The Continuing Struggle for a Negative Income Tax: A Review Article

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The Continuing Struggle for a Negative Income Tax: A Review ArticleAuthor(s): Walter WilliamsSource: The Journal of Human Resources, Vol. 10, No. 4 (Autumn, 1975), pp. 427-444Published by: University of Wisconsin PressStable URL: http://www.jstor.org/stable/144983 .

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THE CONTINUING STRUGGLE FOR

A NEGATIVE INCOME TAX:

A REVIEW ARTICLE*

WALTER WILLIAMS

After a summer of furious analytic activity, the Office of Economic Opportunity suomitted to President Lyndon Johnson in October 1965 its first National Anti-Poverty Plan that contained a recommendation for a universal negative income tax for all of the poor according to the single criterion of need. So began the major bureaucratic/political struggle within the federal government for "Negit," as negative income tax schemes came to be called.' The ensuing decade reached a dramatic climax in the congressional defeats of President Nixon's Family Assistance Plan (FAP) and of a modified version of FAP referred to as H.R. 1. Even though Congress twice rejected a negative income tax scheme for families with children, it did enact four pieces of legislation that have important components of the original OEO Negit proposal-the Welfare Amendments of 1967, the 1971 amendments to the Food Stamp Act, Supplemental Security Income, and the so-called Long amendment providing a one-year work bonus to low income families.2 And although the recommendation of a full-blown Negit seems a victim of President Ford's efforts to hold down spending and new initiatives this year, it may be only a temporary hiatus in the continuing struggle for basic reform in the American income security structure.

The author is Professor of Public Affairs, Graduate School of Public Affairs, and Director of Research, Institute of Governmental Research, University of Washington.

* Work on this paper was funded in part by a National Science Foundation grant. The following individuals made comments on an earlier draft: Richard Elmore, Robert Harris, Robert Levine, and Theodore Marmor. Lucille Fuller provided editorial help. The author, however, is solely responsible for the contents.

1 I should note that James Lyday and I were the two OEO analysts working on the transfer payments segment of the antipoverty plan. Making the OEO planning activities the starting point does not imply that Negit did not have a history prior to that time (see [20] for an account of this early period); however, the OEO planning did represent the first concerted effort on Negit in the federal government.

2 The last one pushed through by Senator Russell Long, FAP's most persistent enemy, might be looked on as Negit's bastard cousin, but it too can claim some family features.

The Journal of Human Resources X 4



428 I THE JOURNAL OF HUMAN RESOURCES

These events are now portrayed in several major books. The first, by Daniel P. Moynihan [15], a key participant in the first Nixon effort, generated a flurry of controversy that raised doubts about both its accuracy and its judgments. It is now followed by books by Vincent J. (now deceased) and Vee Burke [6] and by M. Kenneth Bowler [5], both of which present new information and interpreta- tions and facilitate a reconsideration of some of the criticism of the Moynihan book. The main concern of the three books is the bureaucratic and political activities that led to negative income tax proposals by the Nixon administration and their eventual defeat in the Congress. None dwells extensively on technical program issues or on issues of research design and methods, such as those raised in the New Jersey negative income tax experiment. However, the books do treat at length what might be termed the interaction of policy analysis and politics, and seldom has the role of the policy analyst as an insider in the policy process been made so clear.

The three books plus a number of recent articles and book reviews provide the basis for a review of the negative income tax's first decade. In this endeavor, I will try to draw out a number of points that both illuminate some current issues and controversies and indicate where we might go next in the quest for a sound income security strategy in the United States. The main issues considered are the role of policy analysis in the policy process and the implications of the struggle over Negit for a deeper understanding both of the political theory of decision-making (incremental versus nonincremental choice) and of the democratic process itself. As will be seen, there is a great deal of overlap in the topics, and more than anything else, what follows is about policy analysis-its contribu- tions and its limitations in both technical and political terms.

THE THREE BOOKS

This section will summarize several reviews of Moynihan's The Politics of a Guaranteed Income and will undertake "mini-reviews" of the Burkes' Nixon's Good Deed and Bowler's The Nixon Guaranteed Income Proposal. Following sections will draw heavily on these books in discussing specific issues.

The Politics of a Guaranteed Income

This long book, which provides an account of the selling of FAP to Mr. Nixon through its defeat in Congress, was written by the most important presidential staff member in that process. Not only is the book an extended account by a key insider, it is also a bold book with intriguing speculations concerning incrementalism and the role of policy analysis. At the same time, the book has brought forth scathing criticisms both by other participants in the struggles for FAP and H.R. 1 and by specialists on transfer payments (see [1, 7, 9, 12, 16,



Williams 1 429

and 17]). These critics challenge both Moynihan's facts and judgments. Indeed, in his long and almost unrelenting critical review, Henry Aaron is led to observe: "Nearly every segment of Moynihan's argument is called in question by other participants in the struggle over FAP, by facts, by logic, or by Moynihan himself" [1, p. 1728]. Further, it is an exasperating book. Even though Moyni- han writes beautifully, he is extremely long-winded and has the annoying habit of refighting his old battles over and over again (for example, The Negro Family [14] ), so that The Politics of a Guaranteed Income meanders down a number of extraneous paths. More importantly, Moynihan painted his cast of actors in one-dimension terms, with those favoring FAP having both laudable motives and great competence while opponents had weak minds, weak backbones in the face of pressure, evil intent, or some combination of these. This lack of judgment about people and oversimplification of motives call into doubt the book's overall credibility. Finally, one must record with dismay that none of the people cited in Moynihan's acknowledgments, to my knowledge, had any involvement in FAP; moreover, I find no discussion in the book of any efforts to verify points or judgments with other participants in FAP-surely odd behavior by a historian of a recent happening. Given these flaws, the level of skepticism is hardly surprising; but one also wonders whether the more recent work, such as that by the Burkes and Bowler, may salvage some of this massive book by such a critical person in the history of FAP.

