Helping the Americans Left Behind

Transcript

Elaine Kamarck: Good morning, everyone, and thank you for having me here at Brookings. I've been here before, usually in my capacity as a professor at Harvard teaching an executive program. We've had a lot of executive programs here in this very room. So it's nice to be here. It's nice to be here to talk about Al Gore's campaign, and to talk about the questions of what do we do for the Americans who are left behind, which is obviously a central question for the vice president and a central question for the campaign.

Let me do this in kind of four basic points, and I'm sure that we will have lots of time to elaborate on them. I will not bother at this point to draw out contrasts with the Bush campaign because I suspect that that will happen. Let me just state what the vice president has been running on for the last year. First and foremost, we must keep the economy prosperous. In the last seven years we've created in this country quite a few million new jobs, and an unprecedented prosperity. To our delight, that prosperity is also finally being shared. In fact, in the last year a report from the Council of Economic Advisors showed that people in the bottom quintile of the income distribution had in fact made bigger percentage gains than people in the top quintile of the income distribution. It has reversed a 30-year trend of growing inequality in the income distribution, and it is a trend which the vice president intends to even further reduce because I think a lot of Americans have been disturbed at the question of growing inequality.

Nevertheless, we can't do that unless we keep the economy healthy and prosperous, unless we keep long-term interest rates down, and unless we stick to a conservative fiscal policy, the kind of fiscal policy that has been run by the Clinton-Gore administration in the past seven years.

Point two is, we must preserve the social safety net, and primary among the social safety net are of course Social Security and Medicare. We must preserve those for future generations because those programs aren't just about old people. Those programs affect the very structure of the middle class in America. Think of how many of you have money to spend on other things--your children, whatever you want to spend it on, because your parents' medical needs and basic living needs are taken care of by the safety net programs. In fact, if you think back to the beginning of the last century--not the beginning of this century the beginning of the last century--when most European democracies, people were beginning to invent what we now see as the social safety net. It is very clear that the social safety net grew up as an antidote to the market. It grew up as a place separate from the market.

It is very important, as free market capitalism develops, for societies to create some kinds of systems that will protect people from the inevitable ups and downs of the private market. And today when we look at the newly emerging democracies of Eastern Europe, when we look at the countries in Latin America that are just becoming democracies, and you ask them, what are they struggling with, one of the things they are struggling with is the creation of a social safety net because it is so important to have it alongside of a vibrant free market economy.

Third, it is very important in this new economy that we make substantial investments in education. Obviously we cannot hope to shrink the gap between the rich and the poor unless we shrink the difference in the educational systems between the rich and the poor. That's why the vice president has proposed spending a significant amount of the surplus on new education programs. That's why he has talked not just about investments in education but about accountability in our educational system and about increasing accountability in the educational system. And that's why he's paid particular attention to the digital divide and to closing the digital divide. In fact, making a pledge to use a little bit of government influence and a lot of private sector goodwill to try to make sure that every house in America has access to the Internet, as most houses in America today have access to a telephone.

Fourth, attention to working families, and attention to basic family stability. Because in addition to providing a good education, one of the things we know is that children grow up well, they grow up healthy, they grow up able to learn if they grow up in stable families. We haven't been very good in the United States in the last couple of decades in providing stable families.

There are a couple of components to that goal. One is, of course, to have a vibrant working family agenda which understands that mothers now go to work and understands that we need to actually help mothers balance work and family. And secondly is to look at the welfare population of the very poorest in America and say, what is the next generation of welfare reform? For that the vice president looks at fatherhood and looks at the importance of trying to attach fathers back to their children, trying to re-link fathers and their children. These are broken links. We have concentrated societally on the financial implications of those links. We now know from about 20 years of good sociological and psychological research that there are significant psychological downsides to absent fathers.

So the vice president for many years now, since he held a conference on this in the summer of 1994, has been promoting fatherhood programs. We have a variety of fatherhood programs throughout the federal government, and in fact he spurred the foundation community to make major investments in the research and funding into fatherhood. We really do see fatherhood and an attention to fatherhood as the next generation in welfare reform.

These are the four big baskets--keep the prosperity going, because if you don't have a prosperous economy you can't do much for anyone. Preserve the social safety net. Make sure we make major investments and major improvements in education, with particular attention to failing schools and to the schools that are really not doing a very good job. And finally, pay attention to working families, pay attention to whatever we can do to help create stable families and intact families because we know that frankly an intact family is probably one of the best protections against poverty that you can get.

With that, I'll turn to you.

John Weicher: Thank you. I expected to thank Bonnie for introducing me and not Elaine, but I'll thank Elaine instead. It's a pleasure to participate in the national issues forum this morning. I think the Brookings Institution has put together a very impressive agenda of discussions on key issues in this year's presidential campaign and I'm very pleased to be here on behalf of the governor.

I think this topic this morning is particularly important. The forum announcement describes it as the still challenging issue, and indeed it is, of helping the working poor to escape poverty, including especially those who have come off the welfare rolls since the 1996 reform. It's helping them to join the middle class in America. The announcement also notes that, "The next president will have to lead a dialogue on how to divide these responsibilities between the federal government, state and local governments, and private charitable and religious organizations." That indeed is also true, and I'll talk about that as well.

Governor Bush started discussing these issues more than a year ago, and he has defined his approach to them, you will remember, as compassionate conservatism. If you have paid any attention to the presidential campaign the last couple of years--and I know that everyone in this room has, and I imagine everyone who will be watching this on videotape will have as well--you will have heard that phrase. You have heard it many times. It has been much discussed since Governor Bush first began talking about it. But it has mostly been discussed as a phrase, in purely political terms. Who likes it, who doesn't like it, and what that means for the outcome of the election. And that's fine, but I want to discuss it this morning as a concept in terms of policy.

Stated simply, compassionate conservatism is conservative in expecting people to be responsible for taking care of themselves and their families. It's compassionate in providing support for those who can't, who need some help in getting started on the road to economic independence. To quote Governor Bush directly, it's conservative to cut taxes, it's compassionate to help people save and give and build. It's conservative to reform welfare by insisting on work. It's compassionate to take the side of charities and churches that confront the suffering which remains. To offer practical help to women and children in crisis.

Certainly the concept of compassionate conservatism applies to the range of issues that we're going to talk about this morning. It certainly is about helping poor people improve their situation by removing obstacles on the road to becoming part of the middle class. Governor Bush has been doing that in Texas. His welfare reform included a substantial increase in transitional benefits for people moving from welfare to work, and a large increase in child care expenditures by the state. Compassionate conservatism includes tax policy. Governor Bush has proposed a 10 percent lower bracket for the first $12,000 of taxable income. That's a tax cut of a third for families of incomes before taxes in the range of $25,000 to $30,000. He's proposed doubling the $500 tax credit that was enacted a few years ago. This would also be a tax cut of almost one-third for each child that a family had. With two children, taxes would be cut by $1,000, with three children by $1,500 and so on.

The combined effect of these changes will remove a substantial number of low income working families from the federal income tax rolls. We calculate that 6 million families with children would no longer be paying federal income taxes. That is about one out of every five families with children in the United States.

Compassionate conservatism is helping poor people in other ways. With health care, helping people who aren't covered, either by private health insurance or by public programs such as Medicaid. Eighty percent of those people are working. So the governor has proposed to increase the ability of the working poor and other low income workers to afford health care . He's proposed a tax credit to cover 90 percent of the cost of health insurance for these families, for low income and poor working Americans up to $2,000.

He's also proposed to change the flexible savings account program to provide more flexibility, to get rid of the use-it or lose-it requirement at the end of the year, to allow carryover, which we don't now have. He's proposed to expand medical savings accounts, make them permanent. Provide more options for people who don't now have health care coverage.

Compassionate conservatism includes opportunity for lower income workers a chance to get a stake in America, to build assets. The governor has proposed a tax credit as part of the individual development account, a credit to financial institutions that match people's contributions to their own IDA's, a 50 percent credit for a match of up to $300 annually. The IDA is open to families with incomes of 60 percent of median income, but people who are poor and near poor roughly up to double the poverty line. These funds can be used for education, for home ownership, for starting a business.

Compassionate conservatism includes opportunities to become a homeowner, to help working poor, lower income people generally, own their own homes, achieve something which has always been thought of as a major part of the American dream. Now for first-time home buyers the biggest problem is always getting the resources for the down payment on the house. Governor Bush has proposed to expand the home ownership voucher, which now lets low income families use their Section 8 voucher, their rental voucher for home ownership, using it for a mortgage payment instead of a rental payment. That was a Republican idea to begin with eight years ago.

Governor Bush would now go farther, let them use it toward the down payment, so that for poor people who want to buy a home and are having trouble with the down payment, who are in the Section 8 program, there's an opportunity there.

