Hosted. In washington, d. C. Good afternoon, welcome to the Cato Institute. Appreciate you coming out today. This is a really important topic. I have a book forum here for the the human cost of welfare by phil harvey and lisa conyers. For those folks following online you can follow along on twitter at catoevent or thehumancostofwelfare. The United States government spent roughly 688 billion dollars to fund more than 100 antipoverty programs. State and local governments spent an additional 300 billion on those and other programs. That means the government is spending close to a trillion dollars every year fighting poverty. If you want to go all the way back to 1965 when johnson declared war on poverty we have spent 2223 trillion dollars fighting poverty. But what have we really accomplished over that period of time . If you use the census bureaus officials poverty numbers poverty rates have barely budged. If you use the alternative poverty measures that are more accurate and take into account taxation and noncost benefits and other things you find that progress against poverty really stalled out in the 1970s and flattened out every since. We are spending more and more every year and getting the same results. As bad as that is for the taxpayers and the fiscal balance sheet, the real problem is it is bad for the People Living in poverty because we are spending money and not helping them but in many cases we may make the situation worse. Or at least that is the case that is argued by phil and lisa in their book. We are thrilled to have them to talk about the studies they have done, the people they have talked to, and the fantastic opportunity to giving voice to the people of poverty to tell their stories. They will tell us about this, we will have conversation and then get you folks involved as well. Phil harvey is the chief sponsor of the dkt liberty prooject which is a group that raises awareness about liberty and freedom in the United States. He is the author of a number of other books including what every child we wanted, how social marketing is revolutionizing Contraception Use around the world and government creep, what the government is doing that you dont know about. He writes for the Huffington Post and many other journals. He is chairman on the board of dkk international. And lisa conyers is the director of policy studies and works on topics like inequality and civil liberties. She has a bachelor from the university of George Washington and masters from the university of maryland. This is a terrific book that we will be assigning later on. If you havent brought bottom of the one already i urge you to do it. Lets hear from the authors of it in the mean time. We will start with phil harvey. [applause] thank you for coming out and thank you for being here on what started to be a rainy day. Thanks to the Cato Institute for arranging this and making it possible. And special thanks to Michael Tanner. Michael has written, studies, lectured widely on subjects relating to welfare and poverty in the United States and his work has greatly informed our book and we are especially grateful for him on that. We will talk a little bit about the basic issues of outlined in the book. Issues related to welfare and its problems. We will talk quickly about the welfare state and the extent to which the United States is becoming one, the correlation between between the rise in welfare and the drop in workforce participation in the United States, the extent to which people on welfare feel trapped and in many cases are trapped in a cycle of welfare and poverty and dependence. And we will discuss the benefits, which is one of the principle reasons for that feeling, that senation sensation of entrapment that so many who lisa interviewed expressed. First, lets take a quick look at the relationship between welfare spending and defense spending in the United States. It it seems to me that given the fact that america spends almost as much as the rest of the world put together on defense that the fact that welfare expenditures are overtaki overtaking already and are destined to overtake defense spending in the years that will go by means we have come a long way indeed to becoming a welfare state because it is now a larger budget than defense. The next slide sews the inverse correlation between increases in welfare expenditures. This is a particular steep increase. The blue line is food stamps, the food stamps program, which s skyrocketed more than the others. The red line is workforce participation. This doesnt prove causation but we think that the correlation between these two items is not entirely coincidental. Welfare spending at the federal level is nearly 700 billion a year and our feeling, after doing the research, and lisa doing over a hundred interviews with welfare beneficiaries is that the cost to us as taxpayers is high but not as bad as the cost being paid by the beneficiaries of this program and i will explain why we will that way. Two principle reasons for the sense of being trapped in poverty which people hate, of being dependent on the government which people hate. Two reasons are the benefits and the culture itself. The benefit clip is the people receiving the benefits as the point when they earn too much money they will lose their benefits, perhaps unpredictably and suddenly. The rules are there but very complicated and very hard to figure out. One woman, at least that i interviewed, quoting her case worker, said you are learning a little money now and we will have to cut your benefits. That woman is afraid to earn any money now. Exactly the opposite of what i think people in poverty want to do and exactly the opposite of what we would like for them to be able to do. The safety net for some people works the way it is supposed to. You lose a job, go on food stamps for three or four or five months, get another job and you go off. For those people, the Safety Network works the way it is supposed to. I dont think we want to imply that welfare is a trap for everyone. For a significant number it is not. But we now see more and more people on for three, four, five, six years. And that is the population we are