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[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

    MAKING ENDS MEET: CHALLENGES FACING WORKING FAMILIES IN AMERICA

=======================================================================

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, AUGUST 1, 2001

                               __________

                           Serial No. 107-16

                               __________

           Printed for the use of the Committee on the Budget

  Available on the Internet: http://www.access.gpo.gov/congress/house/
                              house04.html
                                _______

                  U.S. GOVERNMENT PRINTING OFFICE
74-431                     WASHINGTON : 2002

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                        COMMITTEE ON THE BUDGET

                       JIM NUSSLE, Iowa, Chairman
JOHN E. SUNUNU, New Hampshire        JOHN M. SPRATT, Jr., South 
  Vice Chairman                          Carolina,
PETER HOEKSTRA, Michigan               Ranking Minority Member
  Vice Chairman                      JIM McDERMOTT, Washington
CHARLES F. BASS, New Hampshire       BENNIE G. THOMPSON, Mississippi
GIL GUTKNECHT, Minnesota             KEN BENTSEN, Texas
VAN HILLEARY, Tennessee              JIM DAVIS, Florida
MAC THORNBERRY, Texas                EVA M. CLAYTON, North Carolina
JIM RYUN, Kansas                     DAVID E. PRICE, North Carolina
MAC COLLINS, Georgia                 GERALD D. KLECZKA, Wisconsin
ERNIE FLETCHER, Kentucky             BOB CLEMENT, Tennessee
GARY G. MILLER, California           JAMES P. MORAN, Virginia
PAT TOOMEY, Pennsylvania             DARLENE HOOLEY, Oregon
WES WATKINS, Oklahoma                TAMMY BALDWIN, Wisconsin
DOC HASTINGS, Washington             CAROLYN McCARTHY, New York
JOHN T. DOOLITTLE, California        DENNIS MOORE, Kansas
ROB PORTMAN, Ohio                    MICHAEL E. CAPUANO, Massachusetts
RAY LaHOOD, Illinois                 MICHAEL M. HONDA, California
KAY GRANGER, Texas                   JOSEPH M. HOEFFEL III, 
EDWARD SCHROCK, Virginia                 Pennsylvania
JOHN CULBERSON, Texas                RUSH D. HOLT, New Jersey
HENRY E. BROWN, Jr., South Carolina  JIM MATHESON, Utah
ANDER CRENSHAW, Florida
ADAM PUTNAM, Florida
MARK KIRK, Illinois

                           Professional Staff

                       Rich Meade, Chief of Staff
       Thomas S. Kahn, Minority Staff Director and Chief Counsel

                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, August 1, 2001...................     1
Statement of:
    Hon. Benjamin L. Cardin, a Representative in Congress from 
      the State of Maryland......................................     4
    Marian Wright Edelman, President, the Children's Defense Fund     8
    Ron Haskins, Ph.D., Senior Fellow, the Brookings Institution.    15
    Sharon Daly, Vice President for Social Policy, Catholic 
      Charities USA..............................................    53
    LaVerne Hewlett, Working Mother, Emmitsburg, MD..............    65
    Robert Rector, Senior Research Fellow, the Heritage 
      Foundation.................................................    67
Prepared statements, additional submissions of:
    Hon. Jim Matheson, a Representative in Congress from the 
      State of Utah..............................................     3
    Hon. Darlene Hooley, a Representative in Congress from the 
      State of Oregon............................................     4
    Mr. Cardin...................................................     6
    Ms. Edelman:
        Prepared statement.......................................    10
        Additional submission....................................    41
        Reply to Hon. David E. Price, a Representative in 
          Congress from the State of North Carolina, question 
          regarding Head Start...................................    48
    Dr. Haskins..................................................    17
    Ms. Daly.....................................................    56
    Ms. Hewlett..................................................    66
    Mr. Rector...................................................    69

 
    MAKING ENDS MEET: CHALLENGES FACING WORKING FAMILIES IN AMERICA

                              ----------                              

                       WEDNESDAY, AUGUST 1, 2001

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:11 a.m. in room 
210, Cannon House Office Building, Hon. Jim Nussle (chairman of 
the committee) presiding.
    Members present: Representatives Nussle, Gutknecht, 
Collins, Miller, Putnam, McDermott, Bentsen, Clayton, Hooley, 
Moore, Capuano, Holt, Matheson, Honda, Price Clement, and 
Moran.
    Chairman Nussle. Good morning. This is the full committee 
hearing that we call ``Making Ends Meet: The Challenges Facing 
Working Families in America,'' before the full Committee on the 
Budget. Today we are honored to have a number of witnesses to 
come forward to talk to us about this very critical issue.
    I want to begin by complimenting my very good friend, Mrs. 
Clayton, for her suggestion that we hold this meeting. She made 
this suggestion to me in private, and then did so at, I 
believe, the full committee markup of the budget. I appreciate 
the suggestion that we have this hearing to discuss the way 
that the Federal Government approaches families in need across 
America, or the way that those needs are not met in any 
instances and how we can do a better job.
    I would be happy to recognize Mrs. Clayton for an opening 
comment in a moment. But let me just inform the committee that 
before us today, we have a returning alumni member of the 
Budget Committee, our good friend from Maryland and my partner 
on some budget process reform issues that--believe it or not, 
Ben, we are still discussing and debating--Ben Cardin from 
Maryland.
    Mr. Cardin. I know you will be doing that well beyond our 
terms.
    Chairman Nussle. I have a feeling you are right. He is the 
ranking member, of course, on the Ways and Means Subcommittee 
on Human Resources.
    We are honored as well to have Marian Wright Edelman, who 
is the president of Children's Defense Fund. We are honored to 
have you here today. We know of your good work and concern, and 
we appreciate your willingness to come forward and give us your 
advice.
    We also have the opportunity to hear from Dr. Haskins. Dr. 
Haskins is a former alumni from the Ways and Means Committee, 
and worked quite a bit as we worked through the very difficult 
subject of reforming welfare. He is now a senior fellow at the 
Brookings Institute.
    We welcome all of you to the panel. It is a very serious 
subject we need to consider, and I would be happy to recognize 
either Mr. McDermott or Mrs. Clayton for any opening comment. 
Mrs. Clayton.
    Mrs. Clayton. Thank you, Mr. Chairman, and thank you also 
for keeping your word and working on this issue. I know you 
also care about the issue, and I thank the witnesses who have 
come to share their insights. I ask for permission to put my 
full statement into the record.
    Chairman Nussle. Without objection.
    Mrs. Clayton. I just want to cite a couple of points. About 
2 years ago I made these statements. I would like to say them 
again.
    For some, these are the best of times. The United States is 
now enjoying the longest sustained period of economic growth in 
the history of the Nation. We have seen more people get into 
the work force, there are higher wages and low unemployment. We 
should be grateful for that. Many people have become wealthy 
and more have entered into the middle class. For them, this is 
a robust prosperous economy.
    However, for many people--due to no fault of their own--
this has been the worst of times for them. While the rich have 
gotten richer, many people have apparently gotten poorer.
    The national budget and policy debate this year has focused 
on how to spend the projected budget, not the one we are 
spending now, the projected budget surplus over the next few 
years. Some favor a huge tax reduction that would tend to 
increase the income of the wealthy. Others favor paying the 
national debt and investing in Social Security and other 
measures to ensure our economic security in the future.
    It is time for the debate to include some consideration of 
the effect of Federal Government policies in creating or 
exacerbating wide income wealth disparities and what it can and 
should do to reverse those conditions. It is time for Congress 
to provide additional, necessary, nutritional benefits such as 
food stamps and assistance, especially for children and people 
who work full time, who indeed cannot make enough wages so that 
they can provide their income.
    My last statement is that income and wage disparity are 
sometimes compounded by race, education, gender, and family 
structure. We as policymakers need to see that. A recent report 
from the Children's Defense Fund documented the high risk of 
children who live in poverty: steady growth, less education, 
and lower earnings. Sadly, the number of people who live in 
poverty, who suffer from hunger or food insecurity number more 
than 4 million or more children and many millions of adults and 
seniors.
    Indeed, Mr. Chairman, these are serious issues that affect 
all Americans, and I thank you for this hearing. I look forward 
to hearing the witnesses who have come.
    Chairman Nussle. Thank you. I ask unanimous consent that 
all the members be given 7 days to submit statements for the 
record. Without objection, so ordered.
    [The prepared statement of Mr. Matheson follows:]

 Prepared Statement of Hon. Jim Matheson, a Representative in Congress 
                         From the State of Utah

    Chairman Nussle, Mr. Spratt, members of the committee. I am very 
pleased that the committee has decided to take up this important topic 
today. Too often I am afraid that our hearings are not focused on the 
true plights of those we represent. We talk about a lot of important 
issues, but often without relevance to the day-to-day lives of working 
Americans. This hearing is about those day-to-day lives.
    The challenges that face the working poor in this country continue 
to be immense despite years of economic growth and even declining 
welfare roles. Many Americans are still struggling to make ends meet. 
Understanding the core sources of those struggles, is essential for 
Congress to act in one of its most important roles, as a steward over 
the public welfare.
    In preparation for this hearing, I have spent some time trying to 
understand something about the working poor that live in my home state 
of Utah--trying to better grasp what challenges are most insurmountable 
to them. Although my remarks are by no means exhaustive of the numerous 
social and economic struggles that these families face, I would like to 
share two of the most problematic components of climbing out of poverty 
in Utah.
    When you just look at the numbers, Utah does not appear to be doing 
too badly. Utah has the second lowest poverty rate in the United 
States, 8 percent of residents live below the poverty line. However, 
these numbers are somewhat more complex. If household income is figured 
on a per capita basis, that is accounting for the number of individuals 
within a household, and more accurately indicating their economic well-
being, then larger Utah families are not doing very well. In fact by 
this measure, Utah's annual median per capita income falls behind the 
national average by $5,254. In addition, although Utah has relatively 
low unemployment rates, when the average wage earned in Utah is 
compared to its national counterparts in key industries and work 
sectors, the average wage in Utah is nearly 16 percent below the 
national average. This is especially critical since the cost of living 
index for Utah is comparable to the national average, and higher than 
the national average in the state's metropolitan areas.
    These numbers reveal the complex nature of understanding true 
poverty, since the poverty people experience is related more to the 
number of individuals in their household, and the way wages compare to 
their cost of living. It is then possible for a state like Utah to have 
had great economic growth, high rates of employment and forecasts of 
continued job growth (as Utah has for the last decade) and see the 
numbers of uninsured and underinsured increase, the demand at local 
food pantries grow, and the services requested from local agencies 
balloon. Truly, poverty is a more complex issue than an initial brush 
that numbers may indicate.
    One of the greatest challenges facing families in Utah is 
affordable housing. The National Low Income Housing Coalition defines a 
housing wage as the ``amount a worker would have to earn per hour in 
order to be able to work 40 hours per week and afford a two bedroom 
unit at Utah's Fair Market Rent.'' In Utah the FMR is $608, which means 
that the housing wage in Utah is at least $11.69 per hour. Compared to 
the accepted standard for housing costs, 30 percent, the average renter 
in Utah pays 65 percent of his or her income on a two-bedroom unit. In 
fact, if a worker was earning minimum wage, $5.15 per hour, it would 
take working 91 hours per week to be able to afford a two bedroom unit 
in Utah. Affordable housing is obviously a crisis for families working 
to make ends meet.
    This is only exacerbated by the costs associated with child care. 
For the working poor there is very often no choice besides child care 
if they want to work. Yet, the cost of child care in Utah is nearly 
debilitating. According to the Department of Workforce Services Office 
of Child Care, 54 percent of parents seeking referrals for child care 
services in Utah earn less than $25,000 a year. At the same time, the 
cost of child care alone is between $3,500 and $4,500 a year per child, 
more than tuition at the University of Utah. Although 13,000 children 
in Utah received child care subsidies last year, this only represents 
25 percent of the eligible population according to state standards, and 
only 10 percent of the eligible population according to Federal 
standards. To be eligible for child care support a family must make 
$21,108 or 56 percent of the State Median Income. On average, for a 
family of three making $15,000 a year, nearly 41 percent of their 
income will go to child care expenses--if they have more than one 
child, the cost of child care becomes almost prohibitive.
    If a working family in poverty in Utah was to pay 65 percent of 
their income in rent and 40 percent of their income on one child's 
child care, they would have already over-spent their income. However, 
this same family, who received support through a combination of state 
funds and the Federal Child Care and Development Fund, would spend less 
than 1 percent of their annual income on child care. Clearly, Federal 
programs can have an impact on alleviating the burdens faced by working 
families.
    The reality of these complex situations requires local, state, and 
Federal partnerships. The answers are inherently multi-faceted and not 
easy. However, I hope that as we talk about housing, and child care, 
and welfare, and health care we in Congress can remember that there are 
many real, working people who struggle to make ends meet. Again, I 
commend the committee for holding this hearing. Taking the time to 
address these issues is not always the most politically expedient 
action, but it is a critically important one. I look forward to the 
witnesses' testimony and their suggestions for potential solutions to 
the situations faced by so many Americans in poverty.

    [The prepared statement of Ms. Hooley follows:]

Prepared Statement of Hon. Darlene Hooley, a Representative in Congress 
                        From the State of Oregon

    I would first like to thank the Chairman for allowing this hearing 
to take place today. This is an extremely important issue and I am 
looking forward to hearing from our panels today.
    There are so many problems facing the working poor in our country, 
that it is hard to know where to begin when talking about the issue. 
The problems that we as a country must address are many, and are not 
small. The Federal Government classifies an annual income of $14,000 as 
the poverty line. If you use this as a basis for your determination of 
who is in poverty, then over 12 percent of the United States 
population, or 32 million people are poor. Tens of millions more have 
incomes that will not cover their basic needs. For many of these people 
it's not that they cannot find work, it's that they cannot find work 
that pays enough. Jobs that pay $6 or $7 an hour just can't cover all 
the expenses of day-to-day life and that is how too many Americans 
live: DAY-TO-DAY.
    We need to expand health coverage to all low-income parents and 
their children, affordable child care needs to be more readily 
available so parents can work, and probably the biggest issue facing 
the poor in our country is affordable housing. However, not only is 
cost a major issue, but for 20 percent of families, their housing is 
substandard. So the question is what can we do that we are not doing? 
What can we do differently?
    As we continue to work to find answers to these important 
questions, I look forward to hearing the testimony from our witnesses. 
I yield back the balance of my time.

    Chairman Nussle. We will start with our good friend and 
colleague, Representative Cardin from Maryland. We appreciate 
you being here today, and we welcome you back to the committee. 
All of the witnesses' statements will be made part of the 
record and you may summarize as you would like.

 STATEMENT OF THE HON. BENJAMIN L. CARDIN A REPRESENTATIVE IN 
  CONGRESS FROM THE STATE OF MARYLAND; MARIAN WRIGHT EDELMAN, 
PRESIDENT, THE CHILDREN'S DEFENSE FUND; AND RON HASKINS, PH.D., 
            SENIOR FELLOW, THE BROOKINGS INSTITUTION

    Mr. Cardin. Thank you, Mr. Chairman. Let me thank you very 
much for conducting this hearing. I also want to thank Marian 
Wright Edelman for being here today. She is our hero on the 
issues affecting families in our society and for all the work 
she has done for many years, so it is an honor to be with her 
on this panel.
    And also Dr. Haskins. The two of us worked very closely 
together on the Ways and Means Committee when he was chief 
counsel to the Human Resources Subcommittee that I have the 
honor of being the ranking Democrat.
    I really do applaud you for holding this hearing because I 
think it is important how our Nation responds to the problems 
of working families and whether we are doing enough. During the 
last 8 years we have made progress. We have made progress in 
large measure because we have had unprecedented economic growth 
in our country. We have moved forward in Congress on the earned 
income tax credit, which has helped a great deal. And I would 
also suggest that the welfare reform bill of 1996 also made a 
difference. So we have made a lot of progress during these past 
8 to 9 years, but there is still much work that needs to be 
done and that is what concerns me.
    I don't want us to be lulled into a sense that we have 
accomplished our goal when we have not. One out of every six 
children in the United States grows up in poverty. That is 
unacceptable. It should be unacceptable to all of us. We know 
we can do better.
    We are now looking at an economic slowdown. We don't know 
how long it is going to last and what impact it is going to 
have, but clearly our vulnerable children will be even more 
vulnerable; our vulnerable families will be more vulnerable. As 
we take a look at the people who are currently depending upon 
our welfare system, we see that they have tremendous economic 
challenges. We know that they have tremendous needs, and it is 
going to be more difficult for us to deal with these particular 
families.
    So Mr. Chairman, I must tell you up front, I was 
disappointed by the President's budget because I don't think 
the President's budget spoke to this as a priority. When you 
look at his request for the Administration for Children and 
Families, it rose by an unacceptable 2.9 percent growth. When 
you look at the other areas within the President's budget, 
those grew by much larger percentages. This was one of the 
smallest growth areas. Inflationary growth is about 3.6 
percent, discretionary growth is about 4 percent, but for our 
children and families only 2.9 percent. We can do better.
    When you take a look at some of the President's initiatives 
and then match it up with what actually has happened in the 
budget, we have a mismatch. In regards to one of his major 
initiatives, the faith-based initiative, the President did not 
restore the cuts to the social services block grant, which is 
probably one of the most important programs that could help 
faith groups. Why haven't we provided more money in the social 
services block grant?
    The President talks about a fatherhood initiative. That is 
very important, but there is nothing in the President's budget 
to allow the pass-through of child support to families. Right 
now we have a policy that if you pass child support through to 
families, the State has to repay the Federal share. That is not 
right.
    The President talks about continuing the momentum for our 
welfare system, yet his budget didn't provide for the 
supplemental grants that 17 States rely upon. In each of these 
areas, Mr. Chairman, there is bipartisan support. We have 
bipartisan support to increase the social services block grant 
to deal with the fatherhood initiative and to deal with 
welfare. So I would urge us to recognize that we can do better.
    There was one area that I think the President did move 
forward in his budget, and I want to raise a question to the 
committee on it. The President's budget provides for $200 
million additional funds for promoting safe and stable 
families. That is good. That is something that Democrats and 
Republicans can agree upon. The budget that was passed by 
Congress provides for the supplemental grants in TANF, which 17 
States rely upon. So we have two initiatives that I hope we 
would move forward.
    But, Mr. Chairman, I would rest easier if you could assure 
us today that the funding allocations in the budget resolution 
for these programs is still in place. I am not sure it is 
because of the suggestion about extra outlays already being 
used up in the tax legislation that has been reported from our 
committee.
    So if you clarify for us as to whether we could move 
forward on these two initiatives that are covered under the 
budget resolution, I think that would be good news for our 
families.
    There are some areas--I don't have a lot of time, but let 
me just mention, if I might, four areas that I would hope the 
committee would pay attention to providing some additional 
resources: child care, child support, unemployment insurance, 
and TANF.
    In the child care development block grant program, the 
current funding level is just inadequate. We should be 
providing more money to deal with child care. One half of our 
States have established family eligibility at less than 60 
percent of the State's median income. When you realize the cost 
of child care is between $4,000 to $10,000 a year, we can do 
better and we must do better.
    The child support issue I have already mentioned, where the 
current law imposes 100 percent tax rate on the lowest-income 
families in our society by having an offset on the child 
support that goes--that is paid by the noncustodial parent. In 
some cases, these families aren't on welfare. We can do better. 
We have a bipartisan bill to correct this.
    On unemployment insurance, the GAO report this January 
indicated there is only limited protection for low-income wage 
earners. It is very interesting. Low-wage earners are two times 
more likely to be unemployed and they are one half as likely to 
collect unemployment insurance. We had a nonpartisan group of 
stakeholders in the unemployment insurance field make a 
recommendation. It is time we take that up and deal with it.
    Mr. Chairman, let me lastly mention the issue of TANF. In 
2002 we are going to have to reauthorize the welfare programs. 
The people who remain on welfare are our most difficult cases. 
They have low income levels, low education levels, limited work 
history, substance abuse, domestic violence, disabilities. We 
need to start with the premise that we will maintain our 
commitment of Federal resources on TANF, adjusted for 
inflation, so that our States can plan for the next 5 years to 
have the Federal Government as a true partner to deal with the 
most vulnerable in our society.
    I urge you, as we start looking at this year's budget and 
next year's budget, to allocate a reasonable amount of 
resources so that we can accomplish these goals and reduce the 
poverty of our families in our country. Thank you.
    Chairman Nussle. Thank you Mr. Cardin.
    [The prepared statement of Mr. Cardin follows:]

    Prepared Statement of Hon. Benjamin Cardin, a Representative in 
                  Congress From the State of Maryland

    Mr. Chairman, let me start by thanking you and Mr. Spratt for 
giving me this opportunity to come before your committee to talk about 
our Nation's response to helping working families escape poverty.
    Eight years of unprecedented economic growth, increases in the 
Earned Income Tax Credit, and welfare reform have all contributed to 
the recent decline in the poverty rate. However, we cannot let this 
improvement lead us to complacency, particularly when one out of every 
six children in the U.S. continues to grow up in poverty. Furthermore, 
we must recognize that the gains provided by a long economic expansion 
might quickly erode should the economy continue to slow down.
    Therefore, I was disappointed that President Bush's budget request 
for the Administration for Children and Families failed to keep pace 
with inflation and failed to match the President's overall spending 
update for government programs. We can and must do better.
    If President Bush is serious about helping faith-based 
organizations serve needy families, he should propose restoring the 
deep cuts in the social services block grant, which has a long history 
of collaborating with religious charities. If the President wants to 
help non-custodial fathers play a bigger role in the lives of their 
children, he should advocate sending those parents' child support 
payments to their children, rather than to the government. And if 
President Bush wants to maintain the momentum of welfare reform, he 
should recommend extending the so-called supplemental grants under the 
TANF program, without which 17 States will see a cut of up to 10 
percent in their welfare funding. Regrettably, the President's budget 
is silent on these issues, despite bipartisan support for addressing 
all of them.
    I should point out that the President's budget did include some 
welcome and very useful child welfare proposals. Most prominently, the 
Administration's budget proposed a $200 million annual increase for the 
Promoting Safe and Stable Families Program, which provides resources to 
prevent child abuse, to strengthen fragile families, and to promote 
adoption when appropriate. However, there appears to be some confusion 
as to whether the recent tax bill used up the funding set aside in the 
Budget Resolution to increase resources for this important child 
welfare program. I hope the Budget Committee can clarify this situation 
quickly so that we can move forward to address areas covered in the 
Budget Resolution, including the Safe and Stable Families program and 
the TANF supplemental grants.
    As this Committee considers future funding levels to help working 
families and to address poverty, it might be useful to survey unmet 
needs in some key areas. Because my time is short, I will focus on 
child care, child support, unemployment insurance, and the Temporary 
Assistance for Needy Families Program or TANF.
    The current funding level for the Child Care and Development Block 
Grant (CCDBG) is insufficient to provide quality day care assistance to 
the millions of families attempting to escape or stay off welfare. In 
fact, about half of the States have established thresholds for a 
family's eligibility for child care assistance at less than 60 percent 
of the State median income leaving many low-income families without 
access to child care subsidies, while still having too little income to 
benefit from the Dependent Care Tax Credit. To realize the financial 
burden on these families, you only have to remember that child care 
costs between $4,000 to $10,000 a year, roughly the same as tuition at 
a public university. To ensure that working families can find 
accessible and affordable child care, Congress should increase funding 
for the CCDBG.
    Like quality day care, consistent child support payments can help 
families move toward self-sufficiency. Unfortunately, current law 
actually penalizes States that send child support collections to 
families struggling to leave welfare, and in some cases, to families 
that have already left public assistance. For example, if a State sends 
a child support collection to family on welfare, it still owes the 
Federal Government between half and three-quarters of that same child 
support payment (based on the State's Medicaid match rate). This has 
discouraged States from passing through child support, and encouraged 
them to adopt an effective 100 percent tax rate on child support 
payments to certain families. Last year, the House overwhelmingly 
passed bipartisan legislation to end this disincentive for States to 
send child support to families, but the Senate failed to act on the 
measure. The House should again pass this legislation, particularly now 
that several compatible bills have been introduced in the Senate.
    Another hole in our Nation's safety net exists in the Unemployment 
Insurance system. In January, the Government Accounting Office reported 
that the unemployment compensation system provides ``only limited 
protection for low-wage workers.'' In fact, the GAO found that while 
low-wage workers were twice as likely to become unemployed, they were 
only half as likely to receive UI benefits compared to higher-wage 
workers (even when employed for similar periods of time). The fact is 
that UI coverage rates are not very impressive for any group: only 18 
percent of unemployed low-wage workers were receiving UI benefits 
compared to 40 percent of higher-wage workers.
    As our Nation's unemployment level continues to creep up, Congress 
should consider the non-partisan recommendations issued last fall by 
the major stakeholders in the UI system to correct some of the 
program's shortcomings. This plan suggests, among other things, 
eliminating certain barriers to UI benefits, such as precluding part-
time workers from receiving assistance unless they seek full-time work, 
and ignoring the most recent wage data when determining eligibility.
    Let me conclude with an issue Congress will consider next year, the 
reauthorization of TANF. There can be no doubt that welfare reform has 
been an important factor in helping many low-income mothers join the 
workforce and begin to replace a welfare check with a paycheck. But the 
job of welfare reform is far from done. Those left on the rolls are 
more likely to have multiple barriers to employment, such as low 
educational levels, limited work histories, substance abuse problems, 
domestic violence issues and disabilities. These problems will demand 
intensive services to allow recipients to enter employment.
    Just as importantly, many of those leaving welfare for work have 
yet to leave poverty for a better life. These individuals need help 
with both employment retention and wage progression. In addition, we 
need to do a much better job of ensuring that working welfare leavers 
receive other benefits for which they remain eligible, especially 
Medicaid and food stamps.
    Finally, I want to correct a misconception that there has been an 
enormous decline in the TANF caseload. It is accurate to say that the 
number of people receiving cash assistance from TANF has declined by 
half over the last 6 years. However, it also true that the number of 
people receiving TANF-funded work supports, such as child care and 
training, has grown substantially over the same period of time. Any 
discussion about TANF's future funding must account for this total TANF 
caseload, not just those receiving cash benefits. This comprehensive 
caseload number explains why States spent 93 percent of their annual 
Federal TANF grants last year, even as the number of cash recipients 
continued to decline. In fact, a dozen States actually spent more than 
there annual TANF allocation in 2000, meaning they dipped into funds 
reserved from past years.
    For all of these reasons, Congress should continue to fully fund 
TANF--by which I mean, the current allocation plus an adjustment for 
inflation. Such a commitment will allow States to take the second step 
in welfare reform turning initial employment gains into permanent 
poverty reductions. Thank you.

    Chairman Nussle. Now, as I said, we are honored to have 
Marian Wright Edelman from the Children's Defense Fund. We 
welcome you and are looking forward to your testimony.

