MR. FUND: Our next panelist
is Robert Rector who is the Senior Policy Analyst for Welfare and Family
Issues at the Heritage Foundation. If there is any think tank analyst
who is considered one-stop shopping on welfare in Washington, it's probably
Robert Rector. And I admit that I'm an exuberant optimist but I value
Robert Rector, who I view as a harsh realist, who often tells us the truth
about our programs and perhaps, too, restrains our exuberance.
And I think Robert perhaps
may do some of that today and we welcome it.
MR. RECTOR: Thank you.
I have spent most of my
adult career working in the area of welfare and welfare programs and not
very many conservatives have done that. And it, perhaps, leads to a greater
level of complexity in my thinking which you may see here today. I wish
to commend Senator Coats and Congressman Kasich for their very, very good
intentions in this legislation. And my good friend, Bob Woodson, who has
been a leader in efforts to aid the poor for longer than I can really
say.
Let me tell you a little
bit about my history vis-a-vis this charitable tax credit to try to put
what I'm going to say now into context. When this credit was first talked
about, the first time I believe it stepped forward was in the Kolbe-Knollenberg
bill, I conferred with both of those staffs and I was strongly supportive
of this credit and I helped a little bit in the drafting of it. I was
very supportive of the Coats credit when it first came out. And when the
Save Our Children bill sponsored by J.C. Watts and Congressman Jim Talent
came forward, I believe I played a very, very crucial role in actually
elevating the charitable tax credit to play a prominent role in that bill.
And I have supported this credit very strongly. I think almost as strongly
as anyone in the country.
However, as this issue
began to evolve certain considerations were pressed upon me that have
led me to a very considerable alarm about the unintended consequences
here which I will speak about here today.
Let me back up though
for a minute here and give some sobering assessment of the overall situation
in the welfare state in the United States today. There is a kind of conservative
mythology that the public sector welfare system is bad and corrupt and
destructive. And out here there is this nonprofit private sector which
is good, and vital and so forth and we hear examples coming from Bob Woodson,
which are true and valid but represent only the tiniest fraction of the
nonprofit sector.
In reality, most of the
money that will go into this credit will go by name recognition and most
of the money, probably 80 percent of it, is going to go to organizations
like United Way, Catholic Charities.
Now, the fact of the matter
is that the United Way is to the left of HUD. I say that with an experience
of my entire lifetime, they are to the left of HUD and their thinking
is actually 20 years behind the public sector. They are brainlocked back
some place in the 1960s singing Kum-byah and talking about good intentions
and their entire approach to welfare is, in fact, much more liberal and
much more retrograde than what you would find in a typical state welfare
bureaucracy.
Let me give another example
of this. I could just go on and on and on about this. In the welfare reform
bill that we passed this last year, we put on tiny work requirements on
the food stamp program. Now, they're very weak and they need to be strengthened.
But that actually makes the government food stamp program more conservative
and more effective as a charity arm than almost any private sector food
bank you could find, none of whom have behavioral requirements attached.
I passed out something
that I hope you got which is an illustration of what has happened to the
caseload in the State of Wisconsin. In the State of Wisconsin, through
the public sector, by implementing very simple reforms which could be
duplicated very quickly in almost every county in the United States, the
caseload has dropped over 60 percent. As we speak in the city of Milwaukee,
the welfare caseload is going down 2 percentage points a month.
There is virtually no
nonprofit activity that could even remotely compare to what is going on
in the public sector in Wisconsin. Not even remotely.
In most, many, many of
the counties in Wisconsin, they have dropped their welfare caseload--now
get this--by over 80 percent. There is no welfare in many of these counties
left.
So, the whole thing about
well, the public sector is retrograde liberal and bad and the nonprofit
sector is basically an illusion. And what we are struggling for here is
what is good welfare reform, both in the nonprofit sector and in the public
sector.
But that's not the core
of my concern. We basically are operating here with a false model of what
the welfare system is. The image is that the heart and core and soul of
the welfare system is in the government bureaucracy. That is not true.
The heart and core and
soul of the destructive welfare system, which everyone, here speaking,
opposes is actually in the nonprofit advocacy community. They are the
ones that created all of these programs. They are the ones that are on
the nightly news, every night, supporting, fighting for them, sustaining
them. They created, they funded, they increased every one of these communities.
They are the brain trust in the center of the destructive welfare system.
Not the government bureaucracy.
The government bureaucracy has very little impact on public consciousness
and very little impact about public decision making about charity, in
general.
