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Will Marshall

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Welfare Nostalgia Won't Help Poor

Posted: 08/30/11 04:56 PM ET

Some liberal commentators marked the 15th anniversary of welfare reform last week with a curious lament: Welfare rolls aren't growing fast enough.

"If you think the point of the program is to help the poor, then no, welfare reform is not working," asserts Ezra Klein of the Washington Post. He cites an article by Jake Blumgart in The American Prospect, who frets that welfare rolls have "merely inched upward" during the late recession and jobless recovery.

"At the heart of the worst recession in 80 years, TANF (Temporary Assistance for Needy Families) funds only reached 4.5 million families, or 28 percent of those living in poverty," Blumgart writes. "By contrast, in 1995, the old welfare system covered 13.5 million families, or 75 percent of those living in poverty."

Before we wax too nostalgic for the good old days of big welfare rolls, it's worth remembering that progressives led the charge for welfare reform.

"Ending welfare as we know it" was arguably President Bill Clinton's most radical challenge to the political status quo, and the biggest policy change to happen on his watch. By the time he took office in 1992, the welfare system was held in nearly universal contempt by Americans across the socio-economic spectrum. Not only had it failed to make a dent in poverty, but taxpayers believed it undermined work, personal responsibility and family. The system also had failed the poor, providing them neither effective preparation for work or links to jobs, nor public subsidies sufficient to lift them out of poverty.

Clinton had a better idea: Rather than subsidizing dependence on the state and isolation from the economic mainstream, public assistance ought to require and reward work. To "make work pay," Clinton got Congress in 1993 to approve a massive expansion of the Earned Income Tax Credit, which is essentially a "work bonus" for low-wage earners. The credit has become a social policy rarity -- an anti-poverty program that actually works.

On Aug. 22, 1996, after having vetoed two draconian bills sent to him by the Republican Congress, Clinton signed a law which put a time limit on benefits, and replaced the old, open-ended welfare entitlement with a block grant to the states. In combination with the work bonus and other reforms (e.g., cracking down on deadbeat dads and expanding child care support) and a robustly growing economy, the results were galvanic.

More than 7 million people left the rolls between 1996 and 2002. From its peak of 14.4 million in March 1994, the number of people on welfare dropped by 63 percent to 5.3 million in 2001. Millions of welfare recipients left the dole for jobs. Teen pregnancy and out-of-wedlock birth rates dropped dramatically. And the number of Americans living in poverty declined dramatically, by 7 million people.

While some liberals predicted that ending the entitlement would produce scenes of Calcutta-style misery in America -- and a few quit the Clinton administration in protest -- the public heartily approved. By realigning U.S. social assistance with a strong work ethic and personal responsibility, Clinton's reforms helped mitigate public hostility toward public assistance and unlock Americans inherent generosity -- overall federal and state spending (including EITC costs) to support low-income families actually rose after 1996. They also deprived culture warriors of a favorite, racially tinged theme: When was the last time you heard a Republican candidate mock "welfare queens?"

In the late 1990s, of course, jobs were plentiful. Now the economy isn't creating enough jobs to bring unemployment back down to earth. Obviously this undercuts policies aimed at speeding transitions from welfare to work, and liberals are right to draw attention to the hardships the jobless recovery imposes on our most vulnerable families.

But they are wrong to assume that welfare's cash payments are somehow still central to America's efforts to fight poverty, relieve social distress or shorten recessions. Clinton's emphasis on "work first" made the unemployment system, rather than welfare, the safety net of first resort for low-income families in downturns. And indeed that is what has happened.

According to a recent Urban Institute fact sheet:

"Unemployment benefits substitute for welfare: three in ten low-income (below 200 percent of the federal poverty level) single parents received unemployment benefits in 2009, double the share receiving in 2005. This suggests that as more single mothers went to work during the late 1990s and early 2000s, more could qualify for unemployment benefits in the event of job loss. Also, many states have recently expanded eligibility for unemployment benefits."

The other big, countercyclical response to the recession and sluggish job growth has come from the food stamp program (now called SNAP). Last month, the Urban Institute reported that nearly 45 million people receive help from SNAP, an increase of about 69 percent since the recession began in 2007. Many states have seen dramatic growth in their food assistance caseloads as well.

In other words, poor families increasingly rely on other social supports to tide them over hard times. Liberals have a point, however, in arguing against enforcing strict time limits on welfare benefits during a prolonged job drought. Although the Clinton reforms held up well during the 2000-2001 recession, this one is far worse. The "work-first" architecture isn't perfect, and progressives should be open to sensible modifications based on new and unforeseen economic challenges.

Rather than resurrect the old dependency-fostering entitlement, however, progressives should try more creative approaches. We should be prepared to spend more money to help more families from sinking into poverty through no fault of their own. But, in keeping with the spirit of Clinton's reforms, new funding should go to support work. This could take the form of a new public works initiative or -- perhaps more likely, given GOP control of the House -- direct subsidies to employers to hire low-income workers.

The states already have the ability to waive work requirements for a portion of their caseloads; Washington could broaden such authority temporarily, until job growth starts to pick up. Here again, the challenge will be getting GOP austerity freaks to get in touch with their inner "compassionate conservative."

In any event, it's hard to see how relitigating the 1996 reform will help the poor. The entitlement ethos isn't exactly making a comeback in America. And there's no evidence it would work any better now than before.

This item is cross-posted at the Progressive Policy Institute.