               STATEMENT OF MARIAN WRIGHT EDELMAN

    Ms. Edelman. Thank you, Mr. Chairman. Thank you for holding 
this hearing. Thank you, Mrs. Clayton, for encouraging this 
hearing. I am honored to be here with Mr. Cardin and Dr. 
Haskins. We will put our written statement in the record. I 
also want to put into the record a report of the Children's 
Defense Fund on families struggling to make it in the work 
force, a post-welfare report, and a summary of what we think 
this country and this Congress must do; and that is the Act to 
Leave No Child Behind, which will end child hunger.
    Children's hunger cannot wait for another year, so I am 
glad you are thinking about moving food stamp reforms this year 
because we should have no hungry children in the richest nation 
on earth.
    This bill would grow our children's health care coverage--
which you can do this year--coverage for disabled children and 
coverage for children of legal immigrants. We have an 
opportunity to do what is right by our children and see that in 
reality no child is left behind. I am very pleased that three 
members of this committee are sponsors to the overall bill and 
27 members, including the Chairman, sponsor certain provisions 
of this bill.
    But the bottom line is it is time for our Nation to take 
care of its children, all of them. I don't know what your faith 
says, but my faith didn't say, those of us who are Christians, 
a few of the children come, or half of the children come, or 
three fourths of the children, or only able-bodied children 
come, or white male children come. It said all of the children 
come.
    This Nation now has to live up to its promise for all of 
its children. Every 4 seconds a baby in America is born into 
poverty. Every minute a child is born without health insurance. 
Every 11 minutes one of our children is neglected or abused. 
Every 2 hours and 20 minutes a child is killed by guns. Nearly 
11 million children are without health insurance; 90 percent of 
them live in working families, playing by the rules, not 
covered by their employers. We can do something about that this 
year, and I hope you will.
    Seven million school-aged children are without adult 
supervision after school and during the summer months when 
parents are working. They need to be taken care of. We can do 
something about this. We can't afford not to. Only 12 percent--
as you have heard Mr. Cardin say--of the children and parents 
eligible for child care assistance are getting that.
    We need to increase the funds for the block grant and the 
Act to Leave No Child Behind. We would make sure that every 
eligible parent get that. If people are going to stay in the 
work force, they need not worry about the quality of care. We 
know about the importance of the early years, and so I really 
hope we are going to pay attention to child care. That is one 
of the biggest reasons parents say they are not able to stay in 
the work force or go into the work force.
    Head Start serves 3 out of every 5 eligible children. We 
know it works. Every child who should get a good start for 
school should be getting Head Start, so we can do something 
about it. Most poor children, Mr. Chairman, live in working 
families; 78 percent of those children live in families where 
someone worked all or part of the time--this is up from 61 
percent in 1993.
    And, again, we must make work pay. Our community monitoring 
projects found that more than half of those who left welfare 
left for a job, but many of those lost their jobs. And child 
care, the absence of child care or stable child care, was the 
most frequent reason given for not working. Sixty percent of 
those who left welfare to work, in our community monitoring 
report, had wages below poverty. More than half suffered crises 
because of these low wages. They were unable to pay rent or buy 
food or to get medical care, and had their utilities cut off. 
Many States are not telling working families that they are 
still eligible for food stamps or for housing assistance or 
child care assistance.
    Again, we can simplify and streamline these procedures. 
But, again, if you are working and if our goal is self-
sufficiency, you can make a difference on that this year.
    Education is a key factor. Our report found that those with 
a high school education were more likely to be employed and to 
have higher wages; and education and training for parents is a 
very important tool.
    Finally, families who worked and received health coverage, 
child care, and food stamps were more likely to have stable 
employment and less likely to lose a job. So I hope that you 
will take steps now to see that these supports for working 
families are available.
    I want to emphasize the three or four things I hope you 
will do and take action on this year. The first is health 
coverage for all uninsured parents and children, and other 
pending measures to simplify procedures so that parents can get 
the health care they need. Coverage of legal immigrant 
children, allowing parents of children who are disabled to buy 
into Medicaid is something we can do. There should not be 
children without health coverage in this country and there 
should not be children of working families without health care 
coverage. So I hope you will make it easier by simplifying 
Medicaid and CHIP, and provide that coverage this year. Sick 
children cannot wait. I don't want any one of us with a sick 
child not to be able to get health coverage.
    The second is, I hope you will take immediate action on 
food stamp provisions in the farm bill reauthorization. You 
should not ask hungry children to wait another year in order to 
get adequate food when you have the means and the power to do 
something about it. Our report, again, will outline how working 
parents are not able to get enough food to make sure that their 
children don't go hungry. I hope you will take steps in the 
farm bill to make it easier for low-income families to continue 
to receive food stamps when they leave welfare for work by 
allowing States to provide 6 months of transitional food stamp 
benefits, making the benefits responsive, to larger families 
and to inflation by changing the standard deduction, decreasing 
bureaucratic barriers.
    We lay these out in the written testimony, but the bottom 
line is hungry children should not have to wait another day or 
a month or a year in order to be fed.
    And, last, I do hope that your fiscal 2000 Labor HHS 
appropriations bill and other funding issues will put some meat 
and money and investment behind our wonderful words, ``leave no 
child behind,'' and that we provide adequate child care and 
invest in Head Start and end the housing needs. And that is 
all, again, laid out in the written testimony, but it is 
shameful that in the most powerful richest nation on earth that 
we have children living in poverty, that we have hungry 
children, that we have children living in shelters, and many of 
them are in working families. These are not acts of God. These 
are our moral and political and economic choices as a Nation, 
and I hope we will change them.
    Chairman Nussle. Thank you so much for your testimony.
    [The prepared statement of Marian Wright Edelman follows:]

  Prepared Statement of Marian Wright Edelman, President and Founder, 
                        Children's Defense Fund

    Chairman Nussle and Members of the Committee, thank you for the 
opportunity to present testimony on the challenges facing working 
families, struggling to make ends meet.
    The Children's Defense Fund's (CDF) mission is to ``Leave No Child 
Behind'' and to ensure every child a Healthy Start, a Head Start, a 
Fair Start, a Safe Start, and a Moral Start in life and successful 
passage to adulthood with the help of caring families and communities. 
CDF provides a strong, effective voice for all the children of America 
who cannot vote, lobby, or speak for themselves. We pay particular 
attention to the needs of poor and minority children and those with 
disabilities. CDF educates the nation about the needs of children and 
encourages preventive investment before they get sick, into trouble, 
drop out of school, or suffer family breakdown. CDF began in 1973 and 
is a private, nonprofit organization supported by foundation and 
corporate grants and individual donations. We have never taken 
government funds.
    In less than the time it takes to read my testimony; another 14 
infants will be born into poverty in America; another 10 without health 
insurance; and one more child will be neglected or abused. Every 44 
seconds, a baby is born into poverty; every minute a baby is born 
without health insurance; every 11 minutes, a child is neglected or 
abused; and every 2 hours, 20 minutes, a child or youth is killed by 
guns in America.
    These facts are not acts of God. They are our moral and political 
choices as men and women, as citizens and leaders. We can and must 
change them.
    We are blessed to be living in a time of incredible opportunity and 
unprecedented prosperity. Yet despite living in the world's wealthiest, 
most powerful nation, millions of our children are still being left 
behind.
    Every day, too many of our children have too little to eat and no 
place to sleep. According to the U.S. Department of Agriculture, 12 
million children live in ``food insecure'' households, unable to afford 
adequate and nutritious food. About 3.6 million children live in 
households with ``worst case'' housing needs as defined by the U.S. 
Department of Housing and Urban Development. These are households where 
more than half their income is spent on rent or they live in severely 
substandard housing. Many are working families who are simply unable to 
make ends meet.
    Every day, parents of the nearly 11 million children without health 
insurance worry about what to do when their child becomes sick. Ninety 
percent of these uninsured children have working parents. Uninsured 
children are far less likely to receive medical or dental care when 
they need it. They are far more likely to use hospital emergency rooms 
as a primary source of health care and too often fail to get adequate 
follow-up care or information on preventive measures or ways to manage 
chronic illnesses like asthma or diabetes.
    Every week, nearly 7 million school-aged children are left alone 
without adult supervision or structured activities in the hours after 
their school day ends. While struggling to make it in the workforce, 
parents constantly worry about what is happening in those hours between 
3 p.m. and 7 p.m. when violent juvenile crime rates peak and 
unsupervised children are more likely to be at risk of dangerous 
behaviors such as smoking, drinking, sex, or crime. Millions are also 
left without adult supervision during the summer months.
    Safe, reliable child care enables parents to work and to become 
self-sufficient, but too few families have access to quality care or 
can afford its costs without assistance. Public funding for child care 
is so limited that only 12 percent of the families eligible for Federal 
child care assistance receive help. Full day child care easily costs 
$4,000 to $10,000 a year, and the average annual cost of child care for 
a 4-year-old in an urban child care center is more than the average 
cost of public college tuition in all but one state. Working families 
pay 60 percent of the costs of child care. In contrast, for college, 
families on average only pay 35 percent of costs with the government or 
private sector picking up 65 percent of the cost. Head Start, one of 
the most successful early childhood programs, serves only three out of 
five eligible preschoolers.
    Our nation is at a pivotal moral and economic point as we debate 
what kind of choices we will make to build a more just and 
compassionate society--one where no child is left behind. We have the 
know-how, the experience, tools, and resources to end child poverty and 
child suffering. And we have the responsibility as mothers, fathers, 
grandparents, and concerned and sensible citizens to act now.
    We can build a nation where families have the support they need to 
make it at work and at home; where every child enters school ready to 
learn and leaves on the path to a productive future; where babies are 
likely to be born healthy and sick children have the health care they 
need; where no child has to grow up in poverty; where all children are 
safe in their community; and every child has a place to call home--and 
all Americans can proudly say ``We Leave No Child Behind.''

              MORE POOR CHILDREN LIVE IN WORKING FAMILIES

    One in six children--12.1 million--live in poverty. Despite the 
recent (and welcome) drop in child poverty rates, children are more 
likely to be poor today in a time of unprecedented wealth than they 
were 20 or 30 years ago. In 1999, the overall child poverty rate was 
16.9 percent; in 1979, 16.4 percent; and in 1969, 14 percent.
    Seventy-eight percent of these poor children live in families where 
somebody worked all or part of the time--up from 61 percent in 1993. 
The 1996 welfare legislation resulted in millions of families leaving 
welfare for work, but the supports for these struggling families have 
not been adequate to ensure their fragile hold in the workforce. Some 
families are better off today, but millions are not thriving and are 
struggling simply to survive. What will happen to these families as the 
economy cools down? What safety net will catch their children when 
welfare time limits are reached, businesses downsize, and layoffs hit 
the most vulnerable workers?
    CDF has, for the past 4 years, conducted a community monitoring 
project to learn more about what was happening to families leaving 
welfare. We sought the help of more than 180 community agencies in 16 
states, who by the end of 1999 had conducted interviews with more than 
5,200 individuals. A CDF report issued in December 2000, Families 
Struggling to Make it in the Workforce: A Post Welfare Report, analyzed 
the responses of more than 2,000 parents seeking services at emergency 
shelters, food pantries, and other agencies. A copy of this report is 
submitted for the record. These families were among the poorest of the 
poor, often working but finding that low-wage work alone is not enough 
to fend off hardships. Specifically, we found that:
     More than half of those who left welfare since 1996 had 
left for a job, but a third no longer had a job;
     Lack of child care was the reason most often reported for 
not working;
     Nearly 60 percent of those who were working had family 
weekly wages below the poverty line; and
     More than half the employed parents had been unable to pay 
the rent, buy food, afford medical care, or had their telephone or 
electric service cut off.
    We also found that education was a key factor in determining how 
families fare after welfare. Parents with at least a high school 
education were far more likely to be employed as those without at least 
this basic level of education. Those without a high school education 
also earned substantially less.
    CDF's findings about hardships for low-income working families have 
been replicated in many other studies and reports in the last several 
years. Many of these studies were cited in the HHS Third Annual Report 
to Congress on TANF (August 2000). Most studies found that at least 
two-thirds of parents who left welfare worked at some point in the year 
before they were surveyed, but far fewer (between 35 and 40 percent) 
worked all four quarters. Last week, the Economic Policy Institute 
released a report that found families need an income of at least twice 
the Federal poverty line in order to make ends meet. They found that 
nearly 30 percent of the families earning less than this level 
experienced at least one critical hardship such as being evicted, 
having utilities shut off, or not have access to medical care. Here are 
some examples of families struggling to make it:
     A North Carolina mother with an 11-year old daughter left 
welfare for a job. She worked 38 hours a week at $6 an hour and was 
proud to have been named employee of the month. But then she lost her 
housing and was living in a transitional homeless shelter with her 
daughter. She had no health insurance. She earned a few dollars more 
than the official poverty line but not enough to meet basic needs. 
Should a parent working hard every day be unable to find a decent, 
stable place to live with her child?
     Many of us read with dismay a New York Times story of a 55 
year old grandmother trying to care for her four grandchildren. She 
struggled to deliver them clean, fed, and in uniforms to their 
Manhattan public school, starting each day from a different homeless 
shelter. The grandmother, who had worked at a low-wage supermarket job, 
had been unable to get a voucher for child care because she was not on 
welfare. She tried to make ends meet by adding a shift as a hospital 
aide, but when her health failed, the family began to fall further and 
further into a bottomless pit without a home. Should a grandparent, 
struggling to keep her grandchildren together, not have the support she 
needs?
     I heard in Texas a mother earning $8 an hour with no 
health insurance describe her stressful dilemma when her daughter woke 
her up in the middle of the night gasping for breath saying her inhaler 
was broken. The mother had to debate whether to rush her child to the 
emergency room or to an all-night drugstore for an over-the-counter 
remedy she prayed would work. She realized later that for $88--the 
estimated cost of an emergency room visit--she was gambling with her 
child's life. Should any parent or child face this draconian choice in 
a rich America?
     A Colorado newspaper story profiled a young mother who 
lost Medicaid because she bought a car to transport her 6-year old 
asthmatic daughter during the cold winter months. Before she purchased 
the car, she and her daughter had to leave home at 6:30 a.m., take 
light rail and then a bus to get to day care and work. In winter, she 
saw her daughter getting sicker, with hospital visits every other 
month. Concerned that exposing her child to the cold during their daily 
journey was increasing her health problems, she bought the car, not 
knowing that in her state acquiring an asset worth more than $1500 
would mean she would lose her child's health insurance. Should a mother 
have to make this kind of choice?
    Despite their best efforts, the paychecks of these families do not 
stretch far enough to feed, clothe, and shelter their children. Working 
in low-wage jobs, these parents cannot afford child care or health 
coverage, benefits that rarely come with their employment. Without 
stable child care or transportation to get to their jobs, they risk 
unemployment and further hardships for their children and families.
    If low-income families leaving welfare or trying to stay off of 
welfare are going to make it in the workforce, they need help. Working 
parents need child care, health care, transportation, housing, and 
other supports to meet the basic needs of their families. Our community 
monitoring report found that those families who worked and received 
health coverage, child care assistance, and food stamps were more 
likely to maintain consistent and stable employment and were less 
likely to lose a job. They were also less likely to suffer hardships 
like the inability to pay for food, rent, or utilities and were much 
more likely to report ongoing improvements in family well-being.
    What we need to do is make the smart investments in supports for 
low-income working families to enable them to lift their children out 
of poverty and make it in the workforce. But we can't do it piecemeal. 
Children don't come in pieces and the solutions to the problems low-
income working families face must be addressed comprehensively. We need 
to renovate the whole national house for our children--not just the 
individual rooms that are in serious disrepair.

                    THE ACT TO LEAVE NO CHILD BEHIND

    CDF has worked closely with Members of Congress and a wide range of 
children's advocates to craft legislation that combines the best ideas, 
policies, practices, and approaches into one comprehensive measure, the 
Act to Leave No Child Behind (H.R. 1990/S. 940). It was introduced in 
May by Representative George Miller (D-CA) and Senator Chris Dodd (D-
CT). There are currently 67 cosponsors in the House and 7 in the 
Senate. The Act has already been endorsed by nearly 200 organizations. 
The Act would:
     Ensure health coverage for all of the 10.8 million 
uninsured children and for uninsured parents
     Lift every child from poverty in the next 10 years
     End child hunger through the expansion of food programs
     Get every child ready for school through full funding of 
quality Head Start and child care and funds for preschool programs
     Make sure every child can read by the fourth grade and can 
graduate from school able to succeed at work and in life
     Provide every child safe, quality after-school and summer 
programs so that children can learn, serve, work, and stay out of 
trouble
     Ensure every child a place called home and decent 
affordable housing
     Protect all children from neglect, abuse, and violence and 
ensure them the treatment they need
     Ensure families leaving welfare the supports needed to be 
successful in the workplace, including health care, child care, and 
transportation
    We could fund the entire Act to Leave No Child Behind for far less 
than the $1.3 trillion spent on the recently enacted tax bill. As 
Congress continues to debate and revise its budget decisions, it must 
focus on where our national priorities lie. With the investments needed 
to help hard-working families and their children or in tax breaks for 
those in the highest income levels, who have benefited enormously 
during the economic growth of the 1990's; while families in lower 
brackets have either seen their incomes stagnate or decline in real 
dollars.

 OPPORTUNITIES TO INVEST IN WORKING FAMILIES AND THEIR CHILDREN RIGHT 
                                  NOW

    In the coming months, Congress will have the opportunity to act on 
a number of key initiatives included in the Act to Leave No Child 
Behind that address many of the needs of working families. CDF urges 
you to seize this opportunity to move forward quickly on a positive 
agenda to meet the urgent needs of America's children and families. 
Specific areas for immediate action include:
     Health Coverage for Uninsured Children and Their Parents 
and Other Pending Health Measures. Congress included funds in the FY 
2002 Budget Resolution that would allow enactment of several important 
pending measures to extend health care to uninsured children in low-
income families and to many of their parents. Congress should quickly 
enact the Family Care Act (H.R. 2630) and provide health coverage for 
parents of children already enrolled in Medicaid and Children's Health 
Insurance Program (CHIP), simplify outreach and enrollment for the CHIP 
and Medicaid programs, and remove barriers such as asset tests for 
Medicaid coverage. Congress should also lift the ban on covering legal 
immigrant children and pregnant women under CHIP and Medicaid by 
passing the Legal Immigrant Children's Health Improvement Act (H.R. 
1143). In addition, Congress should enact the Family Opportunity Act 
(H.R. 600), a bill with broad bipartisan support in this committee, 
that will give states the option of allowing families to purchase 
Medicaid's comprehensive coverage for children with disabilities. These 
are important first steps toward ensuring health coverage for all of 
America's nearly 11 million uninsured children.
    There also are important provisions in pending patients' bill of 
rights legislation that affect health coverage for children. As the 
House considers this legislation, it is essential that it contain 
strong enforcement provisions and pediatric protections for children 
enrolled in managed care programs, like those included in the 
Bipartisan Patient Protection Act, H.R. 2563, and S. 1052 passed by the 
Senate, which include ensuring families the right to designate 
pediatricians as their children's primary care providers, guaranteed 
access to pediatric specialists, and the use of pediatric-specific 
criteria in evaluating needed or appropriate care. Working families 
need to know that when they have health coverage for their children, 
they will be able to access needed care. Congress should guarantee 
these protections.
     Food Stamp Provisions in the Farm Bill Reauthorization. 
CDF's community monitoring report, like other recent studies, found 
that many low-income working families lose food stamp benefits as they 
leave welfare, although they remain eligible because of their low-level 
of earnings. As the House and Senate Agriculture Committees begin 
developing a new farm bill, we believe it is important to include food 
stamp program changes to ensure low-income families the help needed to 
provide adequate nutrition for their children. CDF's community 
monitoring report found that families receiving food stamps were much 
less likely to encounter difficulties buying food for their families.
    We urge Congress to act favorably on the measures proposed in title 
VI of the Act to Leave No Child Behind. These reforms include:
     making it easier for low income families to continue to 
receive food stamps when they leave welfare for work by allowing states 
to provide 6 months of transitional food stamps benefits;
     making the food stamp benefit more responsive to larger 
families and to inflation by changing the standard deduction;
     restoring food stamp eligibility for legal immigrant 
families including children who arrived in the U.S. after enactment of 
the 1996 welfare legislation;
     removing the current cap on excess shelter costs for non-
elderly households;
     including child support payments as part of the earned 
income deduction for food stamp benefit levels; and
     decreasing bureaucratic barriers to enable working 
families to receive food stamp benefits. These include reducing the 
number of office visits, encouraging phone, mail, or on-line 
verification procedures, and the use of redetermination rather than 
recertification requirements consistent with the approach now used for 
the Medicaid, CHIP, SSI, and other means-tested programs.
    The proposed changes also would revise the current quality control 
penalty structure to encourage states to serve all eligible families 
and provide incentives for states that improve their services for 
working families.
     FY2002 Labor-HHS Appropriations Bill and Other Funding 
Issues. During its consideration of the FY2002 Labor-HHS Appropriations 
Bill, Congress will be able to make urgently needed investments in 
vastly underfunded children's programs. We urge Congress to increase 
funding for the Child Care and Development Block Grant program by $1 
billion in FY 2002 to provide vitally needed child care services to 
246,000 more children and provide a $1 billion increase for Head Start 
to move us closer to our goal of serving all eligible children. We also 
urge you to increase investments in immunizations and child protection. 
Child welfare programs are funded far below the levels needed to meet 
the needs of troubled families and children. The President's request 
for increased funding for the Promoting Safe and Stable Families 
Program and support for young people leaving foster care who are 
pursuing college or vocational training (also included in the Act to 
Leave No Child Behind), should be acted on promptly. Funding for the 
social services block grant must also be restored.
    There are many other urgent child investment issues addressed in 
the Act to Leave No Child Behind that will help working families 
survive and thrive. Other provisions would strengthen supports for 
these families through approaches such as child support enforcement, 
minimum wage increases, living wage initiatives, unemployment insurance 
coverage reforms, and a significant number of changes to the Temporary 
Assistance for Needy Families (TANF) program to help parents both move 
off welfare into the workforce and lift their children out of poverty. 
I urge the Committee to look closely at each title of the Act as you 
focus on how we address the challenges facing working families.
    Never has there been a better time to seize the mantle of 
leadership and build a nation worthy of its promise for all of our 
children. There is no excuse. We can not let the words ``leave no child 
behind'' become a fig leaf for unjust political and policy choices. 
Children cannot eat words and phrases. They need concrete action. It is 
in our hands to make sure that as America moves forward, we leave no 
child behind.

    Chairman Nussle. Dr. Haskins, welcome to the Budget 
Committee. We appreciate your work in the past on budget and 
welfare reform and we look forward to your testimony.

                STATEMENT OF RON HASKINS, PH.D.

    Mr. Haskins. Thank you, Mr. Chairman. It is a great 
privilege to be here today before this August committee. I 
recall fondly all the years of cooperation between the Ways and 
Means Committee and the Budget Committee, and I had the 
opportunity to work with many of the Members sitting here 
today, and I greatly enjoyed that. I consider it a privilege to 
be here and also a privilege to be here with Mr. Cardin, a 
tremendous member of the Ways and Means Committee who helped us 
produce lots of bipartisan legislation during the years that I 
was with the committee when the Republicans were in the 
Majority. And it is a special privilege to be here with Marian 
Wright Edelman, who, as you say, is one of the leaders in the 
children's cause.
    What I would like to do is to talk about a special group of 
families, namely female-headed families, most of whom have left 
welfare or would be eligible for welfare or in fact are 
eligible for welfare. This is a group of families that have 
experienced tremendous changes in recent years, and I want to 
talk about two strands of public policy.
    I agree with Mrs. Edelman that it is possible for policy 
makers to have major impacts here through two strands of public 
policy. One strand is welfare and welfare reform. The 1996 
welfare reforms dramatically changed our welfare system, and 
they made it more demanding. There are parts of the reforms 
that were extremely controversial in 1996: the 5-year time 
limit; the strong work requirements; the sanctions that are now 
in place--all of which are now being used with great regularity 
by the States. They are making some families worse off, but the 
major result has been that there has been a tremendous increase 
in the number of people who have left welfare. In fact, the 
rolls have declined by about 60 percent since 1994 ,and by 
about 50 percent since we passed legislation in 1996 and this 
is completely unprecedented.
    These things you read in the news paper about hot economies 
that produced reductions in the welfare caseload--if you look 
back at the history of the welfare caseload--that simply is not 
true. The welfare caseload has virtually never declined, and it 
has never declined even 3 years in a row. But we are now in the 
sixth year of decline. So the authoritarian use of government 
power to enforce work standards and to require a welfare system 
that demands something of participants is one crucial strand.
    The second, by contrast, is what I would call the work 
support system, and this is outlined in some detail in my 
testimony. It consists of child care, Medicaid, the new State 
Child Health Insurance program, food stamps, earned income tax 
credit, and the child tax credit, especially now that it is 
partly refundable due to recent action by the Congress. Those 
programs are in place to help working families avoid poverty.
    I want the members to keep those two strands of policy in 
mind. Now I want to talk about developments in the economy and 
among American families since 1994. Usually the date that I am 
going to talk about here in summarizing my testimony is through 
1999, but sometimes through 2000, depending on what year is 
available.
    First, the welfare rolls are way down, as I already 
mentioned. Second, employment has skyrocketed among female-
headed families, particularly unmarried female-headed families; 
and these are precisely the families that are most likely to go 
on welfare, to stay on welfare, and to have very long spells, 
often exceeding 10 years. So employment is way up.
    Third, earnings are also way up, and this is extremely 
clear in Census Bureau data, especially in the bottom 20 
percent of female-headed families with children. And their 
earnings in some cases have doubled over this period. So 
earnings are way up.
    Fourth, poverty has declined dramatically, especially among 
blacks. In 1997 and 1999 we had the biggest single-year 
declines in black child poverty in history; and at the end of 
1999, black child poverty was the lowest ever. Furthermore, if 
you look at a broader Census Bureau measure of poverty that 
includes the earned income tax credit and other benefits from 
the work support system, poverty declined more than twice as 
much in the 1990's than it did during the 1980's, and that is 
probably because so many more mothers were working. So it is 
probably the combination of the work and the work support 
system that produces this big decline in poverty.
    And fifth, changes in family composition at last are 
beginning to occur. I want to be cautious here. I don't want to 
say this is caused by welfare reform, but we now have in at 
least three national data sets since 1994 or 1995, and in the 
case of teen births since 1991, there were very substantial 
declines in teen births, as well as in nonmarital births; and 
now in recent years, an actual increase in the percentage of 
American children in two-parent families.
    So we have these two strands of policies and these very 
favorable developments. I would say that there is almost a 
universal agreement that the favorable developments are caused 
by three factors: One are the changes in welfare reform that I 
just mentioned; two are the expansions in the work support 
system that both of the previous witnesses have mentioned; and 
three is the American economy, which is dramatic and wonderful. 
Even wages at the bottom--among the bottom 25 percent of 
female-headed families--are now increasing.
    So it is those three factors, and we could argue about the 
proportion attributable to each, but here is the major point 
that I would make to this committee. This committee and other 
committees in Congress should make sure that those two strands 
of public policy continue to function. While I feel we have 
less control over the economy, welfare reform and the work 
support system were created by policymakers, and it is those 
two strands that are helping produce this remarkable progress.
    There are issues, to be sure. The most important is, I 
think, to maintain TANF funding. There will be great temptation 
in Congress next year, and there might be a member or two of 
this committee who will try to cut the TANF block grant because 
the rolls are down. I feel that would be a serious mistake. The 
States have a lot more to do, as Mr. Cardin pointed out.
    Second, there are families that are actually worse off. 
They are floundering because they have not been able to meet 
welfare requirements. We should find out ways to help those 
families. As Marian Wright Edelman said, the food stamp and 
Medicaid programs are not working as they should. It might not 
cost more money, but we definitely need to look into why those 
programs are not functioning as they should.
    And finally, I think the States have not been as aggressive 
as they could be in family formation issues, particularly 
trying to reduce nonmarital births and to promote marriage. So 
this is an agenda worthy of every committee in Congress.
    The conclusion that we should draw is we are on the right 
track. We should keep going in the direction we are going, with 
modest additional investments.
    Thank you, Mr. Chairman.
    [The prepared statement of Ron Haskins follows:]

Prepared Statement of Ron Haskins, Senior Fellow, Brookings Institution

    Chairman Nussle, Ranking Member Spratt, and Members of the 
Committee on the Budget, my name is Ron Haskins. I am a Senior Fellow 
at the Brookings Institution in Washington, DC and a Senior Consultant 
at the Annie E. Casey Foundation in Baltimore. Until January of this 
year, I was a staffer with the Committee on Ways and Means where I had 
the great privilege of working on the seminal welfare reform law of 
1996. Thus, it is a great privilege to appear before you today to 
discuss the effects of this mighty piece of legislation on working 
families.
    Figure 1 provides extensive information about the effects of the 
1996 reforms. The graphs in Figure 1 show, respectively, that the rolls 
of the Temporary Assistance for Needy Families (TANF) block grant and 
its predecessor program (Aid to Families with Dependent Children; AFDC) 
have declined by nearly 60 percent and that there has been a huge 
increase in the number of single mothers who work. The increase in 
working mothers has been especially impressive among never-married 
mothers; these mothers exhibited a 40 percent jump in employment in 
just the 3 years leading up to 1999. This spectacular rise in 
employment is especially important because in the past never-married 
mothers were the least likely to complete high school or to have job 
experience and the most likely both to go on welfare and to stay on 
welfare for long spells. The figure also shows that child poverty has 
declined greatly both as measured by the official Census Bureau measure 
of poverty and by a broader poverty measure that takes into account 
more public benefits including the Earned Income Tax Credit and food 
stamps. Finally, the figure shows that by 1999 poverty among all 
female-headed families and among black female-headed families was the 
lowest it has ever been.

    Figure 2 provides additional information on poverty. The first 
panel shows that as the welfare rolls declined so dramatically every 
year between 1995 and 1999, both overall child poverty and poverty 
among black children also declined every year. In fact, the declines in 
black child poverty in both 1997 and 1999 are the biggest single year 
declines in history and by the end of 1999 black child poverty was the 
lowest ever. It is useful to reflect on the patterns depicted in this 
panel. At the same time that the nation is experiencing the greatest 
declines in the welfare rolls in history, child poverty is also 
declining more than at any time since the 1960's. In fact, as the 
second panel in Figure 2 shows, under a broad Census Bureau measure, 
child poverty declined more than twice as much during the economic 
expansion of the 1990's than it declined during the expansion of the 
1980's. Both the 1980's and the 1990's expansions generated a net 
increase of about 19 million jobs, but the expansion of the 1990's was 
accompanied by a much greater decline in child poverty. The reason is 
simple. In the 1980's, single mothers stayed on welfare and did not 
take advantage of the growing economy. In fact, during the expansion of 
the 1980's the welfare rolls actually grew by over 10 percent. By 
contrast, as we have seen, in the 1990's about two million mothers left 
welfare or avoided welfare altogether and most of them found jobs. 
Obviously, only when mothers join the economy can they take advantage 
of economic opportunity. The third panel in Figure 2 shows that even 
deep poverty (poverty at half the official poverty level or about 
$7,300 for a family of three in 2001) has fallen dramatically.

    Changes in welfare receipt, work, income, and poverty are not the 
only possible effects of the 1996 reforms. Unlike previous welfare 
reform legislation, the 1996 reforms aimed specifically at decreasing 
the number of children born outside marriage and increasing the 
formation of two-parent families. In creating the TANF block grant, 
Congress formulated four goals that states should use the block grant 
funds to achieve. One of these, of course, was to provide cash 
assistance to destitute families. But an explicit goal of the 
legislation was to reduce welfare dependency both by increasing work 
and by increasing marriage. In fact, three of the four TANF goals 
addressed issues of family formation.
    The data shown in Figure 3 provide some evidence that an 
exceptionally important shift in nonmarital births and family living 
arrangements is now beginning to occur. The top panel shows that after 
more than a half century of increases, the number of births outside 
marriage, the nonmarital birth rate per 1,000 unmarried women, and the 
percentage of all children born outside marriage leveled off in about 
1995. Part of the explanation for this felicitous result is found in 
the second panel of Figure 3. Due in part to widespread recognition 
that teen pregnancy is harmful to both the adolescent mother and her 
child, as well as to federal, state, and local policies aimed at 
reversing the tide of teen births, the nation is now in the midst of a 
decade of progress in reducing teen births. Equally impressive, the 
third panel of Figure 3 shows the most recent and perhaps the most 
hopeful of the increasingly positive trends in nonmarital births and 
family formation. This trend, based on national data from the Census 
Bureau, shows that the percentage of children under age 6 living with 
their married mother halted its 30-year decline in 1995 and has 
increased every year but one since then (Bavier, 2001). Similar results 
have been reported recently from another national survey being 
conducted by the Urban Institute in Washington, DC (Acs & Nelson, 
2001).
    It is necessary to avoid overclaiming for the effect of the 1996 
reforms on these very positive developments in family formation. 
However, there are several reasons to believe that welfare reform may 
be playing at least some role in these historic shifts. First, even 
though many of these developments in family formation began before the 
Federal reforms were enacted in 1996, by that time a welfare reform 
movement in the states was well underway. By 1994, half the states had 
mounted welfare reform demonstration programs under waivers from 
Federal law, an approach to reform that was initiated by the Reagan 
Administration and had been picking up speed during the Bush and 
Clinton Administrations. Many of the state demonstration programs 
involved mandatory work reforms that were similar to those later 
required by the 1996 Federal reforms.
    The mandatory work requirements of state and Federal legislation 
are designed in part to discourage nonmarital births and to encourage 
marriage. By requiring most mothers to work shortly after joining 
welfare, and by limiting cash benefits for most recipients to 5 years, 
mothers are forced to realize that they cannot depend on permanent 
welfare benefits like they could under the old AFDC program when 
millions of mothers stayed on welfare for more than a decade. Once 
mothers understand that they cannot permanently depend on welfare, they 
begin to realize that they must have other sources of income. The major 
means of achieving income for most of these mothers is work. However, 
marriage can also increase the mother's income if she marries a man who 
is employed. The data in the last panel of Figure 3 suggest that a 
growing number of poor and low-income mothers are taking the course of 
marriage.