particularly concerned about and the population that is trapped and miserable. We have been warned of the dangers involved and we are seeing some of the dangers today. Roosevelt referred to release as it waw called then as a subtle narcotic. I think an insightful description. A destroyer of the human spirit underlining dignity and self respect. We must preserve selfreliance. He understood the dangers. Why does Financial Dependence on the government have these innervating and deeply negative effects . It is because all of us want to accomplish things in life, all of us want to be able to say i did that. I raiseded a family and supported by family and got my kids into college and learned to play the saxophone. It is expressed in different ways but we all need earned accomplishments to make our lives worthwile worthwhile and that is the element missing in people that rely heavily on welfare. One of the women lisa interviewed expressed this well and i want to read the quote. I quote here, this is a woman in decatur, illinois. I remember that first paycheck when i went back to work like it was yesterday. 177. Not much, right . But it was mine. And i took it home and showed it to the kids and it made me feel good inside. My kids need so many things; diapers, shoes, clothes and need me to provide for them and it gives me pride to do that instead of them seeing mama cashing welfare checks. I think that encapsulates the human part of this delima. Most of the time, the answer for the need and earned accomplishment is the job. Not for everybody, but for most people it is paid work. We encountered a man named angel who had been on welfare for many years and was angry about the fact. He said you go to there Welfare Office and they should have jobs on the Bulletin Board and there should be Jobs Available in the community. But they dont. You go in on the Bulletin Board and it says need help with food stamps . Need medicaid assistance . Nothing about jobs. And that is the other aspect of this form of entrapment. The whole system, including recruiting, government workers sponsoring bingo night for seniors to get them to come in and sign up for food stamps. There has been some pushback on that recently and i am glad to see that recruiting is taking the business too far. But the psychology of the system is more welfare, more different welfare programs and nothing about jobs and work. Tanf is a program that replaced aid to families with depend children back in 1996 and that program is very small, only 23 percent of the total welfare package. So the other programs have overtaken it and dont have work components. There is one program in the system, the earned income tax credit, which does require work and earning in order to enjoy that benefit. And we think that shows the way to greatly improve the system and come up with ways of making the situation a lot better. Thanks. I just have one simple slide. This is a monday and great way to start the week so thanks for coming out. I think to thank Michael Tanner for having us and Cato Institute. I love they put on these events and get us together to talk about these things. I am delighted to be here. I will talk about the philosophical underpinning behind the book because it is based on a philosophical idea and then i will talk about how we did the book, how i did my travels, and open it to questions from michael and you guys. The reason i picked this slide is because that is basically the philosophy behind the book is that we have the right to life, liberty and the pursuit of happiness but we are most interested in the pursuit of happiness. And the idea is that what we want to look at is if we have the right to pursue happiness, what is that mean, what does it mean to be happy, what does it take for all of us to be happy and then once we decide on that, what does the welfare system have to do with that . Will it help us be happier or not be happier . Is it helping the people on it live satisfied lives . That is the question we wanted to answer with the book. As far as happiness goes, we are not the first to come up with what we do for a living is essential to humans happiness. What we do to get that earned success. And scholars from sock and on have talked about happiness. Probably the first question i would ask you is what do you do . Are you an artist . Teacher . Writer . Policy analyst . That is how we identify who we have and what we have doing with our lives. If we agree we have the right to pursue happiness and we agree happiness is tied up with what we do for a living and how we earn our way what does the welfare system look like under those parameters . Does it help people be happy or does it not . That was the underlying philosophy behind the book. There is a lot of policy analysis and plenty of charts in there but it is a deeply philosophical thought and idea we wanted to address. What we found out when we started looking at welfare programs is they put people in a position where work is a threat tlarnth reward. It is risky to go to work. You will lose there benefits if you go to work. The rules are strict and very hard to deal with. When you hear about, for example, you know, a lot of people on welfare are working. What about the working poor . They are working; right . But the problem is they are being told they can work a few hours a week or a month so they can earn so much but if they go over that you are off the rolls. I met a lot of people who tripped up over the rules with a gift from an aunt or somebody dying in the family and leaving them money and suddenly they were thrown out of the programs and left in a position where they had to get back on and it took several months. The whole psychology about work changes when you are on these programs. The value of the programs becomes greater than a job you could get. So, for example, phil talked about the welfare cliff and the director of health and Human Services in the state of pennsylvania looked at this and did an example of a woman in this position and what it looks like. He took a single mom with two kids, in the suburbs getting cash assistance, food stamps and wic which is additional food for her and her infant, she