The Family Assistance Plan as a Solution to the Welfare Crisis

Abstract

Current public assistance programs are characterized by numerous defects, which include exclusion of large numbers of poor persons, inadequate benefits, stringent eligibility requirements, financing and needs test defects, administrative defects, and inadequate social services and research. In addition, the current welfare crisis centers around the AFDC program because of the expanding welfare rolls, disincentive effects, harassment of AFDC mothers, and numerous defects in the AFDC-UP and WIN programs. A new Family Assistance Plan (FAP) would be created to solve the above problems. Under the plan, a four member family with children would be guaranteed $1,600 annually plus other benefits. Although the plan has some desirable features, the defects of the FAP proposal far outweigh the advantages. The central thrust of this paper is that the FAP proposal in its present form will actually worsen the financial position of many poor persons, and that the present welfare crisis will not disappear once the plan is enacted into law. Public assistance plans are currently a storm center of controversy. Legislators, economists, and the tax-paying public are becoming increasingly concerned about the goals and effectiveness of present welfare programs. Growing hostility and resentment toward present public assistance programs are common. The purpose of this paper is to analyze the newly proposed Family Assistance Plan (FAP) as a solution to the current welfare crisis. The central thrust of the study is devoted to the proposition that the FAP proposal may not solve the present welfare crisis. To support this proposition, however, it is first necessary to George E. Rejda, Ph.D., C.L.U., is Professor of Economics at the University of Nebraska. Dr. Rejda is the recipient of three N.A.I.I. Journal awards and serves currently as Communications Co-Editor of this Journal. He held a Huebner Foundation Fellowship at the University of Pennsylvania. Dr. Rejda has also served as a staff consultant to The President's National Advisory Panel on Insurance in Riot-Affected Areas. This paper was submitted in September, 1970. examine the defects of present public as-