    Again, these trends must be watched closely and Congress would be 
well advised to carefully review these and other data on family 
composition as part of the welfare reform reauthorization debate that 
will take place next year. Given the encouraging data on family 
formation, it seems wise for Congress to consider additional actions 
that might be taken to provide even more movement away from births 
outside marriage and toward marriage and parenting by both biological 
mothers and fathers.
    Regardless of the interpretation one gives to the data on 
nonmarital births and family formation, virtually no one doubts that 
welfare reform is playing a major role in the substantial increases in 
employment and declines in child poverty shown in Figures 1 and 2. Why 
have the welfare rolls and poverty declined while work increased so 
much in recent years? Nearly every analyst agrees that the answer 
involves three factors that have combined to produce these 
exceptionally favorable changes. The three factors are the welfare 
reform movement that swept the states and the Federal Government in the 
early- and mid-1990's, the growth of a Federal system of benefits for 
working families, and a strong economy. Scholars do not agree about the 
relative importance of these factors, nor will they ever (Blank and 
Schmidt, 2001). But no one disputes the claim that two of the factors 
were produced by deliberate decisions of policymakers at the Federal 
and state level. I hardly need to tell members of this Committee about 
the historic Federal welfare reform legislation of 1996. After a 
partisan and even somewhat rancorous debate, Congress approved the 1996 
welfare reform legislation with a bigger bipartisan majority than the 
bipartisan majority that enacted Medicaid in 1965. Let's be clear, the 
1996 reforms were highly bipartisan and were signed by a Democratic 
President who had campaigned on the promise to ``end welfare as we know 
it.''
    But less well known than the famous 1996 reform legislation is the 
work support system that Congress has created with dozens of 
legislative initiatives spanning more than a quarter century. The work 
support system consists of a variety of programs that provide benefits 
to poor and low-income working families. By definition, any program 
that provides benefits to working families is part of the work support 
system, but I would emphasize seven programs (see Figure 4) that now 
provide extensive help to working families. These include child care, 
Medicaid and the relatively new State Child Health Insurance Program 
(SCHIP), food stamps and child nutrition, the earned income tax credit 
(EITC), the child tax credit, and housing programs. As a recent study 
from the Congressional Budget Office (CBO, 1998) shows, owing mainly to 
legislative expansions of these programs since roughly the mid-1980's 
Federal spending on working poor and low-income families has increased 
greatly in recent years. The CBO analysis reveals that if Congress had 
not made statutory changes to expand the work support programs since 
1985, in 1999 the Federal Government would have spent a mere $6 billion 
to support poor and low-income working families. However, taking into 
account all the expansions (plus the child tax credit and the SCHIP 
program which are new), CBO estimated that the Federal Government would 
spend nearly $52 billion on working families in 1999. This projection 
of $52 billion was almost surely an underestimate of the amount 
actually spent to help working families in 1999 because so many more 
mothers left welfare than was predicted, thereby greatly increasing 
EITC spending. In addition, the CBO study examined only entitlement 
spending which does not include some child care programs, housing, and 
several other benefits.

    To gain a more complete understanding of the work support system 
and how it has grown, consider child care, Medicaid, and the EITC, 
three of its major components. In 1993, across all child care programs 
including Head Start, the Federal Government spent about $9.5 billion. 
By 2000, the total Federal dollars available for child care had 
exploded to around $18 billion, nearly twice as much as just 7 years 
earlier. The two major reasons for this increase were that in the 1996 
welfare reform law, Congress included an additional $4.5 billion over 6 
years in money for the child care block grant. Further, Congress 
allowed states to spend TANF dollars on child care either directly out 
of the TANF block grant or by transferring up to 30 percent of their 
TANF funds into the child care block grant. Thus, Congress gave states 
both increased funding of programs designed specifically for child care 
as well as the flexibility to use TANF funds for child care. As a 
result, there is general agreement that states have been able to meet 
all the demand for child care of families still on TANF as well as 
provide TANF-supported child care for a period of time, usually at 
least 1 year, after families leave TANF (Besharov & Samari, 2001).
    Changes in Medicaid are equally impressive. It might be argued that 
one of the original sins of American health care policy for the poor 
was that the only way to gain entrance to Medicaid was through either 
the AFDC or the Supplemental Security Income (SSI) programs. In other 
words, to obtain Federal support for health care, a family had to go on 
welfare. This approach to rationing Federal support for health care was 
never a good idea. But as Congress and the American people became more 
and more concerned about welfare dependency, maintaining a Medicaid 
system that literally required a family to go on welfare before its 
members could receive help became unsustainable. Beginning in the mid-
1980's, Congress enacted a series of reforms, designed primarily by 
Henry Waxman, that expanded eligibility for Medicaid to people, 
especially children, outside the AFDC and SSI programs. These coverages 
were gradually expanded until the 1996 welfare reform law completely 
separated eligibility for the TANF program from Medicaid eligibility. 
Now nearly all children who live in families with incomes under the 
Federal poverty level ($14,630 for a family of three in 2001), and many 
children who live in families with much greater income, are eligible 
for Medicaid health insurance. Moreover, in 1997 Congress and President 
Clinton created the SCHIP program that offers coverage to children 
above the Medicaid eligibility level. In fact, because of the SCHIP 
rules for handling work disregards, some states are providing coverage 
to children in families with incomes in excess of $35,000.
    The EITC shows the same pattern as child care and Medicaid; namely, 
large increases in both total spending and in the number of families 
receiving benefits. In 1984, about 7 million families received an 
average credit of about $260; total Federal spending was $1.6 billion. 
By 1999, after Congress expanded the credit in 1986, 1990, and 1993, 
usually on a bipartisan basis, about 18 million families received an 
average credit of $1,700 at a total Federal cost of $31 billion.
    It would be difficult to exaggerate the importance of the combined 
effect of the 1996 welfare reform legislation and the expansion of the 
work support system by Congress and several presidents. Through 
repeated legislative action involving a broad array of programs and 
though its approval of substantial increases in spending, Congress has 
shown a deep commitment to changing the rules of the game for low-
income families. In the old days, welfare often provided a better deal 
than low-wage work. Now Congress has substantially restricted welfare 
use and greatly increased the returns to low-wage work. As a recent 
study by the Urban Institute in Washington, DC shows, in most states 
mothers who take a minimum-wage job and work half-time are better off 
financially than they would be on welfare (Coe and others, 2001).
    This system of limited welfare and expansive public support for 
low-wage work is the best approach the Federal Government has yet found 
for both reducing welfare dependency and fighting poverty. Taken 
together, these two sets of changes constitute a revolution in Federal 
policy toward poor and low-income families.
    There is, of course, no public policy that works flawlessly. Thus, 
it is not surprising that this new approach to fighting dependency and 
poverty has been shown to have some problems (Haskins and Blank, 2001). 
Four of the problems are especially notable and should be a major focus 
of discussion during the welfare reform reauthorization debate in 
Congress next year. All four could raise issues for the Budget 
Committee and for next year's budget resolution.
    The first problem is one that seems solvable. Because Congress has 
so carefully constructed the work support system described above, it is 
disappointing to find that two vital parts of the system are not 
working well. Families leaving welfare or low-income families that 
avoid welfare are not receiving the Medicaid and food stamp benefits 
for which they qualify. After several years of increases, 
administrative data for both programs show declines in enrollment of 
either families with children or without children. In Medicaid, for 
example, national data show that the number of children enrolled 
declined between 1995 and 1998 (Herz & Baumrucker, 2001). A recent 
national study of families leaving welfare found that only about 40 
percent of families eligible for food stamps actually received the 
benefit (Zedlewski, 2001). It hardly seems necessary to emphasize how 
important these two benefits are to poor and low-income families and 
how essential they are to creating an effective national work support 
system. Thus, Congress and the states should carefully review the 
caseload declines and determine whether changes are called for in 
statutes, regulations, or administrative procedures. It would appear 
that part of the food stamp problem could be solved by changes in the 
Federal quality control system which provides an incentive for states 
to be less than aggressive in ensuring that working families receive 
food stamps (Haskins, 2001). With regard to Medicaid, as testimony 
before the Committee on Ways and Means last year demonstrated, states 
such as Florida, Oklahoma, and Ohio that took aggressive administrative 
action had substantial increases in the number of children and families 
receiving coverage (Committee, 2000). The major thrust of 
administrative action in these states seems to have been measures 
designed to ensure that families knew they were eligible and that made 
it as easy as possible for working families to apply for and maintain 
their eligibility. Florida, for example, changed its procedures so that 
families could apply for and maintain their eligibility entirely over 
the phone.
    A second important problem is that some families are worse off as a 
result of welfare reform. Although the children's poverty rate has 
declined substantially, some families appear, nonetheless, to be 
falling through the cracks. Wendell Primus (2001) of the Center on 
Budget and Policy Priorities in Washington, DC, based on national data 
from the Current Population Survey, estimates that as many as 700,000 
families with children have less income in 1999 than in 1995. Not all 
of this increase should be attributed to welfare reform. Even so, it 
seems clear that the 1996 reforms have led to declines in income for 
some families. Under the AFDC program, mothers could and often did stay 
on welfare for long spells. Indeed, Bane and Ellwood (1983) showed that 
up to 65 percent of the families on the rolls at a given time would 
eventually be on the rolls for 8 years or more. But the TANF program 
that replaced AFDC has serious restrictions on length of spells. The 
Federal 5-year time limit provides incentive for families to get off 
welfare as soon as possible. Many states have adopted time limits that 
are even shorter than the Federal 5-year limit; some families in these 
states have already hit the state time limit and have left welfare. 
State policy on sanctions is probably even more important than time 
limits in causing families to leave welfare (Pavetti and Bloom, 2001). 
More than 35 states have sanction policies that result in complete 
termination of cash welfare benefits. The point is that whereas 
families could stay indefinitely on AFDC, they must meet TANF 
requirements or have their benefits reduced or terminated. Congress may 
want to use the reauthorization debate to review what actions states 
are taking to help these families and to determine whether they can 
return to welfare once they fulfill whatever requirement resulted in 
their sanction. Similarly, Congress may want to determine whether 
states are prevented from helping families that reach the 5-year time 
limit because Federal policy allows a maximum of 20 percent of the 
state caseload to be exempt from the time limit.
    The next two issues are not so much problems as they are 
opportunities that need to be further exploited. The first of these is 
the family formation goal of the 1996 reforms. Although the number and 
percentage of children born outside wedlock has leveled off and the 
number of children living with two biological parents has increased 
slightly, research shows that states have not been very aggressive in 
designing and mounting programs to reduce nonmarital births or increase 
marriage (Gais and others, 2001). There is every reason to believe that 
state and local programs designed to increase marriage and reduce 
nonmarital births would produce even greater success. Especially 
important would be programs that offer services to young couples at the 
time of a nonmarital birth. Recent research shows that about half of 
these couples live together and a total of more than 80 percent 
describe themselves as being in a mutually monogamous relationship 
(McLanahan, 1999). However, research also shows that the majority of 
these relationships fall apart within a year or two (Rangarajan and 
Gleason, 1998). Thus, job training and employment assistance, 
counseling, and other services may prove beneficial at the time of the 
birth when the parents are committed to each other and their baby. A 
major goal of these programs should be helping fathers find jobs or 
acquire skills to qualify for better jobs.
    The second issue is that many, perhaps most, of the mothers leaving 
welfare take low-wage jobs. Both experience and research show that 
mothers now working in low-wage jobs can, with proper assistance, move 
up the job ladder. However, as Gary Burtless (1995) of the Brookings 
Institution has shown, most mothers will not improve their income 
without external assistance. If Congress wants to help these mothers 
improve their income, there is probably no choice except to find ways 
to help them acquire more training and education. The Congressional 
debate on this issue may be somewhat misleading because members may 
simply assert that if education and training are made available, all 
will be well. But this claim is false.
    Two education and training strategies make sense at this point. 
First, states and localities should mount programs in which they 
cooperate with low-wage workers and educational institutions to arrange 
courses that lead to specialized short-term training or even 2-year 
degrees. It is essential that the training be relevant to employment 
available in the local economy. Educational institutions, especially 
junior and community colleges, must be flexible in the length of 
courses and the times at which they are offered in order to meet the 
needs of single working parents.
    The second strategy is to work with employers to identify the types 
of training that are required for low-wage workers to advance in their 
organization. Some programs of this type already exist, but many more 
are needed. Employers in need of skilled workers are often agreeable to 
arrangements of this sort and may even pay at least part of the 
training costs and grant their workers released time for training. In 
some cases, it may prove possible to work with both employers, who can 
identify the types of training and the skills required for advancement, 
and with local post-secondary institutions that can provide the 
training.
    The 1996 welfare reforms, in combination with expansions of the 
work support system over the past quarter century, are now providing a 
solid basis for using public policy to simultaneously minimize welfare 
dependency, increase employment, and reduce poverty. Although it is too 
early to make any definitive claims, it appears that these policies are 
also associated with stable or slightly declining rates of nonmarital 
births and are having a positive impact on family formation. Given 
these achievements, it would be a serious mistake for Congress to make 
big changes in either welfare reform or the work support system at this 
point. Especially if Congress wants states to tackle the remaining 
problems and thereby produce even more progress against welfare 
dependency, poverty, and family dissolution, it would be a grave 
mistake to reduce funding for the TANF block grant. Federal welfare and 
work support policies are producing great success. There is every 
reason to believe that if allowed to continue with only minor 
adjustments and modest additional investments, they will produce even 
more growth in employment and income and greater declines in welfare 
dependency and poverty in the years ahead.