would get housing and be on medicaid. He found adding up the benefits you would have to earn close to 59,000 a year to replace those benefits. If somebody wants to go to work and they are offered a job and it will not cover the value of those benefits they make a rational decision based on the incentive to not work and that is scary because maybe in the short term we think that is okay, we are helping them out and they are getting support so that is good; right . We dont want the poor to not get support. But we are actually telling them not to go to work. We do this in the disability system. Anyone familiar with anyone on disability, you know you are told not to go to work if you get on disability because you have a good chance of loosing your benefits so we take people that are disabled that would like to work and make work into a risk. So that is basically the underlying philosophy behind this book that we believe we do all have the right to pursue happiness and happiness requires work and success and welfare systems get in the way of that. If you get that in a nutshell you get the premise of the book. As far as my role in the book, phil and i did a lot of policy analysis together, but we wanted to do a book that is different than most work coming from d. C. Which is heavy on policy analysis but missing what it is like and how the policies play out in real life so i traveled all over the country, the northeast, southwest, you know, the pacific northwest, california, hawaii, all over the place. And i went into soup kitchens and homeless shelters and tent cities and bus stops and wherever i could find people that would be willing to talk to me and asked if they would be willing to talk to somebody writing about welfare and what their life is about. Surprisingly people were happy to show me the math, what they were living on and how many dollars they got. And we took that and added it to the policy analysis. It goes on with stories from the road after that. We think that is a unique contribution to the whole field of policy. Research and we were delighted to do it. I will open questions from michael now. I think i did what i am supposed to do. All right. [applause] one of the really fascinating things about the book is you did talk to participants and [inaudible conversation] starting again, you gave voice to people in the system which is unusual. I am curious in terms of this, what you learned about why people are poor. Essenti essentially if you look at the debate, people say it is based on racism and sexism and things beyond individuals control and there is another side saying it is bad behavior on the part of the poor. They have done bad things and made mistakes and made bad decisions and that is why they are poor. You interacted with the poor. What did you see in those regards . I think people are poor because they dont have any money. But i think, you know, it is a very complicated subject. It is everything from bad decision making, certainly i saw people who had made bad decisions and ended up in a position where nobody would hire them or they had, you know, addiction issues where they could not hold a job. There are all kinds of reasons why people are poor. I dont think there is any one. I think the fact i did my travels during the recession made it interesting because i was seeing people who had just i mean there was a lot of job loss during that time and i was traveling around and people were saying it is easy to talk about this but there are no Jobs Available and what am i supposed to do . That made it more complicated. The answer is for many reasons. But the vast majority of the people i interviewed would much rather be working. I heard over and over again i would rather be doing work, doesnt matter what kind of work, than having to be on these programs. Some people say people out there dont want to work. Maybe i expected to see a little bit of that and i am sure it is out there but i didnt meet people like that. I met people who were trying hard and their preference would have been to be working. The war on drugs has certainly contributed. The fact that so many young men, particularly young black men, are spending time in jail, clearly find it harder to get legalal work legal work as a result of that and that is another cycle of poverty and incarceration but it has certainly added to the poverty cycle in the United States. I think that is pretty undeniable. I think the other thing you make such a strong case in the book for is talking about the marginal tax rate or the fact when people earn money they lose their benefits, are taxed on that income quickly, and the fact that discourages work i think pretty clear. We made that case and many people had a study called the work versus welfare trade off that is criticized and i think in the pennsylvania study and there is an ohio study that confirmed where we were coming down on that. And i think your book really builds on that work. What would you recommend as an alternative to that . I know when we brought up that stu study some people talked about the earned income credit. What do you recommend as an answer . Certainly making welfare point toward work is an important part of that. The present system is antiwork. It is almost a war on work. And that is insane. We ought to be helping people get out of the system at the very least. I did mention the effect is popping up wages. That is very good. It requires filing an income tax return, it was basically designed originally to refund low income people any federal income tax that had been wi withheld from their wages but tops the amounts considerable more than has been held. It makes work pay. It has contributed substantially to getting people out of welfare and into work and to take a job that may pay 7 8 but when you get the eitc benefit it is the same, again with the cumbersome process, as earning 12 13 per hour and that is the right way to go about it. I agree about the plethora of benefits, housing, food, etc, is very patronizing and to the extent we can give people money and let them make their own decisions about their own lives and set their own priorities. We have seen some states like