For April 16

The Worst Thing Bill Clinton Has Done

by Peter Edelman Atlantic Monthly (March 1997)

(Edelman was a Clinton appointee who resigned in protest after the welfare bill was passed. Why does he argue that the welfare bill fulfill the “Reagan Revolution”? What are the specific provisions of the welfare reform? How does the history of the War on Poverty relate to this bill?

I hate welfare. To be more precise, I hate the welfare system we had until last August, when Bill Clinton signed a historic bill ending "welfare as we know it." It was a system that contributed to chronic dependency among large numbers of people who would be the first to say they would rather have a job than collect a welfare check every month -- and its benefits were never enough to lift people out of poverty. In April of 1967 I helped Robert Kennedy with a speech in which he called the welfare system bankrupt and said it was hated universally, by payers and recipients alike. Criticism of welfare for not helping people to become self-supporting is nothing new.

But the bill that President Clinton signed is not welfare reform. It does not promote work effectively, and it will hurt millions of poor children by the time it is fully implemented. What's more, it bars hundreds of thousands of legal immigrants -- including many who have worked in the United States for decades and paid a considerable amount in Social Security and income taxes -- from receiving disability and old-age assistance and food stamps, and reduces food-stamp assistance for millions of children in working families.

Governor Clinton campaigned in 1992 on the promise to "end welfare as we know it" and the companion phrase "Two years and you're off." He knew very well that a major piece of welfare-reform legislation, the Family Support Act, had already been passed, in 1988. As governor of Arkansas he had been deeply involved in the enactment of that law, which was based on extensive state experimentation with new welfare-to-work initiatives in the 1980s, especially GAIN in California. The 1988 law represented a major bipartisan compromise. The Democrats had given in on work requirements in return for Republican concessions on significant federal funding for job training, placement activities, and transitional child care and health coverage.

The Family Support Act had not been fully implemented, partly because not enough time had passed and partly because in the recession of the Bush years the states had been unable to provide the matching funds necessary to draw down their full share of job-related federal money. Candidate Clinton ought responsibly to have said that the Family Support Act was a major piece of legislation that needed more time to be fully implemented before anyone could say whether it was a success or a failure.

Instead Clinton promised to end welfare as we know it and to institute what sounded like a two-year time limit. This was bumper-sticker politics -- oversimplification to win votes. Polls during the campaign showed that it was very popular, and a salient item in garnering votes. Clinton's slogans were also cleverly ambiguous. On the one hand, as President, Clinton could take a relatively liberal path that was nonetheless consistent with his campaign rhetoric. In 1994 he proposed legislation that required everyone to be working by the time he or she had been on the rolls for two years. But it also said, more or less in the fine print, that people who played by the rules and couldn't find work could continue to get benefits within the same federal-state framework that had existed since 1935. The President didn't say so, but he was building -- quite incrementally and on the whole responsibly -- on the framework of the Family Support Act. On the other hand, candidate Clinton had let his listeners infer that he intended radical reform with real fall-off-the-cliff time limits. He never said so explicitly, though, so his liberal flank had nothing definitive to criticize. President Clinton's actual 1994 proposal was based on a responsible interpretation of what candidate Clinton had said.

Candidate Clinton, however, had let a powerful genie out of the bottle. During his first two years it mattered only insofar as his rhetoric promised far more than his legislative proposal actually offered. When the Republicans gained control of Congress in 1994, the bumper-sticker rhetoric began to matter. So you want time limits? the Republicans said in 1995.

Good idea. We'll give you some serious time limits. We now propose an absolute lifetime limit of five years, cumulatively, that a family can be on welfare. End welfare as we know it? You bet. From now on we will have block grants. And what does that mean? First, that there will be no federal definition of who is eligible and therefore no guarantee of assistance to anyone; each state can decide whom to exclude in any way it wants, as long as it doesn't violate the Constitution (not much of a limitation when one reads the Supreme Court decisions on this subject). And second, that each state will get a fixed sum of federal money each year, even if a recession or a local calamity causes a state to run out of federal funds before the end of the year.

This was a truly radical proposal. For sixty years Aid to Families with Dependent Children had been premised on the idea of entitlement. "Entitlement" has become a dirty word, but it is actually a term of art. It meant two things in the AFDC program: a federally defined guarantee of assistance to families with children who met the statutory definition of need and complied with the other conditions of the law; and a federal guarantee to the states of a matching share of the money needed to help everyone in the state who qualified for help. (AFDC was never a guarantor of income at any particular level. States chose their own benefit levels, and no state's AFDC benefits, even when coupled with food stamps, currently lift families out of poverty.) The block grants will end the entitlement in both respects, and in addition the time limits say that federally supported help will end even if a family has done everything that was asked of it and even if it is still needy. . . .

T HIS was the major milestone in the political race to the bottom. The President had said he was willing to sign legislation that would end a sixty-year commitment to provide assistance to all needy families with children who met the federal eligibility requirements. In the floor debate Senator Edward Kennedy, who voted against the bill, described it as "legislative child abuse….

The game was over. Now no one could ever say again with any credibility that the President is an old liberal….

Why is the new law so bad? To begin with, it turned out that after all the noise and heat over the past two years about balancing the budget, the only deep, multi-year budget cuts actually enacted were those in this bill, affecting low-income people.

