Welfare Changes Draw Fire: House Proposals Would `Gut' Reform, Governor Says

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Changes made in House committees last week to the welfare law would "destroy welfare reform in Wisconsin," Wisconsin Gov. Tommy G. Thompson has said in a letter to House Speaker Newt Gingrich.

The welfare changes would allow unions to block community-service activities, drive employers away from welfare-to-work programs, boost administrative costs and "in effect . . . gut welfare reform," Mr. Thompson wrote.

Wisconsin is widely regarded as the national leader in welfare reform. The state's welfare caseload has dropped by an unprecedented 55 percent as a result of reforms supported by Mr. Thompson since the late 1980s.

"We are aware of the problem that Governor Thompson pointed out in his letter and are currently looking into it," a spokeswoman in Mr. Gingrich's office said yesterday.

Other House aides said Mr. Thompson's concerns will be taken seriously and probably will result in changes, but he may have misinterpreted some changes.

At issue is the $3 billion welfare-to-work program that is being added to the welfare law as part of the budget deal worked out this year by the White House and congressional leaders.

The welfare-to-work program is intended to help states help welfare recipients who have been on the rolls for more than two years, who live in areas of high unemployment or who have few skills to find and retain jobs.

The bill says the welfare-to-work funds can only be spent for "job creation" in the public and private sectors, wage subsidies, on-the-job training, contracts with job-training programs, job vouchers, and job-support services.

It also has worker protections, including:

* Rules to prevent states from "displacing" regular workers with welfare recipients.

* An expanded grievance process allowing welfare recipients to challenge state rules they believe are unfair and punishing states that violate the grievance process.

These rules are disastrous for Republican-style welfare reforms, the Heritage Foundation's Robert Rector said.

Wisconsin's new must-work welfare program and community-service programs, which are supposed to give people work experience while encouraging them to seek better-paying jobs, would be "outlawed" under the proposals, Mr. Rector said.

Moreover, the welfare-to-work program appears to be a reincarnation of a much-maligned 1970s program.

"This is CETA. This is exactly what this is," Mr. Rector said, referring to the Comprehensive Employment and Training Act, a $60 billion program that was shelved under President Reagan as a scandal-ridden boondoggle.

Last week, the House Ways and Means and Education and the Workforce committees voted on changes affecting the welfare law, including worker dislocation, the grievance process and required wage levels. …