The cornerstone of Paul Ryan’s recently released poverty proposal is his “Opportunity Grant,” which transforms participating states’ anti-poverty programs into block grants. Programs up for conversion include food stamps, childcare subsidies and housing assistance. The proposal doesn’t include Medicaid, but Ryan has proposed block-granting that program in every version of his budget. Ryan’s embrace of this tactic isn’t an extreme right-wing move, he argues; he points to Bill Clinton’s welfare “reform,” a major block grant, as a “remarkable success.”
Block-granting means giving states a fixed amount of federal money for their programs, instead of letting the funding fluctuate with need. Ryan argues that this would give states the ability to be innovative in addressing poverty because there would be fewer guidelines attached to the money; in reality, it’s likely to destroy these programs.
Time has not been kind to those programs that have already been block-granted. While Ryan promises he isn’t cutting spending, block-granting effectively freezes federal money. The welfare program, now called Temporary Assistance for Needy Families, is one of the worst-hit victims: its funding hasn’t been increased since welfare “reform” passed in 1996, so it has lost 28 percent of its value to inflation. TANF can’t keep up when need spikes—during the recent recession, for example—because states don’t have extra money to pour into it. The same is true for many other programs: of the eleven major block grants created in recent decades, eight have lost value by as much as 87 percent.
Block grants also mean trusting states to prioritize the needs of low-income people. This sounds like a cruel joke, considering the approach of various states to Obama’s Medicaid expansion. After the Supreme Court allowed states to opt out of accepting free money to expand healthcare access for poor people, twenty-one decided to do just that. As a result, two-thirds of poor black people and single mothers, and more than half of low-wage workers, will be left out of the Affordable Care Act.
In addition, it is hard to track how states use their money, which makes it easier for them to fudge their numbers and use the funds for other purposes, like plugging budget holes or funding pet projects. That no-strings-attached pot of money would tempt almost any politician.
Block-granted programs may come with fewer rules for lawmakers, but they are often conditioned on intense surveillance for recipients—more so than universal programs like Social Security that just send everyone checks. Aid to Dependent Children, welfare’s first incarnation, involved spot inspectors showing up at single mothers’ houses to check up on the state of their moral character. Today, eleven states drug-test or screen welfare applicants. Ryan’s grant comes with “customized life plans” for the poor, complete with penalties for missing goals.
Programs that haven’t been block-granted exemplify a different approach. The Supplemental Nutrition Assistance Program, or food stamps, is funded by the federal government according to increasing or decreasing need. During the height of the recession, SNAP grew by 45 percent; TANF, on the other hand, grew a meager 13 percent despite the increased need. And while just 26 percent of poor families with children get TANF benefits, SNAP reaches 79 percent of eligible families.
The number of people kept out of poverty thanks to food stamps, which don’t rely on block grants; TANF keeps 641,000 people out of poverty
The reduction in funding for the Community Development Block Grant, an affordable-housing program, since its inception in 1974
The share of Florida’s welfare applicants who failed a drug test in 2011; the rate of illegal drug use for the state’s general population is 8 percent
The amount of federal money that states will forfeit by refusing to expand Medicaid under the Affordable Care Act
Half-full: Government spending on healthcare has slowed dramatically. Projected long-term deficits, which austerity hawks have used to push cuts, are radically more manageable than experts thought a few years ago.
Half-empty: Many plans offered in the Obamacare exchanges remain unaffordable. Roughly half of those using the exchanges have difficulty with their monthly premiums and are not confident they could pay for a major illness. A public option would help address these concerns by creating low-cost competition.