Nixon's Good Deed

This book, by a husband-and-wife journalist team, is a combination of pains- taking investigative work and clear, concise writing. For those of us who suffer from the tendency to write volumes in a volume (Moynihan is a marvelous example), it should be a useful experience to see how two good journalists boiled down a vast amount of information from the earliest work on Negit through the passage of the Supplemental Security Income (SSI) program in October 1972 into a 222-page book of relatively large print.

The Burkes do a number of other good things. They explain the tangle of welfare-its Catch-22 qualities and its inequalities, in which recipients in some states received benefits that left them below the poverty line while recipients in other states could still claim welfare benefits even though their earnings ex- ceeded $10,000 a year. Moreover, the Burkes present an excellent treatment of the ways in which the income and expense disregards provided for in the 1967 welfare amendments had major implications for the development of the FAP proposal (a relationship generally missed by the insider analysts). The Burkes also show a sharp eye for contradiction and an ability to depict the irony in many of the controversies over transfer payment programs. In particular, they are good at finding the telling example, especially as illustrated by interchanges




among key persons, and the apt quote that captures a crucial point succinctly and vividly.

The book is not, however, without significant flaws. Most importantly, the Burkes, like Moynihan, treat the various participants in the controversy in black-and-white terms so that ultimately Nixon's Good Deed also is marred by a narrowness of perspective and a tendency to oversimplify complex moral and political issues. In fairness, the Burkes' transgressions do not appear as serious as Moynihan's; and on balance, even with its biases and blind spots, there is a ring of truth in the book-an overall impression of good reporters' efforts to present the facts as best they can and to editorialize on the side. Unlike the Moynihan book, Nixon's Good Deed remains believable in that the Burkes try to report facts accurately before they render judgment. Although I quarrel with a number of these judgments later in this review article, I believe that the book is the best treatment to date of the political and bureaucratic controversy over welfare reform and the negative income tax.

The Nixon Guaranteed Income Proposal

Since most of those writing on FAP and H.R. 1 have had an executive branch slant, Bowler, a political scientist who was working on the Hill during the H.R. 1 deliberations, provides a useful balance and a different perspective. The book's strength is to show how Congress is different from the executive branch, not just in political terms but also in the way it approaches a set of technical issues such as those raised by the negative income tax. In this regard, the treatment of the efforts by the Committee on Ways and Means to rewrite FAP into H.R. 1 is quite illuminating.

The Bowler book suffers from the academician's propensity for overclassifi- cation. Taxonomy often reigns in an effort to stuff complex events into neat theoretical boxes. This is not to argue that Bowler's judgments are necessarily wrong, but rather that he does not gain from making his taxonomies; usually the reverse is true. However, the book does give us insights into how Congress does its business, including how it uses information and analysis. The book lacks Moynihan's boldness and the breadth of coverage of the Burke volume, but it also escapes their self-righteousness and presents a useful treatment of the congressional deliberations over H.R. 1.

INCREMENTALISM

Moynihan, the Burkes, and Bowler all see FAP and/or the SSI program as a quantum policy jump incompatible with incrementalism. Moynihan labels FAP "an extraordinary, discontinuous, forward movement in social policy" and goes on to state, "those who call for 'fundamental social change' could, if they so desired, point to the events leading up to the proposal and near enactment of the



Williams 1 431

Family Assistance Plan as evidence that 'fundamental,' rather than merely 'incremental,' social change is a realistic option for American society at this time" [15, p. 7]. In discussing SSI, the Burkes observed that "the revolutionary right to cash income was won for the aged, the blind, and the disabled in a single section of an Act of Congress, not by incremental steps" [6, p. 195].

Since the late 1950s, when Charles Lindblom's "The Science of 'Muddling Through'" [11] appeared, political scientists and others have been arguing about both the descriptive and the normative validity of the concept of incrementalism. In all fairness of Lindblom, his theory, developed over a number of years, has grown to be a subtle and complex explanation of the political decision-making process, so that any quick characterization of it is bound to do the theory an injustice. However, it is the theory in its short form about which most of the debate arises. The short version says that political changes are hammered out in tough bargaining among partisan advocates to arrive at a new decision quite close to the starting point of decision-making. Incrementalism is seen by Lindblom as both descriptive of the American political process and normative in that the process avoids dangerous large leaps into the unknown.

Whether FAP and SSI call into question the concept of incrementalism is difficult to answer in part because of the fuzziness of that thesis. Moynihan is surely correct when he observes that "the distinction between an 'incremental' change and a 'quantum leap forward' is much in the eye of the beholder" [15, p. 175]. Indeed, at times one feels that the whole controversy over incrementalism is academic hair-splitting.