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    Chairman Nussle. Thank you, Dr. Haskins. I have questions, 
but I will invite Mrs. Clayton to go first.
    Mrs. Clayton. Thank you very much.
    Dr. Haskins, let me start with you. There is, I guess, a 
CBO report that I don't have before me but I am sure you are 
familiar with. In spite of those elements of policy that you 
speak about, and in spite of the economic well-being or well-
performing economy, at least until the last few months, that 
there is a greater disparity growing still. In spite of the 
structure of welfare, I would suggest to you that welfare 
reform has resulted in a positive reduction of people on 
welfare, and that is good.
    That is not to say that in so doing, we have reduced the 
level of poverty, or work force programs that you cited that 
have aided as we thought they would have, in supplementing the 
transition from welfare to work--i.e., food stamp or sufficient 
child care; or indeed, in spite of the good program that CHIP 
is, in aiding families to make that transition.
    Now, I am sure you would say that people are not coming 
back because they don't have the program. I think the 
enforcement part is working. I think the States are doing that. 
What I am fearful of is the assumption. If I can get you to 
comment--if I am wrong, would you help me clarify. The 
assumption of your report is, everything is going OK. Stay on 
course. Make sure we reauthorize TANF, and not do things to 
enhance the effectiveness of the programs that Congress put in 
place to do. For example, in addition to removing people from 
welfare, it is our responsibility to remove them out of 
poverty. Part of the concern is not to have people dependent on 
government when they can do for themselves. That should happen.
    The other part is that as a country of conscience, we want 
to speak to people who are in poverty. So would you comment on 
that? Did I misunderstand you?
    Mr. Haskins. Yes. I just want to emphasize again the main 
point of my testimony, which is the combination of the 
demanding nature of the welfare system, that is almost 
completely new and has resulted in literally millions of 
mothers leaving welfare, and at least 60 percent are employed 
at any given moment, and 80 percent over a period of time, so 
they are doing exactly what Congress and the States wanted them 
to do.
    Then, secondly, this work support system that does in 
fact--we can see this in the Census Bureau data, we don't have 
to guess. Their incomes are dramatically supplemented by the 
work support system.
    But what you point out about the work support system not 
being perfectly effective and in fact, having some serious 
problems is correct. I totally agree with that, and I have not 
ever written a report that diminishes those problems. They are 
important problems.
    There are two things especially that the Congress can do 
that I think would have an immediate and powerful impact on the 
level of poverty in the country. The first is to fix the food 
stamp program. Most of these families are eligible for about 
$2,000 in food stamps, and only 40 percent of the mothers who 
have left welfare and are still eligible for food stamps get 
them. There are lots of technical reasons.
    I know you are on the Agriculture Committee. I testified 
and gave several good reasons in my testimony. The biggest of 
all, I think, has to do with the quality control system. There 
need to be fundamental changes in the quality control system, 
and I think many more of these families would then get their 
food stamps.
    The second is that we could provide $3 billion in cash paid 
by fathers to these families--female-headed, low-income 
families--through the child support system, if we would pass--
or what we really need to do is get the Senate to pass the 
action the House took last year. The House passed legislation 
to do this by a vote of 405 to 18 last year, and the Senate 
refused to take it up. So those are two actions we could take 
this year or next year that would have an immediate and 
substantial impact on child poverty.
    Mrs. Clayton. Let me just get any member of the panel, or 
all. There is an article in today's paper that comes, I think, 
from the Washington Times on the pending reform of the TANF, 
the welfare reform. They have several myths, and I am just 
going to cite the first one.
    Myth number one: Welfare reform has reduced poverty by 
putting poor women to work. Over the past 5 years, a lot of 
poor women have left welfare, added wage-paying employment to 
the work that they do at home. But two points about this fact 
should be kept in mind. First, increased work participation 
owes a lot to a tighter labor market, high wages, and earned 
income tax credit. Welfare reform is only part of the story.
    Mr. Cardin. I think we have all agreed that welfare reform 
was a part. The economy has played a major part. I want to 
underscore a point that Dr. Haskins has made about the fact 
that we have a continuing role. You are absolutely right. We 
know we have got to keep people off of cash assistance. We are 
not sure we have been as successful in getting people in the 
work force and being successful in the work force. We don't 
have enough information to know that from the information 
available.
    I want to correct one statement. The number of people that 
are receiving assistance under TANF is actually increasing; it 
is not declining. The number of people on cash assistance has 
declined dramatically, but the number of people receiving 
services under TANF is increasing, and that is the way it needs 
to be. So the Federal role is still extremely important, and 
you are absolutely correct. We know for sure that the number of 
people receiving cash assistance has declined. We know the 
overall poverty rate has declined. We think a lot of that has 
to do with the economy and the other tools we have put into 
place, but we have not been as successful in making sure that 
people are out of poverty that are leaving welfare.
    Ms. Edelman. I would make just one other very brief comment 
in response to welfare reform. I think the jury is still out in 
terms of its impact, and the key will depend on the kind of 
investments you make in housing and food stamps and other 
supports that working parents need.
    Second, while there has been some decline in child poverty, 
I don't think we should be proud that there are 12 million poor 
children after 8 years of unprecedented prosperity in the 
richest nation on earth, and that 78 percent of them live in a 
household where someone works.
    The child poverty rates, despite our modest progress over 
the last few years, are higher than they were in 1969 and in 
1979, and we are richer than we have ever been.
    And, third, you know, we should not be making modest 
investments in our children. We know about the effective 
investment of prevention. We should be making significant 
investments in our children. And we did not make a modest tax 
cut. That is why we need to talk about having a comprehensive 
investment in making sure that child care, Head Start, 
education, and health care are available. So we should talk 
about how we take care of our children at this rich time in our 
history.
    Chairman Nussle. That is where I would like to pick up the 
questioning, because I think oftentimes on our committee we 
talk so much of numbers, and I am sorry about that. 
Unfortunately, that is the role of the Budget Committee, to 
talk numbers, to talk percentages, and I am certainly pleased 
and I know you are all pleased, and hopefully the Nation is 
pleased, that we have the kind of decline in our welfare rolls 
that we have seen. I think that is good news.
    The untold story about that, unfortunately--and that is the 
reason I was so interested in holding this hearing--is that 
while it is great that there is 60 percent that have been 
reduced, it means the other 40 percent have not, and they are 
still stuck for some reason. And exploring that is the reason 
for this hearing.
    A couple of things I would just like to ask, first on 
housekeeping. Ben, you asked the question about safe and stable 
families and the TANF supplemental grant as well as future 
issues. I am interested in working with you on that. It may 
require a waiver at the Rules Committee as an example. I am 
willing to help work with you to figure out whether we should 
consider that. I understand because of the way the outlays were 
used in Ways and Means this year that in fact we may--but I 
will be happy and the Budget Committee will be happy to work 
with you.
    Mr. Cardin. Thank you. The safe and stable families expires 
October 1, so we need to act quickly on that.
    Chairman Nussle. As you know, we put that in the budget for 
a reason. We felt that was an important priority, and even 
though there may be a technicality on how the Ways and Means 
Committee worked on their outlays this year, we will work with 
you to see if we can't figure that out.
    Mr. Cardin. Thank you, Mr. Chairman.
    Chairman Nussle. I would suggest, as well, that my message 
on TANF--having been on the subcommittee when we came up with 
that, when we wrote the welfare reform bill and legislation 
that has had some success--my message to the administration is 
that does need to continue, Dr. Haskins. I don't believe that 
we are yet ready to claim total success until we can erase that 
face that is looking at me up there, especially of the first 
one there, of the child that is hungry. That one disturbs me 
probably most of all.
    You mentioned that the three components, Dr. Haskins, that 
have got us to the point of success are, number one, some 
success, good success, is welfare reform; number two, expanding 
the work support system; and, third, economic growth and the 
strong economy. Those different levels are, in part, the reason 
for the success that we have seen so far.
    One of the things that I remember when we debated this bill 
in subcommittee and you helped guide us through that process, 
is we had a system where one size fits all. The reason that we 
moved to the system is we recognized that one size does not fit 
all. Everybody needs a little bit different size and 
flexibility.
    I would ask this for all three of you. I know you have put 
it into your longer testimony, but could you boil it down for 
me? What is next? What do we need to do next in order to meet 
the needs of the many who are still stuck? We celebrate the 
ones who have been able to escape, and that is good news; but 
there are still those that are stuck. And particularly what I 
think we tried to debate during the welfare reform is that it 
is not just dollars; it may be policy changes as well. Just 
throwing money at it is what we did, arguably, for 25, 30, 40 
years since the war on poverty of the sixties. That didn't seem 
to do enough; we needed, policy changes.
    So the question is, are there policy changes that we need 
to make? Are there financial investments that we need to make? 
What is your advice, from all three of you, as we go into 
reauthorization of TANF and food stamps and other very 
important programs?
    Why don't I start with you, Ben, and we will work down the 
aisle.
    Mr. Cardin. First let me say I agree with Dr. Haskins. I 
think we should stay on course, and I think the basic bill 
passed in 1996 should be continued and the funds should be 
adjusted for the additional cost of inflation, and we should 
continue our commitment to allow the States the flexibility 
they need to address the problem.
    I think we should amend that bill to remove the 
disincentives for work. There are several provisions in the 
bill that actually work as a disincentive for the State getting 
a person in work and still providing any assistance.
    Third, as Dr. Haskins pointed out, the pass-through in 
child support would be a major help to bring families together. 
It has passed the House. It is a bipartisan bill. We need to 
get it through the Senate.
    And then, lastly, I would mention the issue of child care. 
We are not providing enough resources for child care. It is a 
huge problem for those who remain on the welfare rolls. It 
provides safe and affordable child care for American families. 
We have to make a larger investment here in Washington.
    Chairman Nussle. Thank you. Ms. Edelman.
    Ms. Edelman. We have laid it out in the written testimony, 
but the first thing is, are we making a commitment as a country 
that our goal is to end child poverty, not just to end welfare, 
and take the measures that we know that support work? Child 
care support needs to be available for those who are working, 
health coverage for working families and transportation, are 
all laid out in the Act to Leave No Child Behind, as well as 
work expense allowances, more child support dollars, low-cost 
housing.
    But, again, children don't come in pieces. They need a 
range of supports to their families in order to escape poverty: 
better wages, earned income tax credit expansions. The child 
tax credit that you voted as part of the tax bill we would like 
to see fully refundable. It would help make an enormous impact. 
Food stamp reforms that we are talking about here so that we 
can take steps forward to alleviate hunger. Better wages.
    And so we have laid this out in a coherent vision in the 
Act to Leave No Child Behind, and I hope you will support it. 
But I want to come back to the point that children don't come 
in pieces. Families need a coherent set of policies and a 
commitment to providing supports and the skills--including 
education and training--that they will need to become self-
sufficient. But it is going to require profound culture change 
at both the Federal and State level. We have laid it out in a 
1,200-page bill, and a section of that addresses steps that we 
can take to end child and family poverty and it also presents 
our position on TANF reauthorization.
    Chairman Nussle. Dr. Haskins.
    Mr. Haskins. I think there is almost no question that the 
number one thing we could do to have the biggest impact on 
poverty is to promote marriage. There is no question that over 
the last 30 years the single biggest cause of child poverty and 
increases of child poverty has been the dissolution of American 
families. At last, since 1994 and 1995, we are beginning to 
make progress. It is not clear what role the government can 
play, so I would not recommend big investments.
    We should remove disincentives for marriage from the earned 
income tax credit and all other programs, but we should also 
encourage experimentation by the States. There are in fact many 
States that are changing their laws and are instituting 
programs to help families move toward marriage. I will give you 
one example. We now know that for children born outside of 
marriage in big cities in the United States, 50 percent of the 
parents live together at the time of the birth, and an 
additional 30 percent, for a total of 80 percent, say that they 
are in a committed monogamous relationship.
    Now, they love each other. They love the child. If we could 
give them help at that moment, especially the fathers in their 
income and employment, I think it could have a major impact on 
marriage. And if the couple stays married, the statistics are 
that the child will virtually never live in poverty.
    The second thing--which we have mentioned several times--is 
the child support enforcement reform which would directly put 
about $3 billion in these families' hands over a 5-year period. 
The House already did it. We should convince the Senate to do 
it.
    Third is the food stamps. Again, $2,000 for these families 
would immediately bring several hundred thousand of them above 
the poverty line. And keep in mind, we don't have to change the 
statute on the food stamp benefit. It is an open-ended 
entitlement. We just need to figure out how to get States to be 
more effective in making sure that families that are eligible 
actually get it.
    Fourth, I already mentioned floundering families. I think 
that is a very important issue. We should not forget these 
families. We should focus on these families. We have very poor 
interventions now. I think it is more like 20 percent than 50 
percent. But we should learn how to help these families.
    And, finally, this is way too complicated to talk about in 
any detail, but I think our Nation's employment support system, 
the U.S. Employment Service, the Job Training, what used to be 
the Job Training Partnership Act, now the WIA, Workforce 
Investment Act, and TANF all need to work together. There are a 
few places where that is happening but it is not happening very 
well. That could also have major impacts on our unemployment 
insurance program. So those are the five leading candidates on 
my list.
    Mr. Cardin. Could I just have one last comment?
    Chairman Nussle. Yes, please.
    Mr. Cardin. Dr. Haskins mentioned several objectives that 
are in the core program of TANF and we give bonuses for it, 
including promoting marriage. What we don't have as a core 
objective in TANF is reducing poverty, and I think we should 
amend the statute to make reduction of poverty a core objective 
of TANF, offering bonuses to our States that achieve results in 
those areas.
    Ms. Edelman. I support that.
    Chairman Nussle. Thank you, all of three of you. Mr. 
McDermott.
    Mr. McDermott. Thank you, Mr. Chairman. I would like to 
shift the focus a little off food and get to housing. I assume 
this House budget material from the Democratic Caucus has been 
available to the Republicans, but it has some fascinating 
statistics in it and--yes, I know they are top secret. Things 
like the Low-Income Housing Coalition, which I suppose maybe 
the Republican staff didn't look at, but the fact is that I 
voted against TANF because I could see what was going to 
happen. I remember when we emptied the mental hospitals and 
suddenly people couldn't figure out where all the people came 
from who were lying around in the streets. And I want to assume 
for a second that housing prices are so far out of line for 
most people, they estimate that the rent in San Jose for a two-
bedroom apartment is $1,308, and that means you have to have 
weekly hours, at minimum wage, of 175 hours to pay for that.
    Now, when you start thinking in those terms, you can see 
that more and more people are going to lose housing. Now, where 
do they live? Well, they can move to shelters or they can move 
to motels. What ought to be required reading for everybody who 
has any ideas about this is the book, ``Nickel and Dimed'' by 
Barbara Ehrenreich.
    In terms of the problems of housing, now if a parent loses 
housing and can't get into a shelter, where do they sleep? In 
the car; right? With the kids. Now, then comes along the child 
abuse officer who says, ``Hey, this is child abuse so we are 
going to take these kids away from this parent.''
    And I expect we are going to see--I guess I will ask you, 
Ms. Edelman. What is your forecast if we don't--as we did 
yesterday--do anything about housing in the HUD bill and some 
of these other problems--what is your forecast for us down the 
road if we don't deal with these things?
    Ms. Edelman. I don't even have to be a forecaster. I mean, 
in drafting the bill there is a section that addresses 
affordable housing--housing came up over and over again. There 
is one story about a North Carolina mother with an 11-year-old 
daughter who left welfare for a job. She worked 38 hours a week 
at $6 an hour, and was proud when she was made employee of the 
month. Then she lost her housing and was living in a 
transitional homeless shelter with her daughter. She had no 
health insurance and earned a few dollars more than the 
official poverty line.
    But the housing issue and the shelter issue and the 
rootlessness issue has come up again and again. I hear school 
officials tell me about children that are moving every 3 
months, where their parents are trying to stay one step ahead 
of the landlord. There are 80, 90 percent turnover rates in 
some schools. It is just an enormous problem. And so we have 
not addressed that in a significant way, because the percentage 
that they are having to pay for rent is simply beyond the means 
of most low-income families working at minimum wage. And an 
issue that we have to address, is accessible, affordable 
housing shelters.
    We have gotten used to--I have gone to a State and gone 
through a school in an Arizona city where they have a school 
for homeless children. Why should there be a school for 
homeless children? Where is the----
    Mr. McDermott. It is the same in Seattle.
    Ms. Edelman. And it is the same in Phoenix. We have gotten 
used to shelters. It is a huge problem. We address it 
systematically, but it is so core.
    Last story. I was in Columbus, Ohio, and a teacher told me 
a story of asking children during the hurricane season to write 
essays on shelters, and the children did not write about 
shelters in emergency situations. She had a number of stories 
of children who were describing what it was like to live in 
homeless shelters, to have no place to play, to have no 
privacy, to have the stigma of having to tell their classmates 
they didn't have a place to live.
    It is a profoundly important issue for millions of working 
families that I hope we will address, and so I thank you for 
raising it.
    Mr. McDermott. Let me raise another more complex question, 
or it seems attendant to it. If you look at this material that 
was given to us from a study by somebody named Peter Edelman, 
and you look at the least affordable places in the country, 
they are all on the West Coast, with the exception of one 
reference to Charlotte, North Carolina and Raleigh-Durham/
Chapel Hill, North Carolina. Everything else is Washington, 
Oregon, and California.
    Those three States have minimum wages quite a bit higher 
than the national average. The national average is something 
like $5.15; 5.15 is the minimum wage, except in Washington 
State whereby initiative we made it 6--I think it is $6.40 or 
something. The States where we pay the most, they are the worst 
off. What is the answer here?
    Ms. Edelman. Again, I think what we know is that people 
without a living wage, you can't make it with housing and food 
and with child care on $6 an hour. I think you had a report 
come out talking about what is a livable wage that will allow 
you to meet the needs of your children. And so the incomes of 
working families at a minimum wage level, as it has currently 
existed--without the other work supports like child care and 
housing, these families can't make it. And so I think we need 
to address that.
    Mr. McDermott. Thank you.
    Chairman Nussle. Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman. I want to associate my 
comments with my friend, Mr. McDermott. He brought up some 
issues that are really probably one of the most important 
things to me being a Member of Congress, and that is how do we 
provide housing for the people in this country who need 
housing?
    I was raised by a single mother. My dad left when I was 
about 6 months old, and I lived in a poor neighborhood. There 
were probably 50 percent Mexicans, 40 percent Oakies, and 10 
percent Arkies, and I was in the minority as an Arkie. So I 
know what it is like to try to better yourself in life and to 
buy a home. But the problem I have is that we acknowledge the 
problem and yet we never deal with the problem.
    Now, Mr. McDermott talked about California, Oregon, and 
Washington and so many other States, and then locally here. We 
talked about the concept of affordable housing, and you will 
never have affordable housing if you don't have a move-up 
marketplace. It is impossible, because unless you have people 
moving out of the lower-priced homes into homes that they can 
afford more money for, the lower-priced homes are never going 
to become available for people who need those homes.
    We have talked about Section 8 vouchers, and there has been 
some discussion in the Housing Subcommittee from public housing 
authorities that we need to increase Section 8 vouchers. I know 
what they are trying to do. And specifically, the director from 
Los Angeles came in and said that Los Angeles County has about 
a 3 percent vacancy rate in rental units for Section 8 voucher. 
And 3 percent in a marketplace like that means they are 100 
percent occupied, because 3 percent is a normal rollover for 
people moving out of units and repainting units or recarpeting 
and bringing them out. So what he meant was there is no 
availability at all of affordable housing.
    Now, Section 8 vouchers used the way we use them, totally 
focusing on rental units, does nothing but benefit landlords 
who own rental units, and increase demand for rental units; 
because when you increase Section 8 vouchers in a limited 
affordable housing market, all you do is increase the average 
rents that landlords can charge for those. And yet we don't 
address the problem.
    Now, we had an interesting debate on the floor recently on 
the VA-HUD bill, and some people probably wagged their fingers 
at me for my belief. We were talking about public housing and 
the problems sometimes dealing with public housing units: Gangs 
tend to be drawn to them; drug abuse. We acknowledge that in 
Congress and we try to deal with it, because we fund them at a 
different level than local government funds police protection 
for the rest of the community. So we acknowledge that there is 
a problem.
    When we talked about being able to use government funds for 
down payments for people in these income brackets, to be able 
to get them into a home rather than having these moneys the 
government is providing just solely used to benefit landlords 
who own the rental properties--and if you tell a person who is 
at low-income level that you must use these Section 8 vouchers 
for rental, and you are going to be relegated to rental housing 
for the rest of your life, they will never be self-reliant.
    In fact, every year, 2, 3, 4, 5 years, their rents increase 
because market demand increases and the cost increases.
    We talked about being able to use these moneys to be able 
to put a buyer assistance down payment so these people could 
buy a home--and I mean the people who are stuck in public 
housing,--and also have the availability to use Section 8 
vouchers as part of their monthly payment.
    The way to solve the crisis of low-income people who are 
stuck in public housing is to be able to get them to a home of 
their own.
    Now, a great example is one of my finest friends----
    Mrs. Clayton. Would the gentleman----
    Mr. Miller. Just a second. I would be happy to take 
questions. A lady who is a checker down in the Longworth 
cafeteria--missed yesterday. She wasn't at work. I walked up 
and said, are you OK? Were you sick? And she had this huge grin 
on her face and said, I bought a house yesterday. And she was 
elated. I said, how long have you been working? She said, I 
have been working for it over 2 years, and I finally bought 
that house.
    The happiness in that woman who works herself to death for 
probably very little, that now she can afford a house, that is 
what we should--the example of California was mentioned about 
the high rents, the minimum wage, you know, they should be able 
to do better. But California, because of tort reform and the 
tort issues associated with building condos and townhomes--and 
you understand this, you have not seen any townhomes or 
condominiums built in California for 10 years because the law 
is such that an attorney can go file a lawsuit against the 
builder of a townhome that the association has nothing to do 
with. The attorney can therefore go to the board of directors 
and say, you either enjoin in this lawsuit or you can be held 
personally responsible for not enjoining; and they have to 
enjoin.
    And any attorneys on the committee here, I wish you would 
check that out because it is a fact. Builders will not build 
those units which are generally affordable because they can't 
even get liability insurance in these States to build them; 
because all liability policies have exclusions for attached 
products; because they know there is going to be a lawsuit.
    So how do we help people? If you can take Section 8 
vouchers and use part of the money for a down payment and get 
these individuals into a home and then let them use the Section 
8 vouchers that they qualify for part of their rent, in 4 or 5 
years their rent hasn't gone up, and before you know it, these 
people can afford to make their payments by themselves. Plus 
down the road 8 or 10 years if they decide to move to another 
community, they have the equity in the home that they own, that 
when they sell it, they can take that money to buy a home in a 
neighborhood they want to live in, not a neighborhood they are 
forced to live in because that is the only area they can get 
into with a Section 8 voucher.
    So I applaud my colleagues on the Democrat side for wanting 
to address this issue. But I would also encourage us to look at 
some approach other than a Band-Aid over the sore.
    Let us realistically look at--try and figure out what the 
problem is and try to cure the problem rather than putting a 
Band-Aid over the sore. You have such a situation in this 
country where the concept of property rights have so eroded and 
due process on applications for approvals for units--in 
California we built out 140,000 units this year, 80,000 less 
than are needed, and it is not because developers don't want to 
build units. It is they can't get through the process and get 
entitlements rapidly enough to build them. So every year the 
demand increases, it increases, and the amount of people who 
want to go into housing cannot afford to do it.
    I would strongly encourage this committee and other 
committees to address the problem, as housing is a great issue. 
If you buy a $100,000 home in this country, $35,000 of that is 
directly attributed to government fees. That is an aberration, 
and we need to deal with it. And thank you for your kindness, 
Mr. Chairman.
    Chairman Nussle. Thank you. The gentlemen's time has 
expired.
    Mr. Miller. A long time ago. I yield.
    Chairman Nussle. Ms. Hooley?
    Ms. Hooley. Thank you, Mr. Chairman.
    A question to any of the panelists. What do we do--as we 
have seen people leave the welfare rolls, many of them still 
living in property, we still have many people--the time is 
running out for people to leave our welfare system. Having 
listened to people who have been on the welfare rolls, there 
are some people that are very difficult to move off the welfare 
rolls. What do we do with those that are still there, as we 
have certainly some recession at this point, although we still 
have kept our unemployment fairly low--what do we do and how do 
we deal with the children, those that are still left on our 
welfare rolls as we are not able to get some of those parents 
back into the marketplace and on jobs? Any one of you? Or all 
of you?
    Mr. Haskins. We struggled with the issue when the welfare 
reform bill was written. I think most people working on the 
bill assumed that there would be families that would not be 
able to leave the rolls and support themselves over a period of 
time because of addictions; because of borderline mental 
retardation; because of personality disorders and so forth. So 
the trick is to develop a system that is both demanding and is 
indeed built on personal responsibility, but still allows for, 
more or less, continuous receipt of welfare by a very small 
group of people.
    So wisely, the Congress punted and said to the States, you 
figure it out. Under Federal rules, States can have 20 percent 
of their caseload that exceeds the 5-year time limit so that at 
least, even in the cases where we are failing and we can't 
figure out how to help the people leave, they can stay on 
welfare, in effect, indefinitely, and it is up to the State to 
decide who can stay.
    Now, the big issue before us is how many of these people 
can we help get off the rolls and stay off the rolls? I will 
absolutely assure you that today people who answer that 
question, their percentage is much smaller than it was in 1996. 
In 1996, Members of the House of Representatives stated on the 
floor that half of the people or so were going to have a lot of 
trouble leaving welfare. Yet we have already seen reductions in 
the rolls of 60 percent. Now some of them are struggling, and 
there are still people left on the rolls that can leave.
    So we don't know what the percentage of floundering 
families are, but as I said in my testimony, we should learn 
more about how to help these families. It is going to involve 
small steps. There will be a lot of failure, but the key is to 
keep helping them solve their child care problems, get 
treatment for addiction if they need it and so forth, and all 
these things the State can do under the TANF block grant 
because they have the flexibility to do that.
    Mr. Cardin. One of the problems is that you are penalized 
for taking a small State, and we have changed the law in that 
regard. If you leave welfare and go to work, and the State 
wants to provide some supplemental assistance, your clock is 
still running. We should correct that. We should reward work. 
We should reward people who want to take the courage to try to 
succeed but need some help.
    The people that we are talking about don't have work 
histories. They don't have a lot of experience. So it is going 
to take small steps, and the welfare reform bill of 1996 did 
not acknowledge that there were going to be some very difficult 
people, that we have to have more flexibility with the system. 
We need to deal with that.
    Secondly, we need to provide services long after people 
have left the cash assistance, and States are doing that. They 
are doing some of that today, but we need to acknowledge that 
as a partnership with the Federal Government, that we are not 
just interested in getting people off of cash assistance. We 
want to see people succeed in the workplace, and that is going 
to require a lot of postemployment training programs. We have 
started that, but they are expensive, they cost money, they 
cost resources, and that requires the Federal Government, 
again, to be in a full partnership in understanding that our 
objectives are more than just getting people off the cash 
assistance.
    That is why I raised the issue that a core principle of 
welfare reform should be reduction of poverty. If we do that, 
then it is a legitimate concern of the State to continue 
programs to make sure people not only get off of cash 
assistance, but succeed in the workplace.
    Ms. Edelman. We have laid out our response to the need for 
a minimal safety net of decency and protection for children in 
the 12 titles of the Act to Leave No Child Behind, which I hope 
you will look at. Children should not go hungry, regardless of 
the status of their parents. Children should not be homeless in 
America regardless of the status of their parents. And children 
should get that healthy start in life with basic health care 
and early investment and with a decent education so they never 
have to depend on welfare, so that these basic building blocks 
of decency and self-sufficiency should be provided to every one 
of our children.
    And secondly, we do address the need for treatment and 
prevention for those families who have domestic violence and 
substance abuse problems. We don't have adequate treatment, we 
don't have adequate education and training, and we need more 
transitional supports, as has always been addressed. But we 
have looked at everything we know how to look at to say how do 
we make parents more self-sufficient, enable them to work, 
which we favor, but how do we make sure that the next 
generation never has to rely on welfare or have needs because 
they have the skills and the good early starts that they need. 
This committee can make an enormous step doing that by making 
sure that the health care and the food assistance and the child 
care assistance is in place.
    Ms. Hooley. One more question just to Representative 
Cardin. If we make getting out of poverty part of that system, 
what kind of an investment is it going to take? Because, I 
mean, we have a lot of working poor, a lot of people who are 
struggling, who work hard every single day, who just can't make 
it, and it seems like more and more of the odds are against 
them as child care goes up in our State, as utility bills go 
up, as housing costs go up. How do we ever get to the point 
that people who have worked hard, who have gotten off of 
welfare, they are doing everything they can to take care of 
their families and children; how do we get into that next step, 
and what kind of an investment is that really going to take?
    Mr. Cardin. It is an excellent question, and that is what I 
hope this hearing is the first step in focusing, what type of 
investment we have to make as a nation. Clearly TANF is part of 
that, and the continuation of TANF and the expansion of TANF. 
But it is also dealing with child care and increasing the child 
care block grant. It also deals with housing and dealing with 
the housing policy. It is the Medicaid budget and making sure 
that transitional Medicaid exists for people who leave welfare. 
It is the EITC and strengthening the EITC so people can really 
make money by working in our society. It is the social services 
block grant that we cut in 1996, that we shouldn't have cut in 
1996, that provides the support service within our community.
    So we don't have one tool nationally. There are many tools 
that are available to help us succeed in reducing poverty in 
this country. Clearly TANF is one of those tools that needs to 
continue and expand as we look to reauthorizing it next year.
    Ms. Edelman. May I make one other comment, please? We could 
fund all the health care provisions, the child care provisions, 
the work supports that we advocate for expansion of the earned 
income tax credit and lift every child out of poverty for far 
less than we voted in tax cuts for the non-needy. And if we 
just did not have the repeal of the estate tax for about 3,500 
wealthy families take effect, we could do much of what we need 
to lift our children out of poverty and to give them health 
care.
    So this is not a money issue. It is a choice issue about 
how we are going to invest resources. But we have the means to 
lift every child and family out of poverty for far less than we 
have chosen to invest in the non-needy.
    Chairman Nussle. Mr. Bentsen?
    Mr. Bentsen. Thank you, Mr. Chairman. I thank our panel for 
being here.
    At the outset, I want to thank Ms. Edelman. Your 
organization recently opened a branch office down in McAllen, 
Texas, in the lower Rio Grand Valley, which is really a couple 
hundred miles from my district, but I spend a lot of time down 
there, and I think it is important that you have done that. I 
think we are finding in Texas, particularly in one of the 
fastest-growing counties in the United States and along the 
border area, that child poverty is an ever-increasing problem. 
It is not a new problem, but it is an ever-increasing problem.
    Mr. Cardin and Dr. Haskins and others have brought up other 
issues, and I don't want to just focus on TANF and its outcome, 
because there is much more to poverty than the TANF program. 
Obviously we know a lot of working families are struggling to 
make ends meet who have never even been involved with welfare, 
but the fact is, as Mr. Cardin brought up in his testimony, 
TANF reauthorization is before us, and we need to be thinking 
about it.
    When TANF passed in 1996, we were in the upswing of the 
general economy. When TANF comes up for reauthorization in 
2002, we may well not be in a recession, but we certainly will 
be on the tail end of the positive business cycle, or at least 
at the very beginning of a recession, at which times usually 
those in the lower income end of the scale tend to fare worst. 
And I am curious, given the research that you all have done, 
how you see TANF working, because I think it is going to be 
important for us. And I want to ask just a couple of questions.
    Some have to do with the general functions of the programs, 
and some have to do with the State-Federal relationship of the 
program, because I think they are both important.
    Ms. Edelman, in your testimony, you raised some--I think--
startling statistics about the number of people who get off 
welfare and get a job, but then fail to continue to have that 
job after a period of time. This is occurring, if those numbers 
really are as high as your studies and other studies you cite 
are showing, at the same time that we are seeing States who 
either implemented their own rules or the Federal program hits 
the time limit, and if we have a triple witching hour in the 
stock markets, this could well be the triple witching hour of 
human resources, because the third factor is the economy as I 
mentioned.
    Are you all seeing any evidence that we have a significant 
number of the population who have not been able to hold a job, 
are running up against the time limit and are running into a 
declining economy?
    Second of all, on the issue of health care. We know that 
the States--I believe, quite frankly, the States have not done 
a particularly good job of running some of the Medicaid 
programs. In fact, I believe--and I get criticized for this 
every once in a while--but as a Texan, I am quite disappointed 
at how poorly we have done in participating in the Medicaid 
program. We have 800,000 children in Texas who are Medicaid-
eligible and not enrolled in the program, and the reason they 
are not enrolled is because they don't know where to go to find 
it. It's a hide-and-seek game that the State pays for what 
people are otherwise legally entitled to. In fact, the State 
has been held under a dissent decree in Federal court, and the 
legislature has done some work, but they haven't done enough, 
in my opinion.
    We also know that in TANF--and this was a critical part for 
many of us to support TANF--that the legislation was crafted, 
and Mr. Cardin played a role, and Mr. Nussle played a role in 
this, to ensure that there was sufficient funding for child 
care and job training in the form of block grants. 
Additionally, the legislation extended funding for 
participation in the Medicaid program once someone left the 
welfare program and went into the work force and would 
otherwise be ineligible. But we come to find later that in many 
reports the States were not adequately drawing down on those 
funds, and, in fact, there was a move in the Congress at one 
point to draw those monies back in to use for accounting pumps 
to make our budgets work.
    Are those studies correct? Are the States doing an 
efficient job of drawing down these funds, or when we go to 
TANF reauthorization, is this something where, quite frankly, 
we should have a stronger Federal role imposing this?
    Mr. Cardin. You are raising a lot of issues that will come 
up. The States did a rather poor job in enrolling Medicaid-
eligible people who left the welfare rolls in the Medicaid 
program. There has been some slight improvement in the last 
year. Some States have done better than others, but still there 
are too many families that are ineligible for Medicaid that are 
not enrolled, and we think part of the reason is that there are 
mixed messages being sent when they leave welfare. They don't 
know they are entitled to these benefits. And we have tried to 
correct this, and some States have worked with us.
    Ken, we don't know what impact the 5 year time limit is 
going to have, because the States haven't run up against it 
yet. They are just starting to come up against the 5-year 
limitations. They also have a safety valve within the statute. 
So it really has not been tested yet, and we don't know.
    We also have the contingency fund that has never been 
called upon. That expires this year. We should reauthorize that 
for 1 additional year until we reauthorize TANF next year. We 
don't know what is going to happen in the next 12 months, but 
it would be nice to have a contingency fund available in case 
the economy turns.
    We also have to reauthorize this year the supplemental 
grant that affects your State of Texas. It does not affect 
Maryland, but it is an important part of the program. So we 
have to take some actions this year. But you are asking 
questions that are going to have to be confronted by Congress 
next year when it reauthorizes TANF, and we have to be 
sensitive to deal with the problems that you mentioned.
    Ms. Edelman. There are 6 million children currently 
eligible for Medicaid and for the Child Health Insurance 
Program who are not getting it. States are not doing a good 
enough job. The fact that you could have children without 
health insurance, 11 million of them, and we are not breaking 
our necks to let their parents know to simplify the procedure 
so that they can access them? I mean, we will submit for the 
record a report on where all the States are.
    [The information referred to follows:]

                                                         LOW-INCOME UNINSURED CHILDREN AND CHIP
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Target: Uninsured children under 19 at or
                                                                       below 200 percent of Federal poverty
                                                                                      level                     Type of   Total children
                                                                   -------------------------------------------    CHIP    ever served by   Date of CHIP
                                                                                     Percentage of              program*    CHIP in FY    implementation
                                                                        Number       all children     State                    1999
                                                                                       in State        rank
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama...........................................................         154,000            12.9         43          C          38,980          2/1/98
Alaska............................................................          11,000             5.3          6          M           8,033          3/1/99
Arizona...........................................................         190,000            13.8         47          S          26,807         11/1/98
Arkansas..........................................................          92,000            12.8         42          M             913         10/1/98
California........................................................       1,281,000            13.1         45          C         222,351          3/1/98
Colorado..........................................................          72,000             6.4         16          S          24,116         4/22/98
Connecticut.......................................................          53,000             6.3         13          C           9,912          7/1/98
Delaware..........................................................          13,000             6.6         21          S           2,433          2/1/99
District of Columbia..............................................          16,000            13.7         46          M           3,029         10/1/98
Florida...........................................................         444,000            11.5         41          C         154,594          4/1/98
Georgia...........................................................         214,000             9.7         37          S          47,581         11/1/98
Hawaii............................................................          13,000             4.0          2          M              NI          7/1/00
Idaho.............................................................          31,000             8.0         30          M           8,482         10/1/97
Illinois..........................................................         211,000             6.1         11          M          42,699          1/5/98
Indiana...........................................................         131,000             8.0         31          C          31,246         10/1/97
Iowa..............................................................          67,000             8.6         35          C           9,795          7/1/98
Kansas............................................................          60,000             8.0         29          S          14,443          1/1/99
Kentucky..........................................................          93,000             8.6         33          C          18,579          7/1/98
Louisiana.........................................................         194,000            14.6         48          M          21,580         11/1/98
Maine.............................................................          24,000             7.6         26          C          13,657          7/1/98
Maryland..........................................................         100,000             7.1         23          M          18,072          7/1/98
Massachusetts.....................................................          69,000             4.4          3          C          67,852         10/1/97
Michigan..........................................................         156,000             5.7          9          C          26,652          5/1/98
Minnesota.........................................................          50,000             3.7          1          M              21         10/1/98
Mississippi.......................................................         110,000            13.1         44          C          13,218          7/1/98
Missouri..........................................................          97,000             6.4         17          M          49,529          9/1/98
Montana...........................................................          24,000             9.6         36          S           1,019          1/1/99
Nebraska..........................................................          30,000             6.3         12          M           9,713          5/1/98
Nevada............................................................          43,000             8.6         34          S           7,802         10/1/98
New Hampshire.....................................................          20,000             6.3         14          C           4,554          5/1/98
New Jersey........................................................         134,000             6.3         15          C          75,652          3/1/98
New Mexico........................................................         117,000            21.1         51          M           4,500         3/31/99
New York..........................................................         399,000             8.2         32          C         521,301         4/15/98
North Carolina....................................................         138,000             6.6         20          S          57,300         10/1/98
North Dakota......................................................          10,000             5.7          8          C             266         10/1/98
Ohio..............................................................         205,000             6.7         22          M          83,688          1/1/98
Oklahoma..........................................................         170,000            17.6         50          M          40,196         12/1/97
Oregon............................................................          67,000             7.4         24          S          27,285          7/1/98
Pennsylvania......................................................         200,000             6.5         18          S          81,758         5/28/98
Rhode Island......................................................          19,000             7.5         25          M           7,288         10/1/97
South Carolina....................................................         110,000            10.4         39          M          45,737         10/1/97
South Dakota......................................................          17,000             7.8         27          M           3,191          7/1/98
Tennessee.........................................................         115,000             7.9         28          M           9,732         10/1/97
Texas.............................................................       1,031,000            16.7         49          C          50,878          7/1/98
Utah..............................................................          46,000             6.0         10          S          13,040          8/3/98
Vermont...........................................................           7,000             4.6          4          S           2,055         10/1/98
Virginia..........................................................         118,000             6.5         19          S          16,895        10/22/98
Washington........................................................          85,000             5.3          7          S              NI          2/1/00
West Virginia.....................................................          45,000            10.1         38          C           7,957          7/1/98
Wisconsin.........................................................          75,000             5.2          5          M          12,949          4/1/99
Wyoming...........................................................          15,000            10.5         40          S              NI         12/1/99
--------------------------------------------------------------------------------------------------------------------------------------------------------
* M=Medicaid expansion; S=separate State program; C=combination of separate program and Medicaid expansion; NI=not implemented as of September 30, 1999
  (FY 1999).

