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Have you heard: We’ve got new, sweeping welfare changes

ASK THIS | February 08, 2006

News organizations should ask serious questions about the changes in welfare policy that were quietly enacted as part of the Fiscal Year 2006 budget reconciliation bill. They are the most sweeping welfare changes in a decade.

By Joel Berg

Q. Why did Congress pass sweeping changes in welfare (TANF) as part of the budget reconciliation process, rather than as a stand-alone TANF re-authorization bill? Was it because the changes lacked the votes to pass in a stand-alone bill? Or was it because the leaders wanted to avoid public and media scrutiny of the changes? Or both?

Q. Given that the 1996 changes in welfare were worked out as a bi-partisan agreement between President Clinton and Congress but that the 2006 changes were enacted by a Republican Congress and President (without so much as a single Democratic vote of support in either the House or Senate), does the issue of welfare reform provide another example of how America’s current political climate makes it impossible to tackle any major national issue in a bi-partisan manner?

Q. Why do leading politicians of both parties — who frequently spoke glowingly about welfare reform in the late 1990’s — now all-but-ignore the welfare issue in their public utterances?  Why is the Bush Administration all-but-silent on this issue and why are most materials on the HHS web site about welfare reform more than a few years old?

Q. Are Democratic members of Congress afraid to speak out against more restrictions on public assistance because they don’t want to be labeled “pro-welfare?” Are Republican members afraid to speak out in favor of those restrictions because they don’t want their compassion questioned? Are politicians of both parties more reluctant to talk about this issue because there is increasingly evidence that welfare reform may not be working as well as previously advertised?

Q. What political forces pushed Congress to place further work requirements on low-income Americans but also forced Congress to reject an increase in the national minimum wage, which has not been raised from the current level of $5.15 an hour (about $11,000 for a year of full-time work) since 1997?

Q. Why were Governors – including Republican Governors – more doubtful than the Congressional leadership of the ability of states to meet the new work requirement levels set in the reconciliation bill?  How forcefully did Governors and their social services administrators work behind the scenes to defeat these provisions?

Q. States struggled to meet lower levels of work participation when the economy was far stronger in the late 1990s. How are they going to meet higher work participation levels given today’s economy?

Q. Given that the new law forces states to meet higher work standards without giving them significant amounts of new funds to meet those standards, how will this impact upon states already facing fiscal difficulties?

Q. Given that poverty, inequality of wealth, hunger, and food insecurity have all increased over the last four years, was welfare reform at least partly to blame for some or all of these increases? Will the further tightening of benefits under the reconciliation bill further increase poverty, income inequality, hunger, and food insecurity in America?

Q.  Do welfare reform policies, which force more workers to accept low-wage jobs, drive down average wages for all low-income workers? If so, will the new welfare provisions, forcing more people into work, accelerate that trend?

In December 2005, Congressional Republicans enacted the Budget Reconciliation bill for Fiscal Year 2006 by the barest of margins. Vice-President Cheney broke a tie in the Senate and the bill passed by only a two-vote margin in the House. Not one Democrat in the House or the Senate voted for it. The media coverage on the bill’s debate and passage focused mostly on large cuts in Medicaid, students loans, and other programs that benefit low- and middle-income Americans.

Largely overlooked, however, was the reality that the bill also enacts the most sweeping changes in Temporary Assistance for Needy Families (TANF) Program –better known as welfare – since President Clinton signed bipartisan welfare reform legislation into law in 1996.

The new law would increase the percentage of families receiving public assistance that are required to work in each state, and impose new penalties on states for failing to meet federal requirements. 

The Congressional Budget Office estimates that the new law will cost states $8.4 billion over the next five years, but the only significant new federal funding provided in the law is $200 million per year for increased child care, all of which would have to be matched by states. These changes will have a dramatic impact upon the millions of Americans – most of whom are children – who currently receive TANF benefits, as well on many of the tens of millions of other Americans living below the poverty line.

(See detailed reports by the Center on Budget and Policy Priorities and the Center for Law and Social Policy here and here.)

These changes were enacted without any hearings on the final provisions. Nor was there any substantial floor debate in either the Senate or the House on these final provisions. In a Dec. 8, 2005, letter to Congressional leaders to oppose using the reconciliation process for major welfare changes, New York City Mayor Michael Bloomberg, a Republican, wrote: “Budget reconciliation is an expedited process designed to curtail debate.”

These new requirements come at a time when the media should be asking tougher questions about whether even the previous, less strict, requirements were working as well as advertised.

There was a dramatic 7.7 million-person (64 percent) national decline in the number of people receiving federally funded welfare (TANF) between August 1996, when President Clinton signed the welfare reform bill into law, and June 2005, according to the U.S. Department of Health and Human Services. The number dropped from 12.2 million people to 4.5 million.

In its first few years of implementation, welfare reform worked better than many liberal critics originally predicted. I worked for the Clinton Administration when the president signed the 1996 bill into law and I think, on balance, he did the right thing. The previous welfare system was failing both recipients and taxpayers, and needed to be fixed.

