Bush's Blunder

In the last three months, the welfare-reform debate
been transformed in ways few people envisioned even recently. The change hasn't
been for the better. Early this year, many people believed that reauthorization
of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996
provided an opportunity to help low-income working families and the
hardest-to-employ, and to reduce poverty. Instead, the debate is now mired in the
bumper-sticker disputes of the early 1990s about who can appear tougher in
requiring more welfare recipients to work more hours more quickly.

It has been a depressing turn of events, but it isn't too late to turn
things around. There is still time and opportunity for a serious affirmative
agenda that both promotes work and reduces poverty. But if there's going to be
progress this year, it's important to look at where the debate ought to be, how
it got derailed, and what can be done to get it back on track.

Some quick background: The 1996 welfare law was controversial because, among
other things, it ended entitlements to cash assistance for low-income families,
imposed a federal five-year time limit on assistance, and shifted to a system in
which states received fixed block grants each year and had enormous discretion
over how to use them. The law also made many legal immigrants ineligible for
public benefits, made sharp cuts in the Food Stamp Program, and restricted
disability benefits for children.

There were heated disputes about each of these issues, but there was far less
controversy about work itself. Many members of both parties have long agreed that
the welfare system should expect and require work of those who are able. So in an
effort to both promote and support work, the 1996 law expanded child-care
funding, made it easier for families who weren't eligible for welfare to qualify
for Medicaid, strengthened child-support enforcement, and adopted
"participation-rate" requirements (under which a state could be penalized unless
a specified percentage of families receiving assistance were working or
participating in work-related activities each month). The participation-rate
requirements were just one feature of the 1996 law, but they're taking on a
central role in this year's debates.

What the States Learned

Most states began implementing the 1996 law with a "work first"
philosophy, urging and requiring families receiving welfare to take any available
job, restricting access to education and training, and imposing sanctions (grant
reductions and terminations) when families failed to meet program requirements.
When states took this approach, their caseloads went down and employment went up.
At the same time, a lot of the employment was in very low-wage jobs, and many of
the families with the most serious problems got cut off from assistance when they
couldn't meet the new requirements.

Many, though not all, states gradually moderated their approaches, for several
reasons. First, as they looked at the quality of jobs people were getting, they
began to conclude that programs needed a better mix of education, training, and
work-related activities. Second, they came to conclude that families still
receiving assistance often faced serious and multiple barriers to employment:
health and mental-health problems, disabilities, domestic violence, substance
abuse, no means of transportation, and a lack of basic literacy, among others.
This suggested that many of these families needed more than a work requirement
and a threat of grant cancellation; rather, it was important for states to use
more flexible, individualized strategies in working with them. Third, the strong
economy and caseload decline left them with freed-up block-grant funds, which
meant that they weren't under pressure to cut benefits and actually had
money to expand services and supports.

As 2002 began, there seemed to be a surprising
degree of consensus among
states, researchers, and advocates about the basic story since 1996. Since the
law was enacted, a historically unprecedented drop in welfare caseloads had
occurred; child poverty had fallen (but not nearly as much as welfare caseloads
had dropped); employment had largely increased among single-parent families; much
of the employment was unstable and low-wage; too often the gains in employment
didn't translate into significant improvements in family well-being; and
strategies were needed for the families that hadn't found employment amid the
strongest economy in recent U.S. history. Moreover, research suggests that if
parents went to work but family income didn't go up, there wasn't much change in
child well-being; for children to do better, it was important that parental
employment translate into increased family income.

There also seemed to be a broad consensus about how to build on what had
worked and where to make needed adjustments. Probably the strongest themes for
most states were that they wanted to stay the course with sustained funding and
increased flexibility. For many in the progressive community, the affirmative
strategy includes the following:

  • Build into the law a national goal of reducing child
  • End restrictions on education and training for families receiving
  • Encourage more individualized strategies for working with families
    with multiple barriers to employment, including the use of transitional jobs
    programs for people with little or no work experience.
  • Broaden access to child care for low-income working families.
  • Let states use block-grant funds on an ongoing basis to help
    low-earning working families, instead of time-limited assistance to the working
  • End restrictions on the use of block-grant funds to help families of
    legal immigrants.