    Ms. Edelman. That there is unspent child health money when 
parents are really struggling to get health care means that 
they have to do a better job. And one of the things that I hope 
we will do in Congress this year is to simplify those 
procedures to demand better outreach and to make it easier 
rather than harder for working parents to get the health care 
to which they are currently entitled.
    I hope we won't wait until next year to simplify these 
procedures and to invest in health coverage for all children 
and their parents, particularly, again, since most of them are 
working.
    And lastly, the jury is out on what is going to happen. We 
have 21 States that have reached their TANF time limits, and 
another 11 States' time limits will be reached by the end of 
the year. And the remaining 16, except Michigan and Vermont, 
will reach those time limits by the end of 2002. But we should 
be very concerned if we have got so many parents who are not 
staying in the work force after they have gone into the work 
force and are having to fall out because of the absence of 
child care and health care and the other things we talked about 
earlier, and because we haven't dealt with the hardest cases 
yet.
    I think these are going to be very big issues that the jury 
is out on, and we need to, again, make sure that we are taking 
adequate measures to alleviate and prevent child suffering as 
we go through these transitional periods. But it is going to 
require, again, a redefinition of what our goals are. If our 
goals are to eliminate child and family poverty, and to make 
parents more self-sufficient, and to see that the children get 
what they need, I think this will require States to act in a 
very different way, and to make sure that we are making it 
easier rather than harder for children and parents to be 
served.
    So I hope that is something that we will be paying a lot of 
attention to as we reauthorize TANF, but our goals have to 
change, not seeing how many folks we can get off welfare, but 
how many folks can get into the labor force and how many 
children we can make sure get health care.
    Mr. Bentsen. And my time is up. I don't know what Dr. 
Haskins wants to add, but I do want to say this for the record: 
Congress, in my opinion, has repeatedly made the rules for 
Medicaid easier for the States. They passed a bill that I 
introduced last year, a bill that Diana DeGette introduced last 
year to make enrollment easier, and at some point I think the 
Federal Government is going to have to tell the States, if you 
are not going to do it, we are going to do it for you. I know 
that breaks a lot of codes and all that we have sort of set 
with the States, but I think it is a real problem.
    Mr. Cardin. There is no question there was financial 
pressure on certain States not to be aggressive enrolling 
people who left welfare and Medicaid, and that was felt at the 
local offices, and it affected the number of families enrolled.
    Chairman Nussle. Mr. Moore?
    Mr. Moore. Thank you, Mr. Chairman and members of panel. I 
do appreciate your testimony here this morning. We in Congress, 
as you know, deal with many very, very important issues. 
Certainly tax cuts are important to American people. We have 
had a lot of debate, a lot of time spent by Members of Congress 
in the House and the Senate on tax cuts, and the President 
pushed through his $1.35 trillion tax cut. Certainly energy 
policy, which is on the floor today in the House is important. 
Education is important, defense, and the President still is 
talking about his missile defense system, which all costs a lot 
of money. Yesterday and the day before we spent probably a lot 
of time, but not nearly enough time, talking about cloning and 
medical research and how to handle that in the future. And 
these are all--and I am not being sarcastic--very, very 
important issues.
    On the other hand, as Ms. Edelman said, I don't think there 
is anything more important in this country than our children, 
and I think we all have to take, I guess, a new inventory of 
this. And, again, I appreciate the testimony here, because all 
of you have stressed the need to pay enough attention to our 
children in this country and what happens with them.
    I came to Congress in 1998, and I had been a district 
attorney for 12 years and dealt with child abuse and family 
violence and saw what that does to families and to children 
especially. And you don't forget that when you see it firsthand 
as a prosecutor and talk to moms and kids who have been through 
some of the things they are through.
    I think there are two vulnerable populations in our 
society, and we need to pay particular attention to them, and 
certainly the senior citizens and elderly and especially the 
poor among those. But the ones who truly can't take care of 
things are children, and we have a special obligation, I think, 
as Members of Congress, to devote sufficient time and attention 
to children and make sure their needs are met, because, again, 
they can't care for themselves. They are totally dependent, at 
least young children, on adults to provide that care.
    It is frustrating, as a Member of Congress to know that we 
have all these responsibilities to Americans, and the issues I 
have already talked about, and we pay attention to those, and 
yet the voices that aren't heard enough, I guess, are the ones 
speaking out for kids, as you all have this morning.
    I was over in Kansas City--I think I mentioned this once 
before in talking to the Secretary of Education who was here--
and I went to I think it was a second- or third-grade class. 
There was a little boy, and the superintendent of the schools 
who was taking me around said, do you see that little boy over 
there? He and his mom live in a car, and how do we expect him 
to focus on what is being taught in school when he is wondering 
where he is going to be sleeping at night? And the test scores 
are not going to be good either.
    We talk about testing kids, and we talk about education and 
leaving no child behind, but we leave a lot of kids behind. And 
one thing I participated back home a couple of weekends--and 
this is very, very small--but went door to door trying to tell 
people about the CHIP program in some of the low-income 
neighborhoods, and sometimes when people would answer the door, 
they seemed almost suspicious of why somebody there from the 
Federal Government would be trying--what do they want, and what 
were they going to be asking, what kind of questions.
    And you mentioned, Dr. Edelman, a report about medical care 
for children. I guess I really would like to see that and find 
out how we can better--the States--get parents to enroll their 
kids in the medical care programs that are available to 
children. That would be, I think, very, very helpful.
    Again, I don't have other questions right now, but I do 
appreciate the information. All three of the witnesses have 
delivered their statements, and I know Congressman Cardin has 
done a lot of work in this area, and I really appreciate that 
as well. Thank you all very much.
    Chairman Nussle. Mr. Capuano?
    Mr. Capuano. Mr. Chairman, thank you. First of all, I want 
to thank you for having this hearing as well. I think it is 
honorable and the right thing to do.
    I have a few comments, a few clarifications I would like to 
get, and then a few questions, starting with, first of all, I 
appreciate the focus on the difference between ending poverty 
and ending welfare. I think it is an important distinction that 
I will carry forward from this day as I speak about these 
issues--because I haven't really thought of it in those terms--
and I just want to thank you for putting it in those terms.
    Secondly, I wish Mr. Miller was still here, relative to his 
comments on down payment assistance. There are many people who 
think that we have to do one and not the other, and that is 
just not true. Last year, the House actually passed a bill on 
housing issues the Senate didn't take up that included a down 
payment assistance program that I authored in the Banking 
Committee. It was adopted, I believe, on a voice vote. I am not 
even sure. It was bipartisan; everybody agreed with it. There 
was no problem whatsoever amongst any housing advocate that I 
know relative to the President's proposal on a new down payment 
assistance program. The problem is at what cost? And for me the 
issue is not that program or any other program that wants to 
help anybody get into housing, either as a tenant or an owner. 
It is that program is authored at the detriment of existing 
housing programs.
    We are proposing to build a new porch on our houses when we 
not only allow but actually encourage the crumbling of the 
foundation. We are taking money away from existing housing 
programs and are adding in new programs, and that is a huge 
distinction. It is not the same to say we oppose new programs. 
We don't. I don't know anybody who does. We simply want to make 
sure that the programs we have are maintained and stabilized 
before we start building on it. And I wish he had been here to 
hear that, and I will try to express that to him at a later 
point.
    The other point I want to make is I am sure that it is 
true. I know it is true. Not every State has screwed up the 
SCHIPs program. There are some States that have done a pretty 
good job, and I think that has to be drawn out as well, because 
it is not a total problem. There are many States that have done 
a good job--not many, several. Maybe many. I don't know the 
exact number. And they have provided a model that other States 
can and should follow. We don't have to reinvent it here in 
Washington. It would be a shame, though--I happen to agree with 
Mr. Bentsen that maybe we will have to at some point. It would 
be a shame if we have to take it back. I don't want it back. It 
should be at the State level, but they refuse to do it. When 
other States can do it, that is something we will need to 
address, and I think it is important to say that, that not 
every State has made a mistake.
    I would just like to get a clarification, Dr. Haskins. I 
think I understand it, but I want to make it clear in my own 
mind. When you talked about encouraging marriage, and at a 
later point during that same discussion you talked about 
committed monogamous relationships, I want to know, was your 
statement a statement on moral values or a statement on the 
economies of scale that is gained by more than one person 
contributing to the overhead of a family loosely defined?
    Mr. Haskins. I believe it was both. But it certainly is 
just a statistical observation first. There is, I think, 
virtually no analyst would doubt that one of the main 
contributing reasons to increases in child poverty and 
continuing high levels of child poverty is the dramatic 
increase in the percentage of our children who live in single-
parent families. It started roughly in the early 1960's and 
just kept going until about 1994 or 1995, at which point it 
leveled off, and it is coming down a little bit now. That in 
itself will have a dramatic statistical impact on growth of 
poverty rates or child poverty rates in general.
    But it is also a moral statement that parents who have 
children should be deeply committed to them. All our young 
people should know that by far the best rearing environment for 
a child is a married two-parent family.
    Now, we have a lot of single families. We shouldn't forget 
them. We should not demean them. We don't need to say unkind 
things about them. But the fact remains that children do much 
better in a married two-parent family, and our public policy 
should take that into account.
    Mr. Capuano. I appreciate that, but I would take issue with 
the moral value aspect. I agree with you 100 percent that the 
economy is gained by having two or more adults together. It is 
a great benefit and a great benefit for the child. On the other 
hand, I didn't expect this to be a moral discussion. I might 
disagree with you on, first of all, the definition of marriage, 
and, second of all, whether a child is better off with two 
parents or two adults in the household, whether they are 
married or not. I would argue that they probably are better off 
even if they are not married, and marriage would be nice, and 
it is a nice moral value that maybe I might share with you, but 
I am not sure it is important to the discussion we are having 
of the economics of policy. But, again, it is a discussion for 
another point.
    But I want to ask Ms. Edelman and Mr. Cardin, Dr. Haskins 
made a comment that we are on the right track, very general 
statement obviously, and lots of details we could argue about. 
I just want to make sure that you would agree with that general 
statement that we are on the right track, or would you not? 
Would you disagree with it?
    Mr. Cardin. I think we have some very important tools that 
are in place, and we need to strengthen those tools. In regards 
to welfare, yes, I think we are on the right track. In regards 
to housing, no, we are not on the right track. In regards to 
other areas that affect poverty, I think we have to be bolder 
and look at new approaches, but I think in regards to the 
social programs of welfare and the related--if we provide the 
resources, and we correct the problems that I have mentioned, I 
think the tools will work to reduce the poverty levels in this 
country.
    Ms. Edelman. May I just make a very few brief comments? One 
is that we will submit for the record how all the States are 
doing in enrolling their children and what can be done to make 
it better, so you can make your own judgments. But at some 
point we need a Medicare program for children. If every 66-
year-old is automatically entitled to health care without a 
whole lot of bureaucracy regardless of where they live, every 
6-year-old and 16-year-old should have the same. So while we 
are trying to pave the little highways that we have on Medicaid 
and CHIP, I hope we will move ourselves toward the same safety 
net that we have for our senior citizens so that parents do 
don't have to go through the State bureaucratic hassle.
    Secondly, I would just like to comment that even if--and I 
will check my figures when I go back--but even if we took the 
poverty rates in two-parent families in America among children, 
they would be far higher than poverty rates in any other 
comparable industrialized nation, and we need to do better by 
both single parents and by two parents. But we have got 
parents--two parents struggling in a labor market who still 
can't buy decent housing or rent decent housing or afford child 
care, and so we have got to support two parents as well as 
single-parent families in the labor force.
    And lastly, we may be on the right highway, but we are not 
going fast enough, and there has just got to be a whole 
different level of commitment. We cannot have a Nation that 
says, we favor justice and equal opportunity, and have 12 
million poor children. No other country in the industrialized 
world has poverty rates like these. I mean, no other country 
lets its children go without basic health care regardless of 
where they live. And we know what to do. If you made the child 
care tax credit fully refundable, 2 million children could have 
been lifted out of poverty immediately. I am very glad that we 
got a partial one, but we can take those steps.
    We have got to move far more holistically and with the 
sense of moral urgency to see that all of our children get the 
good early childhood foundation they need, to get the education 
they need, and that is what we have tried to do by laying out a 
coherent policy vision in the Act to Leave No Child Behind. 
They don't come in pieces, again, and we have got to stop the 
incremental marginal steps and to take our children and 
families as seriously as we have taken, from my view, far less 
important things.
    So we need to go in a much more comprehensive and a much 
more rapid way. Children have only one childhood, and we are 
building prisons faster and faster. I don't know what to say 
about the values of a Nation that would rather wait until a 
child gets into trouble and build more and more expensive 
prisons and won't give that same child health care and child 
care.
    These are not rocket science solutions. I would just invite 
any member of this committee to go out with us and to look at 
all the wonderful programs and policies that are in place, 
which if we extended them to all children, which is what we 
need to do, could really begin to have an enormous impact.
    So the issue is not what to do. The issue is building the 
will that makes us do it, and we are determined to see that 
that happens.
    Mr. Capuano. Just a little footnote. Some people would 
argue that prisons are a form of housing, and I wouldn't share 
that.
    Ms. Edelman. A very expensive and undesirable form of 
housing.
    Mr. Capuano. You made a comment earlier on that we have the 
means----
    Ms. Edelman. We have the means.
    Mr. Capuano [continuing]. To do all this. Depending on 
where we are and based on what I have seen in this Congress 
thus far and what I read in today's Congress Daily by some 
eminent leaders of this House and the Senate, I think we may 
have to amend that statement at the very near future that we 
had the means, and we made other choices. I don't happen to 
agree with those choices, but think that is going to be the 
case at the end of this Congress and----
    Mr. Cardin. As a Nation we have the means. As a Nation, we 
have the wealth.
    Mr. Capuano. And as representatives of this Nation, I 
believe we have made--not me, but I think this Congress has 
made decisions that will make that statement, that we had the 
means, and we made different choices. I think it is a shame, 
but I think it is true, because I just don't think that we are 
going to be able to meet these ends. We are not willing. I 
shouldn't say we are not able. We are not willing to do what it 
takes to accomplish the goals that we all sit here and espouse, 
yet our voting records don't show that. Thank you.
    Chairman Nussle. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. Let me add my 
appreciation to the panel, to all of you, for appearing here 
and for the quality of your testimony.
    Ms. Edelman, let me ask you first about the implications 
for our current appropriations decisions of your testimony. As 
you know, the Labor-HHS-Education appropriations bill will 
likely come at the end of the current appropriations cycle. 
That means it is in great danger of being squeezed by other 
appropriations bills, by the tax cut that has just been 
enacted, and by the shrinking surplus. So there are going to be 
some real pressures on that bill.
    In your testimony you focus on that bill. You talk about 
the need for a billion-dollar increase in Head Start, a 
billion-dollar increase in the child care and development block 
grant, as well as the restoration of funding for the social 
services block grant.
    In your report on your Leave No Child Behind proposal, you 
advocate full funding for these items. How close would the 
amounts you advocate in your testimony come to that goal of 
full funding? What do you regard as full funding? What is the 
desirable level of funding for these items?
    Ms. Edelman. Well, I think we lay that out, and I will 
submit in detail what we mean by full funding, both for Head 
Start and for child care, and I don't know whether it is 80 
percent, which is what we usually talk about in terms of full 
funding for child care, but we have that worked out as 
obviously a floating target. But I think when we talk about 
full funding for child care, we are saying every eligible 
child, and it varies when we say what we mean. And I think it 
is about the 80 percent level, but we can provide you very 
specific figures of what we mean by that in each of the areas, 
and then you can see how close you are coming.
    It is very clear that in terms of the administration's 
budget proposals, appropriations proposals, we are going to 
actually end up losing children under Head Start, and we are 
going to not address, in any way, the significant child care 
and housing and nutrition needs of our families. But I will be 
able to answer that by submitting that to you within the next 
few hours.
    Mr. Price. Good. That would be helpful, because we are 
going to need to not only look at the administration's request 
very critically, but also what our Appropriations Committee can 
come up with and----
    Ms. Edelman. We will get that to you by the end of the day, 
sir.
    [The information referred to follows:]

  Ms. Edelman's Response to Mr. Price's Question Regarding Head Start

    While Head Start now serves only 3 out of every 5 eligible 
preschoolers and a fraction of the infants and toddlers who are 
eligible for and will benefit from Early Head Start, current 
enrollment would have to be cut by 2,500 young children if the 
administration's Head Start budget proposal for fiscal year 
2002 was enacted. Head Start is the premier early childhood 
program and it is critically important to make the new 
investments that will extend the program to all the children 
who are eligible for and will benefit from its vital and 
comprehensive services.

    Mr. Price. And what kind of effort it is going to require 
to meet these goals, which have a lot of lip service going for 
them, but the question is can we make the money available to 
really meet these commitments.
    Mr. Haskins, let me turn to you and ask a question drawn 
from your testimony, the charts you provided. They give a 
rather hopeful picture. At least they appear to. Welfare reform 
is working, you say. You give an impressive defense of the 
policy changes that have been made, both welfare reform and the 
expansion of the work support system. As you know, skeptics 
attribute much of the change that has occurred to the thriving 
economy. How do you separate the effects of the thriving 
economy from the effects of changed policy? I suppose those 
competing claims are now about to be put to the test as we 
absorb the effects of an economic downturn.
    But let me ask you, how do you expect the economic downturn 
that we are experiencing and that we anticipate, to affect the 
gains that you have identified? What is going to happen to 
those charts, do you think, in the next year or two? And 
depending on what the answer to that question is, what are the 
implications for Federal spending levels or for Federal policy 
more generally?
    Mr. Haskins. Right. First I would like to point out to the 
members of the committee that we also had an extremely hot 
economy in the 1980's. We had a net increase of 19 million new 
jobs, and during that time the welfare rolls went up 10 
percent. So to say that a hot economy automatically sucks 
people off welfare so that they can take advantage of a hot 
economy, it just doesn't work that way. It was only when we 
changed the welfare system in combination with a hot economy 
that we got these good results.
    Now, if the economy continues to go in the direction that 
it is going, and we begin to have impacts on unemployment, 
especially among low-income families, which is a reasonable 
expectation, then we may have some trouble. The States have had 
about a 60 percent decline on average in the number of people 
that they have in their welfare caseload relative to the 
funding level they have, because the funding level for every 
State was set at the highest of a combination of years in the 
early and mid-1990's. So the trick for the States will be to 
handle this problem to bring that money back so more people can 
receive welfare. Some of them have saved up some money. Some of 
them are not using all their money. Some of them have made 
investments in other places, and they--for example, child care, 
presumably they have less child care if they have fewer people 
working, but they will have to bring that money back so they 
can make sure that people that would have qualified in the past 
will continue to qualify for benefits if they cannot find a 
job.
    So there are a lot of resources in that block grant, and I 
would like to point out one more thing to the committee. The 
unemployment insurance system depends on a trust fund, and when 
that money is gone, the States are out of luck. They have to 
borrow money out of Federal law. They are forced to borrow 
money and pay interest. But under TANF, the States get new 
funds every single year, so they have a new source of money 
that comes every single year.
    Now, having said those things, I do think that there are 
things that we should be concerned about. I think probably the 
first thing that we should do is to make sure that States use 
the most recent accounting period. When the States decide who 
gets unemployment insurance, they base it on how much they have 
earned, and over a period of time to qualify recipients must 
work in at least two quarters, but many States do not include 
the most recent quarter.
    Well, what quarter is an unemployed person most likely to 
have worked in? You can't get above 100 percent. They have all 
worked in the most recent quarter. But as a leftover from the 
old days when States didn't have computers and couldn't compute 
it so quickly then states were allowed to ignore the most 
recent quarter. So that one change would make a big difference 
in the number of people that would be covered by unemployment 
insurance.
    Secondly, our contingency fund that Mr. Cardin mentioned, 
is not a very effective device. The trigger is too high. I do 
think we should make some changes in the contingency fund, and 
that would undoubtedly be scored as costing some money by the 
Congressional Budget Office, but I think we should do it.
    Mr. Price. Well, let me just--my time has expired, but as 
to your comparison of the 1980's and 1990's as being basically 
equivalent, except for the policy changes: Am I not correct 
that unemployment averaged about 7-1/2 percent in the 1980's? 
That is considerably different, isn't it, than the 1990's? 
Would that not be an important distinction you would want to 
mention in terms of people leaving welfare for the workforce?
    Mr. Haskins. Absolutely. And there are other differences 
between the 1980's and the 1990's, but if the general 
proposition is that a hot economy with lots of new jobs 
attracts people off welfare, there is absolutely no evidence in 
the history of welfare to support that to anything like the 
degree that we have seen in the 1990's.
    I am just making a simple point that there was both a pull 
and a push; a push that required people to leave welfare and 
really, I think, fundamentally changed the values and the 
approach to life of people on welfare that they have to do 
their part, and the public officials now expect that of them. 
It has been communicated very clearly, and so they join the 
economy in jobs where their income increased, and that is a 
very important part of the solution, along with the work 
support system that we all agree is a good thing.
    Mr. Price. You make a convincing case for the importance of 
policy changes. I am just not sure that your argument using the 
1980's as a baseline holds up.
    But anyway, my time has expired. I appreciate your 
elaboration, and of course I will appreciate any further 
thoughts that you have down the line about the likely 
implications of the economic downturn for Federal policy. Thank 
you.
    Chairman Nussle. Mr. Clement?
    Mr. Clement. Thank you, Mr. Chairman. This has been an 
excellent panel. It has been a very helpful to me.
    I wanted to ask you, Dr. Haskins, first, and then I want 
the others to comment as well.
    I had a situation in Nashville. I went to a high school, 
and they have a nursery school in the high school, and, you 
know, I am one of those people that feel like, if we don't do 
more to help our children, we truly will go back into the Dark 
Ages. As rich and as affluent as the United States is, I can 
see signs of real deterioration, and that lack of investment in 
our children not only to provide them services, but also to 
protect them.
    But I noticed at the high school when I was talking to the 
mothers with the small children in the nursery school, in the 
public high school and home, and then I started asking them 
about their--about the father, and none of the fathers were in 
the high school. All the fathers were older guys, you know, 
with cars, money, housing, whatever. But they were preying on 
those young girls, and--but none of those women or young girls 
in high school were still trying to complete their high school 
education. None of them were really holding that person 
accountable for them having a child. The government was still 
trying to help where they could, but the guy that impregnated 
them seems to be taking a walk. And I am really concerned about 
the deterioration of the family, and this is happening all over 
the country. This is just an example of what I have experienced 
at home.
    Mr. Haskins. I want you to know that if that is the case, 
the mothers are in violation of the law. They cannot under 
Federal statute get welfare payments unless they have fully 
cooperated with the child support system, and it is specified 
in the law specifically what they have do to cooperate.
    Not only that, but if you look at recent data, it is truly 
astounding. In 1996, in the welfare reform bill, we passed the 
most ferocious set of child care provisions you could possibly 
imagine. I suppose we could still add the death penalty for 
nonpayment of child support, but they are ferocious provisions. 
And in 1999, we actually established more paternities than 
there were children born outside marriage because of this new 
law and the cooperation that has been forthcoming from the 
States.
    So the thrust of my answer is that the child support system 
is very strong and getting stronger. It still has problems, but 
it is a very unusual high school where all the mothers in a 
class have not identified the fathers, because we are getting 
paternity establishment all over the country.
    And, by the way, I would like to add one thing. Undoubtedly 
the single most important measure that States have taken to 
establish paternity in these cases of births outside marriage 
is to go into the hospital and to voluntarily ask the father to 
sign the paternity agreement. What a great opportunity it is 
now that he is going to be a father and so on, and they do it.
    Ms. Edelman. Let me say two things. If older men are 
preying on or dealing with younger children, then they ought to 
be dealt with, and that should not be permitted under the law. 
I mean, I think that maybe we need to talk about making sure 
that young girls are not falling prey to older men, and we need 
to talk about that.
    Secondly, I really do believe that every parent, father and 
mother, should be able to support their child and believe very 
strongly in child support enforcement. There are provisions 
here for that and that fathers should be held accountable.
    But third, we have got to establish, again, a new tone. I 
think that we have got to make sure that young men coming up 
are raised, like young women, not to have children until they 
are able to support them, and we make sure that they get the 
education and are then held accountable for making sure they 
are good parents. I mean, Benjamin Franklin said a whole long 
time ago that a key to marriage is young men who can support 
their families, and so I think that we have got to pay as much 
attention to boys as well as to girls and to try to set a 
different climate.
    And last, let me just say we are hypocritical in this 
country in some ways about out-of-wedlock birth. You know, we 
laud in our culture--just as we laud violence--we laud sex 
without consequence. We put on the front of People Magazine 
single, very famous unwed mothers and somehow say that is OK, 
but we need to come to grips with how we are going to--what the 
cultural signals are on violence, on sex as bliss without 
consequence, on the importance of family, but we need to do it 
in all strata of our society.
    But I do support stronger child support enforcement and 
making sure that we don't have that situation repeating itself.
    Mr. Cardin. I think this is one area that we all can come 
together on. I think there has been strong bipartisan support 
about child support enforcement issues, and I think Ron 
Haskins' point about marriage is something that we all agree 
with. I think he would not disagree when I tell you that if the 
father has a job, and he can contribute to the family, it is a 
much better candidate for marriage than if you have a father 
who doesn't have a job or is in prison and has no hope. It is 
much more difficult.
    So there are two initiatives, Mr. Chairman, that this House 
has passed that I think will help the situation. One is the 
child support pass-through that we have talked about, which 
says that the arrearages go to the families so that the father 
feels that he is part of the family with the child support that 
he is paying. It connects the family together, and it makes 
sense. We have passed that before.
    The other is the fatherhood initiative, which says that, 
look, if you want to get a family off of welfare and out of 
poverty, there are two parents here. Don't just deal with the 
custodial parent, deal with the noncustodial parent. Provide 
job training and counseling to the noncustodial parent. And we 
have passed that bill also. It has died in the Senate by 
inaction, but I think there are two major pieces of legislation 
that we should make sure this year actually get to President 
Bush's desk and get signed into law.
    Mr. Clement. I wanted to follow up on the faith-based 
organizations in your testimony. Are you concerned about the 
fact that the faith-based organizations would take away or 
divert money from other services that need----
    Mr. Cardin. No. I am not. I am concerned there is not 
enough money available for faith-based and governmental and 
nongovernmental, nonfaith-based programs to be able to do their 
job. So why not use the existing funding sources that have been 
successful in energizing the faith-based groups, such as social 
services block grant, put more money into that, and you will be 
able to deal with the problems that are out there in a much 
more effective way.
    Mr. Clement. Thank you.
    Chairman Nussle. We have a couple of votes on the floor. We 
have time for one follow-up question, Mrs. Clayton.
    Mrs. Clayton. Just a follow-up. I wanted Dr. Haskins and 
Ms. Edelman to know that there is some reform that you 
mentioned about food stamps that is in progress. The 
Agriculture Committee is in the process of writing the farm 
bill, and the issue you raised about quality control for the 
States is in place. Also transition from welfare to work is in 
place. I think at least we are beginning that role and hope 
that you will continue to encourage it.
    Thank you, Mr. Chairman, for having them.
    Chairman Nussle. I would like to thank Dr. Haskins and 
Marian Wright Edelman for their testimony today and appreciate 
all of your thoughts, and particularly to our colleague Ben 
Cardin. There are many Members who come before our committee to 
testify and oftentimes, because of scheduling conflicts, have 
to leave. Up here for the entire hearing. We know of your 
commitment. We appreciate the fact that you would spend the 
kind of time that you have with us today.
    And what we will do is we will recess the hearing. We have 
three votes on the floor. I apologize to the second panel that 
we have to do this, but we need to go vote, and then we will 
return as soon as we can after the third vote and begin the 
second panel. Thank you again to our panelists.
    [Recess.]
    Chairman Nussle. The full Budget Committee hearing on what 
we entitled ``Making Ends Meet: The Challenges Facing Working 
Families in America'' will resume with our second panel.
    We have with us today a very distinguished panel: Sharon 
Daly, who is the Vice President for Social Policy for Catholic 
Charities, United States, USA. We have LaVerne Hewlett, who is 
a mom and has probably one of the most important jobs that 
anybody can have, and that is nurturing and preparing her kids 
for the future. We are so happy that you could join us today to 
talk about some of the issues that you think are important for 
us to consider. And we have Robert Rector, who is the Senior 
Research Fellow for the Heritage Foundation.
    We welcome all of you. Your prepared testimony will be made 
part of the record, and so that in the time that we have, we 
would like you to summarize and give us your best ideas and 
recommendations, and we will begin with Sharon Daly from 
Catholic Charities. Welcome.

 STATEMENTS OF SHARON DALY, VICE PRESIDENT FOR SOCIAL POLICY, 
   CATHOLIC CHARITIES USA; LA VERNE HEWLETT, WORKING MOTHER, 
EMMITSBURG, MD; AND ROBERT RECTOR, SENIOR RESEARCH FELLOW, THE 
                      HERITAGE FOUNDATION

                    STATEMENT OF SHARON DALY

    Ms. Daly. Thank you very much, Mr. Chairman. I have to 
begin by telling you I think that was the best hearing on 
poverty issues I have heard in 22 years of covering these 
issues on Capitol Hill. I think you and your colleagues are to 
be commended for the serious attention and strong attendance 
that you had and very good questions and, of course, the three 
wonderful witnesses.
    My testimony today is based on both a hundred years of 
Catholic social teaching and a hundred years of practical 
experience by Catholic Charities agencies throughout the 
country who together served 10 million of the poorest people in 
America last year.
    The Catholic social teaching, I just want to mention, is 
based in our Catholic teaching that we have respect for human 
life and dignity. We foster families and support communities 
and believe that a preferential option for the poor should be 
at the heart of both our teaching and public policy. The tenets 
of Catholic teaching made clear that the poor cannot be helped 
only through private charity or volunteer efforts, and as 
important as personal ethics and morality are, we cannot ignore 
the fundamental questions about the justice of decisions made 
by businesses, institutions, and government.
    Our teaching tells us that as a society, both public and 
private institutions have the responsibility to ensure that 
human rights and dignity are protected. Among these rights are 
the right to participate fully in society and in the economy, 
the right to fair pay and just working conditions, the right to 
adequate wages, and the government supports that are needed to 
raise children in a wholesome environment.
    The Church calls on all in our society to recognize that 
economic decisions have human consequences and moral content. 
They help or hurt people. They strengthen or weaken family 
life. They advance or diminish the quality of justice. Every 
economic policy, every Federal budget decision, should be 
judged on its potential for protecting or undermining the 
common good and the effects on the poor and vulnerable.
    The recent experience of Catholic Charities USA's member 
agencies, whose quarter of a million volunteers and staff are 
painfully familiar with the hardships of the working poor, 
underscore the challenges that working families face. Despite 
the strongest economy and the highest employment rates in our 
history, for the past 5 years our agencies have reported steady 
increases of 20 percent or more yearly in the amounts of 
emergency food and shelter they have had to provide.
    In the most recent report, we found an increase in need of 
30 percent in emergency food alone. The typical family coming 
to Catholic Charities for emergency food is a parent who is 
working at $6 or $7 an hour. Each month after paying rent, 
utilities, and child care costs and paying for transportation 
to and from work, the parents have no money left to put food on 
the table. And only half of the eligible families are receiving 
food stamps because, Mr. Chairman, it is harder in this country 
to get certified for food stamps than it is to pass the bar 
exam. Wages at the bottom of the labor market have not kept up 
with skyrocketing rents for even dilapidated apartments. Rents 
and day care costs consume parents' earnings, leaving little or 
nothing for food or clothing or transportation.
    In the recent economic boom, landlords raised rents and 
were able to turn away families with children, especially those 
who have low incomes and need the help of Section 8 housing 
vouchers.
    Across the country, our agencies report that families are 
living in shelters and transitional housing, working families, 
even those with two jobs because there are no affordable 
apartments.
    In today's New York Times, there is a front page story 
showing record rates of occupancy in the shelters all across 
the country. What it doesn't point out is that a very large 
number of these families are working families.
    Others can provide you with more statistics about the 
growing income gap in our Nation and the hardships that working 
families face. But our agencies witness another kind of 
evidence: the shame and weariness of parents who work all week 
and then have to beg for food on weekends; the disrespect of 
older children for parents who can't provide the essentials, 
much less the little luxuries. Yesterday's Washington Post and 
New York Times echo what our agencies tell you of adolescents 
out of control when the mothers have to move from welfare to 
work.
    We have a number of recommendations, Mr. Chairman. The 
first is we need policies to increase wages. We need to have a 
higher minimum wage, and there is nothing that can replace 
that. We have people who do the hard, back-breaking work of 
society. Excuse me for saying this, but they wipe the bottoms 
of the babies in day care centers and of the old people in 
nursing homes. They scrub the floors and toilets in this office 
building when we all leave. They stoop in the hot sun and 
inhale pesticides so we can have good food. Our society would 
collapse without the work of these people.
    Now, some argue that the answer is more education and 
training so they can qualify for skilled jobs. And of course 
that is right, but our society will still need millions of 
workers to keep the hospitals clean, mind the children, and 
process the poultry. We will always need these people, and we 
need to pay them fairly.
    It is hard to justify how we can continue to allow a 
minimum wage that is an insult to working people, and as long 
as Congress postpones action on this, employers will be 
transferring their labor costs or part of their labor costs to 
government programs, because government has to pick up more 
costs for day care and health care and other things that 
employers should be paying for.
    It is also important to note that many of the lowest paid 
and hardest working people, agricultural workers, aren't even 
covered by the National Labor Relations Act or the Fair Labor 
Standards Act. Simple justice requires extending these 
protections to this category of workers and stepping up 
enforcement of the labor laws. But until Congress closes that 
gap and gives people a chance to earn enough to support 
themselves without government help, we need to concentrate on 
wage supports.
    There are certain needs that will just not be met by the 
economy without government intervention. As Mr. McDermott and 
Mr. Miller pointed out, people with Section 8 vouchers are not 
able to use them to find affordable apartments. And housing 
developers are not, on their own, building affordable 
apartments for families with children; not just because of 
government regulations, but because they can make more 
profitable investments in trophy houses and starter castles. 
Only 1 in 5 of low-income families get any kind of housing 
assistance. There is an absolute shortage of day care, and only 
20 percent of eligible families are getting day care subsidies.
    We need also to have government subsidies so that working 
families can have decent housing, safe child care, and adequate 
health insurance. You heard all about these issues in the 
earlier panel, but we have an additional recommendation. And on 
housing, we support the idea that the Federal Government should 
fund production of rental housing for families, as it does for 
senior citizens under the Section 202 program.
    As you and the Budget Committee know well, every single 
year Congress increases funding for this program that funds 
production and maintenance and rents for our seniors to live in 
decent housing. It seems to me it would be possible to provide 
the same kind of program for families with children. The 
Federal Government could contract, as it does in 202 for the 
elderly, with community organizations and religious 
organizations to sponsor and produce that housing.
    We also urge you to look at marriage promotion. We 
certainly have in our faith the belief that marriage is both a 
sacrament and sacred, and also that government policies should 
promote it.
    We have long supported the fatherhood initiative that 
passed the House of Representatives last year but got stalled 
in the Senate. We hope there will be another effort to move 
that this year. It would provide new money to support and 
sustain marriage programs, and would encourage noncustodial 
parents to become more involved in the lives of their children. 
It would also provide training to help noncustodial parents 
contribute to the support of their children.
    The TANF statute allows States to use welfare money for 
programs to promote marriage and stable families. However, with 
so many low-income families struggling to pay for their basic 
needs, we could not support proposals to require States to 
devote a specific percentage of their TANF dollars to marriage 
proposals, especially when those ideas are coupled with calls 
to reduce TANF funding.
    We do have a proposal, though, to promote marriage. For the 
past 60 years, six decades, State and Federal welfare policies 
have discriminated against married couples and two-parent 
families. If we are serious about promoting marriage, Congress 
should require States to remove all the barriers to TANF 
eligibility to two-parent families.
    By the way, Mr. Clement's example of young mothers who have 
become pregnant by older men is very common across the country. 
We would argue against, however, trying to persuade those young 
mothers to marry the older men who took advantage of them. We 
think those men should be prosecuted, not become husbands. So 
there is a big agenda here with respect to marriage.
    As Dr. Haskins recommended, we also think it is important 
to reduce the marriage penalties, the earned income tax credit 
and increase the credit for families with more than two 
children. This year's tax bill was a wonderful step forward 
with respect to the refundable children's tax credit, but we 
need to do more.
    In closing, I would like to remind the committee of the sad 
story of the social service block grant that Mr. Cardin made 
reference to. Several years ago, inexplicably the Congress cut 
that program by a third and transferred the budget authority 
for services to the poor to the highway bill. To the highway 
bill! The social service block grant is the primary source of 
Federal funds for community groups and religious organizations 
to help the working poor, and we urge you to increase that 
funding, to work with the Ways and Means Committee, and to make 
sure that additional authorization is embraced by this 
Congress.
    Thank you very much.
    Chairman Nussle. Thank you very much for your testimony.
    [The prepared statement of Sharon Daly follows:]

 Prepared Statement of Sharon Daly, Vice President for Social Policy, 
                         Catholic Charities USA

    Mr. Chairman, Congressman Spratt, and members of the Budget 
Committee: My name is Sharon Daly, and I serve as Vice President for 
Social Policy at Catholic Charities USA. I would like to thank you for 
the opportunity to testify before this Committee on the challenges 
facing working families in America. Catholic Charities USA is the 
national association of more than 1,400 independent local Catholic 
Charities agencies and institutions with more than 250,000 staff 
members and volunteers. In 1999, Catholic Charities' programs served 
nearly 10 million people of all religions--or of no religion--and of 
every racial, ethnic and social background.

