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Welfare Reform: Ten Years Later
August 26, 2006;PageA9
THE MAIN EVENT
Tuesday marked 10 years since President Clinton signed sweeping legislation to overhaul the nation's welfare system, changing the social landscape for America's poor.
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The bipartisan 1996 bill ended "entitlement" welfare, under which low-income parents with children could receive federal assistance with relative ease. Now welfare recipients have a time limit for how long they can remain on the rolls, and they must show they are actively seeking work.
President Clinton prepares to sign welfare bill.Critics panned the 1996 bill at the time. Sen. Frank Lautenberg (D., N.J.) said U.S. streets would "look like the streets of the cities in Brazil" where there are children "engaging in prostitution."
But the dire predictions proved wrong. Today, the reforms are widely heralded as a success. The percentage of Americans on welfare is at historic lows, and employment levels among single mothers are higher than a decade ago.
Here's a closer look:
Was welfare reform a success? In many ways, yes. The number of families receiving welfare declined to 1.9 million last year, down 60% from a peak of about five million in 1994.
Some of the drop reflects the booming economy of the late 1990s. Douglas Besharov of the American Enterprise Institute estimates that 35% of the reduction in welfare is due to the reform bill, 45% to a strong economy and about 20% to factors such as an expansion of the earned-income tax credit and greater access to Medicaid. Ron Haskins of the Brookings Institution gives more credit to welfare reform, noting that the caseload never declined consistently until after the 1996 reforms, even during boom times.
There are other indications that welfare reform made progress toward achieving some of its intended effects. About 69% of single mothers are employed today, up from about 62% in 1995, according to the Center on Budget and Policy Priorities. That's down, though, from a peak in 2000, when 73% of single mothers were employed. Analysts say greater employment among single mothers is critical, since they make up the majority of welfare recipients.
Another measure of success is the poverty rate among children. In 2004, about 18% of children lived below the government-set poverty line, according to the U.S. Census Bureau. That was down from about 22% in 1994, though up from 16% in 2000.
Has welfare reform worked for everyone? No. One thorny problem is the plight of the poorest of the poor. As of 2003, an average of 1.2 million single mothers a month received no welfare, lived in homes where nobody was earning wages and weren't receiving Social Security benefits. That was up from 700,000 in 1996, according to the Center on Budget and Policy Priorities. Many of these people also have disabilities or mental-health or substance-abuse problems.
Also, some experts are concerned that a segment of the population has just been moved from welfare to low-paying jobs.
Another problem: Fewer of those eligible for welfare are signing up for it. In 2002, the most recent year for which statistics are available, about 48% of people who were eligible for welfare signed up, according to the Urban Institute. That was down from 79% in 1996.
Analysts say the decline in the "take-up rate" is tied to a greater stigma in obtaining welfare, more paperwork required to receive benefits and a culture of work instilled in people by welfare officers. One fear is this new framework could end up discouraging needy people from seeking help for themselves and their children.
--Lauren Etter
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POINTS OF VIEW
"While far from perfect, this legislation provides a historic opportunity to end welfare as we know it and transform our broken welfare system by promoting the fundamental values of work, responsibility, and family."
-- President Clinton, upon signing the 1996 Personal Responsibility and Work Opportunity Reconciliation Act
"This [welfare reform] bill is the most cruel and shortsighted view in public policy I have seen in 25 years."
-- Rep. Jim McDermott (D., Wash.), House floor debate, March 21, 1995
"Democrats -- for all their love for the poor people -- they didn't think the poor could do this. [Welfare reform] is a triumph for low-income mothers. They went to work just like the American public expected them to do."
-- Ron Haskins, author of "Work Over Welfare: The Inside Story of the 1996 Welfare Reform Law"
"From the caseload reduction view, it [welfare reform] is a tremendous success, But a large segment of the population has moved from being on welfare to now being working poor, and a portion of them are significantly worse off than before."
--Evelyn Ganzglass, the Center for Law and Social Policy
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Apocalypse NotAugust 26, 2006, WSJ
Welfare reform turned 10 this week, and more remarkable than its near-total success is the near-total amnesia that seems to have gripped its one-time opponents. The results and the history are both worth revisiting today because they offer some useful political and policy lessons for the future.
When Bill Clinton signed the bill ending a federal entitlement to welfare, a leading liberal newspaper called it "nasty," "atrocious" and "odious" -- adding with typical nuance that "the children will suffer the most." Three Clinton Administration officials resigned over the bill. Georgia Congressman John Lewis not too subtly raised the specter of fascism as he literally screamed on the House floor, "They're coming for the children. They're coming for the poor. They're coming for the sick, the elderly and the disabled." Even as sensible a social scientist as Senator Daniel Patrick Moynihan lost his head and called it "something approaching an apocalypse."