There is, however, a key question with policy implications concerning the extent to which analytic and political efforts combined to foreshadow FAP, SSI, and other transfer payment changes. This question, too, has a strongly judgmen- tal side in that enough digging can unearth obscure past events that seem to have led up to major historical events. In the case at hand, the evidence is not obscure but rather quite strong, particularly in terms of the role of policy analysis. We need to consider this evidence as a basis for making a reasonable judgment about whether FAP challenges incrementalism. Yet, as will be argued, a fine-grained look at the role of policy analysis that facilitates the judgment about incrementalism also suggests that the judgment per se may not matter so very much. What does matter is that a continuing policy-planning effort did pay off.

It was a band of policy analysts at OEO who brought the negative income tax into the bureaucratic/political arena and sold it to Sargent Shriver. These and other analysts at HEW and the Council of Economic Advisers kept the idea alive mainly by doing additional analysis and by developing the New Jersey negative income tax experiment to generate empirical evidence of labor supply responses to different negative tax arrangements. As Williams has pointed out, the policy analysts were neither public relations nor "Hill" men, but rather academically oriented social scientists. The comparative advantage was to go after hard evidence concerning a negative tax [20].




The Negit of the OEO proposal had a number of features, including universal coverage for all those below a specified income level, more humane (than welfare) income determination, and strong work incentives deriving from a relatively low tax rate (50 percent being a kind of magic upper number). The analysts, who were mainly economists, naturally wanted the whole package, not partial victories. Yet, as the Burkes point out in discussing the 1967 welfare amendments that contained a 67 percent tax rate: "So it happened that Congress enacted a negative income tax for welfare mothers while economists still debated the political feasibility of the negative income tax" [6, p. 26]. Politicians are no doubt more realistic than we economists; however, it surely is not unreasonable to think that the choice of a less than 100 percent tax rate was affected by the economists' work on Negit.3

One might ask, in light of all these efforts, why President Johnson, unlike President Nixon, never supported the negative income tax. In the bright illumi- nation of hindsight, the explanations seem clear. First, Vietnam demanded increasing attention and sums of money that limited new initiatives in the social areas. In addition, Negit did not seem to fit Lyndon Johnson's style, but then it hardly seemed to be Nixon's style either. Perhaps more importantly, rather than having a strong advocate like Moynihan, Negit in the Johnson administration had a strong critic-Wilbur Cohen, HEW Under Secretary and Secretary. As the Burkes observed in quoting William Gorham, an HEW Assistant Secretary involved with Negit: " 'In those days welfare policy was made by three men-Cohen, Mills, and the president. And sometimes you had the feeling that the president wasn't included' " [6, p. 37].

The coming of Nixon and the going of Cohen made it a different game. New administrations look for new initiatives. Welfare problems had been irritat- ing in 1965 when Johnson might still have been open to new programs. A couple of years later, when the gravity of the welfare situation became clear, expensive new ideas were not selling. So, in 1969, the incoming administration inherited the welfare mess and saw it as a disaster area requiring immediate attention-this combined with the fact that the policy analysis on Negit was far more detailed and comprehensive than that available in other problem areas. And the Johnson holdover analysts were there with previously developed Negit plans, ready to translate the gospel for the new regime. The point-and it is a key one-is not that available analysis impelled action (politics did), but that it facilitated that action. What may be the hardest thing to explain is how Moynihan and others sold FAP to President Nixon. The buying of FAP by Ways and Means is not obvious but is probably less difficult to understand than the President's acceptance. As all of the authors pointed out, Ways and Means, by congressional

3 A good example of minor events that might be unearthed as forerunners of major ones is Congress's passage of a less than 100 percent tax rate for blind welfare recipients (a quite small group) in the early 1960s. See [6, p. 26].



Williams 1 433

standards, was a responsible and methodical group, so that it was ripe for accepting arguments-and importantly, a goodly amount of analysis-that FAP provided a reasonable attack on the welfare mess.4

FAP, once on the table, paved the way for the 1971 food stamp amendments and SSI. Food, like welfare, was an immediate issue for the Nixon administration and a highly competitive one with the Democratic Congress in seeking expanded provisions. The 1971 amendments made most low income single and family households eligible for food stamps which were, in effect, a specialized form of money that could be used to buy food. So the amendments turned out to be what in many ways is the closest thing we have had yet to a universal Negit. Admittedly, the 1971 amendments provide "earmarked money" rather than "regular" money and do require that able-bodied household mem- bers over the age of 18 register for employment, while Negit of the OEO proposals only used the tax rate as an incentive. But here is a scheme that covers all households below specified income levels varying by family size, and has a less than 100 percent tax rate-surely an outcome foreshadowed by the earlier events.

It might be said that SSI arose from FAP, emerging after FAP's demise in the H.R. 1 package. The most fascinating thing about SSI is not that it is so radical, but that it received so little attention in Congress. The Burkes observed that "since it was couched in technical phrases that understated its impact, SSI received little scrutiny" [6, p. 198] . And Bowler cited the following statement by a legislative aide of Senator Ribicoff: " 'People were so concerned about Title IV (the family provisions) that no one paid any attention to [SSI]. If SSI had been on its own it never would have made it. Also, it passed because it looked like peanuts next to the family programs' " [5, p. 147].