For lower income workers who aren't now receiving Section 8 vouchers, he's proposed a down payment assistance program, a matching grant toward the down payment for families that come up a bit short. That's in conjunction with financial institutions, with mortgage lenders who are in fact making the loans to begin with. He's also proposed a tax credit for building and rehabilitating homes in low income urban areas. This is analogous to the low income housing tax credit for rental housing, but it's for all occupied homes, for houses, for home ownership. It would cover 50 percent of the builder's costs.

This not only helps the working poor become homeowners, but it's doing something for some of the worst neighborhoods in our city. I realize that Brookings will have another national issues forum on urban issues in about a month, and this subject is relevant for that, but it's also relevant here this morning as well.

Compassionate conservatism is also about reaching people who most need the help. People being served by the social welfare system who haven't really gotten started yet. We used to argue among public policy analysts over whether a rising tide lifts all boats. I don't think that's a very useful formulation. I never have. A rising tide lifts many boats but not all boats.

To help those who aren't benefiting from the rising tide of the last 17 years, to help the people at the bottom, Governor Bush sees a special role for faith-based organizations, and this of course leads into the issue of how responsibility should be divided between levels of government and the private sector, the dialogue that was referred to in the forum announcement. Governor Bush wants to bring the strength of faith-based organizations to bear on social welfare issues. This comes from his experience in Texas, where they've been given greater opportunities and they've done good work dealing with illiteracy and teen pregnancy, working with jailed convicts. Governor Bush sees the Texas experience as a basis for a national policy, allowing faith-based organizations to provide services and programs for the poor to other people who need help.

He's mentioned after-school programs for children, addressing the needs of children of prisoners as examples. He's proposed expanding the charitable choice program to all federal social safety net programs so religious organizations are eligible for funding on the same basis as other private providers.

Most broadly, he's proposed to include a charitable tax credit in the federal income tax so that people who don't itemize their deductions but who nevertheless make charitable contributions can receive tax credit for those contributions, to encourage further contributions. And of course this applies not only to faith-based organizations but to all charities across the spectrum.

I want to make clear something very important about this. Governor Bush strongly favors a greater role for faith-based organizations, but they are not a substitute for government. I want to quote him directly on this. "Government cannot be replaced by charities, but it can welcome them as partners, not resent them as rivals." When he said that, in the next sentence he said, "And Medicaid is an example of something the government should be doing."

Faith-based organizations, other private organizations can help, but they are not a substitute for government, they are not a substitute for the traditional programs to help the poor. The governor sees the government and faith-based organizations both working together to help those who've been left behind, to help the people who need our social welfare system and who need something more.

Governor Bush very strongly supports devolution in the state and local government, something you might expect from the successful governor of a large and diverse state. He believes that state and local government should have a larger role in addressing major domestic issues. In education he wants to give the states and the local school districts more authority to set educational priorities, more flexibility on how they spend federal funds. In the area of social welfare he wants more flexibility in the state children's health insurance program and the housing tax credit would be run through the state housing finance agencies, as the low income housing tax credit now is in many states.

I started by talking about compassionate conservatism, and I want to finish with something else you may have heard during the campaign. Governor Bush has stressed that he is a uniter and not a divider, who wants to bring people together and work with them, not against them. That certainly applies to policy for those who have been left behind, those who are trying to get into the middle class. These are serious and complicated issues that we're here to talk about this morning. If they were easy they would have been resolved long ago by administrations of either party. There's been no shortage of good will.

But they are very hard to deal with and they are hard enough to deal with when we're working together and they're impossible to deal with when we're not. Thank you very much.

Bonnie Erbe: So listening to John's remarks, Elaine, I'd like you to respond to what he said about the rising tide. In other words, I sort of gleaned from that that maybe the Bush campaign feels that the Gore campaign is relying too much on taking credit for the last decade or so of prosperity in lifting people, and not outlining enough specifics of a plan of what it's going to do about the future. What's your response to that?

E. Kamarck: I think that, first of all, prosperity is the most important thing you can do in a presidential campaign. If you do not have prosperity, you do not have taxes coming into the government, you don't have programs, you don't have any of these things funded. You have to pay attention to prosperity. You can't play around with silly, risky economic--you have to pay attention to prosperity. If you care about poor people, you have to think about the economy in a sensible, conservative way. We obviously don't think Governor Bush is doing that. We think he's taking some severe risks with the economy.

Secondly, there is a very, very rich record that is Al Gore and Bill Clinton's record on helping poor people. African-American unemployment is at an all-time low. Hispanic unemployment is at an all-time low. Home ownership is at an all-time high in the United States. There has been an incredible--Bruce will tell you more about it. There has been an incredible amount of reinvention at HUD, spurred by the vice president's reinventing government movement. HUD is a very different, very vibrant place.

During the Clinton administration we tore down the big, big buildings which were the symbol of the failed public housing policies of the past and are replacing them under Hope 6 and other initiatives, with mixed income, low density housing, revitalizing neighborhoods all around the country. The vice president has been chair of the Community Empowerment force, which was a program passed in the first term, and there's been a second wave of financing passed for it. It focuses on creating empowerment zones around the country, both urban and rural, and those empowerment zones are making significant progress in fact in revitalizing neighborhoods and taking a holistic approach, one that we didn't use to have, to the problems of urban neighborhoods, rural neighborhoods, and really poor neighborhoods, looking at social services in conjunction with economic development.

Obviously welfare reform was passed under the Clinton administration. We now see the success of welfare reform in every state in the union. We don't pretend that there aren't good, innovative governors out there doing good things in welfare reform, but the fact of the matter is this is something that Bill Clinton and Al Gore ran on, it's something that they passed in the first term, it's something they signed, and the vice president has been now looking at the welfare reform success and saying, okay, what's next? What's next is we have concentrated on the mothers, now we have to concentrate on the fathers. So in terms of welfare reform, he has laid out actually very rich and clear agenda about where we take that progress in the years to come.

He has a very detailed program for urban schools and concentrating on what to do with these failing schools. It's a dramatic program. It says that you identify them, you shut them down, you reconstitute them, you open them up under new leadership and you work at making these failing schools into successful schools. If they don't succeed, you shut them down and turn them into charter schools. There are a lot of ways, but it is a very aggressive way of dealing with the huge number of failing schools which is quite different.

So I think there is a rich variety of programs there, a rich variety of approaches. The concentration on the digital divide is clearly key to economic prosperity and bringing people--particularly making sure poor people can participate in the new economy. The biggest child care increases ever have been passed during the Clinton-Gore administration, and the vice president would continue the high level of child care funding that we see currently, and we see being proposed in the ?01 budget. So there is a wide variety of programs. I don't think we've at all ignored this, but I do think it is important to understand that our ability to make progress and to help people who have been left behind in this economy does depend on the continued economic prosperity of the country. That is a question that goes to macroeconomics and goes to the management of the economy.

J. Weicher: A few things. Prosperity is certainly important, and we are very fortunate that we have now had a long run--17 years of almost uninterrupted economic growth since we brought inflation under control in the early 1980s. The trough of that recession was dated by the National Bureau of Economic Research at November 1982. Since then we have had 17.5 years now of economic expansion, with one short, relatively moderate recession in 1990-91. That's an impressive record. Great credit belongs, I think, to many people for that achievement, an achievement which, going back many years, no one thought would have been possible.

But we are here today mainly to talk about those who have been left behind in this expansion. That's the title of our topic. This is not the session on the economy. Though I might add that as an economist I know of no system of macroeconomic thought which says that a tax cut is likely to lead to a recession. It's not a Keynesian thought, it's not a monetarist thought. I know of no one who would make that argument in any organized economic system. There is certainly room for a tax cut to enable the people who produced the prosperity in this country to enjoy something more of the prosperity themselves.

With respect to welfare reform, that is a major achievement. It certainly is. It did not happen until there was a Republican Congress in 1995-96, but there is credit to go both to the Republicans who strongly supported it, and to the president who eventually signed it. I think that's perfectly true, and I think we know that that has succeeded in many ways which people did not anticipate. I worked in helping to design the welfare reform in Wisconsin that Governor Thompson put in place, and I know that no one involved in that, Democrat or Republican, legislative or executive branch, expected the enormous, 90 percent reduction in the state caseload that the state has experienced since then. We've had a remarkable achievement on a bipartisan basis.

This is, again, not the place to talk about HUD particularly, but I started to laugh when Elaine started to talk about tearing down public housing projects. When I was at HUD in the Bush administration, the Democratic Congress would never let us even talk about tearing down a public housing project. It was simply off the table. It has been off the table since 1972 when there was the famous picture of the Pruitt-Igoe project in St. Louis being dynamited. The public housing lobby would not dream of allowing that to happen, and I thought it was kind of hilarious for Secretary Cisneros in 1996 to attack Secretary Kemp for not tearing down public housing. I think we are seeing the failure in some respects of a well-intentioned program passed in the 1930s, and it's useful to be moving beyond that. But we're moving beyond that not in a partisan way, but in a bipartisan way.

