Acton Commentary

How Can Welfare Reform Improve?


With the recent passage of H.R. 7, known as the Community Solutions Act of 2001, the relationship between the role of the state, private charity, and welfare reform is back in the spotlight. In this recent Detroit News commentary, Rev. Robert A. Sirico, Acton’s president and co-founder, offers some important distinctions and sounds the necessary cautions in the continuing debate over the next phase of welfare reform.

President Bush and his Capitol Hill supporters are pushing hard for new legislation that would give much-needed encouragement to the private charitable sector. Whether or not they succeed, the initiative reflects a dramatic change in the welfare debate.

Twenty years ago, Ronald Reagan created a hysteria by suggesting the welfare state had failed to achieve its promise. Five years ago, Bill Clinton announced he would end welfare as we knew it. Now, the main debate revolves around the precise mechanism by which alternative means of philanthropy can be encouraged.

This is a stunning shift, one that should encourage us about the ability of our political system to make adjustments in light of evidence and good scholarship. By nearly every measure, the conventional model of welfare provision is a proven failure. It is rarely defended in public. Even its old-line partisans are careful to not claim anything close to the success that its original promoters promised.

The current debate about welfare breaks down between two groups. One side argues welfare should be provided by private and religious organizations that raise their own money to meet social needs. In this concept, the government should stay out of the welfare business and only offer a helping hand, but not a replacement function.

On the other side are those who believe government should take a direct role in providing services to the needy, including oversight and funds for private and religious groups to administer. Those who once argued that charity was solely the job of the government have either fallen silent or have changed their minds.

This is a spectacular change. The dominant strain of public policy in the 20th century was that federal policy was the most competent to deal with social problems such as poverty and despair. But as the welfare state grew, so did the problems, which were increasingly being addressed by private and religious organizations.

Government programs became riddled with bureaucracy and regulation, promoting an inflexible approach that forgot human needs while merely shifting wealth from class to class. Pope John Paul II took note of this in 1991, when he wrote of how the welfare state drains human energy from a society. Taxpayers find the expense intolerable, the administrative bureaucracy grows ever bigger and despotic, and the recipients find themselves trapped in a cycle of dependency.

Government programs concentrate mainly on maintaining income and benefits. The downside is this creates an unintended incentive to stay on the programs. These programs are expensive, and middle-income taxpayers resent the degree to which they are involuntarily taxed to support them.

In this respect, private welfare is different. Providers focus on providing genuine help that considers the unique situation of the individual or family in need. Underlying causes are addressed. Dependency is not promoted but discouraged. In faith-based institutions, the workers themselves are willing to go to great lengths to make extra sacrifices because they are motivated by high ideals.

Attentive private charities can better gauge the needs of those they serve and assist them in finding ways out of poverty and despair, addressing both spiritual and financial barriers. And at last, this fact is being reflected in the debate before Congress.

Congress will consider a wide variety of legislation. Some would offer new incentives for charitable giving of both cash and in-kind gifts. Some would remove regulatory barriers that prevent full service from being offered. The most controversial would make direct federal payments available to faith-based providers.

Giving government funds to faith-based organization misses the essential point. Governments at all levels already contract with many church-affiliated organizations, such as Lutheran Social Services and Catholic Charities. These organizations go to great lengths to separate the provision of their services from their religious mission — and not always in a manner that benefits the poor.

Organizations that have received government funding have not always been praised for the results. It is contrary to the nature of religious charity to draw a stark line between their faith and their works. They have sometimes regretted the amount of paperwork and the lack of administrative flexibility that comes with receiving government money. And there is a danger to becoming less dependent on private donations and more dependent on legislative allocations.

The real change in Bush administration policy is better illustrated by less publicized initiatives. The first would permit taxpayers to deduct charitable giving whether or not they itemize their deductions. This would permit far more taxpayers to use their money in a charitable way without added fuss or penalty. Because more than two-thirds of taxpayers do not itemize, this change could have a huge impact.

The second initiative instructs federal agencies to review ways in which regulations negatively affect the delivery of private charitable services. That information will be collected, and the Bush administration will call for specific exemptions that allow people to be served without jumping through the thousands of existing bureaucratic hoops.

For too long, the social task of helping those in need has been seen as the exclusive province of government. Yet in the real world, it is private charities that prove to be the most capable of actually changing people’s lives. An important limit is funding, which is why many tax-law changes are needed.

The welfare state tends to create an "I-gave-at-the-office attitude" among many. Meanwhile, for those who do want to help, too many barriers exist to both giving and providing. The next phase of welfare reform needs to address these issues so we can move away from coerced, tax-paid programs toward humane services that tap into the energy and benevolence of the American people.