The real story has been apocalypse not. Welfare reform has worked so well that its success runs the risk of going almost unnoticed. Welfare rolls are down to about two million today from a peak of five million in 1995. The last time welfare caseloads were this low was 1970, when America had 100 million fewer citizens. But what about the children? The rate of black children living in poverty in America was more than 40% in 1996 and stands at 32% today, according to the U.S. Census Bureau. In the 25 years prior to welfare reform, that number had only briefly ever dipped below 40% and stood as high as 47% in 1980.
That leaves an excuse often heard that the secret to reform's success has been the booming economy. Didn't welfare reform benefit from being passed during the longest economic expansion in modern times? Well, no doubt growth has helped, but consider that the welfare rolls actually shrank during the severe recession of the early 1980s, then stayed fairly constant through the boom of the latter years of that decade. The rolls also continued to soar well after the 1990s' expansion was under way. The recession that began at the end of the Clinton Administration did no more than slow the downward trend in welfare caseloads that began in 1995.
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One reason for this success is that welfare reform never was the giant leap of faith that its opponents claimed. By the time it finally passed in Washington, the concept had been percolating in the states going back at least 30 years to Ronald Reagan's tenure as California Governor. The Gipper took his ideas to Washington, proposing a work requirement, among others things. His 1986 proposal, "Up From Dependency," was offered too late in his term to pass a Democratic Senate, but it advanced the debate.
Reform really took off in the early 1990s as Governors, led by Wisconsin's Tommy Thompson, took the initiative. They battled for waivers from the feds, and then one of their own, Mr. Clinton, decided to run for the White House in 1992 using welfare reform as a way of proving his New Democrat bona fides.
He quickly shelved the idea in his first two years, bowing to a Democratic Congress. But when Republicans won the House in 1994, they made it one of their priorities. Mr. Clinton declared this week that the bill he signed was a "bipartisan" triumph, and in a narrow sense it was. But 98 Democrats opposed him on the House floor, including many of the Democrats who would chair committees in the House if they re-take Congress in November. Mr. Clinton also vetoed reform twice before finally signing it in 1996 after his political guru Dick Morris told him it was the one issue that could cost him re-election. Make no mistake: This was a conservative reform opposed every step of the way by the political left and its media allies.
One lesson here is the familiar American one that states can play a useful role as policy laboratories. Liberals tried to replay welfare reform as the civil-rights movement, with an end to the federal entitlement meaning that every state would "rush to the bottom." But that was always a canard against state politicians, who have been only too happy to spend money on child care, transportation and other things to help welfare recipients get and keep jobs.
That precedent ought to apply now to Medicaid, another federal entitlement urgently in need of reform and on which Governors are taking the lead. Mr. Clinton vetoed a Medicaid reform in 1995 that might well have been as successful as welfare reform in allowing states to reform health care for the poor and force fewer of them into emergency rooms. Florida Governor Jeb Bush and others have in recent years received waivers that may well pave the way for a national reform.
Another lesson is that reform takes time and persistence in the American system. Too many Republicans think the lesson of last year's Social Security failure is that reform is impossible. But rare in American history has been the major policy change that passed the first time it was proposed. Big ideas take time for a wary public to understand. Personal retirement accounts will eventually become law in some form, if Republicans have the tenacity to keep promoting them and don't flinch at the first round of opposition demagoguery.
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The late Senator Moynihan is famous for having said that culture, not politics, is the key to changing most human behavior, and that the job of politics is to help nudge the culture in the right direction. Welfare reform worked because it was rooted in that wisdom, and in a basic understanding of human incentives. Support life on the dole, or reward having multiple children without a husband, and any society will develop a culture of dependency. That is where the U.S. was headed under the liberal ethos that compassion means sparing Americans of their individual responsibility to work and provide for their families.
Welfare reform was not a utopian project that promised to radically change human nature. It sought to make Americans more responsible by altering the incentives to remain dependent on the state. If only government were always so modest.
FACTS
Congress passed the Aid to Dependent Children Act in 1935 to help widows stay home and raise their children. From 1936 to 1994, the number of families on welfare increased to five million from 147,000. There are currently about 1.9 million families receiving welfare.
Last year there was an average of 25.7 million people on food stamps in any given month, down from the peak of about 27.4 million in 1994. The average monthly benefit was about $93 a person, up from $69 in 1994.
African-Americans receive about 39% of all welfare, according to the Department of Health and Human Services. About 37% goes to whites, 19% to Hispanics and 2% each to Asians and Native-Americans.
About a third of welfare recipients have a serious mental-health problem, according to the Center on Budget and Policy Priorities. As many as a fifth have physical impairments.
The median income for a family on welfare is about $11,800, up from about $7,200 in 1997. The median wage of a person who transitions from welfare to work is about $8 an hour. About a third of those workers have health insurance through their jobs. Welfare benefits vary by state. The monthly welfare benefit for a single parent with two children in Alabama is about $164 -- the nation's lowest, according to the Urban Institute. It is $923 a month in Alaska -- the highest.