On The Record: Experts Reflect On Welfare Overhaul
By Stateline Staff
Four years ago today, August 22, President Clinton signed a bill that brought the greatest changes to the nation's welfare system since the government began giving cash assistance to poor families 65 years ago. In interviews with Stateline.org senior writer Clare Nolan, Ron Haskins and Wendell Primus, two leading welfare policy experts discuss the law's accomplishments and drawbacks so far.
As Majority Staff Director of the Human Resources subcommittee of the U.S. House of Representatives' committee on Ways and Means, Haskins worked with Republican Reps. Clay Shaw of Florida and Nancy Johnson of Connecticut to draft the 1996 welfare law. An expert on policies affecting the poor, Haskins today argues that the welfare law has dramatically improved the lives of millions of poor families.
Primus advised President Clinton against signing the law and resigned from his position at the U.S. Department of Health and Human Services to protest some of the law's provisions. He now directs research on welfare reform for the Center on Budget and Policy Priorities in Washington, a non-partisan research organization that focuses on economic policies effecting poor and moderate-income Americans.
Welfare Reform Advocate Ron Haskins:
Stateline.org: Given the amount of money that states have to spend on the poor, the Temporary Assistance for Needy Families surplus, which I think is more than $8 billion right now, and evidence that a few states have been slow to understand the flexibility of the welfare law, do you think the federal government needs to take a stronger role in directing these states?
Haskins: We have testimony from the Congressional Budget Office that shows that the states have, in fact, picked up their rate of spending. I think there is strong evidence that the states are spending more money than they were in the past. But this also has raised an additional and related issue, which is that there is evidence that some states have done what we call supplantation. They have used the TANF block grant to displace state dollars and then spent those state dollars on programs other than programs for the poor. We are hoping that not much more of it occurs. If the states supplant TANF dollars, it will be used as an argument for cutting the block grant during the reauthorization debate in 2002.
Stateline.org: As you know, there's a debate about how much credit the 1996 welfare law should get for the recent rise we have seen in the number of mothers who've left welfare for work. I know that you dispute the notion that the economy is primarily responsible for these positive outcomes. Why?
Haskins: The most important argument is that we also had an extremely hot economy in the 1980s. During that time, the welfare caseload actually increased, not decreased. It's pretty hard to explain how, in the 1980s, a very good economy, adding literally millions of jobs, has no impact on the caseload and in fact the caseload increases. Whereas in the 1990s, a similar economy, even a little better, produces a huge decline in the caseload. The two reasonable explanations are the terrific increase in the earned-income credit and the very substantial changes in welfare reform. (Editor's note: The federal Earned Income Tax Credit allows low-income families to receive a tax refund based on their earnings even though they may owe nothing in federal income taxes.) That's kind of a push-pull: the earned-income credit pulling people off welfare by providing lots of financial incentives for work and the welfare reforms providing a push, by changing the system so that it is strongly encouraging and in many cases even requiring work. There's no denying that the economy played a role, but to give it the primary role, I think is just wrong.
Stateline.org: Do you believe the rolls will go back up when unemployment climbs again?
Haskins: I think the rolls will go back up somewhat. But it is hard to imagine that the rolls will go back up anything like they have come down. A lot of these mothers are now attached to the labor force. Many of them are making more money than they made when they were on welfare. In addition, a lot of low-income jobs will almost certainly be available even during a recession.
Stateline.org: Some states seem to have taken the mandate to reduce the welfare rolls as an opportunity to reduce food stamp and Medicaid rolls. Is it a concern of yours that some states have gone too far in trying to deter families from seeking any kind of government support?
Haskins: We have looked into this. There is very little evidence that the states are trying to foist these declines on recipients. I think there is pretty much widespread, bipartisan agreement that it was not necessarily the intent of the states to force these caseloads down. It was primarily a combination of administrative factors that accounted for the declines. In the old days, when you signed up for cash welfare, you pretty much automatically got food stamps and Medicaid. And now that people are leaving the rolls in large numbers, and some of them not even going on the rolls in the first place..., the administrative systems to capture people and keep them on these other programs, especially food stamps and Medicaid, are now deficient. I do think we have to be vigilant about this, and that we should, especially in the case of Medicaid, do as much as we can to encourage the states to make it easy for people to stay on Medicaid -- to apply in the first place and then to stay on.
Stateline.org: We saw from the report that recently came out of Minnesota that by slowly weaning recipients off the rolls, it has helped many of them escape poverty. At the same time, however, by staying on the rolls longer, folks are going use up more of their five-year time limit. Do you think that, as some have argued, the five-year time limit has served its purpose, it's spurred the states to move people into work, and that maybe it should be lifted?