The pieces of the jigsaw may fall into place too precisely in the brilliant precision of reconstruction; still strong evidence is available, dating from mid- 1965, of the crucial place of policy analysis in the events that transpired. Clearly there were several incremental steps along the way, and the work of policy analysts was an important factor in that movement. But we must take care not to get too deterministic, especially about policy analysis. First, at the height of decision, it was politics that reigned. Second, even though policy analysis probably was the key factor keeping things going and so paved the way for the decisions that came, no one should think that the decisions were preordained. Nixon could well have sided with FAP's strongest opponent within the administration, Arthur Burns, then Counselor to the President and a long-time adviser, against Moynihan who was below Burns in the pecking-order, a Democrat, and a relative newcomer to the Nixon inner circle. History is complex. Only when these events are considered in detail, as in the three books, can a reasonable

4 As usual, politics was not far away. In personal conversations, Ted Marmor suggests that Mills saw support of FAP as a means of establishing somewhat more liberal credentials and a national image in anticipation of the 1972 presidential race.



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assessment be made of the extent to which FAP challenges the concept of incrementalism. Yet telling the tale so as to see how analytic activity can influence policy may be much more useful than debating whether or not nonincremental leaps transpired.

POLICY ANAL YSIS AND PUBLIC POLICY

The long struggle for Negit is surely one of the finest hours of social policy analysis. Never have policy analysts been so prominent for so long in a social program area. As one of the original OEO policy analysts, I must record a fascination with the emergence of policy analysts as the heroes of the Burkes' tale and, to some extent, of Moynihan's (sharing the billing, admittedly, with a few others, including Moynihan). But we need to recognize that policy analysis at best had a winning season, not by any means an undefeated one.S Over the long period in question, policy analysis came up short more than once in the executive branch, and analytic weaknesses in Congress were a major factor in dooming FAP.

Whether increased analytic capability in the Congress will lessen the kinds of political excesses that marked the two efforts to pass a negative income tax could be an important determinant of Negit's chances in later years.6 This key issue is illuminated by considering the views of Moynihan, the Burkes, and Bowler on the questions of analytic effectiveness in the executive branch and the Congress, and the relative importance of analysis and politics in the defeat of FAP and then H.R. 1. Moynihan claims a high quality for executive branch policy analysis and its importance in selling FAP, and a lack of analytic capability in the Senate Finance Committee as a key factor in FAP's defeat. The Burkes, too, accord executive branch analysts a primary role, but they did not feel that greater analytic capability in the Congress would have saved the day. They believed that those opposed to FAP would have ignored analysis since they were playing to the tune of special interest groups such as the National Welfare Rights Organization (NWRO):

Moynihan's faith in the power of analysis to rout distortion is somewhat naive. Certainly in the FAP case at least, Moynihan is wrong. Those who spread misrepresentations [about FAPI . . . aimed at a gullible and captive audience. FAP had put the "liberalism" of many on trial, and to prove

5 I suspect that we analysts in this case are much like long-suffering sports fans who feel elated when their team wins 6 of 10 games after a single victory the year before.

6 The question of congressional analytic capability has even broader implications in that one of the major features of the Congressional Budget and Impoundment Control Act of 1974 is the establishment of the Congressional Budget Office. The latter could increase greatly the role of analysis in Congress, if legislators are willing to use the capability (a big if). See [ 191 for further discussion.



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themselves some had enlisted in the NWRO army against reform. Their ears were closed to any analysis of FAP but that of NWRO. Looking for simple moral issues of right and wrong, they welcomed NWRO's easy labels: racist, punitive, slavery! [6, p. 217]

Let us pursue the disagreement over the effect of greater analytic capability in the Congress by setting out some points of agreement in the three books. All have similar perceptions of the House Ways and Means and the Senate Finance Committees. The former was viewed as well-disciplined, hard-working, and able to work with the Nixon administration by interacting on key issues that required a modicum of analytic competence. No one had much good to say about the Senate Finance Committee, or even any individual member with the exception of Senator Abraham Ribicoff. The committee was characterized in the main as a group of undisciplined prima donnas who had little interest in facts or analysis, but great concern for their images among either conservative or liberal constitu- encies. All of the authors emphasized that extremely partisan politics characterized the Senate deliberations on FAP and H.R. 1. In comparing the two committees, too much should not be made of differing analytic capability in the welfare area since Ways and Means was hardly overpowering in this regard. As Marmor and Rein have observed: "The traditions of committee management of conflict-controlled in Ways and Means, freewheeling in Senate Finance- determined the opposite responses to the same bill" [12, p. 22]. Still, the strong degree, of control in Ways and Means did facilitate the use of analysis.7

These various perceptions in broad dimension seem correct. But two additional points need to be made. First, the level of purely partisan politics intensified between the debates over FAP and those the next year over H.R. 1. According to Bowler, even Senator Ribicoff, who towered above his colleagues, finally waffled over politics by refusing to deal with Senator Long because of fear of antagonizing his liberal supporters [5, pp. 141-42]. The excesses of some of his fellow senators were appalling in terms of the disregard of facts and the degree of support of unsound positions. Further, White House support that was relatively strong during the FAP deliberations diminished or disappeared during the debate over H.R. 1. Moynihan was writing only about FAP, while the Burkes also were concerned with H.R. 1. It is possible that analysis in the somewhat less charged political climate of FAP might have saved the day, but that no analytic effort could have salvaged H.R. 1.

