The Federal Welfare Debate: Is Congress Deserting Working Families?

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

March 4, 2005

The reauthorization of Temporary Assistance for Needy Families block grant — often called welfare reform — is now over two years late. The original law expired in September 2002, but Congress has extended it on a short term basis a number of times, most recently through the end of March 2005.

My assignment today is to review the current debate over welfare reauthorization and speculate about the prospects for legislation and related spending decisions in the coming year.

But, this debate over welfare will be just the first of many times in the coming months and years that members of Congress will be called upon to defend the integrity and legitimacy of federally funded work-supports and poverty reduction services.

The ongoing costs of war, and a commitment by the President to reduce the deficit combined with his desire to extend tax cuts, means we’re seeing proposals to slash spending on work supports such as food stamps, vocational education, housing, transportation, and Medicaid.

And thus, this debate is critical because it can set the precedent and framework for those that will follow.

While the 1996 legislation is often called the federal welfare law, the Temporary Assistance for Needy Families (TANF) block grant to states is no longer primarily used to fund what we have traditionally thought of as welfare: cash assistance to the unemployed. Today TANF is more working poor family block grant, than welfare block grant.

The president’s reauthorization proposal would increase state obligations to have more cash assistance recipients enroll in work activities for more hours than is required under current law. If that’s happens, we expect states will have to increase their spending on work activities and child care for the children of those parents.

Where will the money come from to pay these additional costs? States are not likely to raise taxes to spend more on these programs, so they would have to reduce spending on the support services to low-income working families that they have created and expanded with caseload reduction savings.

Primarily, this means cuts to child care. Yes, cuts beyond the reductions that have already occurred in state after state in an attempt to balance state budgets, deal with increasing cash assistance caseloads, and cope with the end of the accumulated savings from caseload decline.

Of course, many states have implemented other work support programs with TANF that are already suffering from cuts: flexible grants to counties, transportation, education and training, and other services. These services face additional cuts or elimination if the proposed work requirements become law.

Why are we having a debate about adding new work requirements? My own theory is that the current administration wants to get the federal government out of the business of supporting low-income working families. The cost of “making work pay” turns out to be significantly more than the block grants to states currently provide.

Just child care alone needs a massive new investment in order to begin to meet the existing need. Adding meaningful transportation, education, training, housing, and income supports would create additional pressure on the federal budget.

It’s my bet that there are some conservatives who have noted the increase in spending for work supports and want to put a stop to it before the pressure to more adequately fund these popular services becomes a political problem. That’s why they’re promoting an expensive addition to the cost of running a program of temporary cash assistance.

Of course, some of the architects of the President’s proposal also believe that stricter work requirements will further reduce the caseloads. If states strictly followed and enforced new additional hours requirements, and sanction policies these administration members and their outside advisers may be right.

If the federal law promotes a new requirement of participation for more than 30 hours per week, I believe we can expect that some parents will fail — this isn’t surprising when we know that many of the long-term recipients are struggling with the care of young children in the face of inadequate transportation, addiction, mental health problems, and other barriers.

Furthermore, analysis of welfare caseloads suggests that program design or administration has already contributed to caseload decline. In the mid-1990s, over 80 percent of all families eligible for cash assistance got it, while in the most recent report to HHS, less than 50 percent were getting help.

Unfortunately, the shredding of this safety net is occurring at the same time that poverty has been increasing. In the most recent poverty estimates for 2003, the U.S. Census Bureau announced that poverty increased overall, and unfortunately, children accounted for most of the overall increase and more than a third of all poor people.

Even more bad news: 43 percent of all poor people were living in “deep” poverty with income below half the poverty line, about $7,500 for a family of three.

Poverty is up, and welfare is down. We don’t know exactly why that’s happening. But we do know that’s not the way it should work.

While many poor households include a worker, the income they earn isn’t enough to leave poverty. And even though many single mothers went to work in the mid-1990s, the employment rate of single mothers declined from 73 percent in 2000 to 69.8 percent in 2003, more than that of the rest of the population. Job loss and slower job growth in industries that employ former welfare recipients likely contributed to that drop.

It turns out that welfare reform is not recession-proof.

It’s a fair question to ask why federal decisionmakers would choose to increase work requirements at this time, especially when there is no evidence at all that increasing work hours will result in better outcomes for families. Furthermore, paying for these new work programs will force a reduction in services proven to improve employment and family outcomes — services like child care and transportation assistance.

Statements by proponents of the increases — in the administration and on the Hill — make it clear that they believe the first priority — if not the only priority — of the block grants should be to provide support and services to cash assistance recipients, not working poor families struggling to stay off welfare.

This is a fundamental change from the direction we were headed at the end of the Clinton administration.

While no one I know would say that the 1996 bill is perfect, policymakers and taxpayers willingness to provide significant (if still inadequate) supports to low-income families is a very positive outcome of the law.

