Don’t Let Bush Bury Welfare Reform

Margy Waller
Margy Waller Visiting Fellow, Economic Studies and Metropolitan Policy, The Brookings Institution

January 20, 2003

Ironically, it’s beginning to look like the success of welfare reform may be its downfall. Unfortunately, President George W. Bush’s latest statement on the subject proves the point.

Last year, in campaigns across the country, politicians of all stripes took credit for the success of welfare reform policies. Yet, the deadline for reauthorization of the historic 1996 legislation passed without action and the lame-duck Congress punted deliberations into this year.

So what gives? Simple: The controversy that has prevented agreement is not really about money for faith-based and marriage-strengthening programs, and not even about the toughness of work requirements. It’s federal officials’ objections to increasing funding for services like child care that are shaping the debate.

After 1996, as welfare rolls eventually dropped by more than 50 percent and millions of recipients went to work, some members of Congress attempted to cut the guaranteed funding. They argued that reduced caseloads meant states didn’t need the same amount of money as when rolls were larger. State and local policy makers pointed out that they use the freed-up funds to provide services like child care and transportation that help low-income families stay off welfare. And Congress backed off, keeping the promise made in 1996 to retain level and flexible funding.

For those policy makers opposed to a meaningful federal role in supporting low-income working families, the pending welfare reauthorization represents an opportunity to reverse the trend on funding for health insurance, child care and other work supports. Never mind the recent research that shows these supports are critical to the former welfare recipients’ success at work.

The Bush administration started shifting the terms of the debate last year by proposing new mandates that would require every state to adopt expensive “one-size-fits-all” programs based on the now discarded New York City model of compulsory unpaid workfare.

Administration officials cannot point to research that supports making this change, but they still back forcing states to move funds from work supports to busy work. It’s a ploy that uses an unsupportable argument about work requirements to deny resources to working families.

Renewing his proposal in an East Room event last week, President Bush seemed to be calling for making more resources available to support families moving from welfare to work and self-sufficiency. Unfortunately, he didn’t mean that he wanted to include more funding to assist strapped states in providing child care and health insurance to working families.

Instead, President Bush renewed his controversial proposal for an unfunded mandate. He called on Congress to require states to spend the existing funds primarily on creating workfare programs for families still getting a welfare check. This policy change would result in more spending per welfare family, without increasing the overall funding level.

States now spend less than 40 percent of the funds on welfare checks. Adopting the Bush recommendation would require states to spend more on each welfare case. And to pay for the program, states would have to shift funds now spent on providing services to working families. Unfortunately, these are the very services the states created to help families become, as the president wanted, self-sufficient.

Last year, no one publicly predicted Bush would make such a proposal. But then, hardly anyone knew there were objections to providing the celebrated “make work pay” supports that are part of the welfare-reform success story.

The objectors seem to be winning the debate by default. Congress has passed two short-term extensions, instead of making a long-term decision. This creates a real problem for state and local policy makers who must try to erase large budget deficits. In the face of welfare-to-work funding uncertainty, these officials are already reducing spending on work supports like child care. For only the second time since 1994, the national welfare caseloads increased slightly in the last quarter. This increase is what usually happens in a recession, but it puts even more pressure on state and city budgets.

When Congress takes up this issue, members should simply pass a multi-year extension of the existing law, and provide some fiscal relief for states with health- and child-care funds. That way, state policy makers will be able to make decisions based on some certainty regarding federal funding. After all, even the new one-party federal government isn’t likely to resolve whether the block grants are a necessary funding stream intended to provide services to both the unemployed and the working poor.

Congress should avoid creating a crisis for state and local officials that could jeopardize the success of millions of low-income working families. An extension of the law won’t make all the policy changes poor families need, but it’s certainly preferable to new federal mandates that would actually end welfare reform as we’ve known it.