Wailing critics in Washington, D.C. would like you to believe that America’s poor are about to be devastated by plans to block grant welfare funds and send them to the states. The House of Representative’s desire to add specific mandates to that approach simply raises the wailing to a higher pitch.
But the truth is that 70 of the 80 major federal and state welfare-related programs are not affected by the reform bills, while those that are affected will go through a slower rate of growth, not real reductions. Adopting “workfare” or allowing the states to experiment with other structural changes does not automatically assure more innovative use of the money, let alone savings.
Regardless of whether the Senate bill or the House bill emerges from the conference committee set up to reconcile their differences, and regardless of the President’s relative enthusiasm,”welfare as we know it” is not really going to end. But, maybe it should.
Why must we always turn to government–at whatever level–for welfare solutions? Since the 1960’s “War on Poverty,” spending on cash and in-kind transfers (cash, food, housing, energy, medical aid, etc.) has increased 640 percent in real, inflation-adjusted dollars. Yet most social problems–such as out-of-wedlock birth rates–are far worse today. Perhaps welfare reformers are not being “radical” enough. “Radical,” after all, means getting at the roots, and when it comes to helping the poor, we need to recognize that the private sectors of society–including churches and other non-profit organizations, as well as the job-creating profit sector–tend to do a better job than government.
The challenge is to find ways to enable the non-government sectors gradually to take on greater responsibility, while government’s role is reduced. The idea is not to leave the poor without friends, but to find them truer friends.
Rep. Mark Souder of Indiana proposes to stimulate private giving with an increase in the tax deductibility of charitable donations, from 100 to 120 percent. Reps. Joe Knollenberg of Michigan and Jim Kolbe of Arizona would give a $100 tax credit for gifts to community groups that work with the poor. Sen. Coats of Indiana would increase that to $500.
In Seattle, philanthropist and former businessman Mark Bloome asserts that society would be spiritually improved overall and the poor allowed to advance more surely, if the old Judeo-Christian ideal of the “tithe” could be reinvigorated. He does not necessarily connect his idea with welfare reform, but welfare reform certainly would benefit from being connected with his idea. Tithing, the gift of 10 percent of one’s income to the church or other charity, is rare today, a victim mainly of high taxes. The answer, Bloome believes, is to provide a federal tax credit for those charitable contributions a person makes beyond five percent of his income (which are tax deductible) and up to ten percent (the tithe). In contrast to a mere deduction, the tithe would encourage people to give beyond the five percent threshold, which is already a sacrifice, while the ten percent ceiling would prevent tax-credited benevolence from bankrupting the federal treasury.
Tax reform advocates, as well as welfare reformers, would do well to consider the wisdom of ideas like Bloome’s. Experience in the 80’s–when marginal tax rates were lower and charitable giving was higher — and the 90’s — when tax rates went up and charitable giving stagnated–supports the common sense expectation that people will give more when they have more to give. Thus, lower and flatter tax rates probably will increase charitable giving even as they boost the overall economy and personal income growth.
What tax reformers tend to overlook is the political, if the not the moral, desirability of linking a more productive tax system to one that assuredly serves the poor directly. The tithing idea would do it.
Private charity is intrinsic to the American character. It is more personal and voluntary, and hence more moral, than government distributed tax funds. And it tends to be more effective. Perhaps private charity cannot supplant all government welfare, but it can redress the present imbalance. It offers citizens of many political persuasions a potentially better choice than either the present welfare mess or any of the conventional political proposals for reform.
It’s time to get radical.