Now, when we wrote the
Watts-Talent bill which has a charity tax credit very similar to the ones
that are in these other bills, I was asked to help draft that. We put
in some very simple things. The whole image here is that these funds are
to go to direct services to the poor. So, we put in that bill the following
things.
If you receive these funds,
you cannot engage in voter registration, cannot engage in public policy
advocacy, public policy research, you can't involve in agitation, various
other things like that, public policy advocacy activity.
In the first hearing that
we had on the bill, which was the first public hearing on a charitable
tax credit, every single organization on the left said, we don't really
like this credit, but boy, if you create it, you've got to get rid of
all those anti-lobbying restrictions.
And the Catholic Charities
said, and now, I quote: "We regard the highest form of direct service
to the poor as voter registration activity." Okay? Voter registration
activity.
So, what we've been working
with so far in all of our images about what this credit will do--and again,
we're talking here not about the intentions which are pristine, but the
unintended consequences, because conservatives are now in control and
we can enact stuff and we have got to look down the road at what's really
going to happen, not what's in our mind, but what's going to happen when
this money goes out there.
We have been working in
a basic image in which we've got the bad public sector, which we all agree
is bad, and then we're going to create this charitable tax credit and
basically most of the money coming is going to come over to Bob Woodson
and the type of groups that he's talking about which would be fantastic.
But I have a different model.
I don't think that's what's
really going to happen at all. What we need instead is, instead of a binary
model, is a tripartite model in which we've got funds in the public sector
welfare system, funds in essentially the United Way nonprofit system which
is more liberal than the public sector, and which is going to get 95 percent
of this funding or 90 percent, and then even worse, funds in the left-wing,
anti-poverty advocacy community which is totally enmeshed with United
Way. Inside United Way they regard the highest form of service to the
poor as coming up here to lobby against the welfare reform bill. And that
is where a substantial portion of this money is going to go.
So, when we talk about
moving money out of the public sector, some of it is, a small amount of
it is going to go to good grassroots conservative, direct service to the
poor, most of it's going to go to the existing nonprofit community which
is more permissive, more liberal than public sector, and a substantial
portion of that is going to go into public policy research and advocacy
to precisely come back here to Washington and advocate for the expansion
of the whole welfare system, nonprofit and public sector.
How much money are we
talking about? Well, let's say this credit was worth $20 billion a year.
Under those terms, let's say that half of it ended up going to liberal
oriented groups, which I thnik is a vast underestimate. And that liberal
oriented groups used most of it for direct services for the poor but used
only 20 percent for basically what 501(c)(3)s do, public policy advocacy,
public policy research, stuff about hunger, and so forth.
Twenty percent of that
would be $2 billion. Two billion dollars going to advocacy that would
be purely destructive in its effect. I could compare that that the entire
budgets of all the conservative think tanks in the United States are probably
under $150 million. We are talking about something that is like the creation
of Legal Services Corporation but has a hundred times more or ten, 20
times more money.
Now, the simple answer
to that is, well, just put controls on this and this won't happen. One
of my favorite movies is called Bambi Versus Godzilla. I'll give you a
hint. Bambi loses. Okay?
There's no way in the
world you are going to sustain anti-research, anti-lobbying activities
on this tax credit. And the way it's structured now the funds will flow
asymmetrically to advocate in billions of dollars for precisely the opposite
effect of what is intended here. Okay?
One example. I could go
through this a dozen times. That this Congress was unable to put restrictions
on the Legal Services Corporation receiving direct government grants to
prevent them from litigating to prevent the implementation of the welfare
reform bill that was just passed.
We could not put a provision
in there that says, while we passed the welfare reform bill, we do not
intend to spend $300 million to litigate to block its passage. That could
not be passed in the Senate.
Moreover, even if you
passed restrictions you have to sustain those restrictions for 50 years.
It won't be done. And finally, I think that a general tax credit for philanthropy
is a great idea. We must be very, very careful that this credit, which
will seep out into different types of advocacy, is not asymmetrically
structured to benefit one philosophical group or another. And I do not
think that we should pass a credit that allows a person to give to a group
that can advocate for the expansion of food stamps and deny that same
credit to someone who would give to a group that wants to create Star
Wars.
I think that's a very,
very dangerous precedent which has very fundamental implications for the
long-term history and future of this country. And I think that we basically
have got good intentions here and a good idea, but we have to be very,
very careful about how this is structured and to make sure that we don't
end up some place that we don't want to be.
Thank you.
[Applause.]
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