¹ Income Maintenance Programs, Hearings Before the Subcommittee on Fiscal Policy of the Joint Economic Committee, Congress of the United States, Joint Economic Committee, 90th Congress, 2nd Session, Vol. I, June, 1968 Google Scholar.

² Lee Rainwater to author, May, 1968. An example of cataloguing income maintenance alternatives can be found in Green, Christopher, Negative Taxes and the Poverty Problem (Washington, D.C.: The Brookings Institution, 1967)Google Scholar. Vadakin, James, Family Allowances (Miami: University of Miami Press, 1968)Google Scholar illustrates special pleading for one mechanism of cash transfer, in this case one defined by the age characteristics of the recipients. Variations in the nature of family allowances are substantial; European nations have programs so different that little is gained by grouping them as if they served common ends with comparable efficiency. Milton Friedman has disassociated his version of a welfare-replacing NIT from more generous negative tax plans such as James Tobin's. See Time, “Welfare and Illfare: The Alternatives to Poverty,” December 13, 1968. For support of the idea that concepts like NIT do not sufficiently describe a class of programs, see “Comment: A Model Negative Income Tax Statute,” Yale Law Journal, 78 (12 1968), p. 270 Google Scholar, n. 6. The editors assert,” ‘negative income tax” has no precise meaning,” and add that, when they refer to “negative income tax,” they mean their own proposal.

³ Tobin, , et al, “Is a Negative Income Tax Practical,” Yale Law Journal, 77 (11 1967)CrossRefGoogle Scholar; and Lampman, Robert, Wisconsin Law Review, 2 (1969), pp. 543–544 Google Scholar. The plan mentioned—Negative Rates Plan for the Working Poor—is but one of many schemes Lampman has put forward. It is used here to illustrate a type of negative income tax, not Lampman's view of the most appropriate scheme.

⁴ Brazer, Harvey, “Tax Policy and Children's Allowances,” Children's Allowances and the Economic Welfare of Children, Report of a Conference. (Citizen's Committee for Children of New York, Inc., 1968), p. 142 Google Scholar.

⁵ Eligibility for AFDC requires that the family be needy, fatherless (or include an incapacitated father), and include children under 18; that the unemployed parent and or mother accept a job or training for a job if offered (or else lose the benefits); and that, under the “Man in the House” Rule which applied in many states, the mother be moral. “Poverty, Income Sources and Income Maintenance Programs,” The President's Commission on Income Maintenance Programs, (Background Paper No. 2, May 18, 1968), p. 11 Google Scholar. In 1961, the AFDC-UP program was instituted, permitting benefits to households headed by unemployed, able-bodied men. Only 25 states had adopted this program by 1969, and less than 100,000 families were receiving its benefits. Poverty Amid Plenty: The American Paradox (Washington, D.C.: U.S. Government Printing Office, 1969) p. 47 Google Scholar.