Second, FAP was shot down on a question amenable to reasonable analytic treatment. The fatal blow was Senator John Williams's destruction of Secretary Robert Finch in his testimony before the Senate Finance Committee. Senator

7 It is beyond my purpose or competence to do a detailed critique of the analytic capability of Ways and Means during the chairmanship of Mr. Mills. Apparently the committee had analytic competence and an analytic tradition in the area of taxation, but not in the area of welfare. Yet the former no doubt made the committee comfortable with the use of analysis on welfare issues.




Williams sandbagged Finch on the critical question of high marginal tax rates. The problem was that a family eligible for several cash and in-kind transfer programs could face combined marginal tax rates rising to 100 percent or more, so that working yielded less income than not working. It is important to note that pro-Negit policy analysts had been forewarned of these disincentive problems during the struggles within the administration to get FAP accepted. In a meeting of executive branch officials, Martin Anderson, representing Arthur Burns, "came in... with charts pointing out the problems of including the working poor, of coordinating state supplementation with other programs and with the tax rate" [5, p. 55]. It was observed that "He [Anderson] was the Senator Williams of the White House working group" [5, p. 55]. But not much was done to prepare for such arguments when the debate moved to the Congress.

There were then, and still are, no obvious solutions to integrating the several transfer programs to produce an appreciably lower marginal tax rate. In part this is true because of political problems. Yet a careful analysis would have shown the dimensions of the problem in detail and also would have indicated some feasible steps.8 Moreover, it is my view that both the level of analytic capability and the amount of information then available would have permitted reasonably sound analysis of the issue of marginal tax rates and FAP. The analysis no doubt would have been inferior to Henry Aaron's excellent critique done in 1973 of the marginal tax rate question that both specified the issues and presented suggestions for integrating several programs [2]. Aaron had more information than was available a few years earlier and the benefit of the debate on marginal tax rates that FAP elicited. But it is still true that hard work could have yielded an analytic document that would have provided some defense by the Nixon administration against Senator Williams's fatal attack.

How does one account for this particular failure of analysis? First, at the height of the early analysis on Negit (1965-66), program integration was much less of a problem that it was in 1969. A far more important factor was the expectation of policy analysts and others during the Johnson administration that a negative income tax would be considered, if at all, well in the future and only after the results of the negative income tax experiment were in. Analyst/ advocates of Negit in the Johnson administration were tired and disheartened, marking time until the New Jersey experiment got further along. A study of marginal tax rates among various programs was the kind of hard and tedious exercise likely to have appeal only if policy decisions were perceived as near. They were seen politically as distant, so why do a tedious job that appeared to have neither a research nor a political payoff? In short, the analytic gap itself derived more from politics-or at least the analysts' perception of politics-than from technical limitations.

8 I should record a remark once made to me (by whom I do not remember) to the effect that if analysis had been available showing the complex aspects of the marginal tax rate problem, the Nixon administration might well have not bought FAP.



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Another vexing question is why, after the Anderson warning, the Nixon analysts did not investigate the program integration problem in depth. Robert Harris, who as staff director of the President's Commission on Income Mainte- nance had a ringside seat during that period, speculated in commenting on an earlier version of this paper that policy analysis had undergone several changes under Nixon. By summer 1969, when Anderson was pressing his point, most of the more senior analysts of the Johnson administration had left to be replaced by people Harris (and I) believe were probably less able and certainly less prepared for analytic responsibilities than their predecessors. Some of the key Nixon people operating as analysts were not really professional analysts and seemingly did not use the talents of some of their subordinates who were. Harris also feels the Nixon decision-makers were less willing to use policy analysts before decisions were made and more likely to tell the analysts what answers to come up with after those decisions. Harris makes the telling point that analysts were excluded from the drafting of the FAP legislation [6, pp. 87-90], which may account for some of FAP's severe weaknesses. Whether Harris is right is surely moot, but it is obvious that the issues concerning the analysts' competence and their role in the decision process are crucial to an understanding of policy analysis and policy.

The fact remains that we simply do not know if an analysis of marginal tax rates had been available when FAP came before the Senate Finance Commit- tee, whether it would have affected the committee's view. It well may be that the Senate Finance Committee was going to kill FAP one way or another. Yet Moynihan, in my opinion, makes a strong case that the lack of discipline and the lack of analytic capability were important factors in defeating FAP:

The Senate Finance Committee had none of the institutionalized competence of Ways and Means to deal with an initiative as divisive on ideological grounds and complex in technical detail as Family Assistance. [15, p. 454]

Had there been more general analytic competence on hand, it is not likely that the measure could have been so utterly misrepresented-which was recurrently the case-with near total impunity. Social policy has entered a stage in which the ambitiousness of government must be matched by analytic competence if the nation is to avoid a condi- tion ... in which the grandiosity of official pronouncement is equalled only by the absence of result. [ 15, p. 554]

FAP AND THE DEMOCRA TIC PROCESS9

The battles over FAP and H.R. 1 were ugly, mean affairs marked by special

9 A good earlier and more detailed treatment of many of the issues raised in this section is found in [12].




interest group and constituency politics, congressional posturing and moralism, and the sad spectacle of the near-poor pitted against the more poor. Like it or not, it was a struggle fought well within the boundaries of American democratic principles. To these goings-on, Moynihan and the Burkes took a straightforward position: FAP and H.R. 1 were sound pieces of legislation, and no intelligent, fair-minded critic could fault them. I must join with Robert Harris in observing: "As both a supporter of the kind of plan proposed and a critic of most of the specific versions proposed, I find it difficult to accept this line of argument" [7, p. 496]. The narrowness and lack of understanding in Moynihan's and the Burkes' arguments should be examined because major transfer payment legislation may soon be before us again, and the subtleties of the issues had better be understood if reasonable measures are to be enacted.

