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

(Page 3 of 3)

Jack Svahn, the chairman of MAXIMUS Inc., which has contracts in 20 states to run job- placement and child-support-collection programs, has viewed the process from both the state and federal sides. He agrees that states lack the flexibility they need to change their welfare policies. "What happens in New York City is not necessarily going to work in Wyoming," says Svahn, a former state welfare director in California and high-ranking official in the Reagan administration. "The more power you can devolve, the better off you will be." But the Clinton welfare bureaucracy (which includes researchers Ellwood, who helped design the president's welfare plan, and Bane, the deputy HHS secretary in charge of granting waivers) has been seeking ways to squelch state reforms that go "too far," Svahn alleges.

Congress has been getting into the act, too. Both Massachusetts senators, Ted Kennedy (D) and John Kerry (D), oppose Weld's tough workfare plan and want the administration to deny it waiver approval. Sen. Patrick Leahy (D-Vt.), chairman of the Agriculture Committee, tried in July to strip the U.S. Department of Agriculture's authority to grant waivers to states that want to convert food stamps to cash for use in welfare reforms. "Providing cash undermines the character of food stamps as a nutrition program," Leahy said. It also undermines their more-fundamental character as an agriculture subsidy, a fact that surely did not escape the farm-state senator's notice.

The Senate, in spite of Leahy, voted to continue the waiver policy. But a statutory problem remains: the USDA will not let states make food stamps conditional on work. Wisconsin's Work Not Welfare originally proposed that both AFDC and food stamps be cut off to welfare recipients who refuse to work, but the USDA killed the idea.

Over at HHS, a policy change announced in May would require all states to follow an intrusive, time-consuming process for allowing public comment on waiver requests before they are sent to Washington. In defending this policy, Bane suggested that state welfare-reform experiments need to be examined on the basis of, among other things, that "protected groups"--minorities--"are not adversely affected." The National Governors Association notes that such a policy is clearly designed to give public- employee unions, civil rights organizations, and others opposed to serious welfare reform a "vehicle for national appeal of a waiver application," with which they can bog down a reform proposal for months or even years. Even reform opponents without big pockets can gum up the works, thanks to a Senate vote in late July to allow Legal Services Corporation representation for poor clients seeking to overturn welfare reforms that reduce their benefits.

Court challenges led by Legal Services lawyers, in fact, already pose a significant risk to the welfare-reform movement. For example, the U.S. Supreme Court in January rejected an appeal by state officials in California and Minnesota of a federal ruling preventing states from limiting welfare benefits to new residents. Then in July, a federal appeals court in Sacramento struck down millions of dollars in California welfare cuts implemented under a 1992 waiver from the Bush administration. The court stated that the state government had failed to consider the "increased risk of homelessness, inadequate nutrition, and variety of emotional and physical problems" the cuts could create among the state's poor. Observers on both sides of the issue expect the California ruling to affect experiments in other states that reduce benefit levels.

Even if the feds weren't prepared to limit state welfare experimentation, success would still be far from guaranteed. A big question is how to line up private-sector jobs for welfare recipients who, lacking them, will end up working for the government or a government- approved non-profit. Weld argues that since immigrants, many uneducated and unable to speak English, seem to find work in most job markets, welfare recipients should be able to as well.

But states with work requirements are having problems lining up jobs, often because employers aren't willing to hire welfare recipients due to concerns about their skills, commitment, and honesty. And, even though states are making more use of private job- placement contractors whose profits are tied to performance-based incentives, they're slower to reduce state and local taxes, remove excessive regulations--including restrictions on firing people--and streamline other government impediments to job creation for low- skilled workers. High federal payroll taxes and the national minimum wage also make it unattractive for employers to retain workers once their welfare subsidies end.

Without available jobs, work-based welfare reform will short-circuit. As a Pensacola, Florida welfare administrator remarked to The Wall Street Journal about that state's newly imposed work requirement for some recipients: "If we can't find them a job at the end of two years, we haven't held up our end. Then the contract is broken"--and the recipient goes back on welfare.

Another concern is that any reform program promising generous child-care, transportation, and medical benefits to ease the transition from welfare to work might instead entice more low-income workers to apply for welfare in the first place, gutting any cost savings or reductions in overall dependency. Heritage's Rector observes that if a state or national welfare reform is expected to cost more to operate than current programs do, "it is destined to fail."

That's one reason why an alternative to the Clinton plan, designed with help from Rector and introduced by Sen. Lauch Faircloth (R-N.C.) and Rep. James Talent (R-Mo.), would be a sound first step toward serious welfare reform. The plan would require 50 percent of adult welfare recipients to be working by 1996. For AFDC recipients under the age of 21, the bill takes a different tack. It would collapse about 60 different federal welfare programs into a bloc grant, which would be given directly to states with only two major provisos: They must use the money to assist low-income people, and no money could be given directly as cash assistance to young women who have children out of wedlock. States could use the money to expand adoption programs, chase down deadbeat dads, create group homes for young women and their children, or whatever else they want to try. And welfare would no longer be a matching-funds program: Federal spending would be strictly limited to 3.5 percent annual growth.

The Faircloth-Talent bill faces long odds--"If it goes any place, be surprised," says a Senate staffer--but it has served to unite many House and Senate Republicans behind real reform and, just as important, against Clinton's sham reform. Bill Kristol, head of the Project for the Republican Future, says that while serious reform may not pass this year, the GOP's goal should be "to shape the debate and position ourselves to advance more thoroughgoing changes to the welfare system next year."

It may well be possible to toughen the bill next year, especially if Republicans are successful in November House and Senate races. A Republican Senate or Republican- moderate Democrat alliance in the House could rewrite Clinton's bill, or at the very least force the administration to preserve and expand state authority to experiment with work requirements and other reforms, a position that Clinton himself has endorsed in the past. State reformers have demonstrated their seriousness about working out the problems of moving people off of welfare, and should be allowed to go to it.

Will we ever really see an "end to welfare as we know it"? It's a strong possibility, if Washington will get out of the way. In Madison, they even know the date: Wisconsin passed a law last year that will officially end the AFDC program statewide on December 31, 1998.