Haskins: I think it has served its purpose. But no, I don't think it should be lifted. In the first place, we have had dramatic declines in poverty in places other than Minnesota. Secondly, the way Minnesota used its TANF dollars, to provide work incentives, has also been used by many, many other states. They have changed what are called their work-disregard rules and that simply allows people to keep more of their welfare benefit as they start to increase their earnings. It doesn't have to be done that way. The states can use the dollars to provide work subsidies that are not done through the welfare program. Then you don't have a problem with the time limit. We want a system that strongly encourages work and that increases the returns to work by providing various subsidies for work, such as child care, cash through the earned-income credit, food stamps and so forth. We need to point more toward a system, both at the federal level and at the state level, that gets people off welfare and provides them with income subsidies that are financed outside the welfare system and that are administered outside the welfare system, like the earned-income credit.
Welfare Reform Critic Wendell Primus
Stateline.org: You resigned from the Department of Health and Human Services to protest the President's decision to sign the 1996 welfare law. Do you still believe your objections to the law were justified?
Primus: Absolutely. When I resigned, the Congressional Budget Office said that this bill was going to save $54 billion over the next six years. There is no way, I believe, that cutting expenditures by $54 billion on children's programs is going to improve their well-being. If you recall, one of the most onerous parts of the bill was a provision that said retroactively we are going to eliminate SSI benefits to legal immigrants. Well, Congress and the President agreed in the next year to reverse that change. That was probably the biggest provision that saved money.
Stateline.org: The backers of the bill say that dire predictions were made about the law, that child abuse would go up, that millions of children would grow poorer. You have argued that some children have grown poorer since the law was enacted.
Primus: When those estimates were done, that was assuming that the bill was fully implemented, that many families would be effected by the (five-year) time limit (on cash assistance). In many ways I think it is too early to judge this bill. Not very many families are being effected by the time limit. Yet, for mothers between 75-115 percent of poverty, they have earned $2,500 more on average. Yet, their income has only gone up by $500. That means that they effectively have faced an 80 percent tax rate. I think, if families earn $2,500 more, at a minimum they ought to be at least $1,500 to $2,000 better off. And one of the reasons (they are not) is that they are losing assistance.
Stateline.org: So you would concede that the bill has contributed to the increase that we have seen in mothers leaving welfare for work?
Primus: Yes. I just don't think we know the exact amount. When they go to work, I think they should be better off and a lot of times today they are not.
Stateline.org: Do you think those predictions about the law's ultimate effects may impede efforts to relax some of (its) strict provisions when reauthorization comes up in 2002?
Primus: The chief thing we need to do when reauthorization comes up is make sure that we not only focus on families getting into work, but we need to change the emphasis from caseload reduction to poverty reduction. I think that's doable. In a country as rich as ours, we ought to be able to reduce child poverty significantly. That we tolerate child poverty rates of 15 percent is inexcusable.
Stateline.org: The Chairman of the House Ways and Means Committee that oversaw the drafting of the bill, Bill Archer, has said that a former recipient that is working, even if it's part-time work at minimum wage, is better off than she would be collecting a welfare check.
Primus: I agree. Wherever possible, mothers should be working. But, I also think we have put too much emphasis on mothers, who also have parenting responsibilities. We ought to take the same attitude toward non-custodial dads and insure in every way possible that they are also working and contributing to the well-being of their children. We ought to be as equally concerned about getting dads into the labor force and seeing to it that they emotionally and financially support their child.
Stateline.org: Given the amount of anti-poverty dollars -- the Temporary Assistance to Needy Families money -- that remains unspent, does that indicate that devolution to the state and local level is a mistake? Is that a danger sign we need to worry about?
Primus: I think we need to worry about it. The enormous decline in cash assistance is also a concern. I don't think we are going to go back immediately on the block-grant structure. And with the block-grant structure has come some very good things. States have more flexibility to spend on services. There is now more money being spent on child care. You can serve non-custodial dads with these monies. A lot of that is obviously very, very good and many states are doing the right thing. My only argument is that, if we think this bill is doing a lot of good, than come reauthorization time, even though the caseloads have declined by 50 percent, we ought not to reduce that funding. I would argue that funding should be increased so that poverty reduction can become a realistic goal for states. We shouldn't reduce funding until every parent, male and female, is as employed as possible. The real problem, the real problem, is the reduction in food stamps. This bill cut probably $5-7 billion dollars a year out of the food stamp program and only 35 to 50 percent of the working poor get the food stamps they are entitled to. Many of the working-poor are not getting child care, Medicaid and the food stamps to which they are entitled.
Stateline.org: Does that then mean that there needs to be more federal oversight of (the food stamp) program?
Primus: At the federal level we shouldn't be penalizing states as much as we do when they miscalculate the food stamp bonus. That is a ridiculous federal policy that ought to change. We ought to measure performance on how many families (states) have working and paying child support and the extent to which poverty has been reduced and get away from this focus on whether the check has been calculated correctly down to the last five dollars.>