The Burkes argue that "it was demonstrably absurd to allege ... that Nixon's plan would hurt the poor" [6, p. 135]. Since some poor would get more (mainly southerners) and others would receive coverage for the first time (mainly intact families with a working father), the Burkes were surely correct arithmetically. But arithmetic was not the only issue. FAP or H.R. 1 was to be the centerpiece of need-based transfer programs that would shape national policy in this area for a long period of time. Among critics who both understood the legislation and had no obvious self-interest or constituency to serve, the principal complaints were the extremely high tax rates and the work requirements. As Jodie Allen, who, along with Harris, is a good example of the kind of critics I have in mind, observed: "In the early days of FAP there was strong emphasis on market incentives to achieve welfare reform, but now the emphasis [in H.R. 1] is on governmental coercion" [3, p. 30].

Deciding to criticize or even to oppose FAP or H.R. 1 was a summing-up of a number of factors, many of which were quite unpleasant ones. First, almost any negative tax proposal, because of the overlap of transfer programs, would produce high marginal tax rates. Second, the work requirements of H.R. 1 had been incorporated in both the 1971 food stamp amendments and the so-called Talmadge amendment passed during the period of the congressional debate over FAP. The work requirements were part of a move by the Congress to legislate morality and the work ethic. H.R. 1 extended the niggardly, moralistic mood that grew in Congress during the welfare debates. Unless one took the simplistic view that more in dollars is always better, a judgment on balance had to be made about how far a piece of legislation could go in terms of its bad features before one chose to oppose it. One weighed the gains of the neediest group of southern poor and the extension of coverage to the working poor against these negative features. As Hyman Bookbinder lamented: "'You're a fink if you're for it. You're a fink if you're against it' " [6, p. 151]. It was that kind of a gray-area choice, and Moynihan and the Burkes, in an absolutist myopia, just could not see this.



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Further, Moynihan and the Burkes showed either limited understanding or limited tolerance for the role of special interest groups in our society. Such groups by their very nature make the strongest cases possible for their constituents. Nor are the special interest groups expected to present a neutral argument that judiciously weighs their own claims against those of others in terms of some broad conceptualization of the public good. In the same vein, legislators fre- quently seek to serve their constituents by asking whether a piece of legislation conflicts with their needs and interests and not whether the legislation, on balance, is "good" for the country (for an interesting recent essay on Congress discussing these issues, see [13]). All of this is straightforward enough in the abstract but difficult to swallow in practice. It is unsettling when an NWRO representative observes that "the working poor would get money but they'd take it from us'" [6, p. 159]. FAP and H.R. 1 were such vicious struggles because they laid bare so many basic conflicts and contradictions in our society that can cast black against black and poor against poor.

Another key factor that may loom large in the future is Negit's constituency. The Burkes seemingly went too far in claiming that at the end of the congressional debates FAP had no constituency, but it did have a most divided one. The supporting coalition was a tenuous one to begin with. Governors support FAP initially as a measure of fiscal relief, but they jumped on the general revenue-sharing bandwagon when prospects looked better there. As already pointed out, organized poverty groups and their proponents ended up fighting among themselves. And, interestingly, potential beneficiaries were silent. As the Burkes pointed out with great chagrin:

In December 1970, when he was leading a fight to save FAP at the end of the 91st Congress, Senator Ribicoff said he had received relatively "no mail" on behalf of FAP and none from beneficiaries. He said that Senator George Aiken, [Vermont] Republican, had promised to vote for FAP even though he hadn't had a letter from anyone for it. In that year the authors found no member of Congress who remembered receiving a single letter on behalf of FAP from a potential beneficiary. [6, p. 216]

One wonders if the most likely gainers (who were not organized) were aware of the issue, or if perhaps the potential beneficiaries saw some of the flaws that were invisible to Moynihan and the Burkes. Whatever the answer, the next time around major improvements in transfer programs for the poor are going to need all the help they can get.

Unpleasant as all this may be, it is part and parcel of the American democratic system. But somehow there must also be more than pure partisan and constituency politics; somewhere there must be a level of judiciousness. There is a need for prudence that keeps representative democracy from tearing apart in a diverse society. Where is this to be found? We are not surprised to find an interest group like NWRO claiming racism and calling for a $6,500 guarantee




level without taking into account fully the costs and implications, just as we expect the oil lobby to enshrine the depletion allowance. Is it also acceptable for senators to mouth these same ideas with no regard for basic facts or costs, or apparently anything save their national images? And as the Burkes make so clear, Richard Nixon, during the debate over H.R. 1, began to play the crassest brand of presidential politics. In the Senate and in the White House, the sense of reasonableness and of judiciousness that leavens the excesses of special interest pleading-compromise for the national good-simply was missing. The disgust of Moynihan (not for the President, it must be noted) and of the Burkes seems well placed here. It was always someone else's role to be judicious, and this yet may be the fatal flaw of American democracy.

WHAT NEXT?

