By Eileen K. McCluskey

Special to the Gazette

"In the United States we've drawn distinctions between welfare for those over age 65, and for those less than age 18 -- and for the youngsters, we've been niggardly. It's probably not an accident that our policies are skewed in the direction of those who can vote." These are the thoughts of Paul Peterson, Henry Lee Shattuck Professor of Government and the director of the Center for American Political Studies.

Peterson finds current welfare policy unworkable for state and local governments, taxpayers, the national government, and, most of all, the country's poor and needy. His perspectives on welfare arise from a deep and disciplined study of federalism, the United States' constitutional division of responsibilities between the national government and state and local governments. And in his recently published book, The Price of Federalism, Peterson argues that the national government is best suited to care for the nation's poor, sick, and needy, while state and local governments excel at fostering the country's economic development.

"Congress made a mistake when it passed legislation that delegated responsibility for AFDC [Aid for Families with Dependent Children] to the states," Peterson explains in a recent interview. "This was the wrong thing to do because it's asking states to take on responsibility for something they're not equipped to handle. With AFDC relegated to the state level, each state is forced into a position in which they compete with each other to be the least attractive to people who need welfare."

Competition among the states usually carries positive connotations in Peterson's view. "We have the world's finest industrial policy," he says. "We have very close cooperation between business and government, but it's at the state and local level, not at the national level. Local and state governments are very responsive to market forces, [and] not so much swayed by political forces. Germany and Japan are thought to have much closer ties with business and industry, but this is at the national level. The fact that the United States builds these connections at state and local levels may help explain why our economy is doing so well during the 1990s. We have a partnership that is disciplined by market forces, less subject to pressure group and partisan politics."

But if competition at the local level is fine for most other purposes, Peterson says it's disastrous for welfare policy. Because states rely for a healthy economy on a large base of taxpaying, self-supporting citizens, each state is now racing to downgrade its welfare benefits to repel citizens who rely on public supports for survival. "Poor people," states Peterson, "are a burden on the local economy: they need aid, and they're not, by and large, contributing to a region's base of resources. The more poor people a state has, the more of a burden rests on the taxpayers."

Peterson proposes in The Price of Federalism that the national government take back the AFDC program, but at the same time to use this shift back to the national level as an opportunity to improve a flawed design. "The old AFDC had lots of indefensible problems," he says, "so this situation may allow us to think anew." Peterson viewed AFDC's either-or structure as one of its central flaws. "AFDC forced people to choose between work and welfare. It shouldn't be that way," he says. "Work plus some kind of public support for low-income families is what we need."

Peterson's essential argument for an AFDC-like program is that "wages for the less-educated segments of the population are not enough to raise children adequately. Low-wage jobs are not going to disappear from the U.S. economy. Working families, as well as nonworking families, need an income supplement."

What might an improved AFDC program look like? Peterson views the earned income tax credit as a move in the right direction. "Clinton's 1993 tax package expanded the earned income credit substantially and could provide a departure point for a program of family allowances," Peterson says.

Peterson doesn't think that a compassionate and broad-minded policy for poor families can be fast-tracked into action. "This policy has to be thought through," he notes. "It will not come to fruition in the next couple of years. But it can be thought about, discussed, and formulated in that time frame. It has first to be worked out in the policy community: interest groups, scholars, researchers, think tanks."

In Search of a Happier Ending

Peterson is on sabbatical this year at Stanford's Center for Advanced Studies in the Behavioral Sciences. Questions of public education now absorb this thoughtful man -- "We issued a report on the Milwaukee School Choice Plan, in which that city tried out the voucher system," he says. "The mayor of Milwaukee is very excited about it. Schooling is a particular problem in central cities. Milwaukee's poor kids -- these are mostly Latino and African-American children --are learning more in the choice schools than they were learning in the public schools. Approximately half the difference in the test score performances between white students and minorities was closed through this program."

Though he seems hopeful about some aspects of current public education policy, Peterson sees an abysmal lack of adequate services for the nation's poor, and this troubles him. In The Price of Federalism Peterson sums up the situation: "...the inability of most big-city governments to find a way to provide efficient, humane public services for their residents. It is the lives of the minority poor isolated in our central cities that haunt the ending to this otherwise happy tale."

To begin addressing these concerns, especially in public education policy, Peterson recently became the director of the Program on Educational Policy and Governance, sponsored by the Taubman Center on State and Local Government and the Center for American Political Studies. "Only by improving the educational opportunities of low-income minorities can the problems of poverty be genuinely addressed," he says. "To do this we must think of fundamental changes in our current systems of educational governance."