What’s the Deal With the “End of Welfare Reform As We Know It” in the U.S.?

Hello All!

WTD’s W4

Welcome to another edition of “What’s the Deal?”, the blog that shows its employment records before receiving government benefits.

Well, it’s election year politics time: Presidential policy edition!

In this week’s blog, we’ll discuss political jabs by Republican Presidential candidate Mitt Romney against a new directive of President Obama regarding a certain welfare program.  This post is even more prescient now, given the leak of a video this past week showing Mr. Romney’s remarks about 47% of Americans being dependent on the “welfare state.”  We’ll delve into the history of welfare and welfare reform and try to explain why the back and forth argument is taking shape.

The Current (relatively)

Obama’s initiative has Republican’s asking: “Are the chicks free too?”

In early August, Mitt Romney released a new ad targeting an initiative by the Obama administration for a welfare program, that said, “Under Obama’s plan, you wouldn’t have to work, and you wouldn’t have to train for a job. They just send you a welfare check.”  The Romney argument was that Obama’s initiative would gut the work requirements necessary to be eligible for the program benefits, one of the key components of welfare reform- hence his contention that the effort “ends welfare reform as we know it.”

What is that initiative by the Obama administration, you ask?  We’ll let’s clarify that first before we dissect Mr. Romney’s claim.

George Sheldon, the acting Secretary at the Administration for Children and Families (part of the dept. of Health and Human Services, HHS) sent the 50 states a memo in late July that invited states to submit applications for waivers of certain aspects of the TANF law (Temporary Assistance for Needy Families, a program that offers cash to low-income, working households).  The purpose of the waiver application is to give states more flexibility in trying programs that promote more employment.

water cooler convo: not considered an “employment activity”

To have a state’s application accepted under this proposal, TANF funds may not be used towards assisting non-working households or contrast with other requirements of the law.  As low-income program expert LaDonna Pavetti explained, the current work requirements are defined as “activities” not employment, so the goal of employment and income with the program is not always the outcome.  But by giving states the flexibility to make the aid require employment, people in unpaid work, internships or job hunts wouldn’t be given aid; hence the administration’s contention that the flexibility would offer more incentive to find regular employment for welfare recipients.

The Romney campaign decided to use this initiative to send the message that the Obama Administration was seeking to end the work requirements for TANF benefit recipients; effectively ending welfare reform from the 1990s.  The above quote from the Romney TV ad follows the theme of the Romney campaign seeking to portray the Obama administration as leading the U.S. down a road to government dependency and American worker complacency.

You know it has to be exciting if Jim Lehrer is moderating

Before discussing the countering political arguments, let’s look at the history of TANF and the efforts in 1996 that created welfare reform under President Clinton.  We’ll also look at program specifics to see who exactly recipients of aid are and what exactly they are receiving in benefits. From there we can gain a greater perspective on the welfare debate.  Aren’t policy debates fun? (nodding)

Federally Lifting the Bottom Up

For much of the history of the U.S., there were no federally funded welfare programs that gave assistance to the poor (with the exception of veterans benefits).  Charity, religious groups, community organizations, and sometimes state funded programs were the primary providers for the poor, sick, and elderly up until the Great Depression.  The lack of a federal welfare program was not because everything was all rosy; but, the country was expanding greatly in the 19th century, bolstered by pioneering, and an industrial might that required low-skilled workers, and lots of them.  The mindset in the U.S. through the 1920s was that work was plentiful and available for those who sought employment, so welfare payments from the federal level were unnecessary (poverty was high, but unemployment was low, so there were opportunities to move “up the ladder”).

FDR was just thinking of his own retirement plan in signing the SSA (citation needed)

The Social Security Act of 1935 (SSA) signed by President Franklin Roosevelt established for the first time a Federal program to provide old-age benefits for workers (social security), and enabled “the several States to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment compensation laws.”  The impetus for the law was clear: with the extent of hardship from the economic collapse and stagnancy of the 1930s, aid from the Federal government was needed for the first time to counter massive unemployment (~25%) and widespread poverty.

