Welfare Reform: Another Win For The Gipper

Steven Hayward

December 1, 1999

President Bill Clinton demonstrated his protean political skills again over the weekend by celebrating the success of a policy change he opposed and allowed to be enacted only with great reluctance and complaint: Welfare reform. The welfare rolls have fallen by more than 50 percent since Clinton took office in 1993, the result of the booming economy and of the state-based efforts to end welfare as we know it.

While the Republican Congress and several Republican governors might legitimately complain that Clinton has once again stolen credit for their ideas, in fact the person who deserves the most credit is—Ronald Reagan. Not for his actions as president, but for a battle he waged 30 years ago when he was governor of California.

In 1969 President Richard Nixon proposed a federal takeover of the welfare programs of all 50 states. His “Family Assistance Plan” (FAP) would have established a guaranteed annual income, and would have added millions of people to the nation’s already swelling welfare rolls. Nixon’s idea had bipartisan support starting out: Texas Congressman George Bush was a co-sponsor of FAP in the House. But one Republican governor decided to oppose FAP: Reagan.

Reagan was incredulous at FAP. Welfare reform should have as its principal aim the reduction of the number of people receiving aid, not a vast expansion of the rolls. “In California,” Reagan told Congress, “one out of every twelve persons is now on welfare. The new bill will increase this ration to one of every seven, with every indication that it could deteriorate even further.” Welfare reform should save the taxpayers money, not cost them billions more. While the White House projected that FAP would cost $4.4 billion more, Reagan argued that its true cost would be closer to $15 billion when the cost of all of the collateral social programs (such as Medicaid) whose caseload would grow in proportion to the welfare caseload. The work requirement was weak, Reagan argued, and made it more profitable for many people to be on welfare rather than work.

Above all, Reagan opposed the idea that the government should guarantee an income. “I believe that the government is supposed to promote the general welfare,” Reagan said in a TV debate on FAP, “I don’t think it is supposed to provide it.” And Reagan objected to the federal takeover of welfare. If welfare was centralized in Washington, Reagan knew, reform efforts would be difficult and there would be a bias toward increased spending in the future. “It would only be the first installment,” Reagan observed. “Raising the annual family grant would become an election-year must.” While many governors were unenthusiastic about FAP, Reagan was the most aggressive in his opposition. He wrote several times to every governor and to the entire House and Senate, providing extensive analysis of why he thought FAP was a bad idea. Reagan had hesitated to oppose the President from his own party, but in the end was typically blunt.
“I’m sure you know how painful it is to find myself in the position of opposing this measure,” Reagan wrote Nixon after having failed to reach him by phone to tell him that he would publicly oppose FAP. “[But] we received no assurance of what, if anything, the administration intends to do to amend the Act accordingly.”

Most members of Congress sent routine courteous responses back to Reagan. One Republican, however, wrote four single-spaced pages to Reagan defending FAP against Reagan’s criticisms—George Bush. Bush hastened to embrace Reagan’s principles that welfare reform should have as its goal the reduction of the number of people on welfare, a serious work requirements, and a removal of the incentives for family breakup. “Our disagreement is therefore not philosophical but factual,” Bush wrote. Bush thought Reagan had his facts wrong. Bush challenged Reagan’s view that FAP would cost $15 billion instead of $4.4 billion. Bush also thought the work requirement was sufficient, and reduced the incentive for family breakup. Reagan, naturally, fired back at his future running mate, telling Bush that his (Reagan’s) cost estimate was probably conservative. “The bill has a built-in capacity for cost expansion,” Reagan told Bush.

Reagan’s opposition was crucial in the eventual defeat of FAP in 1972. Had welfare been federalized and the principle of a guaranteed annual income established, the state-based welfare reforms of the 1990s would never have taken place. Reagan had argued during the FAP debate that Washington should get out of the way and let states take the lead in reforming welfare. Once again Reagan was a generation ahead of events. He decided to put his words into practice in California, understanding that if welfare could be successfully reformed in nation’s largest state, it would provide an example of why centralizing welfare in Washington through FAP was unnecessary. Reagan’s efforts at welfare reform in California in the early 1970s were only partially successful, but many of his ideas were the models for the welfare reforms of Wisconsin, Michigan, and elsewhere in the 1990s.

Another long-term win for the Gipper.

Steven Hayward is senior fellow at the Pacific Research Institute, and an adjunct fellow of the Ashbrook Center at Ashland University.