B. Erbe: I just would want to ask you a follow-up question to one of the statistics you mentioned in your prepared remarks. The tax cuts you were talking about for low income families, you said would take 6 million families off the federal --

J. Weicher: Families with children.

B. Erbe: Families with children off the tax rolls, which would account for one in five families--

J. Weicher: Families with children. Something like 30 million families in America with children, and 100 million--

B. Erbe: And 280--

J. Weicher: Out of 100 million families, households. You have many families who are elderly, many families who are single individuals. You have many families who have chosen not to have children or who haven't yet had children.

B. Erbe: So only 30 million families in America out of a population of 260 million--

J. Weicher: You're comparing families to individuals, Bonnie. 100 million families, not 280 million people. We're talking about 30 million families out of 100 million.

B. Erbe: It sounded like a very small number.

J. Weicher: It may be, but those of us in this room who are young enough can proceed to do something about that at your earliest convenience so that Bonnie is more comfortable with the statistics that the Census Bureau produces.

B. Erbe: Thank you very much. I just wanted clarification. It sounded like a very small number of families.

Elaine, tell me if I'm going off over boundaries here. But I wondered how you think these--and I'd like your thoughts, too, John--how this particular issue plays into the current polling numbers, particularly with women. Because women are the voting bloc that both campaigns seem to be, if you will, pandering to. There's a reason for that. Women turn out to vote in greater percentages than men. We are a slight majority, 51 or 52 percent of the population. However, we vote in greater percentages than men. Clearly Governor Bush leads in the polls by a double digit margin over Vice President Gore, but President Clinton won--the latest Newsweek and ABC polls that I've seen show--

E. Kamarck: Six to nine points.

B. Erbe: Among white men?

E. Kamarck: Oh, is that what you're--

B. Erbe: Yes, that's what I was looking at. Among white men Governor Bush leads by 12 to 18 points. And among women, because we track these things very closely, among women it had been, up until about the last month or so, very much of a neck-and-neck race, with Vice President Gore actually leading by anywhere from 2 to 8 points, and then in the last month or so, I guess post-Elian is what a lot of analysts are saying, it dropped precipitously, and now instead of ahead he's either neck-and-neck or behind a little bit.

But my question to you is more on the issue of the economic divide. How do particularly women, who I should also say the gender gap--one fascinating fact that I learned about covering this issue is that the gender gap exists because women, who skew Democratic on average about 10 points more than men do, also are about 10 percentage points more dependent on federal programs than are men. So they're going to vote for the party that's more likely to preserve Social Security, more likely to support Medicare, etc., etc., support welfare because they rely on those program more heavily than do men.

My question to you, why then--at least right now at this snapshot point in the campaign, since Governor Bush seems to be more supportive of those programs, is that not reflected among women voters in the campaign right now?

E. Kamarck: I have no idea. I mean, I've done a lot of campaigns, and so what happens is there is this gender gap when the Democratic candidate is running behind. They're running way behind among white men, and just a little bit behind among white women. When the Democratic candidate is winning, they're still running behind among white men, but they've got a big lead among white women. That's been a fairly standard feature of our elections for the last couple of cycles. So I don't--I mean, I think the vice president has his work cut out for him in the campaign. I don't think it's anything--I think it is more a function of the basic gender gap as opposed to anything particularly to do with the dynamics of the campaign.

Now I do think as the campaign unfolds it will become clear that the vice president has a long and rich history and record when it comes to work and family issues. One of the most interesting things to come out of pay equity day, which was last week, was to show that there has been a large portion of the payback between men and women is actually the cost of motherhood. Those of us who have been mothers know exactly what that means to our earning capacity, and that if you took out of the sample women with children, you find that women are making about 90 cents on the dollar as opposed to 72 cents, or whatever it is, on the dollar.

That points to the need for a rich family work agenda. For the last nine years the Vice President and Tipper Gore have held a series of what they call family conferences in Tennessee, and each year they've looked at a different aspect of the family. As I said in my opening remarks, in 1994 they looked at fatherhood and how to reconnect children with their fathers. They've looked at how to involve parents in schools, how to involve the family in health care. They've looked at the work and family agenda and all the problems confronted by people who are trying to make a living and raise children.

This is a very rich body of work and record and programmatic and also just insight that the vice president has to draw on. I think you'll see in fact, as soon as next week perhaps, you'll see the vice president talking about these issues once again in the general election.

J. Weicher: No more than Elaine do I have a detailed answer. I'm not a political scientist, not a public opinion specialist. But we do know that more and more women are working. That has been going up steadily for a long time now. And they are paying taxes. Single women and married women, who are in the lower half of the income distribution, are seeing the cost of government. While I think by and large they certainly value the programs which are trying to help them and help other people, they also see substantial shares of their paycheck going to the government, and they see the difficulty of moving up, even as they are working harder. I think that women as well as men find the idea of some tax relief for people, particularly in the lower end of the tax distribution, to be a very promising idea, very hopeful idea for them, I think, that will make their lives a little bit easier.

Beyond that I think there is just a general feeling among both men and women that the problems of the Clinton-Gore administration are--beyond the range of issues we're talking about here, the problems of the Clinton-Gore administration are turning them off.

Bonnie Erbe: Why don't we go now to the next phase and invite the rest of our panelists to join us at the podium. I will introduce each of you and then ask each of you, starting over there, to sort of chime in on what we've been talking about, and then I'll throw in questions as occasioned by your remarks.

Bill Dickens is a senior fellow, economic studies, with the Brookings Institution, co-author of "Urban Problems and Community Development." I won't spend a whole lot of time on introductions because you all have packets and you have complete bios in there.

Doug Besharov is a resident scholar, the American Enterprise Institute, and he's a professor at the University of Maryland school of public affairs, editor of "America's Disconnected Youth: Toward a Preventive Strategy."

Bruce Katz, sitting next to Elaine, is currently a senior fellow at the Brookings Institution and director of the Center on Urban and Metropolitan Policy. Mr. Katz brings to Brookings 10 years of policymaking experience, intimate knowledge--intimate, that's a scary word these days in Washington--of the federal legislative process, federal budget expertise and a strong understanding of the issues facing urban America.

Then Ron Haskins, staff director, subcommittee on human resources, United States House of Representatives, although I see you writing on a Ways and Means Committee notepad, Ron. You're obviously sharing some other committee's resources.

Ron Haskins: We're a subcommittee of Ways and Means.

B. Erbe: Well, that's permissible then.

Why don't we start with you, Bill. Your thoughts on what's been said here so far.

William Dickens: Sure. One thing that I think the discussion so far has highlighted is that the campaigns differ in the extent to which they want to involve the private sector in solving problems that have previously been viewed as the province of the government, and particularly problems of the working poor, those left behind.

Let me suggest that neither campaign has it quite right yet, and that there are ways in which perhaps the Bush campaign is being a little bit overly anxious about bringing in the private sectors, and ways that the Gore campaign could do better by bringing the private sector in.

Let me start with the Bush campaign. One of the most important issues for the working poor is health care because the problems of not having health care are most acutely felt among people who are working but working in jobs that don't provide health care. There have been various proposals floated for extending various government programs, or requiring employers to provide more extensive health care.

The Bush campaign's answer to this has largely been, as has been stated, to try to expand individual options to get health care on your own. Well, as anybody who has ever tried to get health care on their own knows something, which is that when you go out and you buy health care on your own, it costs a heck of a lot more than if you get it through your employer, even counting your employer's contribution. There's a simple reason for that. Insurance companies know that if you're an individual out looking for health care, there's a better than average chance that you're somebody who needs health care and that you'll spend a lot of their money, whereas if you're getting it through your employer you're one of a group of people. And so insurance in that case can do what it's supposed to do--allow people to pool risk across individuals so that you actually get insurance working.

Well, if you start giving people all sorts of options, if you start giving them tax credits, if you start giving them options to put money into personal savings accounts and things like that, you begin to create the option for the people who are better off, who are part of the company pool, to go out and get health care on their own. This creates what economists call de-pooling. That is, that the people who are the better health risks can go out and get insurance cheaper from outside their employer, and then of course their employer is left with providing health care for the people who are more sick. Their costs start going up and then they say, the heck with it, there are these options out there, and you end up with no insurance.

Probably the better approach to dealing with the problem of health insurance, than trying to provide all sorts of individual options through the marketplace, is to try to figure out ways to expand pooling so that people share risks rather than allowing individuals to go out and try to take advantage of the market.

A place where it's probably a good idea to try to bring the market in is in another area that's very important to the working poor, and that's education. A lot of working poor people are to be found in America's inner cities, where the school systems have been notoriously not working tremendously well. At least part of the problem there, at least as has been suggested that the problem is, and there's been enough evidence now to support this view, that the school system is a monopoly and it doesn't have the competition that a lot of other sectors have. We've seen in a lot of places in this economy in the last couple of decades where competition has been very, very good for sectors that previously didn't have competition.

