Welfare profiteers.

• Author: Conniff, Ruth
• Position: Military contractors, consulting firms, and entrepreneurs seek money as the federal government cuts welfare

Now that the federal government has scrapped the old welfare system, corporations are getting ready to cash in. Arms contractors and other big businesses are speculating that there's money to be made in the new welfare-reform law, if they play their cards right.

In late March, representatives from Lockheed Martin, Andersen Consulting, Electronic Data Systems, and a few smaller firms came to Washington, D.C., for a conference entitled "Welfare Privatization: Government Savings & Private Earnings," at the Park Hyatt Hotel.

"Capitalize on the massive growth potential of the new world of welfare reform," a promotional flier for the conference proclaimed. "Gain a leading edge in the market while it is in its early stage."

About 100 participants paid $895 a head to attend. Many were state and local government officials. They got to hear private companies market their wares--the newest methods to streamline bureaucratic systems, and "job-readiness" seminars guaranteed to get people off welfare and into work.

Company reps circulated among the public officials, handing out cards, while speakers from the Cato Institute and the Heritage Foundation extolled the virtues of a free-market approach to welfare reform.

Welcome to the post-welfare state where military contractors, consulting firms, and eager entrepreneurs are competing for the revenue generated as federal and state governments slash aid to the poor.

William Eggers, director of privatization and government reform for the Reason Foundation, kicked off the conference, which was sponsored by the World Research Group of New York City. "I know the conference fee was not cheap," the tan, boyish-looking Eggers told us. "But as a government watchdog, I can tell you it is an efficient use of resources." When the conference is over, Eggers said, "you can translate all your new-found knowledge into millions of dollars of savings, if you're a public entity, or, if you're a private firm, into business opportunities." Welfare, Eggers explained, is "the hottest area in the country for privatization."

The new welfare law may spell economic disaster for poor families: The Urban Institute estimates that the law will push some 2.6 million Americans below the poverty line over the next six years. The law will take an especially painful toll on immigrants, disabled children, and poor working parents, who will be the first to feel the effects of cuts in food stamps, disability insurance, and cash assistance. But corporations may be the big winners. Lockheed Martin, Electronic Data Systems (EDS), and Andersen are currently competing for a government contract in Texas worth an estimated $2 billion over five years to administer the state's welfare-to-work program, as well as parts of the food-stamp, Medicaid, and unemployment-compensation programs.

How can the welfare law, which limits public assistance for the poor, translate into corporate profits?

By ending the federal entitlement to welfare, and giving states a fixed amount of funding to administer public-assistance programs, the new system offers a unique opportunity for welfare agencies to...