A year ago, Loretta Gruytch decided to go back to work.

The 71-year-old resident of Lebanon, Oregon, had suffered from high blood pressure for some time. But her medications cost $600 a month, and she and her husband (who also has health problems) live on Social Security. “You make a choice between paying rent and utilities and getting medication, and you have to have a place to live.”

She’d held jobs in retail and as a mail carrier. She didn’t think she could handle a forty-hour job, but she thought that twenty or twenty-five hours would be enough to pay for her prescriptions.

But she had put it off too long. While she was at a job interview at a local deli, she had a brain aneurysm and a stroke, and had to be rushed to the hospital. Her doctor helped her to enroll in Oregon’s healthcare plan. For the past year, Gruytch has been able to get her medicine. But today, mired in budget crisis, Oregon is cutting back on health coverage. As a result, Gruytch may lose her prescription coverage altogether. She says, “I don’t know what I will do if they take my medicine away.”

On the other side of the country, 43-year-old Brooklyn resident Maria Jones has also slipped through the cracks of the social safety net, forced to choose between her daughter’s education and her own health.

Jones came to the United States from Puerto Rico at the age of 18. She married young and had three children, but divorced her soldier husband after the marriage turned violent (they went through rounds of counseling first). When her children were young, she worked in a dentist’s office. More recently, she was a childcare worker, making and selling crocheted and knitted goods on the side.

Two years ago Jones had a massive heart attack, leaving her face partially paralyzed for months. After her illness, she could not work, nor could she complete the work requirements she needed to get welfare. She began to fall behind on rent. Her youngest daughter–“my miracle baby”–was in her first year at Hunter College at the time, and living with her mother. Jones asked her daughter to apply for welfare. “I was always taught that families stick together, no matter what,” says Jones. When a caseworker told her daughter that she would need to leave school and enroll in the Work Experience Program (WEP, the city’s “workfare” program) to get benefits, she dropped out of school.

After she recovered somewhat, Jones told her daughter to go back to college. “She gave me one semester of her life. I was not going to let her give up her dreams to get welfare,” she says. Now, she subsists on a disability check of $570 a month. Her rent is $680. “Unless I hit the lotto, I don’t know what I am going to do.”

In the Bush Administration’s ideological war on the welfare state, Gruytch and Jones are collateral damage. Unlike with Clinton, who sought to end welfare “as we know it,” the Bush agenda explicitly targets noncash benefits, like healthcare and education, which currently are available to poor and working poor people. Some of the changes the Administration seeks are subtle switches in rules–demanding additional paperwork for the earned-income tax credit, for example, or extra documentation for poor children to receive school lunch. Others replace federal entitlements with block grants to states.

Taken together, the proposed changes will make it more difficult for people to get healthcare, housing assistance, early childhood education and other minimal social benefits. They will fall especially painfully on the working poor. While President Clinton’s 1996 welfare reform law rescinded the federal entitlement to cash assistance, the Bush proposals seek to end the social minimum wage.

One common thread of the Bush Administration’s proposals is that they aim to turn federal entitlement programs into block grants. The idea of block-granting these programs, which began with Reagan’s attacks on poverty programs and expanded with Clinton-era welfare reform, may sound like a technical change interesting only to policy wonks. But in reality, it is a way of quietly defunding social programs, slowly ending health coverage and rent supports for people who have them now. Just as the language of states’ rights during the Jim Crow era was a way to disguise the demands of white segregationists, the language of block grants is a way of deflecting attention from the social costs of cutting back the welfare state.

The scariest proposals involve Medicaid. Right now, the program–which provides health coverage for about 48 million people–is administered by the states but jointly funded by the federal government and the states. Every dollar that a state spends on Medicaid is matched by some money from the federal government. In January, Health and Human Services Secretary Tommy Thompson proposed turning the program into block grants. If such a proposal became law, the federal government would give a fixed, capped amount to each state every year. Since there would be no built-in mechanism to increase federal spending should states’ costs rise, this would be likely to erode funding in the long run. In addition, there would be no incentive to expand services (federal matching funds would be eliminated). Joan Alker, a senior research fellow at Georgetown University who focuses on healthcare, says, “If more people came on the rolls, if there was a new technology or drug, if there was an epidemic, states would be left holding the bag.”

Under block grants, states might also get greater “flexibility” to determine benefit packages. They might even have the option to deliver services selectively for certain populations–to one part of the state, but not another. Currently, the Medicaid program is divided into two parts–“mandatory” recipients and “optional” recipients, and “mandatory” services and “optional” services. Mandatory recipients include pregnant women and children under 6 up to 133 percent of the poverty line, children under 19 below the poverty line, some low-income parents, children in foster care and elderly and disabled people on Supplemental Security Income (SSI). Mandatory services include hospital services, doctor’s visits, nursing-home care, immunizations and lab services.

But a quarter of Medicaid recipients and the majority of elderly recipients are optional beneficiaries, meaning that the federal government does not require states to cover them. These include elderly and disabled people with incomes above the SSI limit (74 percent of poverty), working parents above mandatory income levels, pregnant women above 133 percent of poverty, and low-income children above the poverty line. Many services provided by Medicaid are optional as well–including prescription drugs (for anyone but children), home healthcare, vision and dental care. In a budget crisis, these would be the first ones to go if the federal government isn’t funding them. Indeed, states have already started to cut “optional” populations off Medicaid. The people whose healthcare is threatened are marginal and poor. According to a report by Cindy Mann of Georgetown’s Institute for Health Care Research and Policy, in 1998 the optional benefit population included 4.2 million children, 3.7 million working parents, 2.3 million elderly people and 1.5 million people with disabilities. Medicaid also covers a high proportion of nursing-home expenses. Denise Soffel, health policy analyst at New York’s Community Service Society, says, “People aren’t thinking about Granny in the nursing home using Medicaid dollars.”

