As President Bush's Secretary of Health and Human Services, Tommy Thompson, the former governor of Wisconsin, will decide how federal authority is used to supervise an array of programs that reach the poor and disabled. He will also play a key role in proposing changes in these programs. How is he likely to use that power?
The press has raised questions about the extremism of other Bush appointments, but they've been easy on Thompson, who was confirmed 100-0 by the Senate on January 24. He's known as the father of W-2, the Wisconsin welfare program that virtually eliminated cash assistance to poor mothers. But, the story goes, he was also willing to spend money on the services and supports that women need to go to work and lift their families out of poverty. This, says the Washington Post, is "serious" welfare reform.
This is, in fact, sand in our eyes. Welfare rolls did plummet in Wisconsin, by 67 percent since 1986. By 1997 a mere 25 percent of Wisconsin's poor families were receiving cash assistance, compared with 60 percent in 1986. But income from work was not making up for these families' loss of welfare. The earnings of the 62 percent of welfare leavers or current recipients who worked averaged only $8,560 a year, substantially below the poverty line. Cuts in benefits caused the average income of families leaving welfare to fall by $2,000 a year, while 38 percent reported no income. These people tend to fall through the cracks in surveys, and Governor Thompson didn't have much interest in finding out what happened to them. When one commissioned study showed that his program to dock welfare benefits when children were truant from school seemed to be having the effect of increasing truancy, he simply terminated the research contract.
The number of children placed in foster care has risen rapidly in Wisconsin, by 32 percent in the past decade, and by 51 percent in Milwaukee, where the welfare population is concentrated. Reports of child abuse and neglect are rising, and so are the reported incidents of domestic violence and juvenile arrests. But by far the most Dickensian development is the rise in infant deaths. The national downward trend in mortality rates for black and Hispanic infants has been reversed in Wisconsin. The mortality rate of black newborns, once lower than other Midwestern states, is now the highest in the region. The bottom line is that Wisconsin's welfare cutbacks have left people working more but poorer, and substantial numbers of these people are desperately poor.
What then about those vaunted support services? In fact, Thompson vetoed one bill that would have allowed W-2 participants to count up to fifteen hours a week in vocational or technical college classes toward their work requirements, and another that would have exempted parents who need to be at home to take care of a disabled child. True, Thompson's administration has offered an ambitious childcare program, extending eligibility not only to former welfare recipients but to a wider swath of low-earning mothers. But what always matters as much as formal eligibility is how a program is administered, and the reality is that only 14 percent of eligible families participate.
Aside from what is left of cash assistance, the most important supports for the poor are the federal food stamp and Medicaid programs. Wisconsin boasts of what it calls the "light touch" in administering these programs. Not only does the state fail to inform people of their rights, but the US Department of Agriculture found that W-2 agencies put illegal obstacles in the way of people trying to obtain food stamp benefits. The result is that food stamp use has dropped in Wisconsin by 32 percent, the largest percentage drop in the nation. Medicaid enrollment also declined after the Thompson administration failed to implement a federal law requiring states to maintain coverage for families leaving welfare.
To be sure, Wisconsin has spent money, especially federal money. It pioneered a practice called "supplantation," which diverts federal welfare funds to pay for other state programs, or for tax cuts, while the state itself has reduced its spending on welfare to the bare minimum allowed under federal law. Meanwhile, administrative costs have skyrocketed.
The profits made by the private agencies that now administer much of W-2 contribute to the illusion that the state has spent money on welfare reform. In Wisconsin, as in several other states, for-profit and nonprofit companies now handle the determination of eligibility, job placement and the provision of support services. Because they receive a portion of the funds that are saved when caseloads and services are reduced, they have an incentive to deny benefits. As a result, the private agencies in Milwaukee have been able to keep for themselves $27 million of the $318 million in federal funds they administer. Moreover, recent investigations revealed that the largest of the private agencies, Maximus Inc. and Goodwill Industries, improperly billed the state hundreds of thousands of dollars.
What does a Thompson appointment bode for US social programs? As head of HHS, Thompson will be a strong and effective proponent of extending to the remaining big social programs for the poor–food stamps and Medicaid–the same changes in federal law that allowed welfare to be privatized and turned into block grants. He is already on record as favoring this, and even if Congress were to resist, he has the authority to use waivers to the same end. Wisconsin has a waiver request pending now to privatize the administration of food stamps. The Wisconsin record on welfare shows us the danger this poses to poor people. And with Bush in the White House and Thompson at HHS, even the modest restraints the federal government has until now imposed on rapacious state administrations will be gone.