February 26, 1987

To the Congress of the United States:

I hereby transmit for the consideration of the Congress proposed legislation, entitled the ``Low-Income Opportunity Improvement Act of 1987,'' to encourage State-sponsored and community-based demonstrations in public assistance policy.

This legislative proposal is the result of an exhaustive, year-long administration study of the needs of poor Americans. Hundreds of welfare recipients, former recipients, and self-help and welfare experts were consulted. The study, ``Up From Dependency,'' concludes that our Nation's current welfare system is both inefficient and ineffective in meeting the needs of the poor and in providing opportunities and incentives for economic independence.

Currently our welfare system is a labyrinth of 59 major welfare programs that require some 6,000 pages of Federal regulations and cost more than $132 billion in FY 1985. Welfare spending has soared since the 1960s, so that today some 52 million Americans, or one in five, benefit from welfare. All told, this spending is more than twice as great as the ``poverty gap,'' or the amount it would take to lift all Americans above the official poverty level. Thus, many Americans who are not poor receive public assistance benefits, even as many others remain in poverty.

The study also found that our current array of welfare programs creates incentives that undermine the willingness to work and become self-reliant. Most welfare recipients say they want to work, but they also say they can often get more on welfare than they can earn in a full-time job. The study found that while current welfare programs provide valuable temporary help to families, that same help replaces the breadwinner and enables young mothers to raise children without fathers.

The study found that by parachuting benefits to individuals from faraway State and Federal capitals, our centralized welfare system also weakens communities. It undermines the implicit social contract among neighbors and neighborhoods that keeps any community peaceful, livable, and productive. Finally, while welfare rescues many Americans from short-term distress, it also mires too many in long-term, unwanted dependency.

I believe we can and must do better. I believe it is time to learn from the mistakes of our centralized welfare system by implementing a new national strategy that stresses grass-roots participation, State and local initiative, and creative ideas for reducing dependency and strengthening economically self-reliant families.

This strategy must build on the enterprise that individuals, communities, and State governments have shown in recent months and years by creating their own alternatives to the current welfare system. Federal legislation enacted since 1980 has given States greater, if still modest, latitude to undertake employment and training programs. The States have responded with reforms that put a premium on reducing dependency and instilling skills and a sense of pride among welfare recipients. This legislative proposal builds on that success by giving States greater flexibility to implement new ideas aimed at reducing welfare dependency. America's 50 States have always been laboratories for creative social change, and this initiative creates a process to tap that creativity.

This proposed legislation also encourages investment in the hundreds of self-help and anti-poverty initiatives now blossoming around the country. In cities and rural areas, thousands of low-income Americans have mobilized to help themselves, their neighbors, and their children. This proposed legislation seeks to assist those efforts by encouraging local leaders to work with the States in creating welfare policies that will work best for their own communities and citizens. The bill recognizes that a single, national solution to the problem of poverty and welfare dependency cannot work for thousands of distinct communities. The proposed legislation encourages diverse solutions for diverse needs and communities.

Toward these ends, the bill authorizes the waiver of certain rules and requirements in Federal programs in order to promote demonstrations of innovative solutions to the problem of welfare dependency, while ensuring that the rights of families and individuals under Federal civil rights and other laws are protected in the demonstrations. The demonstrations offer opportunities to simplify the delivery of public assistance, to increase the self-sufficiency of low-income families and individuals, and to give States and communities greater flexibility to design public assistance policies that seem most appropriate for their own citizens. The waiver applies to any Federal or federally assisted program intended to alleviate poverty and that meet certain other requirements specified in the bill.

The bill also establishes an Interagency Low-Income Opportunity Assistance Board, with a chairman appointed by the President, to certify and evaluate demonstrations proposed by the States. Each State will be required to report annually on each demonstration.

I urge the Congress to act without delay on this important legislative proposal. I am confident that working together we can provide States and communities the means they need to assist low-income Americans in building lives of dignity and self-sufficiency.

Ronald Reagan

The White House,

February 26, 1987.