Opening up competition in education in a real serious way is an interesting experiment that's worth trying. We have had a few experiments with voucher programs in individual cities, but none of them have been systemwide. None of them have been big enough to see what the impact would be on the entire schooling system. There is precedent for doing these sorts of experiments. Back in the 1970s we did a number of experiments with what we called the negative income tax. One of the important things we learned from those experiments was that what we thought we were going to learn from them wasn't anywhere near as important as what we ultimately learned from it. I think there would be a good reason now today to try a full-scale experiment with vouchers, and I would call on the Gore campaign to go ahead and endorse such a program.

Bruce Katz: If my colleague Belle Sawhill were here, I think the first thing she would say is it's remarkable that we're having this kind of session. We're talking about the plight of the working poor in a presidential election. It's very much a sign of the times, the prosperity, the budget surplus. This has been a policy blind spot for decades. We focus a lot on the very poor, with welfare and the homeless and other issues and programs, and we focus very much on the great middle class, particularly through reductions in tax policy. But really, this campaign over the course of the past number of years since welfare reform, we really have begun to focus on those people in this blind spot, making $15,000, $20,000, $25,000 a year, who can't afford health insurance, who can't afford child care, who have major housing burdens and so forth. So the fact that we're actually talking about this and the candidates are putting on the table real concrete proposals with a wide array of issues, I think, is a very positive sign.

With that positive statement, because I've worked with both John and Elaine, I would focus on two issues where I don't think enough focus is being put on in the campaign. First is housing. Housing is the major expenditure of most working poor households and of poor households in this country. The average household in this country spends about 33 percent of their income on housing, about 18 percent on transportation, less than 5 percent on health care.

And yet when you look at both campaigns and you look at where the big-ticket items are with regard to helping the working poor and making work pay, I would say that a big sort of gaping hole is with regard to housing. HUD's latest report on the number of households in the country who pay more than 50 percent of their income for rent or live in sub-standard housing now says that about 5.4 million households basically fit this worst-case housing needs sort of definition. And that's up from about 4.8 million at the beginning of the decade.

These are not just the very poor. These are people who are in the workplace, hundreds of thousands of teachers and cops, hundreds of thousands of people who work in the service sector and the retail sector. And when you get to places like Silicon Valley or Boston or New York City or some of these hot markets, it's not just the working poor who really are facing housing burdens. It's also moderate- and middle-income households as well.

I don't think really that either campaign has put forward the kind of aggressive, ambitious effort that needs to deal with this kind of housing crunch. We do have programs like the housing voucher program that are enormously efficient and enormously effective. We do obviously have ways, whether it be earned income tax credit or the minimum wage, to also help families deal with this housing crunch. But I don't think we really can talk about the working poor without adding housing to the list of health care, child care, income support, saving. We've got to put housing on that list, and it just can't be about emotion.

The second point, which I'll quickly make, is if we're going to talk about people left behind, we have to talk about places left behind, because one of the most important demographic trends that is occurring in this country is the growing concentration of the poor and the working poor in both central cities and older suburbs. We now have about 8 million people living in neighborhoods of high poverty. These are principally urban neighborhoods where the poverty rate is 40 percent or more. And the people in these neighborhoods really face a triple whammy. The schools don't teach, there are no jobs, and there really are no job networks to help them find jobs.

The jobs are principally being created not within the cities but within the suburbs and ex-urbs of this country. Our economy is decentralizing. Particularly the new economy is decentralizing along the exit ramps, further and further away from the poor.

And so when you get to issues like welfare reform, it's not just about investment anymore in helping make work pay or in dealing with some of these other issues. It's really about the spatial concentration of opportunity in our country. We're about to complete a look at how welfare reform has played out in 100 cities in the country. And what we are going to find, as we have found before, is the city welfare rolls are declining, but they're not declining as fast as the suburban welfare rolls. And so what you have in Maryland is you have Baltimore with 13 percent of Maryland's population and 60 percent of the welfare caseload. In Pennsylvania, Philadelphia is 12 percent of the population and 47 percent of the welfare caseload.

When we reform welfare and reauthorize welfare in 2002, it is an urban policy. And it's not just about investments. It's also about how we govern, whether workforce and housing and other programs are governed at the metropolitan level as opposed to the parochial level, and about these intermediaries that John has talked about--faith-based, non-profit, private-sector intermediaries that really can help people who are living in these neighborhoods of high poverty access jobs and employment opportunities in the new economy.

So those are the two areas, housing and the connection between people left behind and places left behind, that I think we need a lot more focus on, not just on the investment realm, but how we restructure existing programs and how we build a network of community-based and non-profit and other institutions to help people move--

B. Erbe: Ron.

R. Haskins: The striking thing about Elaine and John is that they both took kinder and gentler to heart. I had difficulty telling from their presentations where the real burning issues are that divide the two campaigns. And I think, to some extent, this is true of the candidates as well on these issues. So what I would like to do is highlight five areas where I think there is potential for sharp disagreement among both the candidates and the two parties.

The first is welfare reform. Elaine did a wonderful job of noting that the president signed the bill and that the vice president supported it and so forth. But I was involved in welfare reform and I saw what happened close up, and the Democratic Party was strongly against welfare reform; the strongest rhetoric I've ever heard in any debate on the House floor about how bad the principles of the welfare reform bill.

And perhaps it is true that Dick Morris did not play as big a role as most people think he did, but I am still worried about what would happen in welfare reform, and especially the aspects of welfare reform that the Democratic Party opposed strongly, and to some extent still opposes, like the five-year time limit, like strong use of sanctions, like the end of entitlements. And I wonder what would happen to all of those things in the Gore administration.

I would not expect a direct frontal attack, but there are lots of ways you can undermine these provisions. And if we did that, I think we would lose the effect of at least a million additional mothers going into the workforce. And one of the reasons that this discussion is so important is in the last three or four years we've added another million mothers to the rank of the low-income poor. So they're on the ladder. They have a chance. If we can figure out these programs, we'll really be able to help them. And it is because primarily of the welfare reform bill, not the economy.

The second thing is faith-based. This is a little bit abstract, of course. Nobody has really laid it out in detail. We heard a lot about it during welfare reform. We took a big step by making it very clear that churches could play a much bigger role than they've ever played before in other faith-based organizations and other charities. We haven't seen a huge explosion of it. We don't have good research about it. We don't know the role that faith-based care is really capable of playing.

But we do know, and I think we have agreement, at least among the analysts, that there is a group of people at the bottom, not the working poor that we're talking about today, but a group of people at the bottom, some on welfare, some off welfare, who really need help. They need spiritual uplift. They need a complete remodeling job. And I think that churches are going to prove to be much better to do that than government. But we haven't figured out how to do it. So this is a huge challenge. The Gore campaign does not talk too much about faith-based organizations. The Bush campaign does. This could turn out to be a big difference.

Health care has already been mentioned. It's interesting that when Governor Bush talks about health care, his first thought is on the market, that we ought to have a tax credit. I think Bill might have been a little bit tough on the proposal. I think the idea of the Bush campaign is that employers, long-term employers, where most low-income people work, would be more likely to support health care if there were a subsidy from the government, so you'd have three sources of contributions. But anyway, I think I'll go with what Katz said. We need to find out more about this because we don't want to have a 100 percent government-run health care system.

The fourth issue is marriage. Elaine, I think, didn't even use the term marriage, though she talked about fatherhood. And she mentioned research that shows unequivocally that both adults and children are much better off if they're married. So why don't we talk about marriage? And I think we don't have any programs. We can do some tinkering around at the edges or some nifty things we can do that Republicans did with Democrats' support in earned-income credit to make it a little bit more marriage-friendly. But the talking about it and the clear statement that children are better off in married families by all our national figures would be a step in the right direction. And I think Bush does a lot more of that than Gore does.

And finally, education. Education is an area where we really could have extremely sharp differences. I agree with Bill. It seems to me that we ought to give the private sector much more involvement than we have so far. And I feel that this is--the reason I feel this is such an area for differences is I don't see how Democrats can really--they may figure out a way to allow this to happen, but they can't advocate this cause because of their close relationship with the teachers' union. So this is an area for very, very striking differences in proposals. And in reality, after the presidential election is over, if we have a Republican president and Republican Congress, we may get some really fundamental changes in American education for the first time.

B. Erbe: Doug.

Doug Besharov: Well, everyone's done specific things, so let me take advantage of coming last and try to step back a little bit. First of all, if I were a voter who didn't spend that much time studying all of the issues, I would have had some difficulty telling the difference between the candidates here. I heard Elaine talk about being conservative and I heard John talk about conservatism. So I guess, you know, besides beating the communists, we beat the liberals.

I think that the differences in approaching federal-state relationships will be more ambiguous than either Elaine or John suggested, which is to say, having looked real hard at some of Governor Bush's proposals, they feel like the heavy hand of the federal government; the same thing with the vice president. I mean, so that's a rhetorical difference, and I don't know who's going to come out on top.

