Kay Steiger notes the major implications of this important article about the effects of Clinton's welfare reform in the current economy (Mark Schmitt also weighed in at length on Monday). The key is the fact that "[t]he program’s structure — fixed federal financing, despite caseload size — may discourage states from helping more people because the states bear all of the increased costs." Obviously, this provides good incentives in a growing economy but bad ones in a recession -- the policy will have counter-cyclical effects, and makes it difficult for states to respond to inevitable increases in the number of people who need assistance.
Of course, some people aren't worried:
Among those sanguine about current caseload trends is Robert Rector, an analyst at the Heritage Foundation in Washington who is influential with conservative policy makers. He said the program had “reduced poverty beyond anyone's expectations” and efforts to dilute its rigor would only harm the poor.
Those must be some really low expectations.
--Scott Lemieux