    Despite arguments about details, there was a surprising amount of
    agreement about the need to respect state flexibility. This was not because
    advocates agreed with everything that states have done. Rather, many believed
    that the welfare debates in states tended to be less ideological and more
    pragmatic, and that as caseloads have fallen and more people have gone to work,
    the discussions were less divisive and more focused on what could be done better
    in the next stage.

    As the reauthorization debate began, the two most anticipated
    agenda items from the right were efforts to cut block-grant funding to states and
    to impose new requirements for them to "promote marriage." Block-grant funding
    had been frozen at levels reflecting welfare caseloads since the early 1990s, and
    it was anticipated that conservatives would argue that states no longer needed
    the money. The counterargument was that as welfare caseloads went down, states
    had redirected block-grant funds for expanded child care, transportation, and
    other benefits that helped low-income families and reduced the need for welfare.
    By 2000, in fact, 33 states were spending more on child care than on cash
    assistance, largely because they had been able to redirect welfare block-grant
    funds. The freed-up funds thus were playing a critical role in helping working
    families get by so that they wouldn't need welfare.

    As for marriage, some conservatives had advocated setting aside 10
    percent of block grants (about $1.6 billion a year) for marriage-promotion
    activities; others seemed to be advocating preferences for married families in
    public programs, and a heated debate about marriage was expected.

    The Administration's Bombshell

    Then, on February 26, the administration announced its welfare
    reauthorization proposal; seemingly overnight, the focus of debate shifted. The
    administration proposed to maintain block grants at current levels through
    2007 -- neither a cut nor an acknowledgment that a fixed block grant erodes in
    every year. And the administration "only" proposed to redirect $300 million each
    year for activities intended to promote "healthy marriages" -- an amount
    considerably less than some had sought but still reaching $1.5 billion over five
    years for a narrowly defined list of approved activities.

    The centerpiece of the administration's proposal, though, has become known as
    the "70-40" proposal: By 2007 states would be penalized unless 70 percent of
    families receiving welfare were working or in certain work-related activities for
    at least 40 hours a week. In meeting the 40-hour requirement, only a narrow set
    of activities could count toward the first 24 hours. There are many details, but
    the practical effect would be that after three months of participation, an adult
    could only be counted if he or she was in a subsidized or unsubsidized job -- or a
    "work experience" program for at least 24 hours a week. If he or she only
    participated for 23 hours a week, he or she wouldn't count at all. The state
    could count training or other activities toward the first 24 hours for no more
    than three months in a two-year period. A state could thus effectively allow
    people to participate in full-time training for no more than three months. After
    that, individuals could only participate in training if they were also satisfying
    the 24-hour direct-work requirement.

    There are at least five significant problems with the proposal:

  • First, it would force many states to run large-scale
    "workfare" programs in which families are compelled to work without pay for their
    welfare grants each month. This would happen because the only ways to meet the
    requirements for adults who couldn't find unsubsidized jobs would be to provide
    subsidized jobs or workfare slots, and workfare is a lot cheaper. Workfare
    programs have been controversial because they displace other workers, require
    people to work without the dignity of a paycheck or the rights of other workers,
    and have shown not to be effective ways of transitioning them into unsubsidized
    employment. A few states (and New York City) have made extensive use of workfare
    in recent years, but most states haven't because they don't think it's the best
    way to help people get and keep jobs.
  • Second, the proposal would make it vastly harder for states to
    provide access to education and training for families receiving assistance,
    because the new rules provide that full-time programs cannot last longer than
    three months. (In practice, they'd have to be even shorter, because states
    typically require some weeks of job searching before putting parents into such
  • Third, it would make it harder for states to provide individualized
    plans for families with serious employment barriers, because after three months,
    any such activities would have to be on top of 24 hours of direct work.
  • Fourth, it would create enormous incentives for states to cut off
    assistance to families with the biggest problems, because any family that
    couldn't consistently and reliably participate for 40 hours every week would be a
    drag on the state's ability to meet participation rates.
  • Fifth, it would shift the central focus of state programs away from
    efforts to help people find jobs and toward the bureaucratic morass of counting,
    tracking, and verifying hours of participation each month.