                            THE WORKING POOR

    On a daily basis, our agencies provide services to the struggling 
families who are the focus of today's hearing. The people coming 
through our doors are the people whose daily labors make life easier 
for all of us. They clean our houses and our office buildings. They 
care for our children in understaffed day care centers, or for our 
parents in nursing homes and long term care facilities. They stock the 
shelves in our supermarkets. They harvest our food in the fields, get 
meat and poultry to market in the slaughterhouses, and prepare food and 
serve it in restaurants and cafeterias. They have provided the 
difficult and often back breaking labor that has played a large role in 
creating and sustaining this nation's recent economic boom.
    Every day, Catholic Charities staff provide help to working parents 
who cannot afford to put food on the table after spending so much of 
their income on rent and child care. They see parents who are living in 
our shelters far from their children's schools, because there is no 
affordable housing available. They see parents who have worked for 
years at low wages with no benefits, who have been unable to afford 
regular check-ups and are now suffering from untreated diabetes, high 
blood pressure and heart disease. And our experience with these working 
families has led us to conclude that the Federal Government can and 
must do more to ensure that parents can provide for their children 
without having to come to Catholic Charities for a handout.
    Consider, for example, that in the past year, requests for 
emergency food assistance nationwide, including at Catholic Charities 
agencies, were up 30 percent, mostly from the working poor. Indeed, 
according to our front line caseworkers, the typical family coming to 
us for emergency food assistance is a parent working at or even $1 or 
$2 above the minimum wage. Each month, after paying rent, utilities and 
child care costs, and arranging transportation to and from her job 
(often far from where she lives), she has no money left to put food on 
the table. And that's a good month. If she gets sick, for example, and 
has unpaid medical bills, or loses time off work, she will get behind 
in the rent.
    The experience of our local agencies may seem difficult to 
reconcile with the generally positive economic news. How can it be that 
working families have to come to churches and charities for food when 
we are in the midst of the strongest economy that this country has ever 
seen? How can so many families be living so close to the edge when, as 
the Census Bureau figures tell us, in 1999 the nation's poverty rate 
fell to 11.8 percent, its lowest level since 1979, and poverty among 
African Americans fell to 23.6 percent, its lowest level ever?
    This phenomenon is easier to understand if you look closely at the 
official definition of poverty, and compare that with what it really 
takes a family to live, factoring in the actual costs of the basic 
expenses: rent, utilities, child care, transportation to work, and of 
course, food. The fact is, parents aren't earning enough to cover these 
basic expenses and make ends meet without government assistance. And, 
unfortunately, government assistance has often been missing or 
inadequate. I would like to talk today about what the Federal 
Government can do to help these struggling families.
    Before I get to my recommendations, I would ask that you enter into 
the record a story recently published in the Ford Foundation Report 
titled: ``The Real Cost of Living: Self-Sufficiency May be the Next 
Frontier for U.S. Welfare Reform.'' Unlike the Federal poverty 
guidelines, the Self-Sufficiency Standard is a precise measurement of 
how much income a family needs to manage without government assistance 
or private help, taking into account actual, local costs for basic 
needs like adequate housing, food that meets minimum nutrition levels, 
child care and transportation to work.
    The article features the story of a low-wage mother of two young 
children, working 50 hours per week at $8.50 per hour--or $18,000 a 
year--yet struggling to make ends meet. Under the standard Federal 
poverty measurement, this young mother is well over the threshold of 
$14,630 for a family of three. Yet she walked into her local Catholic 
Charities agency in Allentown, Pennsylvania, for emergency food 
assistance. She would need to earn $14.98/hour--almost double her 
current wage--to meet her family's basic needs without assistance. This 
example illustrates precisely the reason there is such a disconnect 
between the glowing accounts about reductions in child poverty and 
unemployment in the past 5 years, and the actual struggles of working 
parents who are truly living on the edge.
    Addressing this growing disparity must be of primary concern to the 
Federal Government because, without government action, the situation 
will only get worse. Throughout the 1980's and 1990's, the richest 1 
percent of Americans saw their wealth grow by an average of $414,000--
an increase of 157 percent--while the poorest 20 percent of Americans 
saw their average wealth decrease by $100.\1\ While those at the top of 
the economic ladder are thriving, working parents are finding it 
impossible to provide for their families. As the U.S. Conference of 
Catholic Bishops stated in its Pastoral Letter, Economic Justice for 
All:
    The obligation to provide justice for all means that the poor have 
the single most urgent economic claim on the conscience of the nation * 
* * to see a loved one sick is bad enough, but to have no possibility 
of obtaining health care is worse. To face family problems * * * can be 
devastating, but to have these lead to the loss of one's home and end 
with living on the streets is something no one should have to endure in 
a country as rich as ours.
    The poor cannot be helped only through private charitable giving or 
private volunteer efforts, though these are important components in any 
just society. Our Catholic teaching tells us that it is the also the 
responsibility of society, acting through government, to assist and 
empower the poor, the disadvantaged, the disabled, and the unemployed. 
The principle of subsidiarity is an important component of Catholic 
social teaching, but it does not mean that the Federal Government 
should cede responsibility for the poor. Rather, the principle of 
subsidiarity acknowledges that many challenges facing the poor are 
national in scope, will be beyond the capabilities of private 
charities, or even local and state governments, to address, and that 
can best be remedied by Federal legislation. The factors that make it 
so difficult for working parents to provide for their families--working 
for less than a living wage, a shortage of affordable housing and 
quality child care, and a lack of access to health care--are national 
problems that require a national solution.

                       RECOMMENDATIONS FOR REFORM

I. Congress should Increase the Minimum Wage
    The most important change that the Federal Government should make 
to support working families is to substantially increase the minimum 
wage, and index it for inflation so that its buying power would not 
erode over time. Catholic social teaching tells us that raising the 
hourly minimum wage is not just an economic issue--it's a moral issue. 
In our Catholic teaching, all economic institutions have a 
responsibility to support the bonds of community and solidarity that 
are essential to human dignity. In other words, paying a decent living 
wage provides more than buying power; it recognizes the worth and 
humanity of our brothers and sisters, and when private employers fail 
to meet this standard, government must step in.
    Current proposals would raise the minimum wage $1.50 over 2 years. 
When implemented, this increase would give full-time workers an 
additional $3,120 per year to help provide for their families. We would 
certainly welcome such a move, although even that increase is too 
little for families to exist solely on what they earn. As a result, the 
Federal Government and the states have an obligation to provide a 
variety of work supports that can bridge the gap between what working 
parents can earn and what it really costs to live in dignity. Over the 
long term, Congress should work steadily toward making the minimum wage 
a living wage.

II. Congress Should Enact Additional Work Supports for Low-Income 
        Families
            A. Affordable Housing for Low-Income Families
    According to our member agencies, the number one problem of low-
income families is the shortage of affordable housing. There is an 
affordable housing crisis in this country. HUD reports that the number 
of families who pay more than half their incomes for rent, live in 
severely substandard housing, or both, is at an all-time high. In March 
1999, HUD released a report titled Waiting in Vain: An Update on 
America's Rental Housing Crisis, which reported on families who endure 
waiting lists for years before finding affordable housing. And the 
situation is not improving. A report released last month by the 
National Housing Conference found that one out of every seven American 
families--13 million in all--had a critical housing need in 1999.
    In October 1999, Catholic Charities of the Archdiocese of Chicago 
issued its own statement on the lack of affordable housing for low-
income families. The conclusions in that paper are no different than 
what is being reported throughout the country: a shortage of 153,300 
low-income rental units in the Chicago area; average rents of $736 per 
month, a difficult figure for a minimum wage family to afford; and 
rents rising at nearly twice the rate of inflation. Out of that paper 
has developed a proposal that gets at the very heart of the housing 
crisis: the need for the Federal Government to do more to spur 
production of affordable housing stock. We have proposed a pilot 
project, building on the successful Section 202 program for the 
elderly, to create new housing stock for low-income families. Under our 
proposal, the Federal Government would provide funding to faith-based 
organizations to produce and maintain housing for low-income families. 
The housing would include supportive services for residents, ranging 
from job training to child care to parenting education. This program is 
a model that can be replicated throughout the country to fill the void 
left by private developers, who can make far more money building luxury 
and vacation homes for high-income families than affordable housing for 
working families. Simply put, without proactive measures by the Federal 
Government, our housing crisis will never be solved.

            B. Increase Resources for Child Care
    Next to the lack of affordable housing, our local agencies report 
that that lack of affordable, quality child care is a critical obstacle 
to success in retaining a job and advancing in the workplace. While 
Congress recently increased the FY 2001 Child Care and Development 
Block Grant (CCDBG) by a welcome $817 million, there are still less 
than 20 percent of eligible children now receiving help. This is an 
increase up from 10 percent, so we are moving in the right direction, 
but there is still a long way to go.
    There are a number of factors that make it difficult for low-income 
families to find or afford quality child care. Parents lacking job 
experience or skills frequently have to accept jobs on weekends or the 
night shifts, when office buildings need to be cleaned or fast food 
positions need to be staffed. Child care during these non-traditional 
hours is woefully scarce, and parents often must turn to substandard 
substitutes. In addition, state subsidy rates are below the local fair 
market rates. Inadequate subsidies deprive parents of genuine options 
in choosing day care providers, keep poor children out of existing 
quality child care programs, and limit providers' ability to attract 
qualified staff with fairer salaries or improved benefits. Finally, 
child care workers are seriously underpaid; the average salary is 
$14,000. These low salaries, which often don't include benefits, 
contribute to a high rate of staff turnover, which is difficult on the 
children in care. The inability to attract and retain quality workers 
to care for our nation's children is a problem that must be addressed. 
And, finally, there are not enough child care dollars to serve all who 
are eligible for assistance.
    We urge Congress to increase the FY 2002 CCDBG budget by $1 
billion. This increase should be part of an annual Congressional 
commitment to narrowing the gap between the children who receive CCDBG 
aid and the number who need it. And CCDGB funds must be used to address 
the urgent need for more child care facilities to provide non-
traditional hours of service.
    In addition, Congress should pass the ``Child Care Quality 
Incentive Act'' (H.R. 2097/S. 1000). This legislation, introduced in 
the House by Representative Sanford Bishop and in the Senate by Senator 
Jack Reed, provides incentives for states to increase quality, 
including tools to allow states to attract and retain qualified staff; 
provide salary increases and benefits to child care workers; maintain 
healthy environments in child care centers; and purchase basic supplies 
and educational materials.\2\
    I would add one additional note on this subject. Catholic Charities 
USA, along with numerous other organizations, has long urged Congress 
to restore funding for the social services block grant (SSBG), which 
provides a wide range of services to the poorest and most vulnerable 
Americans. Programs funded under SSBG have had to be scaled back in 
recent years, since Congress transferred part of the budget authority 
for SSBG to Federal highway programs. The just-published SSBG Annual 
Report on Expenditures and Recipients for 1999, reports that:
    Twelve and a half million individuals in the country received 
services that were funded at least partially by the SSBG * * * Child 
day care, with the support of SSBG, served the largest number of 
recipients. Forty three states reported SSBG expenditures for child day 
care; 2.62 million children received day care services supported at 
least partially by the SSBG. In other words, nearly half of all child 
recipients (6.8 million [54 percent] of all recipients of the 1999 
SSBG) received child day care services. Expenditures of $397 million 
for child day care, the largest category of SSBG expenditures, 
accounted for 13 percent of all SSBG expenditures.
    In light of this report, Congress should take steps to restore SSBG 
funding, in addition to the reforms mentioned above, as a means of 
increasing access to affordable child care.

            C. Increase Access to Health Care
    Catholic Charities USA has long advocated for the adoption of 
universal health coverage, which would allow all individuals to receive 
on-going, preventive care when they are healthy, and necessary 
corrective care when they are ill. While we realize that Congress is 
unlikely to consider proposals for universal coverage in the 107th 
Congress, we have been encouraged by statements made during discussions 
on a Patient's Bill of Rights indicating that Congress should do more 
to help the nearly 43 million individuals who currently lack health 
insurance.
    In fact, Congress can take a significant step toward greater access 
to insurance this year by expanding Medicaid and SCHIP to cover working 
parents and children with disabilities. Many people mistakenly believe 
that families living at or below the poverty level receive health care 
coverage through Medicaid. While that is true for low-income children, 
the same can not be said for low-income parents. Indeed, a study just 
released by Families USA found that 81 percent of low-income, uninsured 
adults do not qualify for Medicaid or other public health coverage in 
their states. The vast majority of the uninsured are in working 
families.\3\
    The budget resolution recently approved by both houses of Congress 
provides $28 billion to spend on health care for the uninsured. This 
provision will be meaningless, however, if Congress does not pass 
authorizing legislation and appropriate the funds. We hope that 
Congress will act soon to use this money to provide coverage under 
Medicaid and SCHIP to working parents and pregnant women. This is 
particularly important in light of recent studies demonstrating that 
providing public health coverage to parents leads to increased 
enrollment in public health programs by their children. When parents 
are included in state health programs, their kids benefit--often 
dramatically. As a study by the Center on Budget and Policy Priorities 
showed, states that expanded their public health programs to parents 
saw children's participation rates increase significantly, from 51 
percent to 67 percent, compared to an increase of 51 percent to 54 
percent in states without similar expansions.\4\
    We know that there is a clear correlation between lack of insurance 
and access to health care. The uninsured have more difficulty obtaining 
primary care and access to essential medication, and have a higher rate 
of hospitalization for treatable conditions such as hypertension, 
asthma or diabetes. It is simply unacceptable that so many hard working 
Americans, whose daily labors make life easier for all of us, must 
suffer the consequences that result from being uninsured.
    While we are on the subject of health care, I would like to mention 
two areas of health care that our agencies deal with quite frequently: 
substance abuse and mental health. According to the Office of National 
Drug Control Policy's 2001 Annual Report, more than five million 
individuals are in need of immediate treatment for drug abuse, yet less 
than half of those individuals will receive it. Our agencies report the 
same sad story, frequently having clients for whom no treatment is 
available. This ``gap'' in treatment resources has significant negative 
consequences for society, including decreased family stability, lower 
worker productivity and higher crime rates. We know that effective 
substance abuse treatment works. By devoting additional resources to 
fund substance abuse treatment programs--and particularly integrated 
treatment for individuals who suffer from both substance abuse and 
mental health disorders--Congress could help reduce the gap in unmet 
substance abuse treatment needs.
    Two bills pending before Congress would do just that. 
Representatives Charles Rangel and Ben Cardin, and Senators Olympia J. 
Snowe and John D. Rockefeller, have introduced H.R. 1909, the ``Child 
Protection/Alcohol and Drug Partnership Act of 2001'' (H.R. 1909/S. 
484). This legislation would provide funding to promote joint 
activities among federal, state and local child welfare and alcohol and 
drug abuse prevention and treatment agencies.\5\ Senators Orrin Hatch, 
Patrick J. Leahy, and Joseph R. Biden have introduced S. 304, the 
``Drug Abuse Education, Prevention, and Treatment Act of 2001,'' which 
would provide additional Federal funds for programs ranging from jail-
based substance abuse treatment to residential treatment centers for 
women with children to treatment for persons living in rural states and 
economically depressed communities.\6\
    Similarly, we urge Congress to pass S. 543, the ``Mental Health 
Equitable Treatment Act of 2001,'' introduced by Senators Pete Domenici 
and Paul Wellstone.\7\ S. 543 will prevent group health plans from 
imposing different treatment limitations and financial requirements on 
individuals suffering from mental illnesses than those imposed on 
individuals suffering from physical illnesses. According to the 
Department of Health and Human Services, each year 56 million Americans 
experience a diagnosable mental disorder, but only one in four adults 
and one in five children receive necessary treatment. We know that when 
properly designed and administered, treatment for mental illness is 
every bit as effective as treatment for physical illnesses. Yet, as a 
General Accounting Office report found last year, many insurers 
continue to impose limits on mental health benefits that are more 
restrictive than those for medical or surgical benefits.
    Left untreated, mental illness can take a remarkable toll. The 
economic burden of mental illness in the United States is $170 billion 
per year, yet the human cost born by individuals suffering from such 
conditions, and on their families, cannot be estimated. Passage of S. 
543 can help to ensure that individuals suffering from mental illness 
can receive the treatment necessary for them to live in dignity and 
lead healthy, productive lives.

            D. Strengthen Working Families
    There are a number of other initiatives that would greatly 
contribute to the living standards of the working poor. I would like to 
highlight three in particular, all of which are included in S. 685, the 
``Strengthening Working Families Act,'' introduced in the Senate by 
Senators Evan Bayh and Olympia J. Snowe.\8\
    First, S. 685 would promote responsible fatherhood by funding 
programs designed to support and sustain marriage, encourage non-
custodial parents to become more involved in the lives of their 
children, and provide job training and other services to help non-
custodial parents contribute to the support of their children. As a 
general matter, children raised with the involvement of both parents 
develop fewer behavioral problems, perform better in school, and 
experience higher levels of sociability. In addition, children raised 
in two parent families are less likely to be raised in poverty. For 
those reasons, we strongly support programs that seek to increase the 
number of fathers who are involved in their children's lives.
    Second, the bill would allow states to ``pass through'' child 
support payments directly to custodial parents and their children. 
Under current law, a family receiving cash assistance under the 
Temporary Assistance to Needy Families (TANF) program is required to 
assign to the state its right to child support payments during the 
assistance period. This can be discouraging for non-custodial parents 
who pay support for their children, only to see the money retained by 
the state instead. For families that are struggling to become self-
sufficient, child support payments can provide a critical boost. 
Indeed, studies have shown that when households headed by single 
mothers receive child support payments, their poverty rate drops from 
33 percent to 22 percent.\9\ By allowing for a child support pass 
through, Congress can ensure that child support paid by non-custodial 
parents, primarily fathers, reaches the children who need it, and can 
give low-income families the help they need to succeed without welfare.
    And third, the bill would increase the Earned Income Tax Credit 
(EITC) for low-income families with three or more children and simplify 
the EITC rules, thus improving taxpayer compliance and reducing error 
rates. The EITC is the only individual tax credit that provides a 
Federal payment when a filer's tax credit exceeds income tax liability, 
lifting 2.6 million children out of poverty while encouraging work. 
While middle income and affluent families get the full benefit of the 
personal exemption for all of their children, low-income working 
parents receive the EITC for only a maximum of two children. Child 
poverty rates are significantly higher among families with three or 
more children (28.6 percent) than families with two children (12.4 
percent).\10\ Given the EITC's proven role in lifting families out of 
poverty, expanding the credit for families with more than two children 
is an important step in addressing this problem. (The bill also 
restores the social services block grant, an issue discussed in Section 
II.B. above.)
III. Congress Should Make TANF Work Better for Low-Income Families
    Most low-income families are not receiving, and have never 
received, welfare benefits. Yet we cannot adequately address the 
problems of all low-income families if we don't consider the needs of 
parents who are struggling to make the transition from welfare to work. 
In less than 1 month, we will observe the 5-year anniversary of the 
creation of the Temporary Assistance to Needy Families Program (TANF). 
As this anniversary approaches, pundits and policymakers will be 
debating whether welfare reform has been a success or a failure. The 
answer to this question depends, in large part, on what we define as 
success.
    If the goal of welfare reform was to reduce welfare caseloads, it 
is difficult to argue that TANF has not succeeded. Between 1994 and 
1999, welfare caseloads were cut in half. For many, that is all the 
proof they need that welfare reform has worked.
    If, however, the goal of welfare reform was to lift people out of 
poverty, and to help them live their lives in dignity, the conclusion 
is not so simple. In 1994, Catholic Charities USA issued a position 
paper on welfare reform, titled Transforming the Welfare System. In 
that paper, we made the point that there is a difference between making 
people work, and making work pay. The reports we receive from our local 
agencies underscore this point. They tell us that, while parents are 
leaving TANF for work, the jobs they secure often keep them at or near 
the Federal poverty level. And the longer they are off cash assistance, 
the more likely they are to lose the link to a number of important 
income support programs, like food stamps or Medicaid, that can help 
them provide for their families. It is then that they turn to churches 
and charities for help in making ends meet.
    A recent editorial from the Chicago Tribune underscores the need 
for TANF to provide more support to working families. The editorial 
references a recent audit conducted by the state of Wisconsin--a state 
that has done more than many others to support individuals leaving the 
welfare rolls for work--which found that less than half of those who 
left the welfare for work in early 1998 earned enough to lift them 
above the official Federal poverty threshold 3 years later.\11\ If that 
is what is happening to welfare leavers in one of the states doing the 
most to support work, it is clear that more must be done. The upcoming 
reauthorization of TANF provides us with a prime opportunity to make 
the program more supportive of working parents. Among our 
recommendations for the upcoming reauthorization are the following:
    A. Poverty Reduction: First, actual poverty reduction should be 
made an official purpose of the TANF program, and states should be 
given bonuses tied to poverty reduction. We know from past experience 
that states respond to fiscal incentives when they are written into 
Federal welfare law.
    It is important that poverty reduction under TANF be calculated 
according to a meaningful measure. We cannot evaluate poverty reduction 
using the Federal poverty guidelines. These guidelines are outdated, 
and no longer provide a useful measurement of what a family requires to 
live without assistance from government agencies or private charities. 
Federal poverty guidelines are based on the premise that a family's 
primary expense is food. Today's families spend the bulk of their 
income on housing and child care. Using the Federal poverty guidelines 
to measure poverty reduction would allow states to collect rewards for 
reducing poverty without guaranteeing that more families can survive on 
what they earn. Poverty reduction measures should be based on progress 
toward a living wage, one that represents what families need in their 
own communities to make ends meet.
    B. Education and Training: Congress must find a way to ensure that 
families on TANF have an opportunity to move up the wage ladder. Too 
often, parents leave TANF for low-skill, low-paying positions that may 
never lead to a living wage. This can be addressed by providing TANF 
parents with better access to continuing education--particularly post-
secondary education--and job training programs. Numerous studies have 
shown that, for women leaving welfare, education beyond high school is 
a key factor in moving up the economic ladder. Yet as a general rule, 
TANF policies have not allowed recipients to pursue post-secondary 
educational activities. In light of the evidence demonstrating that 
better education leads to better outcomes, it is counterproductive to 
put in place policies that discourage or fail to support higher 
learning. Congress should take steps to encourage programs like Maine's 
``Parents as Scholars,'' which stops the TANF clock while recipients 
pursue post-secondary education. Wyoming also has a similar program in 
place.
    C. Wage Supports: States should be provided with strong incentives 
to use TANF funds to provide workers with wage supplements. These 
stipend payments can help families meet work expenses or other needs 
that their minimum wage earnings are insufficient to handle. Texas 
recently initiated a program to provide families with stipends of at 
least $1200 per year to meet work expenses.
    D. Transitional Benefits: While many families remain eligible for 
health care, food and child care assistance, they have been losing 
these vital supports upon leaving TANF, due to widespread confusion and 
the existence of numerous administrative barriers. States should be 
required to automatically enroll families leaving TANF for work for one 
full year in the Food Stamps Program, Medicaid, and child care 
assistance programs.
    Almost two-thirds of families leaving TANF do not receive food 
stamps in the 6 months after leaving welfare, although numerous studies 
show that most continue to live below the poverty line and even more 
fall within the Food Stamp Program's income limit (130 percent of the 
poverty level). Many don't realize they are still eligible, and the 
states don't do a good job of telling them. Many can't afford to take a 
day off from their new jobs to go down to the welfare office and apply 
in person. States should automatically provide the family with the same 
level of food stamp benefits that it was receiving while on TANF for a 
period of 12 months. States should not make it difficult for the family 
by imposing additional administrative requirements. The TANF computer 
should simply tell the Food Stamp computer that this family is 
eligible, and the family should be issued an electronic benefit card or 
food stamps.
    Similarly, families leaving welfare for work are currently eligible 
for up to 1 year of transitional Medicaid coverage, but they often 
aren't getting it, for the same reasons they aren't getting Food 
Stamps--they aren't aware they are eligible, or they aren't able to 
satisfy burdensome requirements. Again, the TANF computer should simply 
see to it that the family leaving for work is issued a Medicaid card 
covering all members of the family for a full year.
    Finally, a parent's ability to secure child care is a crucial 
factor in determining whether the family will succeed in the transition 
from TANF; yet only 30 percent of families leaving TANF receive child 
care assistance. As a condition of receiving the Federal funds 
available each year through the Child Care Development Fund block 
grant, Congress should require states to guarantee child care 
assistance to families making the transition from TANF (and to make 
that guarantee known). Of course, any Federal child care requirement 
would need to be accompanied by an increase in funding of the Child 
Care and Development Fund, and contain appropriate safeguards to ensure 
that the guarantee of assistance to families leaving TANF does not 
crowd out child care and other assistance to families currently on 
TANF.
    E. Food Stamp Reform: In addition to providing transitional food 
stamp benefits, states should be required to encourage working families 
to apply for food stamp benefits, and to simplify their application 
procedures so families can access the benefits to which they are 
entitled. Working adults cannot afford to spend a full day at the 
welfare office every few months, filling out a 26 page application, 
supplying 14 kinds of verification, and enduring the condescension of 
the eligibility worker. To do so is to risk not only a day's wages, but 
also quite possibly a job. When you consider that current rules in many 
states require working parents on food stamps to reapply in person 
every 3 months, it is no wonder that less than half of eligible 
households are participating in the program.
    Families should be able to apply for food stamps by mail with 
income verified by employers, if necessary, to avoid the necessity of 
losing time from work for an interview. States should also make efforts 
to develop and implement a comprehensive communications strategy 
informing families that their food stamp eligibility is not affected by 
the TANF time limits.
    F. Restoration of Benefits For Legal Immigrants: Congress should 
also act to ameliorate some of the harshest provisions of the 1996 
welfare law: those provisions barring legal immigrants who entered the 
country after August 22, 1996, from receiving public benefits. At a 
minimum, Congress should restore eligibility for Medicaid, SCHIP and 
food stamp benefits to legal immigrant children and pregnant women.
    Under current law, pregnant women and children who are legal 
residents and arrived in the United States after August 22, 1996, are 
barred for 5 years from receiving Medicaid and SCHIP benefits. Pregnant 
women and sick children cannot wait 5 years to get the medical 
attention they need. The important goals of Medicaid and SCHIP are 
undermined when states are not permitted to use Federal funds to 
provide preventive and other basic health care services to lawfully 
present immigrants. Representatives Lincoln Diaz-Balart and Henry 
Waxman, and Senators Bob Graham, Lincoln Chafee and John McCain have 
introduced the ``Legal Immigrant Children's Health Improvement Act'' 
(H.R. 1143/S. 582),\12\ which gives states the option to extend 
Medicaid and SCHIP benefits to these women and children. Congress can 
lessen the chance that these children will develop long-term and 
chronic health problems, and instead help guarantee that they can 
become productive members of our society.
    Similarly, a growing child's need for adequate nutrition is not 
lessened merely because the child is a legal immigrant. The Food Stamp 
Program, by supplementing the limited purchasing power of low-income 
households, helps to alleviate hunger and malnutrition for poor 
individuals and their families. While our nation as a whole is enjoying 
great prosperity, too many working families, including legal immigrant 
working families, have not shared in that prosperity. Their daily 
labors make life easier for all of us, but their take-home pay is often 
insufficient to cover rent, child care, clothing and transportation 
costs, and still have enough left to pay for their food. Representative 
James T. Walsh, and Senators Edward M. Kennedy and James M. Jeffords 
have introduced the ``Nutrition Assistance for Working Families and 
Seniors Act'' (H.R. 2142/S. 583)13, which would restore Food Stamp 
benefits for legal immigrants, among other provisions. Passage of the 
bill will ensure that these working families can provide their children 
with the nutrition they need for healthy development.
    Efforts to restore Medicaid, SCHIP and Food Stamp benefits have 
broad bipartisan support and further basic notions of fairness and 
common sense. According to the National Academy of Sciences, the 
average immigrant contributes $1,800 each year more in taxes than he or 
she costs federal, state and local governments. Immigrants pay taxes to 
support services to others; they too should have access to assistance 
when they fall ill. In addition, the babies born to legal immigrant 
mothers will automatically be U.S. citizens upon their birth and will 
immediately be eligible for federally supported health care. As has 
been repeatedly demonstrated, the costs of prenatal care and adequate 
nutrition for legal immigrant mothers will be offset by reduced 
Medicaid costs for their babies. Indeed, the U.S. saves $3 for every $1 
it spends on prenatal care. Even more important, these newest little 
citizens should get a healthy start in life.

