Packwood Sees Senate Rejecting Welfare as an Entitlement : Reform: Key GOP committee chairman predicts Congress will strip AFDC of its protected status. He says finance panel favors block grants.

In one of the clearest signals yet that the nation’s welfare system faces fundamental change, a key committee chairman predicted Monday that the Senate will join the House in voting to rescind the government’s 60-year pledge to provide cash benefits to all who qualify.

Finance Committee Chairman Bob Packwood (R-Ore.), whose panel will draft the Senate version of welfare reform, said that he expects Congress to strip Aid to Families With Dependent Children of its protected status as a federally guaranteed “entitlement.”

Packwood’s comments are significant because opponents of the welfare initiative approved by House Republicans had hoped that the Senate would reject some of its more contentious elements, including removal of entitlement status.

The House measure would consolidate AFDC and other guaranteed benefit programs into a smaller number of block grants, which have dollar limits, and transfer control to state and local officials. Under the present entitlement status, anyone who qualifies receives benefits regardless of how much money has been budgeted.

“We’re in favor of block grants,” Packwood said at the conclusion of a committee hearing.

Other key provisions of the House bill are less likely to pass muster in the Senate.

Packwood said he and his colleagues have serious reservations about House decisions to replace “liberal mandates” with “conservative mandates,” such as requiring states to withhold cash assistance from teen-age mothers.

While opponents of the House welfare reform measure were cheered that the Senate may soften the House bill, authors of the House measure are fearful that the Senate could undermine the bill’s goals of reducing out-of-wedlock births and ending the cycle of dependency if it goes too far in changing the legislation.

They also fear that the Senate could dilute the big money savers in the House measure--denying benefits to legal immigrants and income support for some disabled children.

Packwood said the Senate has not yet determined whether it will start with the House bill or a completely new blueprint.

If cash welfare benefits are changed to a block grant, eligibility criteria and rules could vary greatly from state to state. Some states likely would be generous, offering job training and placement and federally subsidized jobs to help welfare recipients make a transition to the world of work. Other states likely would set strict time limits, while offering little assistance to individuals.

One risk is that, if the number of people in a state eligible for cash assistance were to increase rapidly because of a recession, some qualified people could go without help.

“It’s been my experience in life (that) small things are better administered than big things, and it doesn’t matter if it’s government or industry,” Packwood said, referring to separate state block grants. “That’s why a lot of small, sharp entrepreneurs are beating the socks off big corporate behemoths.”

“Many of the things we administer at the federal level we just don’t do very well. I’m afraid it is inherent in bigness and centralization,” Packwood said. “Now does that guarantee that the states will do better. . . . ? No, no guarantee. Is it worth a try? Yes.”

While indicating a preference for a block grant for cash assistance, he refused to specify whether he favors the same approach for the other programs that would be turned into block grants in the House plan, including child care, foster care and school meals.

But John Truscott, spokesman for Gov. John Engler of Michigan, who attended a meeting between three Republican governors and Packwood and other senators Thursday, said: “Our interpretation was block grants on everything.”

Negotiations with state officials are expected to continue as the Senate moves forward with welfare reform, aides to the committee and governors said.

President Clinton, commenting Friday on the passage of the House bill largely along partisan lines last week, urged the Senate to pursue a bipartisan approach.

Given that it takes 60 votes to break a filibuster and the Republicans in the Senate only have 54 votes, the Senate is likely to have more reason to take minority views into account as it crafts its welfare reform bill than did the House.

Packwood, however, made it clear in his comments Monday that he is not committed to such a strategy. He said earlier that welfare reform may be included in the budget reconciliation package in late summer, which under Senate rules are not subject to a filibuster.

The ranking minority member of the committee, Sen. Daniel Patrick Moynihan (D-N.Y.), opposes stripping welfare of its entitlement status and at least one committee Republican, Sen. John H. Chafee of Rhode Island, has expressed concern about the approach.