Memo raises price tag on welfare plan

April 05, 1994|By New York Times News Service

WASHINGTON -- President Clinton's plan to overhaul the welfare system could cost much more in the long run than previously disclosed, possibly adding $58 billion to the nation's welfare costs over 10 years, according to a confidential memorandum presented to Mr. Clinton.

The document also says Mr. Clinton should understand that "in rare circumstances" his plan to enforce a two-year limit on welfare benefits could leave families "homeless or unable to care for their children."

The memorandum, drafted by the 32 members of the administration's working group on welfare, provides the most detailed information yet about the tough decisions Mr. Clinton faces in trying to fulfill one of his most popular campaign pledges. The document was discussed at the only Cabinet meeting on welfare that the president has attended, on March 22.

The memorandum outlines what aides are calling a "Cadillac version" of a welfare proposal but it acknowledges that its cost may force Mr. Clinton to adopt a more modest plan.

Mr. Clinton deferred that decision at the Cabinet meeting two weeks ago. An administration official, speaking on condition of anonymity, predicted yesterday that the president would adopt a version that would add $35 billion in welfare costs over 10 years.

Mr. Clinton has promised to deliver a bill this spring that would expand training programs for people on welfare and require those still unemployed after two years to join a work program.

Financing the new program has become the most problematic aspect of the proposal in recent months. Cabinet officials have repeatedly rejected the program cuts or tax increases suggested by mid-level officials.

Aid to Families with Dependent Children, the main federal welfare program, now costs about $22 billion a year. By 1999, the full Clinton plan would increase that figure by about $7 billion a year, according to the document.

The memorandum suggests that long-term costs would be even greater than previously known. Earlier estimates had suggested that the proposed changes would cost about $15 billion for the first five years. The memorandum says that in the second five years of the program, costs would more than double, reaching $58 billion over 10 years. The costs rise because the program is being slowly phased in.

While the plan to impose a two-year limit on welfare benefits sounds like it would save money, it would actually be much more expensive, at least in the short run, than simply mailing a welfare check. That is because the administration will create training, education and child-care programs, and subsidize the wages of the recipients it puts to work.

The document suggests several strategies for reducing the $58 billion cost. One would be to reduce or eliminate a proposed $16 billion expansion of child care for the working poor, which is intended to help parents keep their jobs and stay off welfare. Another would be to cut back an $8 billion expansion of aid to two-parent families, which is meant to prevent fathers from leaving the home.

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