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Tuesday, February 03, 2009

Welfare Reform's Failure

In 1996, Bill Clinton signed a bill ending Aid to Families with Dependent Children (AFDC) and replaced it with Temporary Assistance for Needy Families (TANF). "Today, we are ending welfare as we know it," Clinton said. "But I hope this day will be remembered not for what it ended, but for what it began."

What this began was a change in the way the United States looked at welfare and the poor. Recipients were capped at five years in the program. After that, you couldn't collect anymore benefits, no matter what your situation. There was a "welfare to work" requirement, which put people into job training programs -- regardless of what education they already had. TANF would be funded through block grants, which states would administer and spend as they saw fit.

What had happened was that Clinton caved to pressure created by decades of Republican propaganda. Welfare recipients were lazy, Republicans said, they had kids just to get benefits, they made a lifestyle of AFDC. When it came to slinging BS about welfare and the poor, then-presidential candidate Ronald Reagan set the standard in his stump speech:

There’s a woman in Chicago. She has 80 names, 30 addresses, 12 Social Security cards and is collecting veterans benefits on four nonexisting deceased husbands. And she’s collecting Social Security on her cards. She’s got Medicaid, getting food stamps and she is collecting welfare under each of her names. Her tax-free cash income alone is over $150,000.

Reagan called this woman a "welfare queen" and claimed she -- along with many like her -- were draining America's resources at public expense. Of course, it wasn't true. There was no woman in Chicago. It was all lies.

But this became the public perception of the AFDC recipient. At the time that Clinton signed Personal Responsibility and Work Opportunity Reconciliation Act of 1996, ending AFDC, researchers with Public Eye ran the numbers and found that just about everything that people had been told about welfare recipients was wrong; the average recipient was in the program for less than a year, had statistically fewer children than the rest of the population, and the vast majority of the children of welfare recipients weren't becoming recipients themselves. What the right had called a "culture of dependency" was their own invention -- it didn't actually exist. Republicans had simply found a new scapegoat to attack and, cowardly as they always are, the group they chose to attack for political gain was relatively powerless. A problem was invented, complete with a fix -- end AFDC.

Later, in looking for signs of success to the new program, people were hard-pressed to find any. Payday loan and rent-to-own stores, both of which charge usurious interest rates for short-term loans, sprung up all over the nation like mushrooms. Despite the rhetoric predicting that forcing people off AFDC would decrease poverty, there was no decrease. In fact, it increased. But this was an ideology-based program, not a reality-based program. No matter how badly it failed, it had to be portrayed as a great success.

"How We Ended Welfare, Together," Bill Clinton, New York Times, 2006:

In the past decade, welfare rolls have dropped substantially, from 12.2 million in 1996 to 4.5 million today. At the same time, caseloads declined by 54 percent. Sixty percent of mothers who left welfare found work, far surpassing predictions of experts. Through the Welfare to Work Partnership, which my administration started to speed the transition to employment, more than 20,000 businesses hired 1.1 million former welfare recipients. Welfare reform has proved a great success, and I am grateful to the Democrats and Republicans who had the courage to work together to take bold action.

So, a program that required states to kick people off welfare rolls succeeded in reducing welfare rolls. Success! This is like saying a law aimed at clearing streets for ambulances succeeded because it resulted in a lot of traffic tickets. If 60% of mothers leaving TANF found work, what happened to the 40% who didn't? Are we supposed to forget about those families?

"Clinton masterfully blurred [reducing welfare rolls with reducing poverty] in a recent New York Times opinion column, as did most others on the 10th anniversary of the passage of the Personal Responsibility and Work Opportunity Reconciliation Act, writing as if getting mothers and their children off the welfare rolls is the same as getting them out of poverty," wrote Robert Sheer for The Nation. "In the absence of any evidence that poverty is tamed, he celebrates a 'bipartisan' victory, which was good for his image but not necessarily for those it claimed to help."

It's only now that the economy's in the tank that the real consequence of welfare reform is being seen. The New York Times reports that, as the economy sinks, welfare aid isn't growing.

Despite soaring unemployment and the worst economic crisis in decades, 18 states cut their welfare rolls last year, and nationally the number of people receiving cash assistance remained at or near the lowest in more than 40 years.

The trends, based on an analysis of new state data collected by the New York Times, raise questions about how well a revamped welfare system with great state discretion is responding to growing hardships.

Michigan cut its welfare rolls 13 percent, though it was one of two states whose October unemployment rate topped 9 percent. Rhode Island, the other, had the nation’s largest welfare decline, 17 percent.

"Of the 12 states where joblessness grew most rapidly, eight reduced or kept constant the number of people receiving Temporary Assistance for Needy Families, the main cash welfare program for families with children," we're told. "Nationally, for the 12 months ending October 2008, the rolls inched up a fraction of 1 percent."

The problem? TANF moved the responsibility for dealing with poverty from the feds to the states. And the states are broke. TANF isn't bringing in new recipients because the states can't afford to pay any more. In fact, as the economy continues to slide and state budgets become more and more pinched, they're cutting assistance.

What are the odds that a program that was based on phony assumptions and political scapegoating would fail so badly? As any critic could've told you at the time Clinton signed it into existence, pretty damned good. Clinton claimed the program would be tweaked as time went on, that obvious problems with the bill he signed would later be fixed. Instead, the bill was signed and forgotten.

"What crystal ball does he have that he knows he can fix it," said Deborah Weinstein, an official at the Children's Defense Fund, at the time. "What powerful constituency would be treated that way? If he knew there were problems, why did he sign it?"

To win an election, that's why. It was Clinton's "triangulation" strategy of taking Republican issues away from them by solving them -- or pretending to solve them -- himself. Welfare reform would've been a big issue in 1996, but Clinton knocked that stool out from under Bob Dole. The consequences of this political maneuver continue to reverberate today. The New York Times again:

“There is ample reason to be concerned here,” said Ron Haskins, a former Republican Congressional aide who helped write the 1996 law overhauling the welfare system. “The overall structure is not working the way it was designed to work. We would expect, just on the face it, that when a deep recession happens, people could go back on welfare.”

“When we started this, Democratic and Republican governors alike said, ‘We know what’s best for our state; we’re not going to let people starve,’ ” said Mr. Haskins, who is now a researcher at the Brookings Institution in Washington. “And now that the chips are down, and unemployment is going up, most states are not doing enough to help families get back on the rolls.”

In fact, it's probably hurting our economy not to increase welfare rolls at this time. Retail sales are down and the best way to get people to spend money is to get money to people who absolutely need it; these are the only people who are guaranteed to spend. This is the reasoning behind extending unemployment benefits.

But we can't, because we've given up control of one of our economic tools. The states can't use it, because they can't afford to, and the feds can't use it, because they don't have it anymore.

The moral of this story is beware Democrats trying to appease Republicans. When you pass laws that don't have a rational basis and instead are based in ideology, demagoguery, and false information, the results can't possibly be good. Welfare reform, widely claimed as a success story, is a failure. It failed because it had no logical or factual basis, only emotional appeal.

That failure should've been as obvious in 1996 as it is today.



vet said...

Nicely analysed, Wisco. I'm glad to see you're making the effort to spread the blame around. After all, there's plenty for everyone.

Welfare should be one of the main self-adjusting (therefore, fastest and most accurately responding) fiscal tools for dealing with a recession. The idea is: when people are out of work, welfare spending goes up, and that pumps more money into the economy. It even automatically targets the areas that need the most support.

If Clinton managed to break such a simple, reliable feedback mechanism as that, then he really did screw the pooch.

Anonymous said...

Good, good, stuff.

Wisco said...

Thanks both.