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Clinton Touts Welfare Reform. Here's How It Failed. | The Nation

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Bryce Covert

Bryce Covert

Lady business with equal parts lady and business.

Clinton Touts Welfare Reform. Here's How It Failed.

Welfare has been on the forefront of the GOP’s brain lately, as the Romney/Ryan team has been relentlessly (and falsely) accusing President Obama of “gutting” welfare reform. So it’s unsurprising that it might came up in President Bill Clinton’s speech at the DNC last night. After all, Clinton was the one to sign the 1996 welfare reform bill, transforming the program into what it is today. It made sense for him to defend President Obama from the Republican attacks saying he was undoing his own legislation.

In the midst of his defense of Obama, not one to miss a chance to give himself a little back-pat, Clinton said of the ’90s reforms: “This is personal to me. We moved millions of people off welfare. It was one of the reasons that in the eight years I was president, we had a hundred times as many people move out of poverty into the middle class than happened under the previous twelve years, a hundred times as many. It’s a big deal.”

But while welfare reform may have initially reduced poverty, it left those still living at that income level worse off than they were before, reaching fewer of them and giving those it did reach less. And our poverty rates didn’t stay low. When they began to rise again, the program couldn’t offer them the support it used to. The recession has been a crystal clear, and incredibly painful, demonstration of this fact.

Dylan Matthews has already taken a look at the claim that millions moved off of welfare’s rolls and poverty was reduced. As he writes, the program’s numbers have steadily fallen since 1996: “Since reform, the rolls have shrunk from 12.6 million to 4.6 million.” The number of people in poverty “fell by 6.4 million people under Clinton, whereas the number of people in poverty increased by 7.4 million between 1981 and 1993 (and the rate went from 14 percent to 15.1 percent).” There is a catch, though. “But it’s worth noting that welfare reform led to a huge spike in extreme poverty, as defined as the number of households making under $2 a day,” Matthews adds.

The Center on Budget and Policy Priorities has done excellent work to track TANF’s failures. “While the official poverty rate among families declined in the early years of welfare reform, when the economy was booming and unemployment was extremely low, it started increasing in 2000 and now exceeds its 1996 level,” it reports. “Over the last 16 years, the national TANF caseload has declined by 60 percent, even as poverty and deep poverty have worsened.” In fact, nearly 70 percent of poor families with children received cash assistance in 1996; in 2009, less than 30 percent did. And the families who are able to access benefits aren’t getting much. Their purchasing power is below 1996 levels, adjusting for inflation, in every state but two. They fall below 50 percent of the poverty line in every state.

The rolls may be going down, but the need is not. The early employment gains among welfare recipients were tied to the strong economy. As the CBPP puts it, “The data suggest that a strong labor market is central to the success of a work-based assistance system.” When the labor market went into free fall, those gains were lost. But rather than low-income individuals finding themselves cushioned by TANF’s safety net, there was nothing to stop the fall.

As the recession hit, jobs evaporated and the unemployed needed support. TANF’s caseload should have shot up, offering assistance to those living in poverty who were no longer working. But the opposite happened. Between 2007 and 2009, the number of unemployed people doubled, yet TANF’s rolls increased by only 13 percent nationwide—in some states, the numbers actually fell. Contrast that with the Supplemental Nutrition Assistance Program, or food stamps, which was able to grow by 45 percent to meet increased need.

To figure out why the program is no longer elastic enough to grow and shrink with demand, take a look at what happened when Clinton signed that bill. Those reforms changed the program from a cost-sharing model to a block grant, in which the federal government gives states a fixed amount of money and requires them to maintain a certain level of their own spending (“maintenance of effort,” or MOE). That federal number stays the same no matter what happens to the economy, unlike the pre-reform program, under which the federal government automatically shared the cost if caseloads shot up. Not to mention that the amount given out in the block grant has been frozen since it was created fifteen years ago, losing nearly 30 percent of its value to inflation.

Meanwhile, the MOE requirements have also fallen in value by the same amount. And as soon as states got the block grants, they started moving the money around. As the CBPP reports, “Over time, states redirected a substantial portion of their TANF and MOE funds to other purposes,” such as using the money to plug holes in their budgets or free up money for other projects. But when the recession hit and they needed to put those funds back toward helping low-income people, “many states were unable—for fiscal or political reasons—to reclaim those dollars.” That’s why they weren’t able to expand the rolls to accommodate such a high need for financial assistance. SNAP, the food stamp program, on the other hand, has funding that rises automatically to deal with increased demand.

Those who opposed welfare reform in the first place saw a lot of this coming. And funnily enough, one of the bill’s critics will be stepping onto the very same stage tonight that Clinton spoke from yesterday. As Ryan Lizza reports this week in his profile of the relationship between Clinton and President Obama, “Obama came to share an ambivalence toward Clinton’s policies that was common on the left” in his early career. Obama called Clinton’s signing of the final bill “disturbing” and later said he wouldn’t have supported it. He even worked to pass a state law while serving as an Illinois state senator that restored benefits to legal immigrants.

This makes for some strange bedfellows. But it’s clear that Obama’s grant of the request for work requirement waivers from a handful of governors is merely allowing them a bit more wiggle room in meeting the law’s requirements. The real tragedy is not Obama’s waivers. It’s welfare’s failure to give some of the most vulnerable among us the support they so desperately need in this economy.

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