⁶ For a typical example of (a), see The Advisory Council on Public Welfare, Having the Power, We Have the Duty, Report to the Secretary of Health, Education, and Welfare (Washington, D.C.: Government Printing Office, 1966), p. 2 Google Scholar, which asserts that “public assistance payments are so low and so uneven that the Government is, by its own standards and definitions, a major source of the poverty on which it has declared unconditional war.” For (b) see the discussion of welfare's “inequitable treatment of marginal nonrecipients” in tenBroek, Jacobus, “California's Dual System of Family Laws: Its Origin, Development, and Present Status,” Stanford Law Review, 16 (03 1964), 257–317 CrossRefGoogle Scholar; (July 1964), 900–981; Vol. 16 (April 1965), 614–682; and Johnson, William A. and Rosenkranz, Robert, “Public Assistance” in Cities in Trouble: An Agenda for Urban Research, Pascal, Anthony H. (ed.) (Memorandum RM-5603-RC, the Rand Corp., August, 1968), p. 87 Google Scholar. For (c) see Reich, Charles A., “Individuals Rights and Social Welfare: The Emerging Issues,” Yale Law Journal, 75 (06 1965)Google Scholar. This theme is understandably stressed by welfare rights' groups, and raised in almost all discussion of public welfare. See also Having the Power, We Have the Duty, Advisory Council on Public Welfare, p. 74 Google ScholarPubMed, for the warn-ing that “there is great urgency for the empathic assertion of public welfare's accountability for the protection of individual rights, and for the scrupulous observance of the individual rights of the people it serves.” For (d) see the illustrative remarks by Congresswoman Griffiths in the 1968 Hearings of the Joint Economic Committee, supra, n. 1; and Moynihan, Daniel P., “The Crises in Welfare,” The Public Interest, No. 10, (Winter, 1968), p. 4 Google Scholar. For (e) see Gans, Herbert J., “The Negro Family: Reflections on the Moynihan Report,” The Moynihan Report and the Politics of Controversy, Rainwater, and Yancey, (eds.) (Cambridge, Mass.: M.I.T. Press, 1967), p. 454 Google Scholar. For (f) see Moynihan, and the work by Lampman, among others, on how the American system of transfer payments affects the poor. Lampman, supra, n. 3.

⁷ The official poverty line in 1969 was $3550 for an urban family of four. The poverty gap was $12 billion in 1966; see Kershaw, J. A., Government Against Poverty, (Chicago: Markham, 1970), p. 148 Google Scholar.

⁸ For data on the characteristics of the unemployed, see the discussion of employability in The President's Commission on Income Maintenance Programs, Background Papers, pp. 63–66.

⁹ See outline in Robert J. Lampman, “Steps to Remove Poverty from America,” Paper prepared for delivery at the Wisconsin Symposium, January 13, 1968.

¹⁰ For a definition of poverty in relative terms, see Fuchs, Victor, “Redefining Poverty,” The Public Interest, No. 8 (Summer 1967), 88–95 Google Scholar. Martin Rein discusses the difficulties in absolutist, “bread-basket” conceptions of poverty in Ferman, Louis, et. al., (eds.), Poverty in America (2d. ed., Ann Arbor: University of Michigan Press, 1968), pp. 116–133 Google Scholar. English social critics have recognized the problem of fixed poverty lines for some time. For a cogent critical view (directed against the views of Rowntree), see Peter Townsend, “The Definition of Poverty,” Paper presented at the Colloquium on Handicapped Families, Bureau de Recherches Sociales, held under the auspices of UNESCO, (Paris, 10–12, February, 1964), pp. 6–10. For information on income distribution changes, see Poverty Amid Plenty: An American Paradox, pp. 38–39.

¹¹ It is extraordinary how difficult it is to convince the skeptics that tax exemptions are functional equivalents of direct government expenditures. See Aaron, H., “Tax Exemptions—The Artful Dodge,” Trans-Action, 6 (03 1969), 4–6 Google Scholar, for a statement of both the problem and the good reasons one has for treating tax exemptions and direct benefits as fiscal equivalents. It should be added that the political process affecting the two forms of transfers differs, and that there may be great differences in the legitimacy associated with particular forms. As Aaron says, suppose, “yesterday on the floor of Congress, Senator Blimp introduced legislation to provide cash allowances for most of the aged. Senator Blimp's plan is unique, however, in that it excludes the poor. The largest benefits, $70 per month, are payable to aged couples whose real income exceeds $200,000 per year. The smallest benefits, $14 per month, would be payable to couples with incomes between $1600 and $2600. Widows, widowers, and unmarried aged persons would receive half as much as couples. No benefits would be payable to those with very low incomes.” Aaron remarks that “one can hardly imagine any public figure” introducing such legislation, for fear of being derided “in the press, by his constituency, and on the floor of the Congress. So one would think. But this system of ‘old age allowances’ has actually existed for many years, not as an expenditure program, but as a part of our tax system,” through the double exemption granted aged couples.