Where we go from here depends in part on where we are now. Some recent work by Robert Lampman, whose writing and consultations were the single most important outside factor in the development of the ideas of the negative income tax at OEO [20, p. 3], helps locate our present position. Lampman points out that' 10 years ago benefits for the poor were well below the poverty line, variable among states, available only to special categories of the poor, harshly administered, and designed to be confiscatory of earnings by taxing them dollar-for- dollar. Not only have these deficiencies been ameliorated in varying degrees, but fewer people are now poor-all of which leads Lampman to observe:

The recent moves toward more income-conditioning of benefits mean, it seems to me, that advocates of a simple, straightforward negative income tax with a moderate tax rate built in are caught between a rock and a hard place. They may wriggle out of the difficulty by designing a negative income tax with very low tax rates or by shifting over to an earnings subsidy (which means negative rates). Or, they may try to cancel out or consolidate guarantees or extend the break-evens of some of the non-cash income-conditioned benefits. To state the alternatives this way is to indicate my belief that we are approaching the outer limits of income- conditioning. [ 10, pp. 9-10]

The statement is not meant to imply that further income-conditioning will not or should not be used in the future. It does indicate that we have traveled a goodly distance on the income-conditioning road (incrementally?) without a full-blown Negit and that additional income-conditioning steps must be carefully thought through and may not be appropriate. Lampman himself sees a need for going in somewhat different directions.

Finding out what is to be done next in the area of transfer payments is partly an analytic problem and partly a political one, with the latter being dominant. This in no way suggests that the technical issues are trivial, but rather



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that it will be much easier to determine efficient and effective means of improving the current income security structure than to ascertain how to get these means accepted politically. It is also important to recognize that one reason technical problems do not loom so large is the amount of analysis and research that has been carried out in the past. I have already indicated to some extent the analytic work carried out inside the executive branch of the federal government. It is certainly not my intention to try to catalog other efforts, but a few comments about some selective analysis and research is needed.

Publication of Income Security for Americans: Recommendations of the Public Welfare Study [8] in December 1974 marked the end of a three-year study effort by the Subcommittee on Fiscal Policy of the Joint Economic Committee that has produced over 20 volumes on the American income security structure. As former Congresswoman Martha Griffiths, who chaired the subcommittee, has observed: "The subcommittee's study has been the most comprehensive ever undertaken, and has met a major need by providing ... analysis of a costly complex of programs and the many difficult policy issues they raise" [8, p. III]. Seldom have we seen such an extensive congressional effort both to generate new information through a committee staffs own work and to elicit papers by leading scholars on a wide range of issues concerning cash and in-kind transfer programs. There is also a set of recommendations proposing: (1)a universal negative income tax administered by the Internal Revenue Service that would serve the poorest individuals and families and would provide strong work incentives through a relatively low (50 percent) tax rate; (2) various measures to reduce program overlap and high joint marginal tax rates including the elimina- tion of some programs (food stamps and aid for dependent children); and (3) rebatable tax credits of $225 per person that are substituted for personal exemptions and are intended to aid low and moderate income groups (see [8, pp. 11-17] for a summary of the recommendations).

The final results contain a wealth of information for future decision-making and a number of recommendations that meet many of the criticisms found in FAP and H.R. 1. Although reasonable people may differ on the specific proposals, the subcommittee recommendations surely provide Congress with a clear blueprint for debating income security problems.10 One can only hope that the next time around on transfer programs, Congress wili look at its own analysis and research.

Longer term research has also yielded useful information. First, the Survey of Economic Opportunity (SEO), a national household survey that oversampled among poorer units, provided massive amounts of data useful in a variety of research projects. One important use of the data was in constructing computer

10 A number of other recent works, including [2] and [4], also provide useful proposals and discussions relevant to reasoned deliberations on income security changes. I have singled out the subcommittee's work because of its importance to the question of congressional analytic capability.




models such as those developed by the President's Commission on Income Maintenance that could estimate with much more precision than before the transfer outlays and distributional effects of various kinds of transfer payment alternatives. Such models in a few minutes can produce reams of information pertaining to various changes in Negit schemes. With almost unbelievable speed, a senator might be shown what his idea concerning a higher guarantee level would cost overall and how it would affect his state. Once a computer model becomes accepted by various parties as was the case with the model utilizing data employed in the FAP and H.R. 1 considerations, it can provide a relatively objective basis for comparing changes within the scope of the model. This capacity, born of analysis and research, greatly facilitated the debates over FAP and later H.R. 1 and should serve again in the future.

The most prominent and influential negative income tax research project has been the New Jersey-Pennsylvania experiment that shows a limited work reduction from negative income tax payments. Also relevant is a study by the University of Michigan's Institute for Social Research indicating strong evidence of the temporary nature of poverty-some families escaping it and others falling into poverty, but with few staying there during the entire period of the study (see [18] for a good summary). Together,' the temporary nature of poverty and the limited work reduction were important factors in determining the structure of the Income Supplement Plan that the Ford administration appeared ready to propose, only to back away because of the President's recession/inflation strategy of no new programs announced in the 1975 economic message.

The three studies have in common that they were all started by the OEO analytic office in the 1965-67 period. These projects have both influenced policy and are presently influencing policy-thinking roughly a decade after they were first funded. For those who seek examples of the impact of social policy research, here are cases in which long-run research has been relevant to decision- making.

