AmEmbassy-Bucharest APO AE 09213-1315 March 22, 1995 The Honorable Jim McGrery House of Representatives House Office Building Washington, D.C. 20510 Dear Congressman McGrery: Saw your debate with Congresswoman Loewy on CNN this morning. I agree with your basic position that we must stop subsidizing welfare without work -- which does little more than induce people to rely on government support on an indefinite basis, while setting a "welfare example" to children growing up in such households. I also agree that we don't need any more work training programs -- we already have one or more for every need. At the same time I am somewhat sympathetic to the point of view of the CNN commentator that states have not always in the past demonstrated their wisdom or willingness to step forward with solutions. Moreover, most people -- including lots of Republicans -- are persuaded that whatever we do, there must be some basic national standard, or we'll return to the system of "welfare shopping", with people moving from one state to another in search of maximum benefits. (The Court many years ago outlawed substantial waiting periods to avoid such.) As an economist with many years examining and thinking about these problems (I started my professional career as statistician and research analyst in a state department of public welfare over forty years ago), I have come to recognize that most of our welfare problem consists of the nearly twenty per cent of our population who fall a couple of standard deviations below the norm in the qualities which make for success in the labor market. No amount of training can overcome these deficiencies. And no amount of rigor in administering welfare programs can get such people permanently beyond the need for some form of perpetual support. So, it seems to me, we must engage the resources of the private sector one way or another to involve these people in a productive life. And the incentives for doing so must necesssarily begin at national level. I enclose a paper written almost twenty years ago which suggests tax incentives and some import protection for private firms willing to provide employment opportunities to these marginally employable individuals -- a system in some ways parallel to the protected workshops for the most seriously handicapped. two per cent, or cabotage, or the operation of inland airlines or other industries such as radio or television which we reserve for American operators. This would get our lowest sixteen or eighteen per cent working, raising their individual moral and providing a work ethic outlook for their children. I hope you and your committee can give serious attention to this proposal, which I have not elsewhere seen advanced -- but which seems to me the natural solution for those who can't be expected to find work by themselves just by cutting off, or severely reducing, current welfare benefits. Sincerely, D. B. Timmins, PhD (Harvard) Professor of Finance & Economics (ret.)