Early Groundwork for Entitlement Reforms
By Marshall Garvey
As President Obama and congressional Republicans debate how to handle entitlement programs like Social Security and Medicare, many Americans worry they’ll ultimately be unable to come to a bipartisan consensus. In 1969, during his first year in office President Nixon addressed entitlement reform in a manner that navigated a Democratic Congress, but carried conservative restraint.
In a televised address to the nation, President Nixon promised to modernize many government institutions, to “put [government] in shape for the 1970’s.” In his words, government had become a “bureaucratic monstrosity” that was “cumbersome” and “ineffective.”
The most ambitious of President Nixon’s ideas was the Family Assistance Plan; a replacement for the Aid to Families with Dependent Children (AFDC) program. This new program would help “the working poor, as well as the nonworking,” and provide benefits to families with dependent children headed by a mother or father. Shying away from making it a comprehensive guaranteed income plan, the President intended it to apply only to families with children, included a work requirement for those with an employable householder, and would not increase benefits for AFDC recipients in states providing high benefits. This provided a marked departure from the current welfare programs that didn’t benefit the employed; to the extent it dis-incentivized employment if the pay would be less than benefits provided.
President Nixon’s plan would have provided a significant boost for working families. A family of four without any income would receive $1,600 (adjusted in 2013 to around $10,121), while those with income would receive a declining amount of benefits until their income reached $3,920. In today’s economy, that means a family of four making $12,652 would have its income increased to $18,725 by FAP. Despite passing easily in the House, the plan ultimately stalled in the Senate. Nonetheless, the foundational principles established were praised by many, including Nixon’s 1972 election opponent, George McGovern—and although he called the overall plan “unacceptable” he credited that President Nixon “recognize[d] the need to boost the income of those who earn too little.”
Nixon’s ideas for welfare reform ultimately shaped a key bipartisan resolution. In 1996, President Bill Clinton and the Republican-controlled Congress agreed on the Personal Responsibility and Work Opportunity Act, which replaced the AFDC with Temporary Assistance for Needy Families (TANF). In doing so, it ended welfare as an entitlement program, required recipients to begin working after two years of receiving benefits, placing a five-year limit on federally paid assistance, and allowed states to create their own welfare systems as long as they met certain federal standards. The law’s overall purpose of shifting benefits away from those able to be employed draws directly from the balanced plan Nixon proposed in 1969.
See the Legacy Forum on the Origins of Welfare Reform: