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|Michelle Dimarob, or Sarah Swinehart (202) 226-4774|
On the Anniversary of Welfare Reform, It’s Time for the Next Round of Welfare Reforms
Seventeen years ago, on August 22, 1996, President Clinton signed into law the most sweeping changes ever made to our nation’s safety net. The Temporary Assistance for Needy Families (TANF) program was the centerpiece of these reforms, replacing the New Deal-era Aid to Families with Dependent Children (AFDC) program. TANF had a new mandate to help those in need by supporting and rewarding work and assisting low-income families in becoming self-sufficient. In the wake of the work-based 1996 welfare reforms, work and earnings in households headed by single mothers increased, child poverty in female-headed households has fallen, and welfare caseloads have declined remarkably.
Commenting on the success of welfare reform and the need to apply a similar approach across the programs designed to assist low-income families, Ways and Means Committee Chairman Dave Camp (R-MI) stated, “Clearly, the best way out of poverty is a job, and welfare reform has been successful because it underscored how reform can both foster job creation and ensure welfare is a pathway to a better life. The 1996 welfare reform law is a model for reforming other safety-net programs so that we use our resources effectively to truly help those in need – not from a hand out, but from a hand up.”
Senator Orrin Hatch (R-UT), Ranking Member of the Senate Finance Committee stated, “The landmark 1996 bipartisan welfare reform law successfully moved millions of Americans from welfare to work. Seventeen years later, it’s time for Congress to fully examine this law to ensure it fits today’s realities. Water-downed work requirements coupled with lax oversight and misguided government spending is pushing our safety-net programs in the wrong direction. It’s time we take stock of these programs – what’s working and what isn’t – to ensure that the backbone of government assistance is work, not just a blank paycheck.”
Even 17 years after these reforms, many of our nation’s other safety-net programs have yet to be reformed. In fact, most low-income benefit programs have few expectations of those receiving benefits, offer little help to support and reward work, and continue to spend more each year without showing that they’re really helping those in need. The Ways and Means Committee has held a number of hearings this year focused on our nation’s safety net and how it can be improved to help low-income families and individuals move up the economic ladder. Below are key selections from testimony at these hearings, along with related information highlighting how our current system isn’t working. It’s time to undertake another round of welfare reforms to ensure those in need are receiving real help to get back on their feet and move up the economic ladder.
1. Federal spending on the 10 largest low-income benefit programs is huge, has grown rapidly, and is expected to continue growing in the years ahead.
“(T)he federal government devotes roughly one-sixth of its spending to 10 major means-tested programs and tax credits, which provide cash payments or assistance in obtaining health care, food, housing, or education to people with relatively low income or few assets…In 2012, federal spending on those programs and tax credits totaled $588 billion….Total federal spending on those 10 programs (adjusted to exclude the effects of inflation) rose more than tenfold— or by an average of about 6 percent a year—in the four decades since 1972 (when only half of the programs existed). If current laws that govern the means-tested programs and tax credits examined in this testimony do not change, total spending on those programs will grow faster than inflation over the next decade, CBO projects.” (Jeffrey Kling, CBO, June 18, 2013)
Federal Spending on Various Categories of Means-Tested Programs
and Tax Credits, 1972 – 2012 (in billions of 2012 dollars)
Source: Congressional Budget Office
2. Beyond those 10 largest programs, more than 80 low-income benefit programs are supported with Federal funds, and spent almost $750 billion in the most recent year.
“Together these facts make it hard for defenders of the status quo to say all is well, especially across the 83 programs the Congressional Research Service has identified as assisting low-income families.” (Human Resources Subcommittee Chairman Dave Reichert (R-WA), June 18, 2013)
Source: Congressional Research Service
3. Few low-income benefit programs expect able-bodied adult recipients to do anything for benefits today…
“Welfare reform led to progress because most recipients were better off working than they had been on AFDC/TANF….The work tests in other welfare programs are far weaker.” (Larry Mead, June 18, 2013)
“Many (working-age, able-bodied residents of public housing) have no intention of furthering their education or of finding employment. When asked how long they plan to live in public housing, the answer is forever.” (Larry Woods, July 31, 2013)
4.…and the Obama Administration continues to call for waiving the limited work requirement for welfare recipients created in 1996…
“The law is clear: welfare recipients must meet work requirements in order to get public assistance. The Administration’s blatant attempt to eliminate work requirements and refusal to own up to it is simply unacceptable. The American people overwhelmingly support requiring welfare recipients to work for their benefits, which has been the law of the land since 1996. It is long past time for this Administration to provide Congress and the American people an explanation of how they arrived at the opposite conclusion.” (Ways and Means Committee Chairman Dave Camp (R-MI), February 4, 2013)
“[T]he approach envisioned by the Obama Administration would mean less real work for fewer hours and for a smaller share of adults on welfare. This approach is contrary to a work-first approach that has been an integral feature of welfare reform. Over the years, research has consistently demonstrated that a work-first approach combining an intense effort to engage the client in work-related activities to foster an attachment to work, with a blended menu of work supports, education, and training has the greatest degree of success in getting clients off of welfare. The reason that I am so vehemently opposed to the Administration’s scheme to undermine the welfare work requirements is that I believe it will hinder, not help, adults from exiting the welfare rolls. Put simply, allowing activities that are not work to count as work will not get people into work.” (Senator Orrin G. Hatch (R-UT), February 28, 2013)
5.…even though expecting work or other activity by recipients has been shown to be a key step to self-reliance.