¹² Tax reform was the subject of extended hearings before the House Committee on Ways and Means during the spring of 1969. For the range of reform proposals see Tax Reform Studies and Proposals, U.S. Treasury Department, Joint Publication, Committee on Ways and Means, and Committee on Finance, 91st Congress, 1st Session, February 5, 1969, (Washington, D.C.: U.S. Government Printing Office).

¹³ The argument is not that programs related to one problem have no effect on other social ills; they do. But consider the difference between treating changes in children's tax exemptions as a tax reform issue and as an antipoverty remedy. A more equitable treatment of children's tax exemptions would not necessarily involve enough money to relieve poverty substantially.

¹⁴ The differences between reforming welfare and eradicating poverty come out sharply in how analysts regard the adequacy criterion. Some, like the editors of the Yale Law Journal, take it as given that desirable programs will have a guarantee level set at the poverty line. Indeed, they question whether the “SSA poverty line—the ‘minimum money income required to support an average family … at the lowest level consistent with the standard of living prevailing in this country’—” is adequate, “even if it has gained wide acceptance.” Yale Law Journal, 78 (12 1968), p. 298, n. 91Google Scholar. On the other hand, welfare reforms costing approximately five billion dollars were in 1970 considered by the Congress. It is clearly possible to evaluate such low-adequacy alternatives by other criteria, and this may be very important if budgetary constraints rule out what the Yale editors seek.

¹⁵ The poverty index set by the SSA is the minimum income per household of a given size, composition, and nonfarm status. In 1966 the Agriculture Department Economy Food Plan, which is the core of the poverty index, provided for total food expenditures of 75 cents a day per person (in an average four-person family). The index adds twice this amount to cover all family living items other than food. It has been adjusted for price changes since 1959; but has not kept pace with the increase in median income. Consequently, there was a larger absolute gap between median family income and the poverty line in 1969 than in 1959. Orshansky, Mollie, “The Shape of Poverty in 1966,” Social Security Bulletin, U.S. Department of Health, Education, and Welfare, (Social Security Administration, March 1968), p. 5 Google Scholar.

¹⁶ I am indebted to Robert Lampman for a suggested typology of poverty reformers. He distinguishes three perspectives: that of welfare (minimum floors of protection); of social insurance (security against variability of income over time through insurance); and of tax and public finance (equity of treatment, work incentives). Lampman emphasizes that each mentality directs attention selectively and ignores issues of great importance to the others. Thus, public finance experts are horrified by the inequitable treatment of welfare beneficiaries in different categories and in different states, and by the high marginal tax rates public assistance formally requires. Such considerations are less salient to welfare reformers who focus on adequacy of benefits, the speed with which destitution is relieved, etc. Social insurance advocates are more likely to evaluate transfers by the sense of entitlement they involve, the predictability of future benefits, and security they offer large classes of Americans, not especially the poor. This suggestive typology has yet to be worked out, but offers a way of comparing transfers that could be added to the approach I am suggesting.

¹⁷ Schorr, Alvin L., Explorations in Social Policy (New York: Basic Books, Inc., 1968), p. 62 Google Scholar.

¹⁸ The experience with the Kerr-Mills Medical Assistance law brings out this point. Generous in theory, only 32 states had workable programs by 1963, three years after enactment. Marmor, Theodore, The Politics of Medicare (London: Routledge & Kegan Paul Ltd., 1970)Google ScholarPubMed.

¹⁹ Some evidence has recently been gathered in Wisconsin indicating that the poor are not as hostile to the means test as commonly asserted. Handler and Hollingsworth found that “the clients reported very little evidence of hostility toward their case-worker or coercion in the administration of social services.” Joel F. Handler and Ellen Jane Hollingsworth, “The Administration of Social Services in AFDC: The Views of Welfare Recipients,” Institute for Research on Poverty, University of Wisconsin, Discussion Paper 37, p. 39.

²⁰ Weisbrod, Burton A., “Collective Action and the Distribution of Income: A Conceptual Approach,” The Analysis and Evaluation of Public Expenditure: The PPB System, Vol. 1 Google Scholar, A Compendium of Papers, Subcommittee on Economy in Government, Joint Economic Committee, U.S. Congress, 91st Congress, 1st Session, (Government Printing Office: Washington, D.C., 1969), p. 184.