            IV. Congress Should Address the Needs of Undocumented 
                    Workers, and Enforce Fair Labor Standards for all 
                    Workers
    Before I conclude, I would like to say a few words about segment of 
low-income working families that is all too often overlooked: 
undocumented workers. According to a study conducted by the Urban 
Institute, more immigrants entered the United States in the 1990's 
(roughly eleven million people) than in any decade ever. These 
newcomers have helped to fuel and sustain an unprecedented growing 
American economy. However, according to this same study, in 1999, 21.3 
percent of foreign-born non-citizens lived below the Federal poverty 
level, compared to 11.2 percent of those of us who are native-born 
Americans.
    The millions of workers who come to this country without documents 
have not done so on a lark. They have risked paying the ultimate 
penalty to come to America and work for sub-minimum wages, in inhumane 
conditions, just so that their children and their families can have a 
chance at survival. They are often openly welcomed by businesses, as 
they are willing to perform tasks that you or I would turn our noses up 
at. Indeed, everyone in this room has a better quality of life because 
of their presence.
    Despite their contributions to our society, non-citizen immigrants 
are allowed to live in poverty and are exploited at every possible 
opportunity. Along with subsistence-level wages, our local Charities 
agencies all across the country tell us that the non-citizen immigrant 
families they serve are subjected to poor housing conditions, a high 
level of hazardous working conditions, and a lack of affordable health 
care. Most of these injustices can be effectively dealt with if these 
non-citizen immigrants were allowed to become legal permanent residents 
and work legally in this country. Such a move would allow them to be 
covered by wage and hour laws.

                               CONCLUSION

    In conclusion, I want to thank this Committee for focusing 
attention on the growing problem of working families who simply aren't 
able to make ends meet. It does not seem right that families who work 
hard and play by the rules remain unable to save money for their 
children's college education, to buy their own home, or to otherwise 
pursue the American dream, because they are too busy trying to keep the 
wolf from the door. For these families, the daily dilemmas they face 
are ones that are foreign to most on this Committee: Will I pay the 
heating bill, or buy clothes for my children? Will I pay the rent, or 
fix the car I need to get to work? Do I go to see a doctor for my 
nagging illness, when I know I will need that money to buy food? But as 
workers at Catholic Charities agencies throughout the country can tell 
you, these dilemmas are all too real.
    It is our hope that today's hearing will lead to enactment of 
proposals that will address the growing disparity between rich and 
poor, and give low-income workers the help they need to not only 
survive, but to thrive.

                               FOOTNOTES

    \1\ ``Pathbreaking CBO Study Shows Dramatic Increases in Income 
Disparities in 1980's and 1990's: An Analysis of CBO Data,'' Isaac 
Shapiro, Robert Greenstein, and Wendell Primus, Center on Budget and 
Policy Priorities, Revised May 31, 2001.
    \2\ H.R. 2097 currently has 60 cosponsors, while S. 1000 has 5 
cosponsors.
    \3\ ``The Health Care Safety Net: Millions of People Left 
Uninsured,'' a report of Families USA, July 2001
    \4\ ``The Importance of Family-Based Insurance Expansions: New 
Research Findings about State Health Reforms,'' Leighton Ku and Matthew 
Broaddus, Center on Budget and Policy Priorities, September 4, 2000.
    \5\ Representatives William J. Coyne, Sander M. Levin, Robert T. 
Matsui, Michael R. McNulty, Pete Stark and Karen L. Thurman have 
cosponsored H.R. 1909; Senators John B. Breaux, Susan M. Collins, 
Michael DeWine, Christopher J. Dodd, Bob Graham, James M. Jeffords, 
John F. Kerry, Mary L. Landrieu and Blanche L. Lincoln have cosponsored 
S. 484.
    \6\ Senators Mike DeWine, Dianne Feinstein, Bob Graham and Strom 
Thurmond are cosponsors of S. 304. There is not yet a companion bill in 
the House of Representatives.
    \7\ There are 48 additional cosponsors of S. 543. There is not yet 
a companion bill in the House of Representatives.
    \8\ Senators John B. Breaux, Thomas R. Carper, Hillary Rodham 
Clinton, Christopher J. Dodd, Bob Graham, Tim Johnson, Herb Kohl, Mary 
L. Landrieu, Joseph I. Lieberman, Blanche L. Lincoln and John D. 
Rockefeller IV are cosponsors of S. 685
    \9\ Testimony of Vicki Turetsky, Senior Staff Attorney, Center for 
Law and Social Policy, before the Subcommittee on Human Resources, 
Committee on Ways and Means, U.S. House of Representatives, May 18, 
2000.
    \10\ ``Should EITC Benefits be Enlarged for Families with Three or 
More Children,'' Center on Budget and Policy Priorities, July 10, 2000.
    \11\ ``The Future of Welfare Reform,'' The Chicago Tribune, July 
30, 2001
    \12\ H.R. 1143 has 89 additional cosponsors, while S. 582 has 20 
additional cosponsors.
    \13\ H.R. 2142 has 32 cosponsors, while S. 583 has 14 additional 
cosponsors.

    Chairman Nussle. Now we will turn to LaVerne Hewlett. The 
reason I introduced you as ``Mom'' is because you may not know 
this, but 7 months ago I got a fancy new title here around 
Congress called Chairman, and while I am very honored to be the 
Chairman of this committee, the most important title I carry 
around is Dad, and I will keep that one for a lifetime. In 
fact, Mrs. Clayton has designs to maybe not let me be Chairman 
much more in the next session, so I may not be able to keep 
that title much longer----
    Mrs. Clayton. You found that out.
    Chairman Nussle. I found that out, yes. But I will keep 
that title for quite a while, and it is the reason that I am 
proud of my kids and that title, and that is why I introduced 
you that way. And you have a lot to tell us. I think this is 
your first time to testify before Congress. Please don't worry 
about that. We are very anxious to hear what you have to say, 
and as I said, your whole testimony will be part of the record, 
but you can tell us what is on your mind in the time that you 
have. So welcome, and we are very interested in hearing from 
you.
    Ms. Hewlett. Thank you.
    Chairman Nussle. If you could pull the microphone up closer 
to you, that way we can hear you.

                 STATEMENT OF LA VERNE HEWLETT

    Ms. Hewlett. Good afternoon, my name is LaVerne Hewlett. I 
appreciate the chance to speak with you. I live in Emmitsburg, 
Maryland, which is in Frederick County, the northwestern part 
of the State. I am a single parent of a 1-year-old son, Kahlil. 
I also have two older children, 18 and 21, who are working and 
living on their own in Virginia.
    Since September of 2000, I have worked in the kitchen and 
dining room of Mount St. Mary's College in Emmitsburg. I work 
Sunday through Thursday, 11 a.m. to 8:30 p.m., and earn $7 an 
hour. I received cash assistance benefits from Maryland between 
May and September of last year while I was pregnant, and 
shortly after the birth of my son. So far, I haven't gotten any 
child support from my son's father.
    In order to work, I have to pay for child care. The cost of 
child care for my son is my largest monthly expense. 
Approximately 40 percent of my income goes to child care. I pay 
$500 per month for child care: $400 for the sitter who watches 
Kahlil Monday through Thursday, and $100 for the sitter who 
watches him on Sunday.
    It is very hard to find a babysitter to watch Kahlil on 
Sunday. Most sitters are only available Monday through Friday. 
I do not get a child care subsidy, because neither of my 
child's day care providers is licensed by the State. There are 
no providers available in my area, and licensed day care 
providers who work out of their home have a 6- to 12-month 
waiting period. And the only child care center in the community 
has a 2-year waiting list. I was getting a $100 a month subsidy 
from the State to cover Sunday costs with a licensed sitter, 
but because she is no longer working weekends, I have lost that 
subsidy.
    I appreciated the subsidy I got for weekend care because it 
really helped. When people leave government assistance and get 
jobs, a child care subsidy can really make a big difference. 
There are too few licensed providers, and many parents like 
myself will have to go without the subsidy; hence, returning to 
government assistance.
    Something needs to be done to increase the number of 
licensed providers, including possibly providing more support 
and training to people like myself who would possibly be 
interested in becoming providers, helping other mothers and 
themselves.
    I have been a bit more fortunate with my rent. I live in a 
low-income housing building and only pay $223 per month. 
Without that assistance my rent would be $528. With the child 
care expenses that I have, I would not be able to pay rent. I 
know of other parents in my area who are not as fortunate, and 
I feel real bad for them. This waiting list with Section 8 is 
very long. It can be anywhere from 1 year to 10. I know some 
areas where it is as high as 5.
    Many landlords are very reluctant to rent to low-income 
parents who don't have a voucher because they are worried their 
rent won't get paid. Then there are others who refuse to rent 
to voucher holders. Hopefully when my son is 2 or 3 years 
older, I could like to move to the city of Frederick where 
child care facilities and public transportation is more 
available.
    I would like to also continue my education, preferably in 
geriatric care. The cost of housing would be a big barrier, but 
I am hoping with this committee's assistance, that wouldn't be 
too much of a barrier for me. I hope that the programs that 
provide child care subsidies, housing assistance, and other 
programs to support working families not only continue but 
expand to help the many working parents out there like myself. 
Thank you.
    Chairman Nussle. Thank you.
    [The prepared statement of LaVerne Hewlett follows:]

      Prepared Statement of LaVerne Hewlett, a Single Mother From
                             Emmitsburg, MD

    Good morning. My name is LaVerne Hewlett. I appreciate this chance 
to speak with you today. I live in Emmitsburg, Maryland, which is in 
Frederick County in the northwest part of the state. I am a single 
parent of a 1-year old son, Kahlil. I also have two older children, 18 
and 21, who are working and living on their own in Virginia.
    Since September of 2000, I have worked in the kitchen and dining 
room of Mt. St. Mary's College in Emmitsburg. I work Sunday through 
Thursday, 11 a.m. to 8:30 p.m. and earn $7 an hour. I received cash 
assistance benefits from Maryland between May and September of last 
year while I was pregnant and shortly after the birth of my son. So 
far, I haven't gotten any child support from my son's father.
    In order to work, I have to pay for child care. The cost of child 
care for my son is my largest monthly expense. I pay $500 per month for 
child care; $400 for the sitter who watches Kahlil Monday through 
Thursday and $100 for the sitter who watches him on Sunday. It is very 
hard to find a babysitter to watch Kahlil on Sunday--most babysitters 
are only available Monday through Friday.
    I do not receive a child care subsidy because neither of my child 
care providers is licensed by the state. There are no licensed 
providers available in my area. Licensed day care providers who work 
out of their home have a six to twelve month waiting list, and the only 
child care center in my community has a 2-year waiting list. I used to 
get a $100 per month subsidy from the State to cover the costs of child 
care on Sundays because I used to have a weekend babysitter who was 
licensed. She stopped offering weekend care and the new sitter is not 
licensed, so I lost that subsidy.
    I appreciated the subsidy that I got for my weekend care--it really 
helped. When people leave government assistance and get a job, a child 
care subsidy can make a big difference, but when there are too few 
licensed providers, many parents like myself have to go without the 
subsidy. Something needs to be done to increase the number of licensed 
providers, including providing more financial support and training to 
people who want to be family day care providers.
    I have been more fortunate with my rent. I am in public housing 
through the Section 8 housing program and pay $223 per month for rent. 
Without the Section 8 program, my apartment would cost $528 per month. 
With the child care expenses I have, I could not make ends meet on my 
earnings if I had to pay that full rent. I feel badly for other parents 
I know in this community who are paying much higher rents because the 
waiting list for Section 8 is also very long. Many landlords are 
reluctant to rent to lower-income parents who don't have a Section 8 
voucher because they are worried the rent won't be paid. Other 
landlords refuse to accept the vouchers.
    When my son is two or 3 years older, I would like to move to the 
city of Frederick, where child care facilities and public 
transportation are more available. I think I could get a job there and 
I would like to continue my education in the area of geriatric care. 
But the cost of housing could be a big barrier in my being able to make 
that move. I hope that the programs that provide child care subsidies, 
housing assistance and other programs to support working families not 
only continue, but expand to help the many working parents out there 
like myself. Thank you for the opportunity to share this with you 
today.

    Chairman Nussle. Our final witness is Robert Rector, who is 
a senior research fellow from the Heritage Foundation. Welcome.

                   STATEMENT OF ROBERT RECTOR

    Mr. Rector. Thank you for having me here today and giving 
me the opportunity to testify. I would like to talk today about 
welfare in the budget and its relationship to poverty. In 
talking about welfare, I will be talking about all means-tested 
or income-tested programs run by the Federal Government.
    The simple fact of the matter, that you would not gather by 
this hearing, is that means-tested welfare spending in the 
United States is now at a record high. Last year we spent $434 
billion on programs to aid the poor. That is roughly 4 percent 
of the gross domestic product, and it amounts to around $5,600 
for each taxpaying family in the United States. Of that 
aggregate expenditure, about half of that goes to the elderly 
and the disabled and about half of it goes to families with 
children.
    When we look at the part that goes to families with 
children, which is around $200 billion last year, we find that 
overwhelmingly this goes to subsidies to single-parent families 
where there is only one mother in the home and there is no 
married father in the home.
    Overall, the welfare system as it affects children in the 
United States is predominantly or almost exclusively a subsidy 
system to support single parenthood. The welfare system as it 
affects children exists predominately or almost totally because 
of the collapse of marriage which has occurred since the mid-
1960's. If this collapse had not occurred, the welfare state as 
we currently understand it, as well as most of the social 
problems we have talked about today, simply would not exist.
    It is important to look at growth of this welfare spending. 
Since Lyndon Johnson launched the war on poverty in 1965, the 
total amount that we have spent each year aiding the poor, 
after adjusting for inflation, has increased tenfold. We are 
spending 10 times as much now each year as we did when the war 
on poverty began. And that rapid growth in spending has gone on 
right through the 1990's. Today, in the year 2000 or 2001, we 
are spending 60 percent more after adjusting for inflation than 
we were back in 1990 at the beginning of the decade.
    One of the most remarkable things about this continuing 
growth of spending is how rarely this huge increase in 
expenditure and commitment is acknowledged in any of the public 
debate. Moreover, welfare spending, according to the 
President's submitted and proposed budget, will continue to 
grow at a very rapid rate for the next 5 to 6 years. Under the 
President's budget, aggregate spending will rise from some $430 
billion this year to $626 billion in the year 2006. That is a 
40 percent increase, an increase of roughly 6 percent per 
annum, well above the rate of inflation.
    According to the President's budget, our Nation will spend 
$3.6 trillion on means-tested aid to assist the poor over the 
next 5 years. Let me repeat that. According to the President's 
proposed budget, we are going to spend $3.6 trillion, a record 
amount of expenditure, aiding the poor over the next 5 years. 
This amounts to some $47,000 per taxpaying household in the 
United States.
    I often think when I listen to witnesses before this 
committee and other committees, exactly how much is enough? If 
$47,000 per taxpaying household in the United States is not 
enough to assist the poor, how much do we require? $50,000 per 
tax paying household, $60,000 or $70,000?
    The fact of the matter is that the problem in welfare is 
not a lack of spending. The problem is the way that we spend 
this money and the fact that this spending encourages 
dysfunction rather than productive behavior.
    Another important way to look at our spending is to compare 
the welfare budget in the United States compared to the defense 
budget. This year, today, we are spending $1.45 on welfare for 
every single dollar we spend on defense. According to the 
President's budget, by the year 2006 that ratio will rise to 
$1.78 for means-tested aid for every $1 spent on defense.
    Part of this hearing is a concern for poverty and the 
effects of welfare reform, and I would briefly like to just run 
down those facts before you today. Since the enactment of 
welfare reform, welfare dependence, which is shown on this 
chart nearest to me on the red line, has declined some 50 
percent. Employment of never-married mothers who are the core 
of the welfare-dependent population has increased 40 percent. I 
would recommend to this committee to look at the research by 
Dr. June O'Neil, former CBO director, who shows that the bulk 
of that increase in employment is the result of welfare reform 
and not the economy.
    Most importantly, poverty has dropped dramatically. The 
black child poverty rate in the United States is now at the 
lowest point in our Nation's history. The poverty rate of 
children living with single mothers is now at the lowest rate 
in our Nation's history, and the percentage of births that are 
outside of marriage after rising steadily for 40 years, has 
tapered off and now is actually fairly level. In fact, among 
black households, the out-of-wedlock birth rate is actually 
falling slightly.
    Child poverty in the United States is caused by two main 
factors: a lack of work and a lack of marriage. Although you 
hear about the working poor family, in fact poverty among 
families where there is a full-time, full-year worker is very, 
very rare.
    Although there is work among families with children that 
are poor, in general it averages about 1,000 hours per year. 
They are either working about half time, or they are not 
working half of the year. If you want to decrease poverty in 
this group, it is very important that you have to increase the 
amount of work being performed.
    Therefore, I think that the policies that we look at in the 
future must recognize that the traditional war on poverty which 
focused on one-way handouts, predominately to nonworking single 
mothers, has been a huge failure. It has increased poverty, 
increased dependents, and it has crippled the lives of millions 
of children. We need to end one-way handouts and increase the 
work requirements in the TANF program as well as in food stamps 
and in public housing.
    Secondly and most importantly, we need to dramatically 
increase marriage in the United States, and I would simply 
commend to this committee the example of one of the excellent 
programs that exist in this. It is a little program called 
PREP. PREP is a very inexpensive program. In over seven 
different scientific evaluations, PREP, which requires about 10 
hours of training of couples in relationship skills, has been 
shown to improve the quality of those relationships and reduce 
the divorce rate among those individuals by 50 percent.
    I have talked to the originator of this program, and he 
said that the program would also be applicable to cohabiting 
couples or couples who are not yet married, to enable them to 
improve the relationships between men and women and enter 
marriage and sustain strong marriages. There is nothing that we 
could do to have a greater impact on poverty in the United 
States than to take some tiny fraction of our current welfare 
spending and allocate it to programs like that, with the 
intention of raising the marriage rate, bringing down this huge 
out-of-wedlock childbearing rate which affects 1 child in 3 in 
our country. There is nothing better we could do to reduce 
poverty, and there is nothing better we could do for the well-
being of the American children, and I hope we will take that 
step in the future.
    Chairman Nussle. Thank you very much.
    [The prepared statement of Robert Rector follows:]

   Prepared Statement of Robert Rector, Senior Research Fellow, the 
                          Heritage Foundation

                              INTRODUCTION

    The U.S. welfare system may be defined as the total set of 
government programs--Federal and state--that are designed explicitly to 
assist poor and low-income Americans. Nearly all welfare programs are 
individually means-tested.\1\ Means-tested programs restrict 
eligibility for benefits to persons with non-welfare income below a 
certain level. Individuals with non-welfare income above a specified 
cutoff level may not receive aid. Thus, Food Stamp and Temporary 
Assistance to Needy Families (TANF) benefits are means-tested and 
constitute welfare, but Social Security benefits are not.
    The current welfare system is highly complex, involving six 
departments: HHS, Agriculture, HUD, Labor, Treasury, and Education. It 
is not unusual for a single poor family to receive benefits from four 
different departments through as many as six or seven overlapping 
programs. For example, a family might simultaneously receive benefits 
from: TANF, Medicaid, Food Stamps, Public Housing, WIC, Head Start, and 
the social service block grant. It is therefore important to examine 
welfare holistically. Examination of a single program or department in 
isolation is invariably misleading. The views that I express in this 
testimony are my own, and should not be construed as representing any 
official position of the Heritage Foundation. In addition, the Heritage 
Foundation does not endorse or oppose any legislation.

                     THE COST OF THE WELFARE SYSTEM

    The Federal Government currently runs over 70 major interrelated, 
means-tested welfare programs, through the six departments mentioned 
above. State governments contribute to many Federal programs, and some 
states operate small independent programs as well. Most state welfare 
spending is actually required by the Federal Government and thus should 
considered as an adjunct to the Federal system. Therefore, to 
understand the size of the welfare state, Federal and state spending 
must be considered together. (A list of individual welfare programs is 
provided in Appendix B.)
    Total Federal and state spending on welfare programs was $434 
billion in FY 2000. Of that total, $313 billion (72 percent) came from 
Federal funding and $121 billion (28 percent) came from state or local 
funds. (See Chart 1.)
    Welfare spending is so large it is difficult to comprehend. On 
average, the annual cost of the welfare system amounts to around $5,600 
in taxes from each household that paid Federal income tax in 2000. 
Adjusting for inflation, the amount taxpayers now spend on welfare each 
year is greater than the value of the entire U.S. Gross National 
Product at the beginning of the 20th century.

    The combined Federal and state welfare system now includes cash 
aid, food, medical aid, housing aid, energy aid, jobs and training, 
targeted and means-tested education, social services, and urban and 
community development programs.\2\ As Table One shows, in FY2000:
     Medical assistance to low income persons cost $222 billion 
or 51 percent of total welfare spending.
     Cash, food and housing aid together cost $167 billion or 
38 percent of the total.
     Social Services, training, targeted education, and 
community development aid cost around $47 billion or 11 percent of the 
total.

                     RECIPIENTS OF WELFARE SPENDING

    As Chart 2 shows, nearly half (46 percent) of total means-tested 
welfare spending goes to families with children. Of the welfare 
spending going to families with children, roughly one quarter goes to 
married couples with children, while three quarters go to single 
parents and other broken families. Thus single parent and other broken 
families with children receive some 34 percent of aggregate means-
tested aid. Overall families with children received some $200 billion 
in welfare aid in FY2000 of which roughly $148 billion went to single 
parent or other broken families.
    The other half (54 percent) of means-tested aid goes mainly to the 
elderly and the disabled. Some 19 percent of total welfare spending 
goes to the elderly, while another 35 percent goes to non-elderly 
adults; the bulk of these individuals are disabled.

                     THE GROWTH OF WELFARE SPENDING

    As Chart 3 shows, throughout most of U.S. history welfare spending 
remained low. In 1965 when Lyndon Johnson launched the War on Poverty, 
aggregate welfare spending was only $8.9 billion. (This would amount to 
around $42 billion if adjusted for inflation into today's dollars.)
    Since the beginning of the War on Poverty in 1965, welfare spending 
has exploded. The rapid growth in welfare costs has continued to the 
present.
     In constant dollars, welfare spending has risen every year 
but four since the beginning of the War on Poverty in 1965;
     As a Nation, we now spend ten times as much on welfare, 
after adjusting for inflation, as was spent when Lyndon Johnson 
launched the War on Poverty. We spend twice as much as when Ronald 
Reagan was first elected.
     Cash, food, housing, and energy aid alone are nearly seven 
times greater today than in 1965, after adjusting for inflation;
     As a percentage of Gross Domestic Product, welfare 
spending has grown from 1.2 percent in 1965 to 4.4 percent today.
    Some might think that this spending growth merely reflects an 
increase in the U.S. population. But, adjusting for inflation, welfare 
spending per person is now at the highest level in U.S. history. In 
constant dollars, it is seven times higher than at the start of the War 
on Poverty in the 1960's.

                    TOTAL COST OF THE WAR ON POVERTY

    The financial cost of the War on Poverty has been enormous. Between 
1965 and 2000 welfare spending cost taxpayers $8.29 trillion (in 
constant 2000 dollars). By contrast, the cost to the United States of 
fighting World War II was $3.3 trillion (expressed in 2000 dollars). 
Thus, the cost of the War on Poverty has been more than twice the price 
tag for defeating Germany and Japan in World War II, after adjusting 
for inflation.

                    WELFARE SPENDING IN THE NINETIES

    Welfare spending has continued its rapid growth during the last 
decade. In nominal dollars (unadjusted for inflation), combined Federal 
and state welfare spending doubled over the last 10 years. It rose from 
$215 billion in 1990 to $434 billion in 2000. The average rate of 
increase was 7.5 percent per year. Part of this spending increase was 
due to inflation. But, even after adjusting for inflation, total 
welfare spending grew by 61 percent over the decade.

    As Chart 3 showed, medical spending (mainly in the Medicaid 
program) grew most rapidly during the 1990's, but welfare cash, food, 
and housing spending grew as well. Adjusting for inflation, cash, food 
and housing assistance is 37 percent higher today than in 1990. 
However, the growth in these programs has slowed since 1995, increasing 
no faster than the rate of inflation. This recent slowdown in spending 
is, in part, the effect of welfare reforms enacted in mid-nineties.

                     FUTURE WELFARE SPENDING GROWTH

    Under President George W. Bush's proposed budget, means-tested 
spending will grow at a rapid rate. Indeed, the rate of welfare 
spending growth in the Bush budget is virtually identical to that 
projected in the last Clinton budget. Projected welfare spending 
figures from the President's FY2002 budget are provided in Appendix 
A.\3\ The rapid of growth in welfare spending is illustrated in Chart 
4.\4\
    Clearly, President Bush's budget plan does not require cuts in 
welfare spending or even a slowdown in the rate of spending growth. 
According to the current spending proposals:
     Total Federal welfare spending is projected to grow from 
$316 billion in 2000 to $450 billion in 2006: an increase of 42 
percent. The rate of spending increase is projected at 6 percent per 
year.
     Federal spending on cash, food, and housing aid is 
projected to grow from $142 billion to $174 billion: an increase of 23 
percent. The annual rate of spending increase would be 3.6 percent, 
nearly 50 percent greater than the anticipated rate of inflation.
     Together, Federal and state welfare spending would rise 
from around $438 billion in 2000 to $626 billion in 2006.
     Altogether, the United States will spend $3.6 trillion on 
means-tested welfare assistance over the next 5 years. This amounts to 
around $47,000 for each taxpaying household in the U.S.

                          WELFARE AND DEFENSE

    The rapid projected rate of growth of future welfare spending can 
be illustrated by comparing welfare to defense. The President has 
promised to make defense spending a priority. Under his budget plan, 
nominal defense outlays would increase for the first time in a half 
decade. Defense spending would rise by 20 percent over 5 years from 
$301 billion in FY2000 to $362 billion in FY2006.
    During the same period, however, welfare spending is scheduled to 
rise by 42 percent. As Chart 5 shows, the gap between welfare and 
defense spending will actually broaden during this period. Currently, 
the U.S. spends $1.45 on welfare for every $1.00 spent on national 
defense; by 2006, we will spend $1.78 on welfare for every $1.00 on 
defense.

                      EXAGGERATED VIEWS OF POVERTY

    Welfare spending advocates often paint very alarming pictures of 
poverty in the United States in order to promote even more rapid 
increases in welfare spending. To the average voter and the average 
politician, the term poverty provokes images of destitution. In reality 
the typical ``poor'' person in the U.S. has standard of living far 
higher than our normal images and expectations for poverty.
    According to the government's own data, the typical American, 
defined as poor by the government, has a refrigerator, a stove, a 
clothes washer, a car, air conditioning, a VCR, a microwave, a stereo 
and a color TV. (Half of the poor own two color TV's; a third have 
telephone answering machines.) By his own report, the typical poor 
individual is able to obtain medical care for himself and his family; 
he lives in a home that is in good repair and is not over-crowded. By 
his own report, his family is not hungry and in the last year he had 
sufficient funds to meet his essential needs. While this poor 
individual's life is certainly far from opulent, it is equally far from 
the popular images of poverty conveyed by activists and the press.

                      WELFARE REFORM AND THE POOR

    In 1996, Congress enacted a limited welfare reform; The Aid to 
Families with Dependent Children (AFDC) program was replaced by the 
Temporary Assistance to Needy Families (TANF) program. Critically, a 
certain portion of AFDC/TANF recipients were required to engage in job 
search, on the job training, community service work, or other 
constructive behaviors as a condition for receiving aid. The effects of 
this reform have been dramatic.
     AFDC/TANF caseloads have been cut nearly in half.
     TANF outlays have fallen substantially. (See chart 6.)
     The decline in the TANF caseload has led to a concomitant 
decline in Food Stamp enrollments and spending.

    While critics predicted the reform would increase child poverty, 
the exact opposite has occurred. Once mothers were required to work or 
undertake constructive activities as a condition of receiving aid they 
left welfare rapidly.
     Employment of never-married single mothers has increased 
nearly 50 percent;
     The child poverty rate fell sharply from 20.8 percent in 
1995 to 16.3 percent in 2000.
     The black child poverty rate and the poverty rate for 
children living with single mothers are both at the lowest points in 
U.S. history.
     When non-cash welfare aid such as the Earned Income Tax 
Credit, Food Stamps, and public housing are properly counted as income, 
the child poverty rate stands at 11 to 12 percent.
    In the welfare reform of 1996 all sides came out as winners: 
taxpayers, society and children. By requiring welfare mothers to work 
as a condition of receiving aid, welfare costs and dependence were 
reduced. Employment increased and poverty fell. Moreover, research 
shows that prolonged welfare dependence itself is harmful to children; 
reducing welfare use and having working adults in the home to serve as 
role models for children will improve those children's prospects for 
success later in life.
    The workfare principles of the 1996 reform should be intensified 
and expanded. Work requirements in TANF should be strengthened. Similar 
work requirements should be established in the Food Stamp and public 
housing programs. Finally, because the reform has clearly succeeded in 
cutting welfare use, TANF outlays should be reduced by 10 percent in 
future years.
             welfare spending and the collapse of marriage
    As noted previously, about half of all means-tested welfare 
spending is devoted to families with children. Of this spending on 
children, around three quarters goes to single parent families. For 
example, Chart 7 shows the percent of aid to children in major welfare 
programs which flows to single parent families. The single parent share 
is generally well above 80 percent.
    Clearly, the modern welfare state, as it relates to children is 
largely a support system for single parenthood. Indeed, without the 
collapse of marriage which began in the mid-1960's, the part of the 
welfare state serving children would be almost non-existent.
    The growth of single parent families, fostered by welfare, has had 
a devastating effect on our society. Today nearly one third of all 
American children are born outside marriage. That's one out-of-wedlock 
birth every 35 seconds. Of those born inside marriage, a great many 
will experience their parents' divorce before they reach age 18. Over 
half of children will spend all or part of their childhood in never-
formed or broken families.