The Bush Administration’s hopes for rapid Medicaid reform were stymied when members of the National Governors Association were unable to agree on a proposal endorsing block grants. But Congressional Republicans are still saying they will mark up a Medicaid reform proposal this year, and the Administration has not given up. “If they don’t get it done this year, they will come back to it next year,” says Melanie Nathanson of the Center on Budget and Policy Priorities (CBPP).

Other poverty programs, such as public housing, are also on the chopping block. The Bush Administration is contemplating a radical restructuring of the federal rent voucher program, under which low-income people pay one-third of their rent and the federal government makes up the rest. The voucher program is overwhelmingly used by working poor families, people with disabilities and elderly people, and helps several million people stave off homelessness each year. In New York City alone, about 100,000 people use housing vouchers, and there is a waiting list of 150,000.

In fact, thanks to the recession, the use of rent vouchers is rising across the country. But the Bush Administration is planning cutbacks that would leave 184,000 vouchers currently in use across the country without adequate funding to cover them. At the same time, the Administration envisions turning the entire rent voucher program into state-administered block grants. Legislation to accomplish this has been introduced in both houses of Congress. Despite volatile rental housing markets, the block grants would cap funding for vouchers. Vic Bach, housing expert at the Community Service Society, says, “Over time, the vouchers will be devalued and will cease to be an effective way of obtaining affordable housing.” The program will be renamed Housing Assistance to Needy Families, an allusion to Temporary Assistance to Needy Families (TANF), the name of the program created by the 1996 welfare reform law. Conservatives such as Howard Husock of the Manhattan Institute dream of the day when there will be time limits and work requirements for public housing, and Michael Liu, an assistant secretary at Housing and Urban Development, has said that the Administration will not prohibit states from setting time limits for public housing. Counties in southern Delaware and Charlotte, North Carolina, are already experimenting with public-housing time limits. Another Bush housing proposal is a $50 monthly charge for families in public housing with little or no income. But some housing authorities have already tried minimum rents and given up–in one case, according to the CBPP, after tenants were found selling their blood to pay the rent.

Many liberals hoped that Clinton’s welfare reform would mean an expansion of assistance for working-poor families–more generous daycare or health benefits, for example. But the Bush Administration is building on the most punitive aspects of the 1996 welfare law, seeking to expand work requirements while tightening access to education and training. Meanwhile, many people who left welfare for jobs during the 1990s boom have lost them as the economy has soured.

For example, 39-year-old Brooklyn resident Rosario Rodriguez left welfare a year ago when she landed a $6.50-an-hour job making maternity garments at a small Brooklyn factory. She liked the job, she says, even though she worked in a dirty, unheated room, lost her health benefits as she exceeded Medicaid’s income limit (“it was a factory job, it had no healthcare”) and got only a half-hour lunch break. But after six months, she was laid off as business slowed down.

Now she spends her days at the “job center,” New York’s euphemistic name for welfare offices, where there aren’t any jobs to be found. She says, “My caseworker told me he would pray for me.” Rodriguez suspects that she won’t be able to find paid work, and will instead have to go into the city’s Work Experience Program. Meanwhile, her daughter, a high school student, just had her first baby. Rodriguez would like to help out and stay home with her grandchild, but she fears this would result in a loss of benefits.

It’s easy to overlook the connections between Bush’s sweeping vision and the program changes of the Clinton years. But when it comes to TANF and to poverty, the two Presidents are very similar–in that both have emphasized work, regardless of its quality, and regardless of whether or not it is stable, pays a living wage or provides health coverage. The marketplace, not the government, is supposed to soothe poverty, even when all the evidence shows that it does not.

Against great odds, low-income activists struggle to fend off these attacks on the remnants of the welfare state. For example, Community Voices Heard, a group representing poor women in upper Manhattan, organizes around economic issues. It has not been an easy time, and activists are deeply frustrated. “A lot of people on WEP got jobs,” said longtime activist Stephen Bradley at an organizing meeting on a rainy mid-May evening–jobs that they’ve now lost. “They got off welfare, but now they are back on welfare.” Politicians, he says, are unresponsive: “We go and we plead our case, but they don’t listen.” Congressman Charles Rangel, who represents Harlem, has never consented to an in-person meeting with them. Harlem native Lloyd Anderson says, “People need to be able to pay their bills and take care of their children.”

Through organizing and lobbying, people have made some advances. This past spring, Community Voices Heard and other community groups won passage of a City Council law that permitted people in WEP to attend college for part of their work requirement–though Mayor Bloomberg promptly vetoed the law. Healthcare for poor people in New York State was threatened with cutbacks, but these were averted when the state raised taxes on upper-income people to maintain Medicaid spending for the poor. And a successful action was held May 14, when about 100 activists thronged the lobby of Club for Growth, an elite Beltway fundraising organization that funnels money to conservative Republicans and pressed for the Bush tax-cut plan. Holding photographs of firehouses that are closing and schools in disrepair, they chanted, “Where’s the jobs? Where’s the jobs?”

Almost all the forces of the rich and powerful are stacked against them. Right now, Bradley says, “People are desperate. We are like a lost society.” His words ring true. As Loretta Gruytch faces life without the medication she needs, and Rosario Rodriguez prays for work, it is hard not to feel as though our whole society has somehow gotten lost. Yet at the same time, despite the array of forces against them, the dedication and courage of these activists in Harlem offer hope for the future. When Lloyd Anderson says, “It’s getting ready to get hot,” one can only hope that he is right.