    Given all this, the plan would pose serious problems even if the
    administration were seeking additional funding to pay for it. But the
    administration sought no new funds to pay for either the new work program or the
    increased child-care costs. Instead, both block-grant funds and child-care
    funding would be frozen at current levels for the next five years, which means a
    cut when adjusted for inflation. So states would essentially face two choices:
    back on child care for other low-income working families and curtail other
    low-income assistance to pay for the costs of the work program, or find ways to
    cut off families from assistance in order to manage.

    The Response and the Politics So Far

    Had anyone other than the administration proposed a plan like this, it
    would have been dismissed out of hand. There have been many criticisms of state
    performance over the past five years, but two things seemed incontestable:
    caseloads had fallen beyond anyone's predictions and there had been a
    historically unprecedented increase in work among single-parent families. So,
    going into 2002, people had argued about whether states could be doing more to
    improve job quality or about which approaches were the best for working with the
    hardest-to-employ. But no one was suggesting that states hadn't been serious
    about requiring work.

    Furthermore, the hallmark of the block-grant framework had been state
    flexibility. The principal arguments used in 1996 to dismantle the then-existing
    system had been that Washington can't and shouldn't micromanage, that
    one-size-fits-all solutions don't work, and that states need maximum discretion
    and flexibility to craft solutions that work for them. But here was a proposal
    that would put the federal government back in the business of specifying which
    activities would count toward which hours of a participation rate -- and that would
    force states to dismantle effective programs because they don't conform to the
    administration's specifications.

    Nothing in the research findings over the last five years commends the
    administration's approach. The drafters of the plan seem enamored of large-scale
    workfare programs. The research, however, has never found that such programs are
    the most effective ways to promote employment. The most recent welfare-work
    research finds that the programs with the largest impacts use "mixed strategies,"
    which emphasize linking people with employment but use a combination of job
    searches and development, education and training, and individualized approaches.

    Then there's the problem of cost. The Center for Law and Social Policy has
    estimated that, if state caseloads remain flat, the plan would cost about $15
    billion more over five years than states would spend under current law. The
    Congressional Budget Office has estimated that a House bill modeled after the
    administration's approach would cost $11 billion above current state spending
    over five years. While states would need to cut other spending in order to
    the administration has never articulated which current programs are expendable
    and where states ought to be cutting.

    So if the plan is responding to a problem that doesn't exist (in a way
    inconsistent with the basic framework that states have valued for the past five
    years, without a basis in research, and with prohibitive costs), what does it
    have going for it? The politics of welfare and the current politics of
    Washington, seemingly.

    It's hard to go wrong saying that you're in favor of requiring work from
    families on welfare. But going into 2002, caseloads were down, employment was up,
    the typical news story was about the struggling working parent, and public
    hostility seemed to have receded. This all suggested the potential for a new
    framework. But when the administration's plan was announced, key Republicans in
    Congress promptly agreed that the problem was that states were doing too little
    to require work. Republican governors, unwilling to criticize President Bush,
    have generally been either supportive or silent. Democratic governors, with a few
    exceptions, have been hesitant to criticize the plan without their Republican
    colleagues' support. And Democrats in Congress have struggled in their efforts to
    frame a clear set of messages: They've generally agreed about the need for more
    child-care funding and to end restrictions on benefits to immigrants, but they've
    had sharp internal disagreements about how to otherwise respond to the work