²¹ As Weisbrod says, “a ratio of unity would thus indicate that all resources of the program are being devoted to the target group and do not benefit any others.” Ibid., p. 185.

²² See also D. P. Moynihan's remarks about stigma and community reactions to transfer programs in his “Crises in Welfare,” The Public Interest, No. 10 (Winter 1968), 3–29 Google ScholarPubMed.

²³ See Weisbrod., supra, a. 19, p. 187.

²⁴ Outlined in Christopher Green, op. cit., pp. 126–130.

²⁵ In most of the literature proposing various income maintenance plans, guarantee levels are so low that to consider many heads of four-person families would give up higher incomes to loaf on $1500 or so per year is ludicrous and in violation of our common sense. Yet, for political reasons, there is still concern over incentive effects of such plans.

²⁶ Davi d Wilkinson, “Foxtracks Across Ice,” unpublished paper, University of Wisconsin, provides an illustration of this point. He visualizes the plan “as a line from a reel anchored to the top of an economic ladder. The line assures that the family won't drop below a certain rung. At the same time it assists a family moving up the ladder, though with decreasing payout as the family gets closer to the top. The reel and line represent an income assistance system working in conjunction with the family's own efforts to increase total income with earnings. The line won't lift the full weight of the family to the top, but it continues to be of assistance until the family gets there. The maximum vertical length of the line represents the level of support minimally guaranteed. The lift of the line represents the tax rate applied to earnings, with a smaller tax rate producing more lift than a larger rate. The break-even level corresponds to the top of the ladder, the point where all the line is reeled in.”

²⁷ Musgrave, R., The Theory of Public Finance, (New York: McGraw-Hill, 1959), ch. 1Google Scholar.

²⁸ See, for example, Klein, W., “Some Basic Problems of Negative Income Taxation,” Wisconsin Law Review, (Summer 1966)Google Scholar

²⁹ In response to a question about guaranteeing every family an income of at least $3200 a year (for a family of four), with the government making up the differences the following results were obtained: favor— 36%; oppose—58%; no opinion—6%. Results of a question about providing enough work so that each family that has an employable wage earner would be guaranteed a wage of about $60 a week or $3200 a year were: favor—78%; oppose—18%; no opinion—4%. American Institute of Public Opinion, Gallup Opinion Index, Report No. 37, July, 1968, pp. 23–24.

³⁰ Yale Law Journal, 78 (12 1968), p. 282 Google Scholar.

³¹ The following discussion draws on work of the staff of the President's Commission on Income Maintenance Programs which presented its final report Poverty Amid Plenty: The American Paradox, in November, 1969.

³² The President's Commission on Income Maintenance Programs. Poverty Amid Plenty: The American Paradox, p. 115.

³³ All of the financial cost estimates are for Fiscal Year 1972. This postponement of program initiation reflects a number of considerations: the administration's budget-cutting in 1969, the political gains of future as against present expenditures, and the assumption that passage of welfare reform would take perhaps two years. It perhaps should be added that USB cost estimates were understated by some $400 million because no allowance was made for increased numbers of beneficiaries, according to OEO economists I interviewed in 1970.

³⁵ For a characterization of the redistributive “political arena,” see Lowi, Theodore, “American Business, Case Studies and Political Theory,” World Politics, 16 (1963–1964)Google Scholar.

³⁶ On October 2, 1969, President Nixon sent to the Congress the Family Assistance Act of 1969, a plan modeled after FFB with the addition of a work requirement, child care provisions, somewhat different work incentives, and more than twice the estimated program costs. These changes from the FFB alternative would require a separate discussion of policy developments outside the scope of this paper, but of continuing interest. For a discussion of various aspects of the Nixon Administration's proposed Family Assistance Bill, see New Generation, 52 (Winter 1970)Google Scholar.