I'd like to spend the rest of my two and a half minutes or whatever on what I think is the $300 or $3 trillion gorilla, which is Social Security and Medicare. And both candidates spoke about that first, but I'm going to take a chance here and put on my Captain Marvel decoder ring. This is what I think is going on.

The vice president is at this point committed to using the surplus, for better or for worse, to keep current benefits in Social Security. Most of you in this room are too young to realize this, but there are a lot of non-deserving, non-poor getting those Social Security benefits. And so at a conference about those left behind, Elaine, I was a little troubled when you called my mother someone who is in the social safety net. My mother is as close to a social leech as it comes.

B. Erbe: God, nice to your mother. This is a rough crowd.

D. Besharov: She feels the same way. She calls me and says, "Why did I just get an increase in my Social Security check? I don't need it." And so the sleeping giant here--and I don't do polling either--is how many elderly think this, on both sides, is pandering, which is how many elderly are ready for a cut in their Social Security?

Both presidential candidates have said, "We're not going to cut benefits." But Governor Bush has kind of a back door here--not for cutting benefits; I think they both will if they get elected--for an important point. You heard John give a litany of tax cuts, which really do address those people left behind. John spent a lot of money this morning. And the vice president wants to say, you know, "risky business decision." How does the vice president--I mean, how does the governor spend so much money? The answer is, although he says he's going to cover all the elderly, he's going to pay for that by a little bit privatizing Social Security, take the pressure off the surplus so that he's got more money for tax cuts. That's why I'm saying you decode this.

Now, as I say, the vice president will say privatizing Social Security is risky business, da, da, da, da. I don't know anything about that. But it explains why, in the governor's budget, the governor can get so much more aid to the working poor. And it must dwarf--I'll let John answer it later--it must dwarf what the vice president has so far proposed in terms of total dollars. Well, Elaine will also say something. My count is it dwarfs it, and it's because of this interplay.

So what I'll leave you with is, if we're really worried about the subject matter of this conversation, which is those left behind, the key to either party's helping those left behind is to get some of those people who are now getting Social Security and Medicare to contribute their rightful share to the common weal.

Thank you very much.

B. Erbe: Bruce and Elaine, your thoughts, because we haven't--the social safety net and the--your thoughts on what would happen under a Bush administration, if he is elected, in terms of the breaking down of those walls between separation of church and state, in terms of, you know, vouchers for private, Catholic and religious schools, in terms of faith-based services; you know, all kinds of things that affect lower-income people. Net effect: Good? Bad? Indifferent? What?

B. Katz: You're talking to the wrong Democrat, because I'm a huge supporter of investing in faith-based institutions. And, you know, and many HUD programs are, you know, basically run through religious institutions that perhaps have to do some hoops and hurdles to create subsidiaries so they get around the church and state issue.

I think the major difference between--and again, it really wasn't stated here in the opening--the major difference between the two campaigns is partly around the level of investment in some of the issues we're talking about here today; the level of investment of the Gore campaign in health care versus the Bush campaign, the level of investing in child care and preschool education in the Gore campaign versus the Bush campaign. I think that is an essential difference that we haven't really put on the table, and obviously using the decoder ring to sort of understand how people pay for that.

And then I think the other issue is just the sort of different means that campaigns use to sort of address some of these issues.

Elaine Kamarck: The vice president a year ago, more than a year ago, last April, gave a very well-publicized speech in which he endorsed charitable choice. He has been working for the last couple of years heading a mentoring coalition that he formed of a group of--of a whole bunch of national organizations who are mentoring welfare mothers as they return to the workplace, because one of the things we've learned in the course of doing welfare reform is that the support systems around going back to work are equally as important as the jobs. So lack of those support systems accounted for the fact that in the past, a lot of welfare mothers got jobs, lost jobs, got jobs, lost jobs.

And so one of the things that the vice president realized through working with these groups was that--and meeting just many, many welfare mothers--is that for many of them, faith was an extremely important part of their getting themselves out of welfare, kicking an alcohol habit, kicking a drug habit, et cetera. He sees--and therefore, he endorsed, much to the consternation of some people in his own party, he endorsed the concept of charitable choice.

Now, he does have a narrower vision of it, because he looks at charitable choice particularly for programs where we know that faith has played a unique role; so in juvenile justice programs, in drug addiction programs, in welfare-to-work programs. And he laid out last April--and many of you can go to the Web site and look at this speech--he laid out his vision of charitable choice.

But the fact is that whoever said this before is wrong. He constantly talks about the role that faith-based organizations do play and how they are incredibly valuable augments to the social safety net, to the services that government provides, et cetera, and how important they have been and will continue to be with all parts of the population, but particularly parts of the population that suffer from forms of kind of emotional isolation, poverty, et cetera.

B. Erbe: So a red herring, as far as you're concerned.

E. Kamarck: Yeah.

B. Erbe: I'd like to get to you, but one other thing before I go to you, Doug, and then back to you, Ron, for a response. But marriage, the issue of marriage; again, is it--

E. Kamarck: The vice president is all for marriage. Let's get that right on the table.

B. Erbe: Again, is that something that he talks about?

E. Kamarck: Yes. He talks about it. He gave a speech in October right here in Anacostia talking about the importance of marriage, talking about the importance of marriage counseling to help marriages stay together. He is against the marriage penalty. He is absolutely all for marriage.

The reason I didn't mention it in my initial conversation is that--and I think you all alluded to this--we can't legislate marriage. Okay, people are going to get married; they're going to get divorced. We can try to use the bully pulpit to encourage people to get married and stay married, but it's kind of a hard thing for the government to get involved in.

What we can do, however, through programs like the pass-through program and welfare reform, through various social service programs that we're now experimenting with through HUD, through HHS, we can, in fact, try to relink fathers with their children. We can't tell them to go back and marry the mothers and love the mothers. I mean, that, excuse me, is beyond what government can reasonably do. But we can, in fact, try to relink them to their families. We can try to reinforce their obligations to their children.

The vice president and I visited an incredible program in Chicago, and it's one of many that are now being funded where, in fact, fathers have been estranged from their little children for years--and these guys are pretty tough guys; they've often been in jail; we know they've been arrested; sometimes they're drug addicts--where these fathers were brought to a play room and, with counselors and supervisors around, played with their children on Saturday mornings as part of a whole program to reattach the fathers to the families.

One of the things that we are learning about this--and we've been learning since the vice president got involved in this and got the foundation world to get involved in this--is we used to think, "Well, give the guy a job, and if he has that job, he'll go support his children." And it turns out, one of the things we're learning through the fatherhood programs is it actually works the other way around. Reattach him to his children, get an emotional investment in his children, and that guy will get a job and he'll keep a job. I heard this myself. So I think the reason--the only reason I didn't talk about marriage is I think we can actually do a lot more around fatherhood than we can around marriage.

B. Erbe: But also, I mean, part of what I gleaned from Ron's point is you're talking about the mistakes that have already been made. What is the vice president doing to prevent future generations from making those mistakes? You know, "Don't have these children before you're married." What is he doing to do that kind of--you know, "Don't make babies until you are married; that is wrong," that kind of rhetoric.

E. Kamarck: That's absolutely--

B. Erbe: That, government can--you know, that the bully pulpit can do.

E. Kamarck: That the bully pulpit can do and obviously should do. And he's--he's talked about that consistently in the context of stable families. Look, it was--it was Bill Clinton and Al Gore who talked about the importance of two-parent families, and talked about that in a way that was very controversial because I know, I was there in Democratic Party at the time. They really broke the mold of the Democratic Party. It was one of the ways in which they become new Democrats was by, in fact, getting right out in front there and saying two parents are better, and stable families are better. If you want to deal with poverty and get to its root cause, look at family structure. And that's one of the root causes--

John Weicher: That's the most terrifying thing I've ever heard said about the Democratic Party. I can assure you that two-parent families are not controversial in the Republican Party. Governor Bush would not have to go out and corral a significant fraction of the party to support the idea that marriage is a good thing, and marriage is especially a good thing if you have, if you have children.

I should say that most of the Democrats I know wouldn't need to be persuaded of this either. It's a terrifying thought about what the--that that has to be thrust of the big issue.

E. Kamarck: This is more than a decade--this is more than a decade ago. And this was part of the transformation of the Democratic Party--

J. Weicher: So the party of the '80s thought marriage was controversial.

R. Haskins: It may have been more than a decade ago, but three months we were deeply involved in a debate on the House floor about fatherhood, in a--and we used the word "marriage" frequently in the legislation, and the Democrats came to the floor trying to remove the word "marriage" and we had a very lively debate on the floor of the House of Representatives--

E. Kamarck: Well, that wasn't Al Gore.

R. Haskins: --where Republicans were basically defending marriage. So, I completely agree with what Elaine says, especially the president. I haven't seen as much of what the vice president has said about this, but the president has set a great example on especially out-of-wedlock marriages. He's very, very out front, and that he should be commended for that. But the basic point I was making is, you know, it's easy to talk about things and to, you know, give a speech and do some small initiative, but the question is how committed with the candidates be once their president to turning their commitment into problems that go beyond--to show you that I'm not just totally partisan--the Points of Light approach, things like spending $3 billion on the tax code to do something about the marriage penalty and earned income credit. Or, the president just vetoed--now I've going to have a lot of responses--but the marriage penalty in the tax code, and he'll get another chance probably this year. So, that is really--when you get to that level, I think we will reveal some serious differences between the two candidates.