As we recognize the importance of analytic and policy research activities, we need also to recognize the limited nature of their impact on decisions. First, the effect is unlikely to be one where research results in a single burst overwhelm all counter arguments. Rather, the research results will join other bits of intelligence, often with some of the contribution coming from researchers who enter into the policy debate. When a decision is reached, it will not be possible to conclude that research or researchers carried the day, but only that they were one of the factors. Second, a new transfer payment policy is now blocked by the current political climate. Political factors dominate.

So we come back to politics and the democratic process. On the negative income tax front, the last decade-surely among the worst in American history- yielded both major negative-income-tax-like programs and a congressional de- bacle over FAP and H.R. 1. The bad events may dominate our thinking, but we have come a long way. The democratic process, for all its flaws, has ground out



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program changes that incorporated major Negit components. Yet, perhaps para- doxically, there appears to have been only minor changes in values.

The key to understanding the welfare reform effort of the last 10 years well may be the recognition that the changes that occurred in programs altered them materially in terms of both size and direction, yet the initial changes were not perceived as major shifts in ideology or principle. For example, Medicaid and food stamps have outgrown the in-cash welfare programs, not an intended result. And SSI, however much of a leap it really was, certainly was not seen by most legislators as a major ideological shift. During the same period, the main efforts that overtly keyed on changing basic principles were cut down. In an ideological sense, Negit failed. But as we have seen, critical components of Negit have shaped the major program changes that have restructured transfer programs in the last decade. Ted Marmor, in commenting on an earlier draft of this paper, characterized these events as "change without choice (food stamps) and choice without change (FAP)." The potential implications of these happenings are large because the income security changes now needed may require basic changes in principles, and the country may not be ready for it.

It is hard to be optimistic about the next steps in transfer programs since they seem certain to demand more statesmanship than FAP and H.R. 1 produced. Key items on the agenda held over from H.R. 1 are the problems of the working poor and of the entire work and welfare issue.. Also, it seems unlikely that we can escape the formidable task of trying to restructure the massive social security program that dominates the federal income security system. The time has come to look hard at this entire structure. A sound income security system will require legislation that cuts across several congressional committees and will affect diverse interest groups. The last 10 years has generated a vast amount of relevant technical and political information. Moynihan, the Burkes, Bowler, and other sources are a record of the bureaucratic/political effort. The continuing struggle over the negative income tax yields a history course that the President and Congress should study lest we move down FAP's dark road again.

REFERENCES

1. Henry Aaron. "Review of The Politics of a Guaranteed Income." Yale Law Review (July 1973): 1725-35.

2. __. Why Is Welfare So Hard to Reform? Washington: The Brookings Institution, 1973.

3. Jodie T. Allen. A Funny Thing Happened on the Way to Welfare Reform. Washington: The Urban Institute, January 1972.

4. Michael C. Barth, George J. Carcagno, and John Palmer, with an Overview Paper by Irwin Garfinkel. Toward an Effective Income Support System: Problems, Prospects, and Choices. Madison: Institute for Research on Poverty, University of Wisconsin, 1974.



444 1 THE JOURNAL OF HUMAN RESOURCES

5. M. Kenneth Bowler. The Nixon Guaranteed Income Proposal. Cambridge, Mass.: Ballinger Publishing Co., 1974.

6. Vincent J. and Vee Burke. Nixon's Good Deed. New York: Columbia Univeristy Press, 1974.

7. Robert Harris. "Review of The Politics of a Guaranteed Income." Social Service Review (September 1973): 493-98.

8. Income Security for Americans: Recommendations of the Public Welfare Study. Report of the Subcommittee on Fiscal Policy, Joint Economic Committee, U.S. Congress. Washington: U.S. Government Printing Office, Dec. 5, 1974.

9. Tom Joe. "Review of The Politics of a Guaranteed Income." Social Work (May 1973): 3-4, 112-16.

10. Robert J. Lampman. "Scaling Welfare Benefits to Income: An Idea That Is Being Overworked." Policy Analysis (Winter 1975): 1-10.

11. Charles E. Lindblom. "The Science of 'Muddling Through.'" Public Ad- ministration Review (Spring 1959): 79-88.

12. Theodore E. Marmor and Martin Rein. "Reforming 'The Welfare Mess': The Fate of the Family Assistance Plan, 1969-72." In Policy and Politics in America, ed. Allan P. Sindler. Boston: Little, Brown & Co., 1973.

13. David R. Mayhew. Congress: The Electoral Connection. New Haven, Conn.: Yale University Press, 1974.

14. Daniel P. Moynihan. The Negro Family. Washington: U.S. Department of Labor, 1965.

15. . The Politics of a Guaranteed Income. New York:Random House, 1973.

16. Richard P. Nathan. "Workfare Welfare." New Republic (Feb. 24, 1973): 19-21.

17. Abraham A. Ribicoff. "He Left at Half-Time." New Republic (Feb. 17, 1973): 22-27.

18. The Changing Income Dynamics. Office of the Assistant Secretary for Planning and Evaluation, Department of Health, Education, and Welfare, May 1974.

19. Walter Williams. "The Congressional Budget Office." Public Policy Paper No. 6. Seattle: Institute of Governmental Research, University of Washing- ton, July 1974.

20. . The Struggle for a Negative Income Tax. Public Policy Monograph No. 1. Seattle: Institute of Governmental Research, University of Washing- ton, 1972.



Documents

The Continuing Struggle for a Negative Income Tax: A Review Article