The current administration appears to prefer a significant shift in direction away from the working poor to a limited focus involving work requirements, marriage promotion, and time limits for welfare recipients.

Frustrated about the failure to pass such a bill in 2004, the administration and some key Congressional staff have threatened that the block grant would be cut as part of a budget reconciliation bill this year.

In 2004, most observers viewed the funding level for child care as the primary point of dispute preventing passage of reauthorization.

The House bill proposed an increase of only $1 billion, while the administration proposed flat funding even while the President’s budget acknowledged that this funding level would lead to a loss of 300,000 child care slots. Meanwhile, the Senate voted overwhelmingly to increase child care funding by $6 billion.

However, Senate supporters would not pass an increase without a spending offset to “pay-for” the spending increase. And last year’s offset was used for another purpose.

In their search for an offset this year, some members have expressed a willingness to cut another low-income work support in order to pay for an increase in child care.

Meanwhile, members of the Senate Finance Committee continue to seriously negotiate the terms of a bipartisan bill that would be expected to pass the committee and then go to the Senate floor for a vote.

Ultimately, this theoretical Senate bill would have to be reconciled with the House bill, expected to look pretty much like the bill that has passed the House in recent years.

There’s never been too much doubt that members of the Senate could reach agreement on a reauthorization bill, assuming they could identify a funding source for a significant increase in child care funding.

What have long been of concern are changes that a Conference Committee would make to the Senate bipartisan compromises.

Ask yourself these questions:

1) What would happen if the Conference Committee adopted provisions much closer to the House work requirements and state rates, as well as provisions requiring a full-family sanction for failure to meet the requirements?

2) What would happen if the Conference report provided only $1 billion for child care, dropping the Senate’s increase in child care funding?

Do you think it would be possible for Senate progressives and moderates to oppose the Conference bill? We can assume that the bill would be described as it has been for years by the administration — designed to reduce poverty, while strengthening work and providing additional resources for child care.

Do you think the public has a deep enough understanding of these issues to support the decision of a member of Congress to vote against such a bill? It’s probably fair to assume that the member opposing the bill would be described as being “soft on work” and denying poor working families a desperately needed in crease in child care assistance. Is that fair? Nope.

But, the lack of debate in Congress over these issues in recent years has helped to make it possible for such an unfair characterization to be possible.

For the past year, Republicans have threatened that the failure to reach a deal on reauthorization will mean that the welfare block grant will end up being cut in a budget reconciliation bill.

So, when hopes for a friendlier administration were dashed in the November election, it seemed more likely that Senate progressives would make an effort to reach a deal.

What happens next may depend on the answers to these questions:

  Will members of Congress be willing to set the precedent that it is acceptable to reduce funding for one work-support program to pay for another?   If so, will members of the Senate insist on assurances from the leadership that there will be no further compromises in the conference committee negotiations? While the House bill slated for markup represents one-party’s vision, the Senate is working toward a bill that would be supported on both sides of the aisle. The Senate bill would represent a set of compromises by Democrats that they would not want to see further compromises on in the conference.
 Will members of the Senate insist that Congressional leadership promise to leave TANF out of reconciliation if the reauthorization moves forward? The current effort to reach agreement on a bipartisan bill in the Senate is largely fueled by the threat to cut the block grant in reconciliation if reauthorization is still pending at that time. What good does it do to compromise on policy regarding work requirements and other matters in order to avoid a funding cut, if we later face the funding cut anyway?
 Suppose the reauthorization bill doesn’t move forward after all. What is at risk?
 Will members of Congress be able to agree on a budget resolution with directions to cut entitlement programs?
 If so, will members of Congress be able to reach agreement on reconciliation cuts?
 If they can, would the rules for budget reconciliation prevent the including policy changes in TANF as part of the bill? After all, in general policy changes must contribute create savings. And that’s hard to do in a block grant — all you can do is make policy changes that shift spending but generally would not reduce it.
 Would policy changes be more significant in a reconciliation bill with its special rules, or in a reauthorization bill negotiated between the House and the Senate?

Then ask yourself, which would be worse:

1) Creating the public understanding that Congress is willing to undermine one of the critical (if inadequate) work-support programs, without providing the public with any information about the underlying debate over these issues; while simultaneously setting a precedent for cutting one low-income program to pay for an increase in another;
2)Taking the risk that the program could be undermined in a reconciliation bill much more likely to be accomplished in a party-line vote, while retaining the public understanding that progressives stand behind programs that provide support to working families and those in need of a temporary safety net?

In the end, it will be easier for those policymakers who support other anti-poverty services like Medicaid, housing vouchers, workforce development, transportation assistance — and even Social Security — to make the arguments necessary in a fight to save those services if they have first laid the groundwork for those debates by shining a spotlight on all the ways the administration’s TANF reauthorization proposal would undermine the goals of welfare reform, and the promises made by members of Congress to reward and support work.