B. Erbe: Doug, you were--

D. Besharov: A long time ago, and I'm not complaining. I lost my decoder ring because I couldn't figure out why faith-based programs work for drug addicts, where there's not a lot of research, but they don't work for elementary and secondary education where we have a lot of research that religious schools are good for disadvantaged kids. So, there's an inconsistency on one of those arguments. And then on the one on marriage, I think it's almost as difficult to make a man into a father as to do couples counseling. Again, this distinction is lost to me. And I think in both cases what it reflects are underlying political alliances on both sides of this discussion and not the substance of the issue. And you heard someone mention about school vouchers and unions, and the problem about fatherhood it brings in a job-training constituency, not a family constituency.

So there are underlying political constituencies that drive these words, and there's not going to be a decoder in this campaign.

B. Erbe: Do you want to answer him or should I? I mean, in fairness to Elaine, from the left I will say to you--I mean, I think what she was alluding to was when you're a drug addict and you're sort of at the very bottom of the heap and the only way out you see is through some sort of faith, the only way, it makes sense to the vice president to rely on faith. Whereas, elementary and secondary school children are hardly, you know, at the bottom of the sociological heap, to indoctrinate them religiously you sort of have more doubts.

So what you're saying to me is the exact opposite of logical.

J. Weicher: I'm glad that the moderator clarified that. Let me say that I've been in South Central L.A. and the--the single most hallowed piece of ground there for the low-income down on their luck families is the local Catholic school. Not the federal job training program which has broken windows. Not the public school. Those people are just as down and out, they just happen not to use drugs. Their fathers do. Their mothers do. It's not a distinction, Bonnie, that I think holds. There is a distinction about separation of church and state, but that goes to these drug treatment programs as well. It really is--that is the distinction that most of us are concerned about.

E. Kamarck: That's right. And those, and those treatments--and in fact, an important part of the Charitable Choice legislation period is that there are options, okay, for people to have. I mean, it is very--the way this piece works, to be Constitutional, is that there are options that the, for treatment, okay, so that you do not, you're not forced into a religious-based treatment. And I think the Democrats and Republicans agree on that. That's the Constitutional line that everyone, you know, got there on.

B. Erbe: Before you answer, Ron, and the floor is yours after this, but I just want people to start thinking about questions, because in the next--after Ron's finished, we will go to the audience for questions. Ron.

R. Haskins: That guarantees I'll be short. The biggest issue here is programs and policies. And I had--I did not mean to cast any aspersions on the vice president about his commitment about marriage or anything like that, or ability to talk about it in a speech. But let's take the other example here is the Charitable Choice that was in the Welfare Reform Bill. We had a huge fight over that provision. Democrats did not want the provision. You say that's where that line is. Well, nobody knows where that line is. And there's a group that wants it over here. There's another group that wants it way over here. And that's a debate we had in the welfare reform debate, and that's a debate that we had recently in the fatherhood legislation. And I hope we're going to have that debate in education, because Democrats think we should not have, give money to Catholic schools and other religious, faith-based schools, to educate our children. And most Republicans feel that's wrong. We should. There are ways we can do that. We do it now in child care all the time. We do it in hospitals. So let's do it in education where it will make a very big difference.

Now, is the vice president ready to come to the microphone and say yes, I'm committed to that. I think we should take important, solid steps in that direction and here's $5 billion to do a national--like Bill mentioned--negative income tax equivalent for private involvement and religious involvement in public schools. Is he ready to do that?

E. Kamarck: Nope. Nope.

R. Haskins: That's a difference.

E. Kamarck: There's a difference.

B. Erbe: All right. Questions from the audience, please. Yes sir.

Q: I do have some questions about the church-state separation issue with Charitable Choice, one for the Bush camp and one, I guess, for the Gore. On the Charitable Choice issue, a lot of religious groups have been touting that they want the money coming to them because of church-state concerns. There was a debate in the House about this, the Charitable Choice issue, and Congressman Souder and Congressman Edwards got in a back and forth about this money for faith-based groups. And they asked, you know, would you fund the Wicans under the faith-based approach, because the military has recognized them as a religious group. So my question would be, would--Congressman Souder responded that under the Bush administration the witches would not get funding is how, is his quote. So, I want to know, would the Bush administration allow groups that they may not consider religious groups that they don't like, would also allow them funding? And who would decide which religious groups are good and bad? That's the specific question I have for that.

And for you, for the Gore campaign, I know a lot of the religious groups have been trying to meet with the vice president to tell him why even funding the non-proselytizing wings of those church services, why the money going to the pervasively sectarian organization is what the court, the Supreme Court has said is unconstitutional and impermissible. So, I want to know, if you're going to meet with some of the religious groups--I guess they'd be called on the left, or whatever, to talk about that? And if vouchers violate the constitution, which Vice President Gore has said, doesn't Charitable Choice also?

J. Weicher: Just to respond on the general question--we always have issues over what is and is not a religious group. Congress shall make no law establishing a religion. Okay, at what point is something a religion and at what point is it not. We're going to have arguments over the boundaries on that all the time. I certainly hope Congressman Souder is right about that, and I don't--I have trouble with the idea of witches as an organized religion or a disorganized religion for that matter. But I think we're going to have issues like that, and I think decisions are going to be made--when we're talking about programmatic funds, we're often talking about decisions by executive branch officials as to what organizations will receive funding for specific purposes, and that will consist not simply of whether the organization is religious or not, but what the organization proposes do to with the funds, and that's going to be, that's the typical basis in my executive branch years on which decisions are made as to who is to be funded and who is not to be funded.

R. Haskins: Can I add just a very specific idea to that? I think that this is going to be a whole messy process, there's no question about it. And courts are going to be involved. And politicians are going to be involved, and so forth.

B. Erbe: And the people you love, the trial lawyers, are going to be very big-time involved.

R. Haskins: Yes. Oh, I'm glad to hear that. I had forgotten.

E. Kamarck: This will the be trial lawyers re-employment act, brought to you by the Bush administration.

R. Haskins: Well, at least they will be well employed then. Here is the answer to one of your questions about who is going to decide. Under the way we use this money now, unless there are clear prohibitions in the statute, which there are not, states and localities will decide. And that means that we'll get Wiccans funded somewhere, I'll bet you, and other places they won't. And in both cases we could wind up with court cases. So, ultimately, as is always the case when legislation does not clearly define what it means, the courts are going to decide, and that's what's gonna happen.

But, meanwhile, we are moving the bar more and more and more, to more involvement by people of, who are faith-based, in social policy, which generally is a good thing. There has to be a stopping point, but we're a long ways from it.

D. Besharov: Well, I know that there have been two comments here. First of all, I was a little uncomfortable when you said the Bush side and the other side--but any way--. The question of funding of faith-based programs, it seems to me is part of a larger question of the role of government and who makes these decisions. And speaking for myself, but I know many people who have looked at this issue, it's a little bit like what Elaine said, but it goes beyond that. It's not just choice, it is that the decision-makers ought to be the recipients of the services, and that includes a public, non-sectarian child welfare system, a public anti-drug system. The issue here is that the government, whether--and here I disagree with Ron--whether it's at the state and local level or anywhere, should be choosing who provides these services. Let the recipients choose, and then we actually get a little bit away from this church-state issue and we get big-time away from the special interest issues that arise, whoever the recipient of government largess is.

E. Kamarck: Last, year when we were working on this speech, we did do extensive consultations with the heads of the left-of-center religious groups. And I have many letters from them and had many conversations with all of them personally. So we did do--we did do those consultations. They weren't totally pleased with the vice president's stance, but they respected it and understood it. And, I think going back to what Doug said, I mean, what is emerging in all social service provision is a move towards greater choice. And so you see in the welfare reform bill, we allowed for not just faith-based organizations to pursue the TANF grants, but we also allowed for for-profit organizations to get TANF grants.

The most important thing we can do in making sure that this new sort of system of choice ends up working is measure the performance of these providers. Do they actually do for their clients what they say they're gonna do? And then, when we measure their performance, we have to be willing at the federal, state and local level to cut them off when they're not effective.

So, if you're a for-profit group and you're not doing a good job with welfare-to-work counseling, if you're a faith-based group and you're not doing a good job--we have to be, measure performance and make sure that these are cut off. And this is a, this is a kind of wonky thing that I'm usually at Brookings talking about, which is performance based government. But, it is really, frankly, the key to making this kind of new choice world work.