The precursor within the SSA for TANF was the Aid to Dependent Children.  Before the SSA, state programs included “aid for widows” but did not include families as a whole and was limited.  The ADC expanded on top of aid to mothers to include their children; recognizing the vulnerability for impoverishment that children face and that the original legislation might discourage marriage.   Originally, the Federal program only covered children, but in 1950, Congress allowed states to claim Federal reimbursements for assisting other persons (parents or guardians of dependent children).  Effective in 1961 under the more appropriate title of Aid to Families with Dependent Children, the number of people eligible for welfare funds expanded to:

  • the child of an unemployed parent and that parent (AFDC-Unemployed Parent)
  • a second parent in a family with an incapacitated or unemployed parent effective in 1962
  • “any other individual” in the home deemed essential to the child, known as the essential person” option, effective in 1968; and
  • an unborn child, in last trimester of mother’s pregnancy, effective in 1981.

Eventually the Federal government made it mandatory that states provide benefits to:

  • the second parent in families with an incapacitated or unemployed parent, effective in 1984 (previously, some states did not cover the spouse of an incapacitated or unemployed parent);
  • the families of unemployed parents, effective in October 1990. (States that previously did not offer AFDC-UP were allowed to limit benefits to 6 months yearly.)

Why did the AFDC expand to such an extent even when the U.S. economy had surged in the post-war expansion period?

The GI Bill was instrumental in building the largest middle class in history, but couldn’t stamp out poverty

Simply put, despite the extensive growth of the middle class from the WWII generation in the 1950s and 60s, a great deal of the population was mired in poverty and faced difficult prospects for employment and socioeconomic improvement.  This population consisted greatly of minorities and immigrants who had migrated to cities seeking employment or better prospects, but continued to face discrimination and multiple obstacles even after the civil rights movement.

Poverty became a national social issue in the 1960s, and was therefore addressed through expanded welfare programs, most notably at the federal level by President Johnson in his declaration of a “War on Poverty” which included an expansion of AFDC.

In determining what families were eligible for AFDC, states were required to determine a limitation on income, a “standard of need”, and a standard benefit payment.  The “standard of need” was usually defined as the maximum amount of income allowed for a family to be considered “needy” (a vague definition).  The amount of the need standard and payment standard was equal in many states at the program’s inception in 1935, but over time, states did not provide payments equal to the need.  For example, by 1994, the average state need was $688/month while the average payment was $420/month.  This gap mostly reflected the addition of other welfare programs for the poor such as Medicaid (health), Food Stamps (Nutrition), and tax credits (EITC, CTC).

Worker training programs and work incentive were considered a WIN-win

When the AFDC expanded to include unemployed parents in the program in 1961, work requirements were implemented for benefit recipients to receive aid.  States were authorized to deny funds if unemployed parents refused to accept work without “good cause.”   In 1962, states implemented Community Work and Training programs that paid recipients (through federal funds) for community work, but could deny funds if recipients refused to join the training programs.

In 1968, Congress required states to set up Worker Incentive (WIN) programs initially just for AFDC fathers, but expanded in 1971 to require both parents of AFDC to register for work (except for mothers with children under age 6).  In a show of flexibility given to the states, in 1981, states could come up with their own Welfare to Work program and also subsidized job searching as meeting work requirements.  The Family Support Act of 1988 replaced WIN with JOBS (Job Opportunities and Basic Skills training program) which required states to further engage mothers and fathers in education, work or training and expanded funding for Welfare to Work programs.

So, in the precursor to TANF,

  • Pre-Great Depression and pre-Social Security Act, no Federally funded welfare programs existed for the poor, children, or elderly
  • Federally funded programs like Assistance for Families With Dependent Children (AFDC) were enacted for the first time during extreme economic hardship.
  •  AFDC expanded greatly in the 1960s recognizing the pervasive extent of poverty in the U.S. and that both parents and children should receive benefits.
  • Work requirements were implemented to make sure recipients made steps of progress towards lifting themselves out of unemployment and above the poverty line.  Work requirements increased in breadth and length over time.
  • Federal requirements sometimes gave states sole responsibly and flexibility in implementing parts of AFDC, such as designing their own welfare to work programs.
  • Often, the benefit payment amount of the program fell short of the need.

Welfare Reform

Now this road to opportunity is a bit bumpy, since we’re reducing overall funding…but….

