Complex Synthesis

Investment Philosophies

During the time period 1969-1980 Presidents Nixon, Ford, and Carter, and economist, Milton Friedman proposed nearly solutions to radically change the welfare system. They believed that the current welfare system was broken due to its overbearing complexity, cost and nature in which welfare recipients became dependent on the system, and discouraged from working. Despite the influence, power, and intelligence of the men proposing the plans, all four plans failed to be implemented. Interestingly enough, this is largely because one man, named Martin Anderson played a key role in shutting down each of the four plans. In 1969, President Richard Nixon proposed his Family Assistance Plan.1 The plan would combine the Aid to Families with Dependent Children (AFDC) and the myriad of other programs into a single negative income taxation program, where families are guaranteed a minimum $1,600 income per year. Nixons plan encouraged work by not decreasing benefits for the first $60 earned per month, after which, welfare benefits would decrease by $.50 for every dollar earned. This way, families would always gain more disposable income by working. Additionally, potential recipients would participate in mandatory job training. Nixon believed that while the plan would initially raise welfare costs, it would eventually become more cost efficient than keeping the present welfare, as individuals would start to leave welfare for work. Martin Anderson served as Nixons director of policy research and special assistant, and also as the head writer of the Republican National Committee. Despite Nixons desire to implement the plan, Anderson spoke against him on behalf of the Republican National Committee saying we flatly oppose programswhich embracegovernment-guaranteed income.2 Anderson said it was impossible to create a welfare reform including acceptable minimum benefit level, a low tax rate that encourages labor over welfare, and a politically acceptable cost to the taxpayers.3 When the bill got to Congress, they looked at Nixons proposals and Andersons counterargument, and rejected the bill. Five years later, in 1974, the Income Supplementation Plan was developed under President Gerald Ford.4 In all but the name, it is almost an exact replica of the Family Assistance Plan. The bill proposes Friedmans negative income tax, in which a national minimum income is established, however the plan adds a few key modifiers that account for family size and disabilities. Like Nixons plan, and Friedmans ideas on welfare reform, Fords plan would replace the countless other programs into a single efficient system. Ford says his program would cut administration costs in half. Ford adopted Nixons identical 50% tax rate, again saying individuals will pursue work if they benefit from it. This time, Martin Anderson places a role as chair of the White House task force reviewing the plan.2 Again he disapproves of the bill, citing the same reasons from Nixons bill. This time, Anderson convinces Ford, rather than Congress, to refuse the bill. While Anderson shut down Nixon and Fords bills for potentially sound reasons, the problems in the current welfare system were still prevalent. Jimmy Carter was

elected into office promising America a radical new welfare system to fix the far too complex and discriminating system, in which work is discouraged, and fraud and wastefulness was prevalent.5 In 1977, soon after being elected to office, he introduced his Program for Better Jobs and Income. At its roots, it was similar to the previous two bills, promising a guaranteed minimum income, simplicity, and the 50% tax rate to encourage work. Carter separated from the other two Presidents by promising to create twelve million public jobs, and requiring every able recipient to take a job, however encouraging eventual transition to private sector jobs. Carter admitted the program may cost more than current welfare, but the net societal gain would be positive. Anderson was unable to secure an official government position with Carter overlooking the plan. Instead, in May 1977 he published a thesis addressing Carters plan, using the same reasoning to say that the new plan would be costly, give money to people who didnt need it, and create an even more complex system.6 Congress took his thesis into account, and rejected Carters program. By the time Friedman wrote Free to Choose, he was well aware of Carters counterargument. Regardless, Friedman insisted welfare could be improved through a negative tax by assuring every family a minimum amount, while at the same time avoiding a massive bureaucracy, preservingindividual responsibility, and retaining incentive for individuals to work.7 Friedman said the ideal welfare would have everything Nixon, Ford, and Carter had suggesteda condensed program, simplicity, and a solid incentive to work. Rather than ignore Anderson, Friedman brings up Andersons points as the main counterargument to his proposition, and interestingly, Friedman concedes to Anderson, agreeing that radical welfare reform is impossible8 in the present. However, Friedman left the discussion on a positive note saying what is not politically feasible today may become politically feasible tomorrow.9

Work Cited
1 Richard

Nixon: Special Message to the Congress on Reform of the Nations Welfare System., August 11, 1969. Online by Gerhard Peters and John Woolley, The American Presidency Project. http://www.presidency.ucsb.edu/ws/?pid=2194
2 Anderson,

Martin. 1978. Welfare: the political economy of welfare reform in the United States. Stanford, Calif: Hoover Institution Press, p. 10.
3 Ibid.,

p. 141.

4 United

States. 1976. Income supplement program: 1974 HEW welfare replacement proposal. [Washington]: Dept. of Health, Education, and Welfare.
5 Jimmy

Carter: "Welfare Reform Message to the Congress.," August 6, 1977. Online by Gerhard Peters and John T. Woolley, The American Presidency Project http://www.presidency.ucsb.edu/ws/index.php?pid=7942#ixzz1d9cT3h69
6 Anderson,

Martin. 1978. Welfare: the political economy of welfare reform in the United States. Stanford, Calif: Hoover Institution Press, p. 169-206.
7 Friedman,

Milton and Friedman, Rose. Free to Choose: A Personal Statement. New York: Avon Books, 1981, p. 121.
8 Anderson,

Martin. 1978. Welfare: the political economy of welfare reform in the United States. Stanford, Calif: Hoover Institution Press, p. 135.
9 Friedman,

Milton and Friedman, Rose. Free to Choose: A Personal Statement. New York: Avon Books, 1981, p. 126.

Outline Proposition: Presidents Nixon, Ford, and Carter, and economist, Milton Friedmans proposals to fix welfare all failed largely due to the efforts of Martin Anderson. Plan: Goal: Audience: Educated readers, perhaps even specialized readers who are well aware of the current welfare system, public policy, and economic theories. Some of the readers, including my classmates will have read Milton Friedman's book Free to Choose, and will be aware of his opinions on welfare and negative taxation. While they most likely have heard of the five individuals included, they most likely do not know the specifics.