25 million less than it says it needs -- a loss of nearly 12 percent. The Hutchison formula would leave the state with 12 percent less than under the Finance Committee bill in the first year -- and ultimately nearly 21 percent short.

"We are going to be confronted with some very difficult dilemmas," says Lynda Fox, deputy secretary for programs of the Maryland Department of Human Resources. The state would have to either reduce benefits or limit welfare eligibility, she said.

Up to 92,000 Maryland children could be denied benefits over the next five years under the House bill, according to state estimates. Maryland has nearly 154,000 children in 81,645 families on the rolls. A Maryland family of three collects $373 a month -- half provided by the federal government, half by the state.

Senator Hutchison claims rising support for her proposal, which would give 36 states more federal money than the Finance Committee bill would provide while cutting the allocations of 14 states.

Rep. E. Clay Shaw Jr., a Florida Republican who heads the key Ways and Means subcommittee that drafted the House bill, asked: "Is Texas or Florida prepared to increase state funding to the size of New York's? I doubt that."

Acknowledging that "you can argue fairness on both sides," Mr. Shaw said: "You've got to be practical and realize the social impact and economic impact that such a formula would have by decreasing funds to other parts of the country. . . . The social disorder that it would cause is of great concern to me."

There are some signs of give. Sen. Rick Santorum of Pennsylvania, which would lose aid under the Hutchison plan, says: "We realize there are problems in states like Texas and Florida, and others that they are growing dramatically.

"I'm willing to look at a compromise that takes care of the demographic shifts in our country. And, recognizing that Pennsylvania is going to lose population, we shouldn't be guaranteed as much money as we have." But, he says, "Am I willing to give away the store? No."

Senator Hutchison says she is willing to shift of money gradually.

Although many Republican senators have climbed on the Hutchison bandwagon to stall the legislation, two GOP governors whose support helped give momentum to the welfare effort are pressing for passage of the Finance Committee bill.

Gov. John Engler of Michigan and Gov. Tommy G. Thompson of Wisconsin are anxious to get the control over welfare that the legislation would give them. Moreover, both would see their states lose money under the Hutchison proposal.

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