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Welfare: Why Don't They Get It?

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The "Welfare" Reform Proposal

Senator Jim DeMint (R-S.C.) along with seven other Senate Republican co-sponsors, has introduced the misleadingly titled bill, The Welfare Reform Act of 2011 (H.R. 1167). The bill is an attempt to hark back to President Clinton and Speaker Gingrich's popular federal welfare reforms of 1996. At that time, the program that provided a federal entitlement to cash assistance for needy families, the Aid to Families with Dependent Children program, was repealed and replaced by the Temporary Assistance for Needy Families' (TANF) program, which placed time limits on the receipt of benefits and added work requirements. The new "welfare" reform bill expands the definition of welfare well beyond its popular meaning of cash assistance to needy families to encompass a wide range of other programs for low- and moderate-income people and imposes deep cuts and restrictions on them.

To support the supposed need for welfare reform, these lawmakers point out that "welfare" spending has grown more quickly over the last 20 years than have outlays for Medicare and Social Security, education and defense. In a statement, Senator DeMint said that, "with record levels of federal spending and record levels of Americans in poverty and using food stamps, it's hard not to conclude that federal welfare programs are failing."

The proposed bill would, supposedly, save roughly $2.4 trillion over a decade -- or twice as much as the minimum savings that the deficit-reducing super committee is tasked with finding. Specifically, the bill would:

1. Require disclosure of total means-tested welfare expenditures in the president's budget;

2. Plan an aggregate spending cap on all means-tested welfare spending at pre-2007 levels once
unemployment falls below 6.5 percent;

3. Provide enforcement of the spending cap through the budget resolution process;

4. Extend work requirements to the Supplemental Nutritional Assistance Program (SNAP) (formerly known as food stamps);

5. Incentivize states to alleviate poverty through self-sufficiency, not dependence on government; and

6. Prevent federal funding of abortion.

Why Lawmakers Don't Get It:

As usual, some lawmakers aren't getting it and, in fact, are getting it wrong.

They misinterpret the relevance of the recent poverty data -- they see it as a result of individuals' failure to be self-sufficient. The reason that there is more federal spending on means-tested programs is because there are more people in need as a result of the very deregulation of financial institutions that conservative lawmakers championed. The impact of a pre-2007 cap would be a drastic reduction in the number of families receiving needed aid. In just the first six years of the cap, programs would be cut 40 percent, and cuts would grow deeper thereafter. For example, if all programs were cut by the same percentage Medicaid and Children's Health Insurance Program would be cut by $144 billion in 2016 and more than $1.1 trillion over the cap's first six years. Similarly, SNAP would be cut by $24 billion in 2016 and $153 billion over six years and job training programs would be cut by $1.4 billion in 2016 and $10 billion over six years. Needy families should not be penalized for their appropriate reliance in troubled times on welfare "safety net" programs. This is especially true when the "failure" wasn't with these families, but rather with financial institutions.

Similarly, increasing the work requirement for families with dependent children to 120 hours, up from 90 hours under current law, and expanding this requirement to SNAP would leave many needy families without a safety net because of their failure, perhaps for legitimate reasons (e.g., child care issues) to fulfill this requirement. Additionally, under current rules, only a narrowly defined set of activities count toward a state's work participation rate and participation in some of these activities can only count for limited periods or if other limitations are met. Many of the activities that TANF recipients often need to be prepared for work do not count and there is no evidence that participating in a narrowly defined set of work activities improves participants' employment outcomes. Instead of increasing and expanding the requirement, it would be better to expand the type and duration of activities that can count, thereby encouraging more individuals to work.

Although these lawmakers claim that public benefit programs aren't working, the newly created Supplemental Poverty Measure (SPM), which is an attempt to update the woefully inadequate official poverty measure that underestimates poverty, proves they're wrong. The SPM, which takes into account, for the first time, certain out-of-pocket expenses (e.g., taxes, housing, utilities, health care costs) and the value of government income supplements (e.g., SNAP) that are aimed at improving the economic situation of the poor, shows the impact such programs have on poverty.

Under this new measure, almost 7 million more people would have lived in poverty in 2009 and 2010 absent government action and excluding SNAP, for instance, would have increased poverty by 17.7 percent.

This data proves that public benefit programs are an important factor in poverty alleviation and that, especially in today's economy, the nation cannot afford further cuts in them. Yet, that is exactly what this welfare reform bill would do.

So how do they continue to get it so wrong? Your guess is as good as mine.