The key element in this policy debate issue was the passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (commonly referred to as “Welfare Reform”) which among other things, eliminated all Federal funding for AFDC, replacing it with TANF (Temporary Assistance for Needy Families), a block grant program.  A block grant program is one where the Federal government provides a set amount for each state to administer their own program.

The law was a large effort by the Clinton administration and the Republican led House of Representatives (Chaired by Newt Gingrich, R-GA).  President Clinton had made one of his 1992 campaign promises to “end welfare as we know it” and set out to work with states by granting waivers from Federal laws if they came up with Welfare Reform Demonstration projects – projects that showed the state could adequately administer a successful welfare program.  These projects led eventually to the block grant program under the Welfare Reform Act so that states had more control over the program and instituted time limits on benefits along with stricter work requirements.

If Newt and Bill could reform welfare, why can’t Boehner and Obama pass a budget?

The idea behind the new law and direction was that AFDC was not helping its recipients escape poverty and that a state level program (TANF) would be more effective, along with limits on aid and work requirements.  The underlying theme of the law was to change the way that culture and perception of what welfare was: from an expected check from the Government, or entitlement, to an escape from poverty through a “reassurance of America’s work ethic.”

What were the new work requirements under TANF?

Remember, AFDC already had work requirements for its recipients that tightened over time.  Under TANF, the work requirements have been tightened and increased further:

  1. Recipients (with few exceptions) must work as soon as they are job ready or no later than two years after coming on assistance.
  2. Single parents are required to participate in work activities for at least 30 hours per week. Two-parent families must participate in work activities 35 or 55 hours a week.
  3. Failure to participate in work requirements can result in a reduction or termination of benefits to the family.
  4. States, in fiscal year 2004, have to ensure that 50 percent of all families and 90 percent of two-parent families are participating in work activities. If a state meets these goals without restricting eligibility, it can receive a caseload reduction credit. This credit reduces the minimum participation rates the state must achieve to continue receiving federal funding.

Notice on point number 2 the recipients must participate in “work activities.”  This vague definition is there to give states more flexibility in choosing those work activities, but, these activities (as mentioned in The Current) are not specifically employment, which was one of the principle goals of TANF: employment.  Welfare reform also focused its efforts on many other aspects of the roots of poverty, such as programs that addressed out of wedlock birth, promoting parental responsibility, and further employment for young single mothers (one of the largest recipients of TANF funds).

TANF program spending is not just cash benefits and employment assistance

TANF was reauthorized in 2005 with further work participation requirements and in 2009, was expanded to include more people who had joined the ranks of the unemployed during the recession.

Welfare Reform as a Model?

Welfare reform for TANF is continually hailed as a success and a model to follow, as politicians cite the decreased number of people enrolled in the program and increased work participation rates as evidence of success.  But these accolades are unfortunately hollow and do not reflect the actual scene of hardship of poverty that too many Americans face.

Since welfare reform was enacted, TANF funds have declined significantly.  The amount of federal dollars for the program has remained the same at $16.5 billion since 1997, but when adjusted for inflation, states now receive 30% less in federal dollars.   A reduction in cash assistance to families (less 20%) means that TANF has a decreased ability to help families out of poverty than its predecessor AFDC did.

Block Grants may not hold up under economic stress

Further, the marks of success, decreased numbers on cash assistance and increased work participation rates, reflect the changes in eligibility and increases in work requirementsnot an actual reduction in poverty rates.

The change from a Federally administered program to a block grant for state administration meant that states are now only required to fulfill a minimum amount (known as the Maintenance of Effort or MOE).  The block grant can mask reduced federal funding for TANF or if demographic or economic conditions change, leave less funds available for cash assistance.  With less people on the cash assistance rolls, states have had more financial flexibility from the grant.  This has resulted in states using TANF funds for things other than TANF, such as filling gaps in their state budgets or funding other programs.

So is the block granting of TANF a model?  It is a model for giving states more flexibility in how to spend Federal dollars (with decreased accountability), but certainly not a model for poverty alleviation, as suggested by Paul Ryan for Medicaid and SNAP (food stamps).  The real credit from reform, if any, is the increased focus of work requirements.  Moving more folks towards work with monetary assistance is great, but it needs to be supplemented with employment assistance programs needed during hard economic times with less job opportunities.

