The failure of welfare reform

The 1996 welfare-reform law, passed by a Republican-controlled Congress and signed by President Clinton (who famously said that the “era of big government is over”), has been hailed by people in both parties as a great triumph. It replaced the old Aid to Families with Dependent Children program with the Temporary Assistance to Needy Families program (emphasis on “temporary”). The TANF program restructured the funding of federal assistance to the poor, creating block grants to be administered by states. Crucially, it also imposed strict limitations on the amount of time someone could receive benefits, increased requirements to move people off the rolls and into jobs, and gave states much more flexibility in designing their programs.

At first, it did seem like a success, and the direst predictions of some of the critics (Sen. Daniel Patrick Moynihan famously warned of children sleeping on city grates) didn’t come to pass. Welfare caseloads plummeted, and a booming economy seemed to promise jobs for anyone who wanted one.

Of course, the story in 2012 is quite a bit different. In the wake of the worst economic downturn since the Great Depression and a continuing unemployment rate hovering around double digits, the seams of the revamped welfare system are starting to pull. This story from the New York Times details how cash-strapped and jobless people (many of them single mothers) are coping with the absence of state support:

[M]uch as overlooked critics of the restrictions once warned, a program that built its reputation when times were good offered little help when jobs disappeared. Despite the worst economy in decades, the cash welfare rolls have barely budged.

Faced with flat federal financing and rising need, Arizona is one of 16 states that have cut their welfare caseloads further since the start of the recession — in its case, by half. Even as it turned away the needy, Arizona spent most of its federal welfare dollars on other programs, using permissive rules to plug state budget gaps.

The poor people who were dropped from cash assistance here, mostly single mothers, talk with surprising openness about the desperate, and sometimes illegal, ways they make ends meet. They have sold food stamps, sold blood, skipped meals, shoplifted, doubled up with friends, scavenged trash bins for bottles and cans and returned to relationships with violent partners — all with children in tow.

The article notes a couple of interesting facts. First, because the food stamp program is fully funded by federal dollars, while TANF comes via state block grants, states have been pushing people toward food stamps. (Hence the favorite GOP talking point about soaring food stamp enrollment under President Obama is actually a result, at least in part, of welfare reform.) Second, the “greater flexibility” given to states under TANF allows them to divert funds from providing cash assitance to the poor and unemployed to other uses–and not always ones that directly help the intended beneficiaries of the program. Or, as a representative from the Center on Budget and Policy Priorities put it: “The states use the money to fill budget holes.” The upshot is that, despite increased economic hardship, the flow of direct aid has been slowing to a trickle. (It’s also worth mentioning, as the article points out, that this kind of structure–block grants to states and incresed restrictions–is one that Repbulcians like Rep. Paul Ryan would like to apply to other welfare-state programs, like Medicare.)

The story notes that “the number of very poor families appears to be growing.”

Pamela Loprest and Austin Nichols, researchers at the Urban Institute, found that one in four low-income single mothers nationwide — about 1.5 million — are jobless and without cash aid. That is twice the rate the researchers found under the old welfare law. More than 40 percent remain that way for more than a year, and many have mental or physical disabilities, sick children or problems with domestic violence.

Welfare reform was driven by the assumption that jobs were available and that the only problem was the “perverse incentives” created by the existing welfare program. This was, and is, a popular view in conservative and “neo-liberal” circles. Take away the cash assistance, the theory went, and people would be “incentivized” (i.e., forced) into participation in the workforce. Whatever the merits of this as an explanation for why people remained on welfare, it falls apart if there aren’t enough jobs to go around. And for better or for worse, we aren’t, as a nation, committed to a policy of full employment. (During the Depression, for example, the government just flat-out created jobs for people.) Without the jobs is it any surprise that people turn to dubious means to feed themselves and their families?

Secular liberalism and Christian social thought agree that a society should be judged, in significant part, by how its worst-off and most vulnerable members fare. By this measure, it’s very difficult to judge welfare reform a success.

3 thoughts on “The failure of welfare reform

  1. By this measure, it’s very difficult to judge welfare reform a success.

    I’m not sure this actually follows from your argument. What your argument actually suggests is that it was a success, it’s just not successful now. And I think this points to a problem that people on both sides have, namely, that their positions are based on the obviously dubious and possibly false assumption that it’s possible to have a single welfare system for all seasons. But there’s no reason whatsoever to think that a single welfare system can do everything that needs to be done under all conditions; a welfare system that does very well for generally good times may do very poorly in generally bad times (along the lines you suggest in the post), and a welfare system that does very well for generally bad times may do very poorly in generally good times (due to poor incentivizing, etc.). This is a problem with welfare in general: success and failure are so multilayered, the ends of welfare systems so complex, and the kinds of conditions under which welfare systems have to work so diverse, that, short of catastrophic disaster or virtual miracle, there’s no way to classify a system as definitely a success or a failure.

  2. Those are good points, although I wonder if the metric of “reduced welfare rolls”–which was the most prominent measure used to demonstrate the success of welfare reform–wasn’t flawed from get go. But maybe, as you seem to be suggesting, what we need is a system with enough flexibility built into it that it can “ramp up” when times are bad. The problem I foresee with that is that once welfare has been drastically scaled back and/or modified it would be likely be extremely difficult to summon the political will to ramp it up again. (Particularly since, as we’ve seen recently, economic slumps can easily lead to calls for greater “austerity,” etc.)

    1. I think this is in fact quite true; which is why an ideal welfare system would not be a single system but a series of many different independent safety nets, interlinked and set to trigger automatically. But I don’t think there’s much chance of such a thing happening; it would harm the potential of healthcare as a vote-gathering issue, and would require the building-up of rainy-day funds in good times rather than frantically running around trying to scrape together money for soaring expenses in bad times, and that requires more self-discipline than poltiicians can manage — or, in fairness, usually afford in election years.

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