“In the 1980s and 1990s, government, foundations, and leading researchers sponsored or carried out a large number of randomized controlled trials of state and local welfare reforms. Three major reform efforts – two in California, one in Oregon – were found especially effective. Focused on moving welfare recipients quickly into the workforce through short-term job-search assistance and training (as opposed to longer-term remedial education), the initiatives produced gains in participants’ employment and earnings of 20-50%.” (Jon Baron, July 17, 2013)
“As in cash welfare, aid should consist of more than a benefit. It should also require movement toward greater self-reliance.” (Larry Mead, June 18, 2013)
“Work activity should be a requirement across programs….The work experience gained through work activation requirements would make the road to higher income and self-reliance faster and easier.” (Eloise Anderson, July 31, 2013)
“Currently, there is no requirement that families participate in any self-sufficiency program as a condition of receiving housing assistance….Our goal should be to assist families, using a menu of services from all agencies, so that those families never again need public support.” (Larry Woods, July 31, 2013)
6. Not surprisingly, these dozens of safety net programs are poorly coordinated in other ways, diminishing their effectiveness at helping low-income families escape poverty.
“(O)ur safety net system is not a system at all. It is an aggregation of single purpose programs, each with its own objectives, rules, and funding.” (Clarence Carter, July 31, 2013)
“Our objective is to share innovative program ideas and advance policies which favor work, economic self-sufficiency, and healthy families. We believe an effective, secure safety net should be built around these carefully defined objectives. The present federal policy is not in alignment with these objectives….the current state of the federally-directed system is neither effective nor efficient.” (Eloise Anderson, July 31, 2013)
“The reward to working affects behavior. High marginal tax rates mean small incentives to seek, create, and retain jobs, and to make the sacrifices of time, hassle, etc., naturally required by employers, customers, and clients in exchange for a paycheck. The consequences of a low reward to working are felt all over the economy, even by persons whose individual reward to working might not be all that low.” (Casey Mulligan, June 18, 2013)
Marginal Tax Rates for a Hypothetical Single Parent with One Child, by Earnings in 2012
(Including federal and state taxes, TANF, housing assistance, and food stamps)
7. Few programs have been rigorously evaluated, and even fewer can show they are effective – even though such evaluations could improve effectiveness and even save money.
“The consequence of so few federal social programs being rigorously assessed for effectiveness means that Congress has no credible information on the performance of the overwhelming majority of federal social programs. Faced with this lack of knowledge about the effectiveness of federal social programs, it is past time for Congress to devote serious attention and resources to finding out what works and does not work.” (David Muhlhausen, July 17, 2013)
“These examples suggest that a systematic government effort to build a body of such proven reforms, and disseminate them widely in federal social programs, could improve life outcomes for millions of Americans without adding to – or while even reducing – the deficit.” (Jon Baron, July 17, 2013)
8. Congress should enact meaningful welfare reform that improves coordination between welfare programs, ensures they support work and upward mobility, and engages recipients in activities that lead to self-sufficiency.
“In 1996 AFDC (Aid for Families with Dependent Children) was replaced with TANF (Temporary Assistance for Needy Families). The adoption of TANF and the energy its reforms unleashed – adults newly finding and taking jobs, caseworkers oriented towards work-first, urgency inducing time limits, and programs that focused on the family, like the promotion of two parent homes – showed how a federal and state partnership could work together to create the right institutional incentives to create positive change.” (Eloise Anderson, July 31, 2013)
“A discussion of a broader vision of what constitutes healthy federal policies across programs is dramatically needed in Washington and in many States.” (Eloise Anderson, July 31, 2013)
“[T]he safety net is structurally flawed in its design and operation. No matter how well intentioned, the kind of tinkering we do at the margins will not ultimately give us the safety net model the people of our nation so desperately need and deserve.” (Clarence Carter, July 31, 2013)
“The focus on the administration of many single purpose programs significantly hinders any ability to have a comprehensive, integrated approach to the health and well-being of our citizenry. This lack of a shared vision invokes the old adage, ‘If you don’t know where you are going, any road will get you there.’ Conversely, a shared vision or overarching objective would serve to guide the design of any program and promote cross-functional collaboration that increases the efficacy and efficiency of the safety net system as a whole.” (Clarence Carter, July 31, 2013)
“We must be allowed to develop and implement strategies to best serve the needs in our jurisdiction which would result in positive and permanent transitions to mainstream society. This will enable us to increase the number of people that can be assisted, particularly those who have been struggling and waiting for so long.” (Larry Woods, July 31, 2013)
1Source for information on employment and training programs is email to Ways and Means staff from the Coalition for Evidence-Based Policy (CEPB); written report from CEBP including this data forthcoming.