    This collapse of marriage is the principal cause of child poverty 
and a host of other social ills. A child raised by a never-married 
mother is seven times more likely to live in poverty than a child 
raised by his biological parents in an intact marriage. Overall, some 
80 percent of child poverty in the U.S. occurs to children from broken 
or never-formed families. In addition, children in these families are 
more likely to become involved in crime, to have emotional and 
behavioral problems, to be physically abused, to fail in school, to 
abuse drugs, and to end up on welfare as adults.
    Since the collapse of marriage is the predominant cause of child-
related welfare spending, it follows that it will be very difficult to 
shrink the future welfare state unless marriage is revitalized. 
Policies to reduce illegitimacy, reduce divorce and expand and 
strengthen marriage will prove to be by far the most effective means 
to:
     reduce dependence;
     cut future welfare costs;
     eradicate child poverty; and,
     improve child well-being.
    Tragically, current government policy deliberately ignores or 
neglects marriage. For every $1,000 which government currently spends 
subsidizing single parents, only one dollar is spent attempting to 
reduce illegitimacy and strengthen marriage.
    Fortunately, President's Bush's budget plan does propose a new 
program to ``promote responsible fatherhood.'' This proposed program 
could become the seedbed for a broad array of new initiatives to 
strengthen marriage. Still, the money requested is pitifully small: 
only $64 million per year. This amounts to roughly one penny for each 
one hundred dollars in projected welfare spending. The budget 
allocation to the new fatherhood program in FY 2002 should be increased 
fivefold with the funds diverted from TANF outlays. Beyond FY 2000 some 
5 to 10 percent of Federal TANF funding should be devoted to pro-
marriage activities.

                               CONCLUSION

    When Lyndon Johnson launched the War on Poverty he did not envision 
an endless growth of welfare spending and dependence. If Johnson 
returned today to see the size of the current welfare state he would be 
deeply shocked.
    President Johnson's focus was on giving the poor a ``hand up'' not 
a ``hand out.'' In his first speech announcing the War on Poverty, 
Johnson stated, ``the war on poverty is not a struggle simply to 
support people, to make them dependent on the generosity of others.'' 
Instead, the plan was to give the poor the behavioral skills and values 
necessary to escape from both poverty and dependence. Johnson sought to 
address the ``the causes, not just the consequences of poverty.''
    Today, President Johnson's original vision has been all but 
abandoned. We now have a clear expectation that the number of persons 
receiving welfare aid should be enlarged each year, and that the 
benefits they receive should be expanded. This expectation is clearly 
reflected in the future spending projections in Appendix A. Any failure 
to increase the numbers of individuals dependent on government and the 
benefits they get is regarded as mean spirited.
    Yet the expansion of the conventional welfare system is 
destructive. More than twenty years ago, then President Jimmy Carter 
stated, ``the welfare system is anti-work, anti-family, inequitable in 
its treatment of the poor and wasteful of the taxpayers' dollars.'' 
President Carter was correct, yet today little has changed except that 
the welfare system has become vastly larger and more expensive.
    This expansion of welfare spending has harmed rather than helped 
the poor. Instead of serving as a short-term ladder to help individuals 
climb out of the culture of poverty, welfare has broadened and deepened 
the culture of self-destruction and trapped untold millions in it.
    Rather than increasing conventional welfare spending year after 
year, we should change the foundations of the welfare system. Policy 
makers should embrace three basic goals.
    1. We should seek to limit the future growth of aggregate means-
tested welfare spending to the rate of inflation or slower.
    2. We should require all able-bodied welfare recipients to perform 
community service work as a condition of receiving aid along the lines 
of the TANF program operating in Wisconsin.
    3. We should support programs which foster and sustain marriage 
rather than subsidizing single parenthood. In addition, we should 
reduce the anti-marriage penalties implicit in the welfare system.
    These three goals are synergistic. They will operate in harmony and 
reinforce each other. In the long run, it will be difficult to control 
welfare spending merely by cutting funding. Rather, if we change the 
behaviors of potential recipients we will reduce the need for future 
aid. As the need for aid diminishes, spending growth will slow and then 
decline, and the well being of the poor and society as a whole will 
rise.

                               Footnotes

    \1\ A very small number of the programs listed in Appendix B are 
targeted to low income communities rather than low income individuals. 
While such programs are not formally means-tested, they should be 
considered part of the overall welfare system. Only a small fraction of 
aggregate welfare spending is provided through such programs.
    \2\ Appendix B provides a list of the major Federal and state 
welfare programs covered in this testimony.
    \3\ Projected outlay figures taken from Office of Management and 
Budget, Budget of the United States Government: Fiscal Year 2002, 
(Washington, D.C.: U.S. Government Printing Office, 2002). Table 22-2, 
pp.180-190.
    \4\ The outlay figures in Appendix A are less detailed than the 
past spending figures used in Table 1. This accounts for small 
discrepancies between the FY2000 figures in Table 1and Appendix A. 
These minor differences do not appreciably affect the overall analysis.

    Chairman Nussle. Ms. Clayton.
    Mrs. Clayton. I want to thank the witnesses, all of them, 
for their testimony and the supplemental information that they 
gave.
    Ms. Daly, in your report, ``Welfare: How Do We Define 
Success?'' you have an interesting chapter, stating welfare 
successes ended up in your soup kitchens. From what I gather, 
it refers to the increased number of people who have to beg for 
food over the weekend.
    Are there other recommendations that would encourage work 
and still encourage people to move from welfare to work, but 
not have them end up other than what you have indicated. You 
indicated an increase in minimum wage, and an increase in 
public housing. We support that, but I think there are some 
issues on food stamps that I didn't hear, that I would like for 
the record.
    Ms. Daly. Thank you very much, Mrs. Clayton. Those 
recommendations are in our written report. The report that you 
are referring to and that you have held up was published by 
Network, a Catholic social justice lobby with which we are 
associated, and my name is on the back of it. That is why you 
may have thought--because I was praising to the skies that 
wonderful report.
    We certainly share with Network our concerns, and, yes, we 
are seeing the welfare reform success stories in our soup 
kitchens and shelters and food programs, because people can't 
earn enough to pay the babysitter and the rent and buy food. 
And what always is last is food, because if you don't pay the 
rent, you get evicted; and if you don't pay the babysitter, you 
can't go to work. So people come and ask for emergency food.
    We don't think that is a solution. We are not asking the 
government to give us more funding for emergency food for the 
poor. We are asking for the poor to have enough resources to go 
to the supermarket like the rest of us.
    Our first recommendation would be to require the States to 
do something which is now only an option, which would be to 
allow people when they are leaving welfare to automatically get 
their food stamps benefits for a full year. When a mother goes 
to work, she can't take a day off every 3 months to sit in the 
welfare department and reapply for food stamp benefits. She 
can't take another day off from work, to go sit in the Medicaid 
office and reapply for Medicaid every 3 months.
    That is how the system works in most States, because the 
Federal Government wants to make sure that the States don't 
give $1 in food stamps or pay for one immunization for a child 
that they don't have the paperwork for in the records. It is 
really not a question of establishing eligibility. It is more 
making sure all the paperwork records are there.
    So if the Federal Government would allow the States to just 
let people have their benefits for a full year when they go 
from welfare to work, we would see a lot fewer people showing 
up in our soup kitchens who are working every day.
    Mrs. Clayton. I also want to thank Ms. LaVerne Hewlett for 
her statement describing how she is hopeful in the future to be 
more independent and to improve her education. Also detailing 
how the system is supporting her to work, and noting the whole 
issue of having trained licensed day care being a critical 
issue. It is almost like the housing piece. If you don't have 
people licensed and providing services for contract, having 
State dollars or Federal dollars to enable one to purchase it, 
won't matter.
    So, Mr. Chairman, I think that is something we need to work 
on to find out how we encourage more institutions to support 
licensing for daycare and also encourage community colleges to 
train individuals who are interested in going into that area. 
So I appreciate you highlighting the struggle. Even when there 
are dollars, you cannot utilize those dollars, if there is a 
lack infrastructure particularly in rural areas. I come from 
rural America and I know the difference between having 
available institutions and services for health or day care and 
not having them in rural areas, so I appreciate that.
    I did not hear you say that you received any food 
assistance. Was that an oversight on your part? Do you receive 
food stamps?
    Ms. Hewlett. Yes, I do receive food stamps.
    Mrs. Clayton. So you are eligible for food stamps and you 
are receiving food stamps?
    Ms. Hewlett. Yeah. Unfortunately it is not enough to carry 
over. I only receive $10 per month.
    Mrs. Clayton. Ten dollars per month?
    Ms. Hewlett. Correct. And when you look at the grand scale 
of things, $10 can't buy anything.
    Mrs. Clayton. I agree. We have to do something. There is an 
amendment to a bill that says it should be at least $25. We 
think it is insulting that you have to pass the bar before you 
can do--I saw these lawyers smiling at each other. Either that 
says something about us or it says something about food stamps.
    I do know the application process is very difficult. Ms. 
Daly, I think lawyers saying nothing is as difficult as passing 
the bar. But $10, whatever it is for a struggle for $10 is 
difficult. I agree that $10 doesn't pay very much, and we are 
trying to work on that in another bill. The agriculture bill 
did not attempt to raise the minimum benefit. The independent 
bill from Representative Walsh and myself says it at least 
ought to be 25. And usually what you are eligible for is based 
on your income. And it is my understanding that you made $7 an 
hour; right?
    Ms. Hewlett. Right.
    Mrs. Clayton.There are some deductions out there that allow 
eligibility, and part of that deduction is child care and 
health care. So I am not suggesting that you are not receiving 
what you should, but it does seem a little puzzling that if 
there is full recognition of your situation, you should be 
getting more than $10. I am not caseworker, but it seems as 
though all of your deductions haven't been accounted for if 
that is the case.
    Again, I thank all the panelists, and my time has expired. 
Thank you, Mr. Chairman.
    Chairman Nussle. Of course, in order for her to find out if 
she is eligible for more, we have got a whole ream of paperwork 
we have to have her fill out in order to find that out.
    Mrs. Clayton. Whether she is eligible for $5 more or not; 
that is the problem.
    Chairman Nussle. Just to get another 5 bucks. Mr. Moran.
    Mr. Moran. Do you want to----
    Chairman Nussle. Sure. The first thing I want to ask or 
suggest is that--particularly this is true of the testimony by 
Mr. Rector. It is clear from your testimony, the historical 
perspective that you give--and as I stated at the outset of the 
hearing, because the Budget Committee is in the unfortunate--
fortunate but unfortunate at times to have to deal with the big 
numbers and the big picture and the priorities of how this is 
all balanced, it is clear from your testimony that we spend a 
lot of money on these programs.
    In fact, I have a statistic in front of me that says--and 
again statistics aren't giving you the help you need at this 
moment, but the statistics are $8.5 trillion since the war on 
poverty started in 1965. So we are putting money into it, as 
you said.
    The Bush budget, even though there are many who suggest it 
doesn't go as far as maybe it could, or should, or whatever, to 
suggest that $3.6 trillion isn't a chunk of change is missing 
the point. I think the perspective you are adding to this is 
important to this. If the question then becomes if that is not 
enough, A, how much is; and then, B, if we are spending that 
much, why is it we still have people who are still locked into 
programs and don't seem to be escaping?
    So I guess it is both. A, what is enough, if that is not 
enough? And more importantly, B, if that is enough, why then 
does it seem not to be working as well as it could? I just 
throw that out.
    Mr. Rector. That is a very good point, Congressman, and I 
think the committee is in a very fortunate position, in the 
sense that you are almost the only committee that would look at 
the aggregate amount of money we are spending to aid poor 
people.
    The Federal Government has over 70 major programs, means-
tested programs, targeted toward poor and low-income people. 
And each committee has a few of these programs and they often 
will operate with visors, as if those programs were the only 
ones going on. We can also play games where in any 1 year, one 
of those programs, for example, the social service block grant 
program--which we heard a lot about today--for a short period 
of time, may be cut. Then we will talk a lot about that cut, we 
won't talk about other programs, earned income tax credit or 
Medicaid, that have been expanding at astronomical rates during 
the same period. The reality is that all of these programs are 
basically addressing the same population, most of whom will be 
getting benefits from four or five or six, seven programs at 
one time, coming out of different congressional committees. It 
is very important to understand the system, to look at all 
those programs altogether.
    Now, the question how could we spend $8-1/2 trillion on the 
war on poverty, for which you could buy almost the entire 
industrial and business infrastructure of the United States for 
that amount of money, and still have all of the problems that 
we hear about today?
    I believe the answer to that is that the conventional war 
on poverty programs basically rewarded two things. They 
rewarded non-work and they rewarded nonmarriage. They achieved 
tremendous increases in both of those things, thereby resulting 
in huge amounts of poverty and much larger populations in need 
of aid that then generated additional spending. So you were 
essentially digging your own hole. The more money you put into 
those programs, the less marriage you had, the less work you 
had, the more children in need of aid that were created, and 
therefore you spent more money.
    Now, with welfare reform and the creation of TANF in 1996, 
we partially turned the corner on that. We need to recognize 
that half of the women on TANF today are not being required to 
do anything to become self-sufficient. There are no meaningful 
work requirements in the food stamp program, no meaningful work 
requirements in the public housing programs. One-way handouts 
that we have had in the past don't work.
    I have been in this field for a long time. I have really 
been doing this now for about 20 years, and I have sat before 
this committee and other committees dozens and dozens of times 
over that time period, and in every one of those hearings there 
will always be someone that I respect from the other side of 
political spectrum who would say, if we could just spend this 
amount more, just this amount more, then everything is going to 
get better, the light at the end of the tunnel will come.
    Well, the reality is that when you look at this over the 
historical perspective, we did spend that amount more. Every 
single year the spending goes up, and over a period of a 
decade, the last decade, we are now spending 60 percent more 
than when Bill Clinton came into office in the early nineties. 
We always do spend that extra amount. Yet somehow the social 
problems that are supposed to be solved actually get worse, not 
better. And the reason for that is that we are spending this 
money in a wrong way. We need to spend the money in such a way 
as to promote marriage and promote work, and in that task we 
have just barely begun. We have just barely scratched the 
surface.
    Ms. Daly. Mr. Nussle, could I comment? As Mr. Rector 
pointed out at the beginning of his testimony, you have to take 
all of these numbers on spending on the poor and divide by 
half, because half of the spending, as he points out, is for 
elderly and disabled people. Most of those people are in 
nursing homes and are not going to be able to work ever again. 
Most of them were not poor until they got very old and very 
sick and used up all of their income and assets to pay for 
nursing home care. So first of all, divide the big $8 billion 
number in half.
    Secondly, the war on poverty. Robert Rector's spending 
total starts with the war on poverty. The war on poverty began 
in 1965, 35 years ago. The children who were in Head Start in 
the late 1960's are now teachers and nurses and bus drivers, 
legislative assistants here on Capitol Hill, and members of 
State legislatures around the country. I have met Head Start 
graduates all over the place.
    We have invested in similar programs for people for 35 
years. It is like the defense budget. You know, when Secretary 
Rumsfeld comes in and says we have to spend money this year, 
that will not mean we won't have to spend on defense in later 
years. There is always going to be a need to defend the United 
States. There is always going to be a need to take care of the 
people who are poor at that point.
    The people that we spent money on for the last 35 years, 
most of them are no longer poor and are now productive, but 
there are new people who need help. There is the baby born 
yesterday that we can't turn our backs on, even if we wish 
parents were married. We can't turn our backs on them.
    When you just look at the families with children, at the 
half of the poverty spending that is on them, a very high 
percentage of that is on health care, and the reason is, as Ms. 
Edelman pointed out, that we are the only industrialized 
country in the world that doesn't have a universal health care 
system. So we have to have a separate health care system for 
low-income people, especially for children.
    So most of the kind of spending we spend on the poor is not 
really to raise incomes above poverty or to help them get jobs. 
Most of the spending is survival spending. Survival spending in 
hospitals, in nursing homes, in long-term care facilities and 
in programs like the Head Start program and day care, which are 
very good investments.
    Chairman Nussle. Mr. Moran?
    Mr. Moran. Thank you, Chairman Nussle.
    First of all, I appreciate the fact that Mr. Rector has 
been involved in the social welfare area for as long as you 
have, but I don't appreciate the fact that much of your 
analysis is, I think, deliberately misleading. And the most 
obvious example of that is Medicaid.
    You know, from the tone of your testimony, you are 
suggesting--you keep using handouts and so on. In fact, the 
fastest-growing area of the Medicaid program is actually the 
elderly in long-term care facilities, and the fastest component 
of that is middle-class families who have found a way to spend 
down to get their parent, the grandparent or the family into 
long-term care facilities. No one is arguing that the reality 
is that.
    The money that we have spent on very low-income families 
has reduced in its annual rate of growth, and, in fact, with 
the--as a result of the budget resolution that we just passed, 
is going to be reduced much more substantially. It is the 
entitlement programs of Social Security and Medicare, the vast 
majority of which actually goes to the middle class that 
comprises the--most of the social spending for the next 10 
years.
    The other problem I have with it is just the mean-
spiritedness of the context in which your testimony was given. 
The principal recipients of the programs that you take to task 
are children who are suffering for the accident of their birth. 
They are not the single mothers. Most of the medical 
assistance, Medicaid, when it does go to the very poor, other 
than the elderly, is going to children. And likewise with food 
stamps. Most of the food stamp expenditures are actually for 
the children, although you can obviously find abuses in every 
program. The most abused program is actually tax collections on 
the part of the very wealthy. Although I know that would not be 
consistent with your ultimate objective of the Heritage 
Foundation, I bring that up.
    I am going to--since I obviously have somewhat dismissed 
your testimony, Mr. Rector, because of the mindset in which it 
is given or the mean-spiritedness. I just find it really 
unsavory and unfortunate.
    I want to give Ms. Daly both some credit for your testimony 
and your commitment to improving things, but also some 
criticism, substantial criticism, as far as I am concerned, and 
that is in your outline of what needs to be done to address 
this problem. Nowhere is there reference to family planning, 
and much of the problem that we have in terms of families on 
welfare, single mothers--because I think there is a legitimate 
point to be made that if you have only got one adult in the 
household, that adult has to be primarily occupied with raising 
the children. So most families don't work very well. It is an 
extraordinary effort to make a family work if you don't have at 
least one adult in the work force and one adult to focus 
primarily on the children. When one adult has to do it all, you 
are asking for an enormous effort.
    The Catholic Church--and I would only say this because I am 
a Catholic--is part of the problem, and it is in not supporting 
family planning. The principal reason why young mothers are not 
married is because the father of the child is not an 
appropriate husband or real father. I should say the biological 
father of the child is not appropriate for fatherhood or to--to 
be a responsible spouse. We have got to empower more women, 
more consistently, to make even more of a dent in these charts 
by much greater emphasis upon family planning, and I would like 
you to address that, if you would, Ms. Daly.
    Ms. Daly. Well, Mr. Moran, as you know, there has not been 
any difficulty for the advocates of family planning to get 
steady increases for those programs through the Congress, but 
what there has been a problem with is getting steady increases 
in programs for housing production and day care and other kinds 
of health care issues.
    The subject of this hearing is the problems of the working 
poor, so my testimony focused not on people who are still on 
welfare, which is mainly what Mr. Rector talked about, but on 
the vast majority of low-income families in this country who 
are not on welfare now. Many have never been on welfare, but 
can't make ends meet, as the title of the hearing states.
    I could tell you about some programs that Catholic 
Charities runs that are helping biological fathers to be real 
fathers. In Chicago, in New Jersey, in Virginia, all over the 
country we have programs that help young mothers be reconciled 
with their own families so that they can get emotional and 
psychological and practical support from them; and also to get 
to know and work with the parents of the biological father 
where that is appropriate--when the man has not been abusive or 
taken advantage of a young woman--so that the young baby 
growing up has two parents and two sets of grandparents. And 
that helps financially, but it also wraps a family around that 
child for its whole life, and nothing is more important, as Mr. 
Rector pointed out.
    Now, we might wish that the couple had married before they 
had a child, but people who come to our agencies are not coming 
to us for family planning, so we can't tell you much about 
that. They come to us for help with day care, with jobs, with 
getting better jobs, and with being able to take care of the 
children that they already have. So I can only come here and 
testify from my own knowledge and the experience of my agencies 
about the major problems of low-income people who work.
    Mr. Moran. That was a very good response, incidentally. 
Nice job.
    May I ask another question? Jim, apparently I am not 
holding up a lot of people here. But President Clinton signed 
an executive order--it must have been 1998, I think, maybe 
early 1999--with regard to housing. Basically, it changed the 
eligibility that had existed up until then for dependent girls 
in a public housing household to be able to achieve eligibility 
for public housing or Section 8 by virtue of having a child. I 
understand his reasoning that you didn't want to encourage, you 
know, the cycle of poverty and so on and forth, but 
unfortunately one of the statistics that is most compelling and 
upsetting is that the age of the biological father increases 
almost in direct proportion to the youth of the mother. In 
other words, the older the father, the younger the mother, up 
to a point, and then it stands merged about 18, 19.
    The biological fathers, in many cases, were the stepfathers 
or boyfriends of the mothers. That was what too often happens. 
So it becomes untenable for the mother to stay in the house--
for the teenage mother to stay in the house. Even though that 
executive order was signed, there was really no alternative, 
and so we have been pushing for things like second-chance 
homes, which have worked, and which--the Borromeo Housing I 
know Arlington is doing. We have got a little grant for them, 
but it is tough. And of course in the Arlington diocese, we 
have no support from the Catholic Church. Even though they have 
tremendous resources, they are doing virtually nothing.
    Ms. Daly. You might want to check out Christ House.
    Mr. Moran. Oh, Christ House is wonderful.
    Ms. Daly. Christ House is funded almost entirely by the 
Diocese of Arlington, by the Catholic Church.
    Mr. Moran. I understand. I am very familiar with Christ 
House, Ms. Daly, and they are doing wonderful things, but those 
are volunteers in the larger community. In terms of the 
Archdiocese support, it is minimal, particularly for helping 
young women. And what I am getting at is I wonder if in light 
of that executive order, if it is isn't time to look again at 
the maternity homes that are not dissimilar from the second-
chance home concept, where young girls can go into a 
cooperative living facility, have adult supervisors, but share 
babysitting, get some education, some training and live in a 
more secure and much more nurturing environment. The Catholic 
Church used to provide a number of those. It does virtually 
nothing now, I don't think, in that area, and I am wondering 
whether you think that might be something we should look 
further at?
    Ms. Daly. Well, I have to agree with you that that would be 
a good thing to have more second-chance homes and more 
maternity homes. I have to disagree with you that we don't do 
it anymore. Catholic Charities agencies all over the country 
run second-chance homes and maternity homes and group apartment 
living that is supervised so that when the 16-year-old mother 
is 17 or 18, and she doesn't have to live in a congregate 
setting anymore, she can have a little apartment, she is still 
getting some supervision and help.
    I could not agree with you more that government needs to do 
more to fund those second-chance homes. It is very clear that 
they are effective in reducing the second pregnancies if the 
girl only has one baby so far; that girls who live in those 
homes are more likely to finish high school, get training, get 
jobs and do well as mothers. I think they are often more likely 
also to reconcile with their own families and the father and 
the father's family and create a family around the baby.
    I have to tell you that the major source of money for 
programs like that in this country is the social service block 
grant, and I have to keep up with my novena here and hope that 
you all will work to restore funding for the social service 
block grant. If this committee wants to see more second-chance 
homes for mothers, that would be one way to make sure it 
happens.
    On the executive order, I think the President did the right 
thing. I think girls under 18 have no business living by 
themselves in public housing projects or anyplace else with 
little babies; that they are going to be preyed upon by 
unscrupulous people, they will not have the help they need, 
they are emotionally isolated. It just makes no sense for that 
to be the solution.
    Mr. Moran. Ms. Daly, I agree with you on virtually 
everything that you said in response except, while it doesn't 
make any sense, there are some households where neither does it 
make any sense to leave a young child in the same household 
where the boyfriend or the stepfather is still living there who 
was responsible for the impregnation, and I think there needs 
to be someplace where girls end up in that situation can go, 
not in their own living unit, I agree, but a more nurturing, 
secure environment.
    And with regard to the Federal Government needing to do 
more, I agree, but it is not going to do any more than it is 
doing now. In fact, it will do less, unless there is sufficient 
advocacy on the part of groups like Catholic Charities, those 
who have political influence, as your organization does. And 
the direction and the gap-filling and the capacity-building is 
also going to have to take place, I think, in the nonprofit 
sectors before you see major programs implemented at the 
Federal level.
    Ms. Daly. Mr. Moran, before you came in, I was pointing out 
that certainly I would agree with you that we shouldn't leave 
the young pregnant girl in the household where she has been 
abused by the stepfather or the boyfriend of her mother. On the 
other hand, we shouldn't leave him there to abuse anybody else 
either. He should be arrested and prosecuted, and I think, all 
around the country we are beginning to see a lot more district 
attorneys being willing to take that avenue; that it is not 
just a question that welfare programs deal with this. The legal 
system has to protect young women and young men.
    Mr. Moran. I agree.
    Mr. Rector. If I could make a couple of points that relate 
to this. Although we do need to be concerned about these young 
teenage moms, I think it is important for us to understand that 
when we look at the one-third of all births at occur outside 
marriage, very few of those occur to women under age 18. Only 
about 14 percent of total out-of-wedlock child-bearing is 
occurring to girls that are under 18 and are in high schools. 
The overwhelming bulk of those out-of-wedlock births are 
occurring to young adult women age 19 to, say, 23. When you 
look at the data there, it doesn't really suggest that a lack 
of family planning or a lack of understanding of contraception 
is the real issue. In fact, in about half of these cases of 
these young adult women, she is actually cohabiting with the 
father at the time of birth, but the relationship will fall 
apart in about a year and a half after the birth.
    What is really happening here is not a lack of 
contraception. It is a crisis in the relationships between 
young adult men and women, and that is why the marriages are 
not forming. That is why that man is going to leave that house. 
There is going to be yet another boyfriend who comes in in a 
few years. There is going to be a fracture in that 
relationship. There is going to be another boyfriend who comes 
in and this situation of sequential cohabitation, it the main 
breeding grounds for poverty. Moreover, virtually all of the 
serious child abuse in the country is occurring in this type of 
situation where you have got a boyfriend with several young 
kids in the household who are not his biological children.
    We ought to look very carefully at this young girl and her 
boyfriend, who by the time she is in her 20's, is not a lot 
older than she is. They are cohabiting together, but they are 
not married. The government the supporting them, is paying for 
the birth through Medicaid, yet in virtually no State in the 
United States do we hand that couple even a single brochure to 
tell them about the value of marriage, let alone offering them 
counseling and support that might help them to improve the 
quality of their relationship.
    Also, I would say in all respect that even if you throw the 
medical growth out--and my testimony did indicate very clearly 
that the medical component of the welfare state is growing the 
most rapidly, but even if you throw Medical care out, cash, 
food and housing, after adjusting for inflation, increased by 
37 percent in the last decade. We are spending a lot of money. 
The question is, are we spending it in the right way, in a way 
that truly helps, or in a way that hurts?
    I am--and I am sorry that you felt that my remarks were 
mean-spirited, but I would also remind you that many people in 
Congress called the welfare reform of 1996 mean-spirited. I 
spent my entire adult career trying to assist poor people, and 
I think the true judge of mean-spiritedness is in the 
consequences of the policies. I worked a lot on welfare reform. 
I worked on promarriage and prowork policies for several 
decades, and I would put those policies in the terms of their 
consequences up against any traditional welfare program from 
the past, and I think we would win in that debate hands down 
every day of the week.
    Mr. Moran. Well, you are going to have to--you have 
elicited a response, Mr. Rector, and, first of all, I won't 
argue with the 37 percent increase over a decade, although I 
know some points could be made to clarify the meaning of that, 
but that averages out to 3.7 percent on an annual basis. That 
is one-third of the average medical cost increase for the last 
approximately--well, for many of those years in the last 
decade. In no year did medical costs not go up substantially 
more than 3.7 percent. Housing costs went up considerably more 
than 3.7 percent, and in many of those last 10 years. They 
certainly did in the last 2 years. Rental costs have escalated 
dramatically, particularly in the urban areas where much of the 
Section 8 is taking place. I don't know about food. I don't 
have any figures on food, but I think when you put the 3.7 
percent on an annual basis in context, it is not as dramatic as 
it might appear to be.
    I don't want to find even more opportunities for you and 
Ms. Daly to reach agreement in opposing what I am suggesting, 
but the----
    Mr. Rector. It is not too frequent, so----
    Mr. Moran. The only point that you wanted to emphasize was 
that principal recipients of these programs that we are talking 
about are the children who are suffering for the accident of 
their birth, and when you talk about the family situations not 
working consistently, among affluent, well-educated spouses the 
principal reason for divorce is financial difficulties, and 
when you are living in poverty, it oftentimes becomes an 
untenable situation.
    Now, I don't think the government can come in and undo 
that, but I do think much of the family breakup is a function 
of not having sufficient resources to become in any way self-
sufficient, blaming it on one spouse or the other, the constant 
frustration, the constant hurt in not being able to provide for 
your family. Those families that I do know who do live in 
poverty, I think that is the one single problem that makes it 
awfully difficult to stay together, the lack of capability to 
provide adequately for your family.
    I think we are talking about some issues that go far beyond 
the scope of the Budget Committee, but I am glad the Budget 
Committee hazarded them today, and I thank you, Mr. Chairman, 
for the hearing.
    Chairman Nussle. Thank you, Mr. Moran.
    With that, we have come to a conclusion. Where is Khalil 
today? Is he here? All right. Well, I was wondering if maybe--
what your child care situation was for today. I was going to 
say, we are going to have to worry about your babysitter if 
this goes much longer. You are fine back there? OK. Well, I am 
glad you were able to come today.
    I thank all of our witnesses for a very interesting 
hearing. I know that this subject will be discussed many 
different ways, many different times in the future. It needs to 
be. I appreciate all of you coming and spending time with us 
today, and with that, the hearing is adjourned.
    [Whereupon, at 1:43 p.m., the committee was adjourned.]

                                
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