popular support, Congress was skeptical at best, and Johnson remained committed to his own Great Society strategy of providing opportunity and services to the poor.18
When Nixon entered the White House, there was thus little reason to expect the guaranteed income idea to command attention beyond academic circles or government research commissions, even less to expect that it would be elevated to the national political agenda by a Republican leader. The wheels were set in motion when Nixon decided to take on welfare reform, in part to score points among Republican governors, lawmakers, and middle-class voters (especially Southern white voters) frustrated by the welfare system and its rising rolls.19
Shortly after the 1968 election, he tapped Richard Nathan, a Brookings Institution researcher who had worked on pre-election planning for the Nixon team, to head up a Transitional Task Force on Public Welfare. The Nathan task force suggested that an income floor be created under AFDC families nationwide, to be fully paid by the federal government. This would mean higher benefits in poor states (particularly in the South) and relief for state budgets. Arthur Burns, the president’s chief domestic policy adviser, objected to the idea, arguing instead for cutting welfare rolls and costs. But Nixon’s HEW secretary Robert Finch and urban affairs adviser Daniel Patrick Moynihan, a former assistant secretary of labor in the Kennedy and Johnson administrations, convinced the president to back the idea of a nationwide guaranteed standard for AFDC benefits.20
This itself would have marked a significant welfarist policy departure, particularly for a Republican president. Yet the administration would go further. A task force of staffers from HEW (including John Veneman, the new undersecretary) and the Budget Bureau reached agreement on a more far-reaching plan as an alternative to Nathan’s, then set out to win the approval of the president and his key cabinet members for what would become FAP.21 Conceptually, the breakthrough made by Nixon aides was to take a radically welfarist proposal—a guaranteed income for both working and nonworking poor families—and market it as work-based welfare reform.
The outlines of the administration’s proposal emerged gradually. FAP would extend a guarantee of income to all poor families—with one or two parents, working or nonworking. A family of four with no other income would receive an annual minimum federal grant (ultimately set at $1,600), which could be supplemented by the states. Those who worked would receive an earnings disregard for the first $60 they earned monthly, and then see their benefits reduced by 50 percent for each dollar of earned income. Able-bodied family heads, with some exceptions, would be required to accept work or training positions, or lose their portion of the family’s benefit.22
Throughout the spring and summer of 1969, the debate within the administration was heated. Arthur Burns presented a more limited plan, offering fiscal incentives to states to increase benefit levels. Members of Nixon’s cabinet and inner circle lined up on one side or the other. Moynihan was a vocal advocate of FAP, Burns its staunchest critic. HEW secretary Finch and Nixon aide John Ehrlichman supported the FAP approach. The Treasury secretary, CEA chair, and budget director preferred the Burns plan. This internal opposition to the plan, along with early reports of Republican objections in Congress, almost sank it—and forced various adjustments to the proposal after a protracted internal debate over the purposes of public assistance.23
Welfare, Work, and Markets: The Internal Debate
Much of the discussion within the administration addressed familiar issues of rising welfare rolls and costs, benefit levels, and the question of welfare reliance—issues that had been at the center of the debate since the 1967 WIN amendments. But administration officials were also grappling with new and more fundamental questions about the relationship between welfare and work. What were the implications of making poor families on welfare work, and of providing welfare to those who were working but still poor?
The New Deal welfarist model of assistance provided no guidance here, because New Dealers had drawn a line in federal policy between work and welfare, creating social insurance programs for employable Americans and public assistance programs for needy “unemployables.” Yet AFDC was now providing assistance to recipients who were employable (through AFDC-UP), and states were required to refer eligible recipients to work programs (through WIN). The latter policy change concerned many liberals, just as the former worried conservatives. The FAP plan proposed a further breach of the New Deal distinction, by providing public assistance not only for the employable poor (including some AFDC parents)—but for the already employed poor.
Political leaders confronted a major juncture in U.S. public assistance. Recent initiatives threatened to violate age-old poor law principles governing the relationship between assistance and labor markets, posing new dilemmas for policy. The passage of WIN, combined with increases in in-kind assistance in the 1960s, created one dilemma. Various social welfare programs now offered recipients more economic security than many jobs in the low-wage labor market, even as WIN sought to move them into that labor force. This undermined the long-standing “less eligibility” principle, which held that welfare assistance should never exceed the gains from the lowest-paid form of wage labor.24 Now, policymakers wondered how to restore this balance: by requiring work and cutting benefits to the welfare poor? By providing aid to the working poor?
The prospect of aiding the poorest workers posed its own dilemma. It violated another poor law imperative, against the provision of “relief in aid of wages,” aimed at preserving the principle of non-interference in the market system.25 The concern was that providing public aid to the lowest-paid workers would lead them to work less—or not at all. It would distort the market’s ability to set the price of labor, by supplementing market wages. Nixon’s advisers now debated whether assisting these workers would be an effective way to reduce their poverty—or whether it would only draw them out of the workforce and onto the welfare rolls, undermining market mechanisms.26 FAP took a bold stance on these thorny issues, by simultaneously strengthening the entitlement to aid at standardized levels, adding work requirements for the welfare poor, and extending assistance to the working poor. Within the administration, both supporters and opponents of FAP recognized that the stakes were high.
An opening salvo in the internal administration battle over FAP arrived on the president’s desk in mid-April 1969. It was a memo from Burns’s deputy Martin Anderson about the consequences of aiding the working poor, and it began with an ominous quote from Santayana: “Those who cannot remember the past are condemned to repeat it.” The remainder of the memo consisted solely of lengthy excerpted passages from Karl Polanyi’s discussion in The Great Transformation of the controversial Speenhamland public assistance system, in effect in England from 1795 to 1834.27 “The justices of Berkshire,” the excerpt began, meeting in Speenhamland in May 1795, “in a time of great distress, decided that subsidies in aid of wages should be granted … so that a minimum income should be assured to the poor regardless of their earnings.” Anderson underscored Polanyi’s contrast between the previous Elizabethan poor law system and the Speenhamland arrangement:
Under Elizabethan Law the poor were forced to work at whatever wages they could get and only those who could obtain no work were entitled to relief; relief in aid of wages was neither intended nor given. Under the Speenhamland Law a man was relieved even if he was in employment, as long as his wages amounted to less than the family income granted to him by the scale. Hence, no laborer had any material interest in satisfying his employer … [and] the employer could obtain labor at almost any wages, however little he paid; the subsidy from the rates brought the workers’ income up to scale.28
Anderson was drawing a parallel between Speenhamland and FAP’s (and later the EITC’s) provisions to aid the working poor. The memo drove home what he saw as the flaws within the Speenhamland system. Among other problems, it contained disincentives for employees to devote adequate work hours and for employers to pay adequate wages—and thereby “prevented the establishment of a competitive labor market” until it was abolished in 1834.29