Conclusion

So what is TANF again, and why did I ramble on about it’s detailed development for so long?

The Temporary Assistance for Needy Families (TANF) is a Federally funded welfare program that provides modest cash assistance and child care for poor families along with employment assistance and education.  Since its inception from the Great Depression, the program has expanded greatly, but has added increasingly strict work requirements and eligiblities; actually constricting the number of recipients since the major welfare reform act of 1996.

The history of this program is worth reiterating when we look at the political ideology, so let’s take another look at some key aspects:

  • The changing face of U.S. demographics and economy has left many people and families without steady employment, and has kept poverty levels high and relatively stable for decades.
  • For much of it’s existence prior to reform, AFDC required receipients to seek work or engage in community activities (it was never just a free handout for the parents).
  • The reform to state administered TANF through block grants came out of the idea that states could run the program more effectively.

But back to the initial portion of this post….

From looking at the specifics of the Obama administration’s new waiver option for states for TANF, and a look at the work requirements of welfare reform, it’s pretty clear that the Romney ad was false.  In fact, politifact.com, a fact checker, gave the Romney claim of “ending welfare reform as we know it” a “pants on fire” rating, meaning that it epitomized a falsehood.  In fact, from our look at the administration’s memo and TANF’s emphasis on work requirements, the Obama effort actually increases work requirements, and further’s the key emphasis of welfare reform.

Please God, No! No more political ads!

But this is not the end of the story.  The Romney campaign had a certain agenda when it put out that ad, even if it was later labeled false: By claiming that an Obama effort to supplement TANF actually undermined its basic principles of welfare to work, the Romney campaign was trying to paint the picture of the U.S. under Obama as “dependent on government” and complacent.  We can characterize the Republican effort regarding the size and scope of government as political posturing, and we’ll be sure to see more of it as the Presidential campaign progresses.

Many low income advocacy groups and research organizations are very critical of welfare reform and TANF because of the results in addressing poverty and in the way states have been using TANF funds.  These groups often read the conservative characterization of welfare recipients as “complacent” or “dependent on government” as the “Romney 47% video” displayed, incredulously given the extent of poverty in the U.S. that still exists (around 16%).

In general, it seems rediculous to go after TANF as a program that keeps its recipients dependent on government when the program provides fairly minimal assistance to poor families (that has been decreasing) and requires relatively stringent work/employment requirements.  Again, the ideological argument is the root of the issue here: Conservatives believe that less government will improve the overall economy and lift people up through an improved economic climate.  Liberals believe that specifically crafted government programs at all levels will assist the poor in lifting themselves into a more opportunitistic state.

Haha! I climbed this mountain while you were reading this!

Or in short, big government vs. small government.  (ha, just made you read 10 pages)

Until the next welfare check,

Your Faithful Historian,

Eric G. Prileson

Sources and Further Reads:

http://www.cbpp.org/cms/index.cfm?fa=view&id=3498

http://www.pbs.org/newshour/bb/social_issues/july-dec12/poverty_08-09.html

http://www.bloomberg.com/news/2012-08-08/romney-s-thin-welfare-reform-attack.html

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/17/is-obama-gutting-welfare-reform/

http://www.cbpp.org/cms/?fa=view&id=936

http://www.acf.hhs.gov/programs/ofa/policy/colleague-ltr/2012_ltr-gs_to_commissioners-im-2012-03.html

http://www.welfareinfo.org/history/

http://www.washingtonpost.com/opinions/what-history-teaches-us-about-the-welfare-state/2011/07/01/AGGfhFuH_story.html

http://www.neoperspectives.com/welfare.htm

http://www.irp.wisc.edu/publications/focus/pdfs/foc262b.pdf

http://aspe.hhs.gov/hsp/afdc/baseline/1history.pdf

Bureau of Labor Statistics

http://www.iff.org/resources/content/3/4/documents/century_of_caring.pdf

About eprileson

I am a historian and writer who wants to bring to light current events through a historical perspective. It is difficult to understand today's current events without having a grasp of what has occurred before. This is a running thread to help keep people informed about the present and remind everyone to not forget their past. Enjoy and please comment!
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