B. Erbe: The woman in the back that I--

Q: Thank you. I wanted to ask a question about the, with regards to the fathers, just some of the emotional ramifications of just the ideal of reuniting fathers with their children. It may be okay, you know, once in a while have them come into a room on Saturday with their one-year-old kid, but what about those kids who are 13 or 14, never even seeing their father, they come in all of a sudden in their life, and that's an automatic point of instability, a point where, oh, okay, some man comes and he says I'm his father, you know, they're my father, I don't know if I would be so willing to say, "Oh, okay. Well, I love you. Let me come and put, you know, embrace you." I don't think that a lot of times that's the case. And also with the fathers, if they don't feel loved by their kids, what will give them the incentive to say, "Well, I guess I want to get that job now." Or if they even feel like they even have a part in their children's lives. I want to know exactly how this plan will actually work, and how would you deal with that, even so much to the prevention part of it, so that children won't have to endure these types of things in the future.

E. Kamarck: Most of the, most of these programs--and they're all very new, because the field of fatherhood itself is fairly new--most of these programs concentrate on little children, okay, because obviously, you know, the earlier you can establish those bonds, the better. And so most of the programs that at least I know of really focus on small children and making sure that bond is there.

Obviously, to the extent that we can do parenting education in schools, to the extent that we can do marriage counseling through schools and community centers, et cetera, we can try to address this problem of children coming into the world and immediately being part of a broken family and never having a relationship with one of their parents. So, that's--but it has to start very early. It has to start in the schools. And parenting education, whether it occurs through the school, through the community, through the church, is a very important part of trying to get at this before we get to the point where we have to go into various programs and try to reunite some broken bonds.

J. Weicher: The easiest way to address the problem is to be married when you have the child. I think the question that the lady raised, I think that's very, very well-stated and very important. We're dealing with real human beings and real situations, and those situations are very different and very individual. And we talk about it--Elaine talks about it I think in a kind of a social engineering sense, which is, I think, removed from the reality that's going to be in many people's lives. Once you break the bond, it seems to me, it's quite hard to continue it. We all know, if you watch 1950s movies on the American Movies Classics channel, every now and again you will see a movie which will talk about the father, the divorced father who spends Saturday afternoon with his kids. And it's a staple--it's almost a situation comedy staple, and it describes what is an awkward and difficult relationship. Once you break the bonds, it's extremely difficult to put them back together in any situation, and I think at any age. I think you've raised a serious and important question here.

B. Erbe: Yes.

Q: Can I ask a specific question, and then make a sort of naive, British comment? My specific question is about the TANF grant. My understanding, if I'm right, is that these are related to the size of the welfare roll, so that at the moment you've got quite a lot of unspent money out there. And it seems to me from looking at your system that you've been very successful at getting people into work, but those who were formerly on welfare are now still in many cases in a very precarious sort of existence, not necessarily moving into a lifetime career. So my specific question is would you support widening the use of those unspent TANF funds to more innovative uses, perhaps to helping those who have just gone into work?

My sort of naive British comment is that it seems to me that your welfare-to-work system is largely targeted at black single mothers. And whilst I totally agree with you that it's really important to focus on the fathers, it seems that your, a lot of your programs cut them out. And in Britain we have a new deal which relates to young people and much, much wider applicability than in your case. And my observation is that you have yes, very low unemployment, but your unemployment amongst African-American youths is 20--I think 22 percent. I know that's a lot lower than it used to be, but that's still a very high absolute level. And so if you're starting your career and that sort of life, I mean, shouldn't you open up your programs a little bit more in a the way that some other countries do?

R. Haskins: You have a "New Deal" in Great Britain now? You don't learn from history?

E. Kamarck: I think that in fact in some of the more progressive states--and I will congratulate the state of Wisconsin for being one of the more progressive states here, they are using their TANF exactly in that respect. They are broadening it. There's a lot of governors--this is really under the control of the governors--and there are a lot of governors who are using their TANF money exactly as I think it was hoped that it would be used, which was to really provide wide and significant networks of support, because the object here is not just to get the welfare mother into her first job, but to keep her in that job, increase her skill level, and have her move up the economic ladder.

One of the things that we have tried to do in the various fatherhood initiatives is to in fact go back through the federal government and undo exactly what you pointed out--the disincentives, intended, unintended, that cut fathers out. HUD did a variety of things about, regarding rules for public housing, okay, which addressed the problem of--I mean, in fact there used to be a problem of the fathers sneaking back home at night because they weren't allowed in the public housing units. So, there's been a variety of reversals in all of the programs affecting this population from the HUD programs to the HHS programs, which are in fact undoing some of those things that arose from earlier years.

J. Weicher: Just to say I think, I think the test of welfare reform is not getting the first job. The test of welfare reform is what happens over a period of time. When the next recession comes, for instance, assuming it does come, at what point, what happens to the people who have gone into the labor force? Do they go back on welfare, or do they essentially, if need be, go on unemployment compensation and then move back into another job in the way that the typical American does if the typical American is hurt by a recession. And I think we--I don't think we know how that will work out yet. But the first step is getting the first job and going on from there. I don't think very many people regard the first job as the end--that I have talked to--regard the first job as the end of the process. But it is the first start, first step on the process, and we've made that step for many more people. We've achieved, we've helped that process for many more people than I think almost anyone anticipated when welfare reform passed in 1996.

R. Haskins: Let me add just one quick thing to that. It is certainly true that a lot more people have a first job. There has to be at least a million additional mothers compared to what it was four years ago. But we have a fair amount of research, including some right here at Brookings by Gary Burtless, that shows that if the past is our guide, those mothers are not automatically going to move up the wage scale or get better jobs, become computer programmers. So, if we are really going to help these mothers to get beyond 15 or 18--and I don't want to demean, I think that's a huge achievement--but I think we can even do better. Now we're into an area of extreme boredom that could never rise to the level of presidential debate. The issues are can you coordinate the Workforce Investment Act, and TANF, and the U.S. Employment Service, and can we get their employees to feel the same commitment to low income mothers that the welfare employee, and so forth. So, we're doing that around the country. Elaine mentioned Wisconsin. You could mention any other number of states that are trying to work these things out. I think it's somewhat optimistic that we'll be able to do better, but it will be a long, difficult process. And above all, we have to keep the money in the system, I think. It's a--

E. Kamarck: But, but--by the way--

W. Dickens: And it's not just welfare reform either. Ron's correct in saying that we can't say that the increase in work among single mothers is something that's due to the economy, but it's also true that it's not just the welfare reform. It started before the welfare reform. The innovation in the earned income tax credit that started years ago and the more recent increases during the Clinton administration by most estimates play a very, very big role, as does the welfare reform that took place before welfare reform--the welfare reform at the state level under the waivers. And it's an ongoing process that, that's making a big difference.

B. Erbe: The woman in yellow.

Q: My question is for the decoders. I was wondering how you would want to restructure like Social Security? Like, you were saying instead of making it more of a, you know, like an entitlement system, like, "Oh, I paid into it so I get money out." What kind of measures would, do you think would need to be, social measures, would need to be implemented in society to kind of change that mind set, like, even though I might be entitled to Social Security, if I don't need it, I shouldn't get it? Like, I mean, how do you feel about--this is kind of something I like, but there'd be a maximum and minimum wage, like where a minimum wage can't be more than like ten times as low as maximum wage. I don't know, it's just stuff like that, like how would you go about that?

D. Besharov: I think the larger question you answered yourself, which is what's the way this happens, and that is more people start asking the question, What about the current level? Is it right or is it too high? For most people getting Social Security now, they are getting much more than they put in, adjusted for everything and so forth, because of the way we changed the rules in the 1970s for cost-of-living adjustments and so forth. Most people receiving now--to have gotten this kind of return on their investments would have had to be in on the ground floor of Microsoft. So they are doing very well, and they know it. The problem is expectations, and also this tremendous amount of wealth that is now in the elderly. You know, when we talk about what happens when Social Security was created in the 1930s and through the 1980s, the elderly tended to be poorer than society as a whole and so forth. And they are no longer that. Now, part of that is because of Social Security, and you won't hear me at least saying, you know, take that away from folks. But there is now what--you guys are the housing people--$2 trillion in real estate held by people over 65--is it $2 trillion?

J. Weicher: We have about 85 percent home ownership rate among people over 65 years old, and most of them do not have mortgages on their homes--they've paid off the mortgages. So the value of the house is theirs. There have been a number of attempts to try to tap that for various purposes We have reverse-annuity mortgages, and there have been suggestions of using that as a way of funding Medicare. I've looked into that from time to time. The potential problem is that for many elderly--not all, but for many elderly that's their basic asset. And you run the risk that at some point they lose both the house and the service, the medical insurance or whatever that they are funding out of the reverse-annuity mortgage. At the same time, having that availability is a plus, and I know some elderly women who are in fact very happy to have that as a way of supplementing their income.

