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Welfare Reform as We Knew It

September 20, 2012

It’s hard to remember now, but this summer Mitt Romney opened a useful debate about “dependency”—concerning President Obama’s regulation to rewrite the 1996 welfare reform. Democrats deny any such intent, but as early as this week the House plans to hold a vote to override the new rule.

So it’s a good moment to dissect what the Administration is really trying to do, because in this case Mr. Romney is right: The Administration has made welfare’s work requirements far weaker, and for ideological reasons that the press corps has failed to report.


The 1996 welfare landmark is among the few serious bipartisan reforms of government since the Great Society. State innovators like Tommy Thompson’s Wisconsin gave Contract-with-America Republicans a model, while Bill Clinton promised to “end welfare as we know it.” Their insight was that both welfare recipients and the bureaucracies built around them needed better incentives to end dependency, such as time limits on cash benefits and asking the able-bodied to work or train to prepare for work.
Unreconstructed liberals—then about half of Democrats in Congress—predicted a return to Bleak House. Some Clinton officials resigned when he signed the bill. They were wrong in every way. Caseloads plunged by half, to 5.9 million in 2000 from 12.6 million in 1996. Health and Human Service Department studies show that most found work and saw their incomes rise.

The anti-reformers have nonetheless looked for an opening to resurrect the old system. They have now found a way via an HHS regulatory “information memorandum” in July that said the agency would waive workfare requirements if states asked.
HHS is selling this under the guise of “flexibility” and says the point is to get more people working, not fewer. But recall that the joint state-federal welfare program has always had “work” requirements. Prior to 1996, they included such demands as journaling, bed rest and massage therapy.

For this reason, the statute specifically enumerated a 12-point definition of “work.” People who can but don’t meet the work terms eventually lose benefits. States have enormous flexibility to help recipients back into the job market. But they forfeit a portion of their federal money unless a certain percentage of their caseload complies—generally between 30% and 40%.

HHS has unilaterally upended these incentives. States can now get a waiver if they want “to test approaches and methods other than those set forth in section 407,” the work requirement provision, including new “definitions of work activities and engagement.”

But states are already allowed to experiment now, as long as beneficiaries meet the work quotas defined by current law. The crucial change is that HHS is saying they can experiment instead of complying with the law.

HHS suggests, for example, that states adopt “a comprehensive universal engagement system in lieu of certain participation rate requirements.” Universal engagement means that everybody is doing something constructive with their time “for at least one hour per week,” even if that’s as simple as “researching child care options” or “a job readiness workshop,” as a 2008 HHS document put it. So everybody can spend an hour looking into day care instead of—”in lieu of”—the work that 30% to 40% are supposed to be doing.
This new standard didn’t appear out of thin air, but is part of a liberal critique of welfare reform that has made its way into the Administration. In 2005, Mark Greenberg of the Center for Law and Social Policy told Congress that welfare needs to be retargeted to families that are “not in work and not receiving welfare” and states ought to “work with, rather than drive away, families with serious employment barriers.”
In a 2006 article for the journal Policy & Practice, Mr. Greenberg worried that “the challenge is to ensure that compliance and penalty avoidance do not become the central goals of welfare reform.” He added that the work rate “was never a good measure of state efforts to help families get and keep jobs” and called for “more balanced approaches,” including “promoting sustainable employment” and “supporting labor market progress.”
Where’s Mr. Greenberg now? Well, he’s an HHS deputy assistant secretary for policy and the architect of the workfare waiver.
The problem with the waiver is also its illegality. Congress went to great lengths to ensure that work requirements aren’t subject to waivers to prevent backsliding. Yet with no more than a paragraph of legal analysis, HHS simply ruled it could suspend enforcement of laws that Mr. Obama does not like. This is unconstitutional, as the Washington lawyers David Rivkin and Lee Casey noted in these pages.

When its welfare rewrite became a political issue, HHS then invented a new standard that appears nowhere in its original memorandum and says that 20% more people need to move to work from welfare than before to get a waiver. The Heritage Foundation’s Robert Rector points out that this metric is bogus. The easiest way to achieve it statistically is to put 20% or more people on the rolls and then get credit when some naturally leave.
HHS’s last line of political defense is that the Republican Governors of Nevada and Utah asked for this change. They did, though they claim they weren’t trying to weaken the work requirements. In any case, in 2005, 29 GOP Governors including Mr. Romney asked for waivers on “allowable” work activities.
Yet the principle—those that can work must—isn’t partisan. The drafters of reform knew that Governors of either party might try to take the path of political least resistance. Many Republican Governors are as bad as Democrats on Medicaid spending, for instance. That’s why reformers created a structure that would resist gaming.

This is the reform that the Administration has, in fact, gutted. There’s flexibility to innovate and there’s “flexibility.” In the first case, HHS has denied Governors the running room to redesign Medicaid to be more cost effective. But now it tells states that they don’t have to comply with the most basic obligation of welfare reform. It’s as if HHS told states they can have the “flexibility” not to cover health care for poor people.
Americans support a safety net for those who fall on hard times, but they don’t want welfare to become a way of life. Mr. Obama seems to disagree, even if he denies it for the purposes of getting past Election Day. The House resolution to override the HHS waiver is an important reform moment, and if the Romney campaign were competent it would let every American know about it.