In the late 90s, partially because the economy was so strong for all sectors of society (unlike the 1980s, when it benefited mostly the rich) and partially because states (which still had large budget surpluses) spent more on support services for former welfare recipients than originally predicted, significant numbers of low-income people across America did in fact move from welfare to work. 

But if some original critics of welfare reform should admit that some of the changes originally worked somewhat better than predicted, supporters of welfare reform need to acknowledge the gaping flaws that still exist.

It is certainly true that, when the economy was strong, many people on public assistance with the fewest problems, most skills, and greatest motivation did indeed move from welfare to work. Some of these families moved out of poverty when they moved off welfare. Yet many others who moved from welfare to work in previous years still did not earn enough to fully feed their families and meet other basic expenses such as rent and child care, forcing them to increasingly use food pantries and soup kitchens, leave their children with inadequate supervision, and face numerous other problems.

Moreover, the true test of welfare reform is not whether it worked when the economy was strong and when jobs were abundant, but whether it works when the economy is weak and living-wage jobs are scarce, as they are now. This concern is especially critical given that the counter-cyclical safety net (designed specifically to adapt to economic downturns) no longer exists as it did before.

Poverty, income inequality, hunger, and food insecurity all grew significantly nationwide over the last four years. Thus it is fair to question whether welfare reform in America is failing in fundamental ways.

In 2004, there were 37 million people living below the meager federal poverty line (about $17,000 for a family of three), according to the U.S. Census Bureau. This was a 1.1 million-person (12.7%) increase from 2003. There hasn’t been a yearly drop in poverty since 2000, when there were 31.1 million people living below the poverty line.

In most states, the gap between the highest-income families and poor and middle-income families grew significantly between the early 1980s and the early 2000s, according to a recent study by the Center on Budget and Policy Priorities and the Economic Policy Institute. For instance, in New York State, in the early 2000s the richest 20 percent of families had average incomes 8.1 times as large as the poorest 20 percent of families. This is up from a ratio of 5.6 in the early 1980s. In the early 2000s, the richest five percent of families had average incomes 13.4 times as large as the poorest 20 percent of families. This is up from a ratio of 7.8 in the early 1980s. In the early 2000s, the richest 20 percent of families had average incomes 2.7 times as large as the middle 20 percent of families. This is up from a ratio of 2.1 in the early 1980s.

According to the U.S. Department of Agriculture, in the years 2000 through 2004, there was a significant increase in the number of people in the United States who faced hunger or food insecurity. In 2004, the number of Americans facing the threat of hunger increased for the fifth year in a row and the year's jump was, by far, the largest since 2000. In 2004, the number of Americans living in households that faced hunger or food insufficiency rose to 38.2 million, including 13.9 million children (19 percent of all American children). 

In 2001, the most recent year for which such figures are available, it was estimated by America’s Second Harvest that more than 23 million people in the United States, of whom 8.9 million were children, were forced to rely upon more than 30,000 soup kitchens and food pantries. Numerous public and private reports indicate that such numbers have grown substantially since 2001.

Penny wise and pound foolish
Posted by Patti Batchelder - office manager
03/14/2006, 01:30 PM

What a sad commentary on American society that we don't choose to take care of people in need. Critics may say welfare encourages malingering, but given the inadequate amounts of support provided in the last few decades, I doubt that's much of a problem. (What about people earning millions who can't run a corporation properly? Enron aside, what about automakers whose cars can't compete with Toyotas?) But the irony is that it's not saving the taxpayers much, if any, money to cut benefits. A few examples of why follow:
1. Children who grow up poorly educated, ill fed, and provided with inadequate healthcare don't generally turn out to be productive workers who can get good jobs and pay taxes.
2. Poorly-fed children get sick more and cost the taxpayers more in doctor visits or worse, ER visits if states don't provide insurance.
3. People who can't get jobs, or jobs that pay enough to cover basic expenses, may be tempted to turn to various types of crime. (Could some of that identity theft be motivated by the lack of worthwhile jobs and transitional aid?) How much do we spend on locks, alarm systems, watchdogs, gated communities, insurance, extra police,courts, jails...? Uncounted billions. And if an armed robbery results in death, what is the cost of that human life lost?
4. Some people give up and resign themselves to jail, where they at least get food, shelter, and medical care, at great cost to the taxpayers. Many of the prisoners have serious mental and physical problems, some of which might have been prevented or lessened by measures taken earlier in their lives. In any case, if they had had a good education (Head Start is highly cost-effective and not that expensive, but it's been cut), good medical care, mental health counseling when needed, medication for illnesses like bipolar disorder, job training when needed, and if we hadn't cut so many service jobs starting in the 1980's, many people in jail now might have been leading productive lives. Instead of costing perhaps $35,000 per year, they would be paying some taxes.
Americans are paying a tremendous indirect price for our failure to take care of people when they need help. It's not only morally disgusting, it's stupid.

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