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Turn Back on Welfare Reform
Next year, Congress will vote on whether to continue the historic welfare reform legislation adopted in 1996. While there is much progress to be made in reducing the welfare state’s drag on the productive sector of the economy and reasserting the constitutional limits on the federal government, this legislation confirms the validity of the basic principles of welfare reform.
Critics of Great Society-style welfare often pointed out that massive federal expenditures were ineffective at reducing poverty. From the time President Lyndon B. Johnson declared his War on Poverty to the mid-1990s, the government spent $5 trillion on redistributive antipoverty programs and by some measures the percentage of people living in poverty had increased. Instead, these programs created an elaborate bureaucracy economist and syndicated columnist Walter Williams described as the “Poverty Pentagon;” economist Jonathan Hobbs once estimated that “the welfare system sustains a nationwide welfare industry of more than 5 million public and private workers.”
Government programs intended to provide for families that had lost their breadwinner ended up subsidizing out-of-wedlock births and discouraging marriage. Many observers, including Charles Murray in his 1984 book Losing Ground, began to make the connection between government social spending and family breakdown. The result was not reduced poverty, but a perpetual underclass with strong disincentives to work and a lack of family cohesion.
By the 1990s, the once-contrarian position that the Great Society approach to welfare had failed was the consensus. Not only were conservatives criticizing welfare programs, moderates and even some liberals were acknowledging serious problems with the system and their adverse social consequences. Bill Clinton promised to “end welfare as we know it” during the 1992 presidential campaign and told even his Democratic audiences that public assistance should be “a second chance, not a way of life.”
Welfare reformers coalesced around these and other new ideas about how to help the poor. By and large, they agreed that states needed greater flexibility in administering welfare programs. Reform-minded governors like Tommy Thompson in Wisconsin, John Engler in Michigan and William Weld in Massachusetts were meeting with great success in reducing welfare rolls and moving recipients into jobs. Reformers wanted welfare benefits to be temporary as they transitioned recipients into work. No longer was marriage something to be neutral about or even hostile toward – many reformers argued that the key to reducing poverty was to reduce illegitimacy and promote strong families. Increasingly, policymakers spoke less of welfare than of “workfare.”
These principles governed, albeit imperfectly, the landmark reforms enacted in 1996. Aid to Families with Dependent Children (AFDC) was replaced with Temporary Assistance for Needy Families (TANF). Work requirements and time limits were imposed on welfare recipients. States were given new license to experiment with further reforms. The “marriage penalty” faced by many welfare households was alleviated.
Since then, welfare caseloads nationwide have fallen nearly 60 percent. Many opponents of welfare reform argued that this was merely a product of the economy – the new law took effect amidst robust economic growth rates during the second half of the 1990s – and predicted that the reforms would prove disastrous during the next economic downturn. (Although Robert Rector and Patrick Fagan of the Heritage Foundation have pointed out that reform opponents had also predicted, falsely, that reform would yield disastrous results even when the economy was growing briskly.)
But recent data casts considerable doubt upon this idea. The Washington Times reported this month that 267,000 people left welfare between December 2001 and June 2002, a period of poor economic performance. According to the U.S. Department of Health and Human Services, this represented a 5.1 percent reduction in the number of individuals on welfare. During the same time period, 75,000 families left welfare, a 3.6 percent decline. Even amidst anemic growth and a possible recession, the number of people on welfare continues to fall.
Most importantly, this is because the former recipients are getting jobs. They are not simply being thrown off welfare due to time limits, as states are allowed to exempt up to 20 percent of their caseloads from these limits and Health and Human Services assistant secretary for children and families Wade Horn told the Washington Times “as far as I'm aware, there's not a single state that has yet to even come close to bumping up to their 20 percent exemption." A 2001 Manhattan Institute study found that following welfare reform, employment of never-married mothers increased 50 percent, employment of single mothers who are high school dropouts rose by two-thirds and employment of single mothers aged 18 to 24 nearly doubled.
Other liberal predictions of gloom and doom also failed to materialize. Despite widely circulated reports that 2.6 million people, including 1.1 million children, would be dropped into poverty, poverty figures actually decreased by 4.2 million people overall and 2.3 million children during the first five years after welfare reform was enacted. The biggest drop in child poverty was among black children; black child poverty dropped to the lowest point in history as 1.1 million black children moved above the poverty line. The Center on Budget and Policy Priorities projected that welfare reform would increase the “poverty gap” – defined as total income needed to lift all poor families above the official poverty line – by $4 billion, but the Heritage Foundation pointed out in 2001 that the Census figures actually showed the poverty gap decreasing by $4.5 billion.
Welfare reform expired on September 30 and though Congress adopted a resolution to continue it for the remainder of 2002, the Democratic Senate failed to pass reauthorization for next year and beyond. President Bush and his new Republican majority have an opportunity to continue reform. One of the leading reformers in the House of Representatives during the ‘90s was Rep. Jim Talent (R-MO), now senator-elect. Backwards movement is now less likely.
The challenge will
be to move reform forward. President Bush should re-tool his “faith-based
initiative” to make it a true transfer of money and power from the
federal government to the truly life-changing institutions in civil society
as envisioned by Marvin Olasky’s The Tragedy of American Compassion,
rather than a federal handout to religious charities that will ultimately
dilute their spiritual messages and repeat the mistake the Great Society
made with non-profit organizations. Reform should continue to be characterized
by devolution of federal programs to the states and a general effort to
reduce government dependency.