The New Anti-Welfare States

While states experiment with real change, Clinton threatens to end welfare reform as we know it.

John Hood from the October 1994 issue

If you want to see what a real "two years and out" welfare-reform plan might look like, look to Madison, not Washington.

Madison, Wisconsin, not Washington, D.C., that is. That conclusion only became unmistakably clear once President Clinton finally unveiled his long-awaited, much-anticipated welfare-reform plan in June. The Clinton plan promises that, by the end of the century, about 7 percent of families receiving federal cash assistance will have to leave the rolls after two years unless they participate in some form of jobs program.

In the state of Wisconsin, Republican Gov. Tommy Thompson's reform agenda is moving along at a less-glacial pace: A pilot program approved for his state last year will put welfare families to work after 30 days, and cut off cash assistance to families in two years whether they are working or not. Other non-cash assistance such as medical coverage will end after another year. Thompson's plan, in other words, actually makes good on candidate Clinton's pledge to "end welfare as we know it."

Not coincidentally, the Wisconsin plan puts into action the "new consensus" among welfare-policy analysts: Long-time assistance destroys initiative and family formation; regular work is essential to building the skills and self-respect needed to make the leap to self-sufficiency; education and training are far less important than actual work experience; and spending lots of money to "reform" welfare is counterproductive.

Unfortunately for serious welfare reformers in Wisconsin, Massachusetts, Oregon, and other states, the Clinton plan promises to be the end of welfare reform as they know it. Not only does Clinton fail to deliver the goods, but he will keep the reformers from doing so as well. Analysts say a federal bill introduced by or acceptable to the administration will trump plans that call for stronger work requirements. Combined with heavy-handed federal oversight of state experimentation and recent anti-reform court decisions, Clinton-style welfare reform will be a public-policy catastrophe.

That's probably not what many Clinton voters expected after their candidate's campaign promises during 1992. His calls for welfare reform, which New York Sen. Daniel Patrick Moynihan (D) has dismissed as "boob bait for the Bubbas," helped Clinton separate himself from his party's traditional political establishment and contributed mightily to his reputation as a "New Democrat."

His plan, though, was kept deliberately vague. After the election, an internal war in the administration--between paleoliberals aghast at the prospect of cutting off benefits to anyone and political advisers arguing for some sort of bill they could sell to voters as tough welfare reform--took 17 months and some 200 grueling meetings to resolve. It wasn't until June that the details of the bill finally made the papers.

But while the administration was conducting an extended excursion into welfare wonkery, individual states were hammering out and attempting to implement actual reforms. In Wisconsin, Thompson has been assailing the welfare state for years. Since his election on a welfare-reform platform in 1987, the state has reduced its Aid to Families with Dependent Children caseload by almost a fifth, while all but two other states have seen their caseloads rise. But even in Wisconsin, welfare remains in need of a complete overhaul, not just a tune-up. It guzzles hundreds of millions of dollars in state and federal money. And the existing programs do little to help thousands of residents get off of welfare and become self-sufficient members of society. So last year Thompson announced his latest broadside, called Work Not Welfare, which, under a waiver granted by the federal government, initially affects two Wisconsin counties.

Perhaps the best way to get a handle on how Clinton's and Thompson's plans differ is to compare their effect on an average welfare family--a mother with two kids receiving AFDC, food stamps, Medicaid, and a smattering of other programs.

Under the Clinton plan, the 80 percent of current welfare mothers born before 1972 can breathe easy--they're not affected. Younger mothers will have a two-year grace period, during which they can participate in education and training programs to prepare them for the job world. After two years, those who haven't already found a private-sector job would have to enroll in a work program run by state and local agencies. A mother might be placed in a community-service program--picking up trash at a public park, stuffing envelopes at the public library--or in a government-subsidized job with a private company. Wherever she is placed, the mother would be required to work only 15 hours per week.

Robert Rector, a welfare-policy analyst at the Heritage Foundation, points out that for a welfare recipient working 15 hours, the average state's total cash, food, and medical benefits will work out to about $15 an hour, several times the minimum wage she would presumably garner in the market. By the year 2000, the Clinton administration predicts that some 400,000 welfare households, out of 5.7 million AFDC households, would be participating in work programs created by the president's plan.

Under Thompson's Work Not Welfare plan, a typical welfare family's situation would be radically different. Unlike the Clinton plan's emphasis on job training, its focus is on jobs--immediately giving welfare recipients the sort of work experience that would make it possible for them to enter (or reenter) the economy with marketable skills. In the affected counties, all AFDC recipients, regardless of age, will be subject to work requirements by July 1, 1995. The plan cashes out the food stamp program in the two target counties and adds the money to AFDC to create a so-called Independence Account for each recipient. This account consists of 24 months of (not necessarily consecutive) cash assistance provided in exchange for work, plus an additional 12 months of Medicaid and child-care benefits.

While the Clinton plan provides full benefits if a recipient works a couple of days a week, the Wisconsin plan requires her to earn the full value of her AFDC or food stamp payments by work at the minimum wage of $4.25 (though the total workload can't exceed 40 hours a week). In Wisconsin, a mother with two children on welfare receives a total cash grant of $729 ($517 in AFDC and $212 in food stamps). To earn her benefits at the minimum wage, the mother will have to work 172 hours during the month, or roughly 40 hours a week. If she works only 30 hours, her monthly cash assistance will be cut by a fourth. To further motivate recipients, the account must be drawn down within a four-year period. After either drawing down the account or reaching the four-year limit, that's it. No more assistance. And if you don't participate in Work Not Welfare, you immediately lose AFDC. While the enforcement measures may appear draconian, they are designed not to punish people but to spur them into self-sufficiency.

Wisconsin isn't the only state poised to try serious welfare reform. In Massachusetts, Gov. William Weld's welfare-reform proposal similarly imposes a work requirement: All able- bodied AFDC recipients would have to work to continue receiving assistance. Work would help break the cycle of dependency by changing "the daily physical routine of the recipients," said Weld at a recent American Enterprise Institute seminar. "Many AFDC mothers do not get out of the house. As a result of their isolation, they develop major self- esteem problems, and it grows harder and harder for them to become contributing members of society." Weld's program excludes teen parents, parents with infants, and disabled recipients, so the state expects only about 50 percent of AFDC families to participate. To smooth the transition to the wage economy, the plan converts $800 million in cash- assistance programs (primarily AFDC) into day-care subsidies for parents working in private or community-service jobs.

On the West Coast, Oregon has set the pace in welfare reform. In 1990, voters passed a ballot initiative that would have required AFDC, food stamp, and low-income unemployment insurance recipients to earn their benefits by working at 90 percent of the state's minimum wage. Implementing that initiative, however, would have required extensive waivers from the federal government that were either unlikely, in the case of food stamps, or, in the case of unemployment insurance, simply impossible, says Jim Neely, assistant administrator of adult and family services in Oregon's Human Resources Department.