Welfare Reform Is Too Old and Big to Be Gutted

Last week, the Heritage Foundation’s welfare expert Robert Rector sounded the alarm about a new executive order that would “gut” welfare reform. The Department of Health and Human Services had released a memo stating that it would start granting waivers to states to run pilot programs that would lift the work requirements attached to Temporary Assistance for Needy Families (TANF), which is the federal government’s cash welfare program. The conservative National Review also pounced on the administration, declaring that the move “shows once again that [President Obama] is well to Clinton’s left.”

The reason conservatives are up in arms is that the 1996 welfare reform law, which made welfare work requirements mandatory across the nation, is widely thought of as a bipartisan success. Shortly after President Clinton signed the Republican-authored bill into law, welfare caseloads fell drastically, while at the same time employment among single mothers rose and child poverty fell.

Last week’s memo certainly represents a change in the direction of welfare policy, but it probably doesn’t constitute a “gutting,” because the welfare state is now too large and broad to be gutted by a change to one program. There’s little chance that this newest change will undo the progress that has been made since the ‘90s in improving the safety net.

Setting aside the real procedural questions about the HHS secretary’s legal power to adjust the law, in terms of policy, the HHS’ change is a mixed bag. The risk is that states could abuse their new flexibility in requiring welfare recipients to work, and weaken the expectation that welfare is only available to those who are willing to work.

The reward is that it could provide for comparisons between states’ policies that could help illuminate which aspects of TANF work and which don’t. Such experimentation is what made welfare reform possible in the first place. On the other hand, one of the most strongly established findings of such past experiments is that work requirements are helpful.

A little history is necessary to explain that last point. Prior to the passage of the 1996 welfare reform law, the feds made many welfare fund transfers contingent on the state governments running studies, including what are called randomized field trials, to test the efficacy of various measures. As the Manhattan Institute scholar Jim Manzi argues in his recent book Uncontrolled, these kinds of studies – analogous to clinical trials for drugs – provide more reliable estimates of causal factors than most other studies do. By randomly assigning people to a control group and a treatment group, randomized field trials can allow for apples-to-apples comparisons in a way that other statistical methods can’t.

A 2002 RAND Corporation study summarized the research literature on the different states’ welfare interventions. Of the various measures the authors looked at (including financial incentives to work, time limits, and parental responsibility requirements), mandates that recipients work or look for work were the most closely studied. They were subject to 13 randomized field trials, of which all but one indicated that they were successful in getting people off welfare. The RAND review also found evidence that they cut down on poverty.

All of which is to note that the work rule that the administration is now relaxing is the one that is most likely to get welfare recipients off the government’s rolls and into the workforce. It’s not unreasonable to question whether doing so sends the wrong signal about the administration’s intentions for welfare reform.

Nevertheless, in the larger scheme of things, the administration’s executive order isn’t as big a deal as it might have been a decade ago, and isn’t likely to overturn the precedent set by the 1996 law, or result in single moms returning to the welfare rolls in droves. As I described in a recent Atlantic piece, times have changed, and the entire welfare system has undergone a drastic transformation since the Clinton era. While the cash welfare program and its effects on intergenerational urban poverty were central to the larger safety net in the ‘90s, they simply are not as important any more.

Nowadays, there are a number of welfare programs as, if not more, important in determining the outcomes of poor single mothers (the key demographic) than TANF. The Earned Income Tax Credit (EITC), food stamps, housing assistance, and other programs provide more financial assistance than TANF does. Perhaps a graph from the Urban Institute’s Eugene Steuerle best illustrates the scenario facing a low-income earner (in the graph, “SNAP” refers to what are commonly known as food stamps:

Among the truly poor, represented on the left hand side of the graph, TANF is a small consideration relative to the combined effect of housing assistance, food stamps, and the Earned Income Tax Credit. Even if the Obama administration undoes the reforms made to cash welfare assistance, the effects on the other federal welfare programs will be limited.

Furthermore, the safety net as a whole is not focused on the kinds of poverty experienced by poor mothers in the way it was in the years before welfare reform. The welfare experts Yonatan Ben-Shalom, Robert Moffitt, and John Karl Scholz captured the evolution succinctly in a recent paper, writing that “expenditures have shifted toward the disabled and the elderly, and away from those with the lowest incomes and toward those with higher incomes, with the consequence that post-transfer rates of deep poverty for some groups have increased…. [The] U.S. benefit system is… tilted toward the support of the employed and toward groups with special needs and perceived deservingness.” In other words, “welfare queens” are no longer the key demographic anymore, and it’s not likely that undoing some provisions of TANF will change that.

In particular, disability insurance is now one of the most important, and underappreciated, program of our safety net. Last year, the feds spent $113 billion on 8.3 million recipients through the Social Security Disability Insurance system. That system is comparable, in the glaring failings of its structure (not least of which is stretching the definition of “disability” beyond usefulness), to the pre-TANF welfare program.

Maybe the White House gutted TANF, but that won't bring welfare policy back to the early '90s.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

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