    A bill closely tracking the administration's proposal sped through the House
    and was adopted on a near-party-line vote of 229-to-197 on May 16. In addition to
    the work provisions, the bill also incorporates an administration proposal for
    "superwaivers," under which states could attain federal permission to operate
    programs without complying with generally applicable requirements. For example,
    states struggling to meet work requirements could attain waivers of the
    requirement to spend part of their federal child-care funds on initiatives to
    improve child-care quality; or states could attain waivers to impose time limits
    in the food-stamp or public-housing programs. And the bill would allow up to five
    states the option to turn the Food Stamp Program into block grants.

    In the Senate, a more moderate approach may emerge from the Senate Finance
    Committee. In late April, six members of the committee (John Breaux, Orrin Hatch,
    James Jeffords, Blanche Lincoln, John Rockefeller, and Olympia Snowe) joined in
    announcing a set of "tripartisan" principles, adopting the administration's
    recommended 70 percent participation rate but rejecting its restrictions on
    education, training, and 40-hour participation requirements -- and giving more
    weight to state efforts to help families get jobs. Outside the committee, a group
    of 18 progressive Democrats led by Senators Ted Kennedy and Paul Wellstone issued
    a statement urging broader access to education and training, increased funding
    for child care, and funding for transitional jobs programs (subsidized work for
    harder-to-employ families). The statement also recommended an exception to time
    limits for poor working families. Another group, led by Senator Evan Bayh and
    closely allied with the Democratic Leadership Council, supports the
    administration's 70 percent participation rate and 40-hour requirements; its
    members have sought to contrast their commitment to increased resources and
    flexibility with the administration's approach, but their principal political
    effect has been to ratchet up the political pressure for others to be "tough on

    What Happens Next?

    Apart from being a flawed proposal, the 70-to-40 discussions have been
    troubling for another reason: They've pushed virtually all other issues out of
    the conversation. Debate has largely been conducted within the administration's
    very narrow framework: Should the participation rate be 70 percent or 60 percent?
    What else can be done to adjust the rate? Should the participation requirement be
    30 or 35 or 40 hours? What activities should count toward the first 24 hours? Or
    should it be the first 20 hours?

    Many people assume that, in the end, compromise will produce something between
    the original administration proposal and the current law. That's very possible,
    but if that's all that happens, a historically important opportunity will have
    been lost. In 1996 proponents of the changes argued that the nation would never
    make much progress in poverty policy as long as the debate was dominated by
    disputes about what to do about the universally despised welfare system. So
    Congress ended that system, and what now operates in many states bears very
    little resemblance to the system that existed 10 years ago. The plunge in welfare
    caseloads and surge in work should have opened up the potential to talk about a
    next stage in antipoverty policy, but leaders of both parties need to be willing
    to say so.

    A poll done for the National Campaign for Jobs and Income Support actually
    suggests that good policy could also be good politics. The survey asked which
    should be the higher priority for welfare: implementing tougher work requirements
    for people who receive benefits or expanding training, child care, and other
    supports that help move people from welfare to good jobs. The public preferred
    expanding work supports to implementing tougher requirements, 71 percent to 22
    percent. Most strikingly, the poll described the current Bush plan and a
    congressional Democratic one that would increase the availability of child care,
    transportation assistance, and other welfare-to-work programs; permit flexibility
    in time limits so that families meeting their work requirements are not cut off;
    and expand access to education and training so that people can get and keep good
    jobs. The public preferred the congressional Democratic plan, 60 percent to 31

    If the debate is about being tough on work, liberals and moderates will never
    be able to make a convincing case that they're tougher than conservatives. But if
    the debate is about what would most help people get to work, about what would
    most help people get jobs at which they can make ends meet, or about which
    policies can help children when their parents go to work, the affirmative agenda
    is the more plausible one. It's not too late to reframe the debate, but time is
    running short.