ECONOMIC

Equity and Welfare ReformMany problems of equity have been raised with respect to the AFDC program.There are wide variations from State to State in the level of benefits.There are wide variations from family to family in the extent to which theyreceive in-kind benefits. And, perhaps most important, many poor familieswith a working parent earn less than the total benefits to a welfare family.In designing a reform of the public assistance program it will be importantto pay attention to these inequities.It will also be important to give women fewer incentives to have childrenwithout marrying or to separate if they are married. It may therefore benecessary to extend income supplements to the poor family with a workingmale head. In the long run, however, such a program would provide workdisincentives for husbands and wives in intact families. This could be overcomeby a moderate implicit reduction in benefits as earnings rise, but sucha solution could be costly. Resolving the dilemma will be one of our mostchallenging problems.SOCIAL SECURITY AND SUPPLEMENTAL SECURITY INCOMESince the 1930's the Federal Government has provided funds for the aged,blind, and disabled and for the dependents of deceased workers. The currentprograms for these groups are known as Social Security and SupplementalSecurity Income.Social SecurityThe transfer program with the largest disbursement of funds and numberof recipients in 1973 was Old Age and Survivors Insurance (Table 45).OASI provided $42.2 billion in benefits to 25.2 million recipients. The recipientswere either aged or the dependents of deceased workers. Approximately16 percent of the recipients were classified as in poverty, on the basisof money income (including social security benefits). Over 3 million personsreceived disability benefits under social security, almost one-quarter of whomwere in poverty.Social security benefits have been rising rapidly in recent years. The minimumand maximum benefits for a worker retiring at age 65 under full benefitshas increased from December 1970 to December 1973 by 54 percent and66 percent respectively, to $84.50 and $266.10 per month. The consumerprice index increased by 23 percent in the same period. In addition, acrossthe-boardincreases of 7 and 4 percent are scheduled for March andJune 1974. Starting in 1975, social security benefits can be increased annuallyto reflect increases in the consumer price index.One effect of the benefit increases is that the aged are now more likelyto compose a separate family, rather than a subfamily within a largerfamily. Although increased social security benefits have reduced povertyin the past, most recipients at present are not in poverty. Across-the-board173527-867 O - 74 - 12