Welfare reform’s tragic toll

By Max J. Castro

Welfare “reform” seemed like a good idea back in the mid-1990s when the economy was booming and jobs were plentiful. At least it seemed like a great idea to some people, especially Republicans who had despised Aid to Families with Dependent Children (AFDC) – the formal name of the program generally known as welfare – since it was instituted during FDR’s New Deal.

But it wasn’t just Republicans who, under the guise of reform, killed welfare as we knew it. The Republicans, who have never seen a program for poor people they wouldn’t want to cut or a tax break for the rich they wouldn’t want to enact, had a major Democratic co-conspirator: President Bill Clinton.  

Clinton, affiliated with the Democratic Leadership Council, a group that sought to return the Democratic Party to power by turning it into a “lite” version of Republicanism, used his support for killing AFDC to burnish his credentials as a “centrist” (and not a liberal) and to curry favor with the many white voters who saw welfare as a program that took their money and gave it to “other people” with looser morals, a weak work ethic, and excessive melanin in their skin.

There were many fierce critics of so-called welfare reform back in 1996 when it was made into law. One such was Peter Edelman, a high Clinton administration official who resigned in protest. Many levels below Edelman in the food chain, I wrote a column in opposition to the measure that appeared in The Miami Herald. I am proud to have written it.

There were many technical and ideological debates about how ending AFDC and substituting it with something called Temporary Assistance to Needy Families (TANF) would affect the poor. But one did not have to be a sociologist or a policy wonk to figure out that, in essence, TANF would mean less money for a shorter period of time for people who already were receiving meager amounts of money from the government in order to barely sustain themselves.

So it was already clear back then, even with the go-go economy of the Clinton years and despite all of the verbiage about bipartisanship, self-sufficiency and fighting dependency, that this was a measure that would harm poor people, including many children. The rest was wishful thinking at best and top-down class warfare at worst.

But the critics, high and low, were ignored, defeated and ultimately overwhelmed by early, glowing reports of success. But these favorable evaluations proved to be premature, exaggerated, and ultimately plain wrong.

What gave them an initial veneer of credibility was the supercharged economy that existed when TANF was enacted. Indeed, the rate of unemployment got so low at one point that it fell below what economists call “the natural rate of unemployment.” By this they mean the lowest rate of unemployment that will not trigger excessive inflation. Economists were scratching their heads trying to figure out why their models, which predicted that such a low level of unemployment would inevitably cause inflation, were belied by this simple fact: inflation remained under control.

Even during this brief moment, when the U.S. economy seemed to be propelled by the stuff of magical realism or, as Federal Reserve Chairman Alan Greenspan said about the stock market, “irrational exuberance,” there were signs that the switch from AFDC to TANF was not a good deal for poor people. It was, however, a boon for federal and state coffers because welfare rolls and expenditures plummeted under TANF.

At the time, the case against TANF was hard to argue because the “economic miracle” of the Clinton years kept critics’ worst fears from materializing. Moreover, the law was written so that the real crunch would not hit for several years, the time when people would reach their lifetime limit for receiving TANF benefits. AFDC, based on need rather than miserliness and moralism, had imposed no such limits. Then there was much talk about a “new economy.” As a result of new technologies and good economic management, capitalism finally had overcome its vulnerability to periodic crises. Under this wildly optimistic scenario, there never would be a perfect storm combining a deep and prolonged recession with the presence of a huge pool of poor people who already had exhausted or would soon exhaust their TANF eligibility.

That perfect storm did hit. Its leading edge was the financial crisis of 2008, and the waves of the tsunami it set off have only kept growing. The Great Recession reduced state tax revenues. Under AFDC, this would not have been a disaster for the poor because the federal government gave the states as much money as they needed to pay for welfare. But, under TANF, states receive a set amount. As recession-driven poverty increased, assistance for the new poor would have to come from state funds.

What has happened instead is that states are cutting off or turning away poor people by the droves and leaving them to fend for themselves. As detailed in a profile on the impact of TANF in Arizona (which has cut its TANF rolls by half since the recession) published in The New York Times on April 7 details, this is how they have done so:
“The poor people who were dropped from cash assistance here, mostly single mothers, talk with surprising openness about the desperate, and sometimes illegal, ways they make ends meet. They have sold food stamps, sold blood, skipped meals, shoplifted, doubled up with friends, scavenged trash bins for bottles and cans and returned to relationships with violent partners – all with children in tow.”

What is even more tragic is that, under the current political climate, nothing will be done to address this situation, unless it’s new policies that will make things worse for a broader population.

That is what the budget presented by Republican Representative Paul Ryan, approved by the House of Representatives and endorsed by the leading Republican presidential candidate Mitt Romney, portends. Along with more cuts to programs for the poor like food stamps and Medicaid, the Ryan budget uses the same tactics that pulled TANF through – distort the facts and delay the impact – to kill Medicare as we know it. The victims this time will be not only the poor but also the middle class. Here the Republicans are treading on more treacherous political ground. Hopefully, they and their plans will sink into it like a stone.

In many ways, I find the Democrats to be a scared, sorry bunch and the Obama administration a disappointment. But a Republican Congress and a Romney presidency would be so much worse, an outright catastrophe. I remind myself to remind myself that in spite of it all a lot will be at stake in November.

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