Refresher course on welfare reform

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

June 21, 2004

News stories about Ronald Reagan’s life and death almost always cite the welfare reform bill signed by President Clinton as part of Reagan’s legacy.

Is it possible Reagan was the original proponent of successful welfare changes implemented by states in the 1990s? No. A careful review of history finds President Reagan did not seek “independence” for welfare children or work requirements for parents, as two journalists have written since his death.

However, congressional decisions due before the end of June may determine whether the 1996 law is, nevertheless, headed toward Reagan’s primary objective for welfare reform: elimination of the federal program.

Some Democrats were mighty mad over Clinton’s decision to sign the welfare bill crafted by Congress. Still, it’s a fair guess they didn’t think the law was a first step down the slippery slope of a path cleared by the same former president who made up a “welfare queen” in order to undermine support for services to the poor.

A refresher course on the welfare reform plans of both former presidents could help today’s decision makers decide what to do about the current stalemate over reauthorization of the 1996 law. Two things I noticed:

First, conservatives have super-duper long-distance eyesight when it comes to implementing their vision.

Second, progressive policymakers need X-ray glasses to see through the rhetoric about welfare reform; they’ll need extra powers to pull back the curtain on plans to shrink our national system of support for poor families.

President Clinton’s plan for reform offered both carrots and sticks, including work requirements, training, sanctions and community service jobs for those unable to find work. The bill he signed was similar, except for a few major provisions. The most fundamental change: Congress eliminated the guarantee of federal matching funds and replaced it with state block grants. It’s this difference between the original Clinton proposal and what became law that bears most resemblance to Reagan’s vision.

In 1980, Reagan’s welfare director, Robert B. Carleson, made it clear in an interview with the National Journal that he wanted to achieve Reagan’s goal of returning responsibility for financing welfare to states. How did Carleson propose to achieve this shift? First, he would eliminate the guarantee of federal matching funds to assist to poor parents and replace it with a system of state block grants.

Whoa. Snap. That’s exactly what Republican members of Congress forced on President Clinton. What a long view. It took conservatives 16 years to climb that particular mountain.

While the shift to welfare block grants did not happen under Reagan, he did create a number of other social service block grants. And since then, the real value of those block-granted funding streams has declined significantly.

Now the same loss of purchasing power is threatening success of the 1996 law.

Welfare caseloads have declined by more than half, and states have used the savings (from the reduction in the number of families receiving cash assistance) to provide work support services like child care and transportation. But, as the value of the block grant declines, states are finding it necessary to eliminate many work incentives.

Carleson described the second step in the plan: reducing block grant funding levels. That’s effectively what’s happening now, as there are no proposals for increasing grants to cover rising operating costs. The final step in the Carleson/Reagan game plan was eliminating the federally funded block grants altogether. Instead, feds would let state officials decide whether to make state residents bear the entire cost of the program, or they could cut it.

The current administration’s vision includes a host of provisions likely to make it even harder to qualify for help, especially for working families. If this plan passes, when the next reauthorization rolls around we’ll likely hear a proposal to implement the last piece of Reagan’s plan: eliminating the federal role in funding the safety net altogether.

The 1996 welfare law was set to expire nearly two years ago. But, unable to resolve differences about reauthorization, Congress extends it every few months. Members face another deadline at the end of June.

They should fight to protect the successful (read Clinton) parts of the 1996 bill and oppose provisions that would ultimately undermine the law.

These days Carleson is urging Congress to reauthorize current law. Why? He’s afraid reopening the debate will lead to increased spending for services as part of the deal. And that wasn’t in his plan.

So far, some conservatives have been hoping to have it both ways: implement policies that discredit the program and effectively cut the block grant at the same time.

On the other hand, President Clinton’s last comments on next steps included raising minimum wage, considering transportation needs, balancing parenting with work requirements, and providing services to parents with multiple barriers to work.

It’s hard to imagine any negotiated compromise that would be good for working families. So, Carleson’s solution might just be the right one — though not for his reasons. The choice Congress makes will determine whose legacy rightly claims welfare reform in the future.