I think the elderly are asset rich, but not income rich. Where you draw the poverty line doesn't change the structure of poverty in this country, except among the elderly. You move it up and down a little bit, you change poverty among the elderly substantially. They tend to cluster somewhere near the poverty line, and I think that that's--it's--when you get to--when you get closer to that age, the problem--Social Security may loom larger in your calculations--I hope not--but it may loom larger.

R. Haskins: Very little reality this discussion of Social Security cuts though. Living where I live everyday, on Capitol Hill, the political system is not ready to even publicly recognize that cuts in Social Security would produce any particular set of effects. I mean, there is no real desire--it will not be part of the Social Security debate in the foreseeable future. It just won't happen, because both parties are afraid that if they said it the other party would kill them. So there is no way.

B. Erbe: Yes, in the white shirt.

Q: Good morning. My question is generally about asset development programs. The Bush campaign has come out and said that they are firmly in support of programs like individual development accounts, which has been shown to really pick up and have positive benefits for people that we are talking about, say people who are left behind. And these programs are generally supported by both sides of the aisle--for the liberals because they have strong potential to reduce poverty, but also by conservatives because they encourage people to both work and to save. I am kind of curious, Elaine, if you could address perhaps why the Gore campaign has been a little slow to endorse or put a statement out or even offer some tacit support of these programs?

E. Kamarck: A very easy answer to that, which is individual development accounts are law, because of Bill Clinton and Al Gore. They are law. It's not a new idea--okay? They are laws that the Clinton administration recognized early on. The first paper that I know of done on individual development accounts was done at the Progressive Policy Institute, a Democratic think tank, when I was there. I mean, this is a Democratic idea; it was put into law by a Democratic president, and George Bush has taken it and talked about it. But we haven't talked about it, because we did it. Okay? We don't talk about everything we did, but probably we should do it more.

J. Weicher: We talked about changing, expanding it. We are not saying--we are not going back and saying that we support each individual program that has been passed one at a time. We are talking about moving on from here, and that's the burden of the remarks I made, and that's the burden of most of the statements that Governor Bush has made: Where do we go from here?

B. Erbe: Yes, woman in green.

Q: I have a question for both the Bush campaign and the Gore campaign. My question for the Bush campaign: You talked about the tax cuts for the working poor, it's my understanding that a lot of working poor families already don't pay taxes because of the earned income tax credit. And so I don't know if you want to address that.

My other question is about your health care tax credit, and whether that would be refundable, because otherwise it wouldn't affect people that already are not paying taxes.

My question for the Gore campaign is I like that you talked a lot about some broad programs that benefit everyone, but I was wondering if you would talk a little bit about Gore's ideas for child care and health care. And also I know Gore has been endorsed by the AFL, and it seems to me that unions are a very important way to raise the incomes of working people, and if you would talk a little bit about what Gore would do to ensure that people have a choice to join a union.

J. Weicher: To start, very simply, it is refundable. If I neglected to say that, thank you for raising it so that it would make it quite clear. Second of all, with respect to the personal income tax issue, sure, many people pay no taxes because of the earned income tax credit. Many people do pay taxes despite the earned income tax credit. The tax cuts that I talked about we calculate again that even given the current earned income tax credit and the taxes paid or not paid by very low-income people, we calculate that the proposal would remove one in five, six million out of the 30 million families with children, from the tax rolls. It would be a real tax cut for a very substantial number of real people. That's not changed by the existence of the earned income tax credit, but certainly the earned income tax credit has been an important way of providing relief, although originally you had Social Security taxes for the working poor.

E. Kamarck: On child care, the vice president has called for an expansion of the dependent care tax credit, a very large expansion of that. He has also called for after-school programs, which are essential, and a doubling of the money in the budget for after-school programs is essential to working families; and calls for a new investment in preschool education, which is set--which is above and beyond Head Start. It's one of the things I would make sure people understand, that this is even above and beyond the historic increases that we have already made in the Clinton-Gore administration as part of Head Start. And, finally, he has also called for an adjustment in the earned income tax credit to get rid of the marriage penalty in the earned income tax credit.

In health care, the piece of his health care proposal that affects low-income people is a dramatic expansion of Medicaid CHIPS program, to expand the CHIPS program up to 200 percent of poverty, which--and I think you mentioned earlier that the health care crisis is really very concentrated in a very distinct group of people that are literally about up to 200 percent of poverty. And so by expanding Medicaid CHIPS to 200 percent of poverty, and expanding it to the parents of those children, you pick up a lot of uninsured who the market really can't serve very well--there is not just enough money. Tax credits, which we think are fine, are not going to help these families buy health care.

We do propose tax credits, a 25 percent tax credit, for the purchase of health care if you are having to buy in the individual market. And we also provide tax credits for small businesses that--and again, the small business employer is the one most likely not to offer health care. So we offer tax credits for the businesses themselves to encourage them to adopt health care for their employees.

And finally, in terms or right to organize, you know the vice president is a supporter of the right to organize. He believes in the right to organize, and would I think as president be a very careful guardian against the attempts we have seen in the last two decades to erode the basic right of Americans to organize into unions, and as Bill Clinton has been.

J. Weicher: I just wanted to comment a little bit more on health care. Elaine talked about some things with respect to CHIPS. I mentioned before, and I want to stress, that Governor Bush has talked about increased flexibility for states in the administration of CHIPS, so that they can do more to help children whose families do not have health insurance.

I also want to come back to the first thing Bill Dickens said a long time ago when we went down this panel, and then nobody else talked about health care. He made the point that one of the important things in health care is that individuals have more trouble getting coverage than groups do. And one of the things Governor Bush has talked about--and I didn't mention this to begin with--is working with employers and with groups of employers--with the National Federation of Independent Business for example--to establish systems whereby small firms can pool their employees so to speak, and get health insurance for employees, because the group becomes large enough. That is part of the proposal. You will see that in the governor's April 18th remarks on prosperity.

W. Dickens: And what I am worried about is that part of the proposal is fighting with the parts of the proposal that increase individual initiative and allow them to get out of those pools--excuse me, get out of those pools and create depooling, whereas I think a better approach is one which focuses on trying to build the pools, broaden them and support employers in getting into them by targeting the credits on the employers.

J. Weicher: I think they are complementary. I think you can serve two different groups of people in two different ways.

B. Erbe: Time for one last question. The woman in green.

Q: Since income levels are often correlated with post-secondary education, how would each campaign make access to post-secondary education available to those who have been left behind. In welfare policy for the most part, counting post-secondary education is limited--very, very limited. And so I don't think anybody here would deny that to their children or know--who have now gone through school or are in the process of going to college--how will both campaigns make that difference in helping people move out of poverty? Thank you.

E. Kamarck: Simply, the vice president would expand both Pell grants, which have been crucial to low-income people going to college, and the HOPE scholarships initiated in 1997, which basically guaranteed community college to that group. In addition, he is in favor of a national tuition savings plan, which essentially would allow parents to begin saving when a child is born, and then guarantee the tuition at a state university when the child goes to university. So I think that between those--if you take the three programs together--in other words, the Pell grants, the HOPE scholarships and the national tuition savings plan, it becomes a comprehensive higher education program that takes you from very poor people who are eligible for the Pell grants and HOPE scholarships up through the middle middle class, and perhaps a little bit above that in terms of the scholarships.

In addition, he has talked about the establishment of 401(j) accounts, going back to your individual investments, which would be tax-free accounts which not only could an individual contribute to, but an employer could contribute to or a labor union could contribute to, which would help people throughout their lives improve their skills. Because one of the things we are learning about the new economy is that it's not--you can't stop learning when you stop going to school; you have to be able to continually upgrade your skills. And the 401(j) accounts are a mechanism for ordinary working people to build up a little bit of money and use that money for--to keep themselves modern in the workplace.

J. Weicher: I mentioned in my opening statement the expansion of the individual development accounts. One of the basic purposes of the individual development accounts is for education. And the individual development account was targeted--and that includes post-secondary education--indeed, post-secondary education is very important in there. The individual development account is targeted towards families with incomes below basically 200 percent of the poverty line. That expansion I think will help that group of people.

Beyond that, I think we need to be--we will be looking at expanding opportunities for lower-income people to enjoy post-secondary education when we move a little farther into the campaign.

B. Erbe: I want to thank you all, and thanks to the audience for participating, and turn it back over to Ron Nessen for his closing remarks.

R. Nessen: Thank you, Bonnie, and thanks to all the participants. Thanks to you for coming. It was very informative, I thought, very helpful to voters to explore these issues in a serious way. It is exactly really what we had in mind when we started the P2K project. So thank you all.

And, if you like this forum, you can come back next Thursday, the 25th of May. The topic then will be issues raised by an aging population. I think if you will see Derek right outside you can even register for that as you are leaving today. Thank you very much.

[END OF EVENT]