The magnitude of the impact is stunning. Its dimensions were estimated by the Urban Institute, using the same model that produced the Department of Health and Human Services study a year earlier. To ensure credibility for the study, its authors made optimistic assumptions: two thirds of long-term recipients would find jobs, and all states would maintain their current levels of financial support for the benefit structure. Nonetheless, the study showed, the bill would move 2.6 million people, including 1.1 million children, into poverty. It also predicted some powerful effects not contained in the previous year's analysis, which had been constrained in what it could cover because it had been sponsored by the Administration. The new study showed that a total of 11 million families -- 10 percent of all American families -- would lose income under the bill. This included more than eight million families with children, many of them working families affected by the food-stamp cuts, which would lose an average of about $1,300 per family. Many working families with income a little above what we call the poverty line (right now $12,158 for a family of three) would lose income without being made officially poor, and many families already poor would be made poorer.

The view expressed by the White House and by Hill Democrats, who wanted to put their votes for the bill in the best light, was that the parts of the bill affecting immigrants and food stamps were awful (and would be re-addressed in the future) but that the welfare-reform part of the bill was basically all right. The immigrant and food-stamp parts of the bill are awful, but so is the welfare part.

The immigrant provisions are strong stuff. Most legal immigrants currently in the country and nearly all future legal immigrants are to be denied Supplemental Security Income and food stamps. States have the option of denying them Medicaid and welfare as well. New immigrants will be excluded from most federal means-tested programs, including Medicaid, for the first five years they are in the country. All of this will save about $22 billion over the next six years -- about 40 percent of the savings in the bill. The SSI cuts are the worst. Almost 800,000 legal immigrants receive SSI, and most of these will be cut off. Many elderly and disabled noncitizens who have been in the United States for a long time and lack the mental capacity to do what is necessary to become citizens will be thrown out of their homes or out of nursing homes or other group residential settings that are no longer reimbursed for their care.

The food-stamp cuts are very troubling too. Exclusive of the food-stamp cuts for immigrants, they involve savings of about $24 billion. Almost half of that is in across-the-board cuts in the way benefits are calculated. About two thirds of the benefit reductions will be borne by families with children, many of them working families (thus reflecting a policy outcome wildly inconsistent with the stated purposes of the overall bill).

Perhaps the most troubling cut is the one limiting food stamps to three months out of every three years for unemployed adults under age fifty who are not raising children.. .. One of the great strengths of food stamps until now has been that it was the one major program for the poor in which help was based only on need, with no reference to family status or age. It was the safety net under the safety net. That principle of pure need-based eligibility has now been breached.

Neither the cuts for immigrants nor the food-stamp cuts have anything to do with welfare reform. Many of them are just mean, with no good policy justification. The bill also contains other budget and benefit reductions unrelated to welfare. The definition of SSI eligibility for disabled children has been narrowed, which will result in removal from the rolls of 100,000 to 200,000 of the 965,000 children who currently receive SSI. Although there was broad agreement that some tightening in eligibility was warranted, the changes actually made will result in the loss of coverage for some children who if they were adults would be considered disabled. Particularly affected are children with multiple impairments no one of which is severe enough to meet the new, more stringent criteria.

Child-nutrition programs have also been cut, by nearly $3 billion over six years, affecting meals for children in family day care and in the summer food program. . .

So this is hardly just a welfare bill. In fact, most of its budget reductions come in programs for the poor other than welfare, and many of them affect working families. Many of them are just cuts, not reform. (The bill also contains an elaborate reform of federal child-support laws, which had broad bipartisan support and could easily have been enacted as separate legislation.)

This brings us to welfare itself. Basically, the block grants mean that the states can now do almost anything they want -- even provide no cash benefits at all. . .States may contract out any or all of what they do to charitable, religious, or private organizations . ..

The change in the structure is total. Previously there was a national definition of eligibility. With some limitations regarding two-parent families, any needy family with children could get help. There were rules about participation in work and training, but anybody who played by the rules could continue to get assistance. If people were thrown off the rolls without justification, they could get a hearing to set things right, and could go to court if necessary. The system will no longer work that way.

The other major structural change is that federal money is now capped. The block grants total $16.4 billion annually for the country, with no new funding for jobs and training and placement efforts, which are in fact very expensive activities to carry out. For the first couple of years most of the states will get a little more money than they have been getting, because the formula gives them what they were spending a couple of years ago, and welfare rolls have actually decreased somewhat almost

Many governors are currently crowing about this "windfall" of new federal money. But what they are not telling their voters is that the federal funding will stay the same for the next six years, with no adjustment for inflation or population growth, so by 2002 states will have considerably less federal money to spend than they would have had under AFDC. The states will soon have to choose between benefits and job-related activities, with the very real possibility that they will run out of federal money before the end of a given year. A small contingency fund exists for recessions, and an even smaller fund to compensate for disproportionate population increases, but it is easy to foresee a time when states will have to either tell applicants to wait for the next fiscal year or spend their own money to keep benefits flowing.

The bill closes its eyes to all the facts and complexities of the real world and essentially says to recipients, Find a job. That has a nice bumper-sticker ring to it. But as a one-size-fits-all recipe it is totally unrealistic.

Total cutoffs of help will be felt right away only by immigrants and disabled children -- not insignificant exceptions. The big hit, which could be very big, will come when the time limits go into effect -- in five years, or less if the state so chooses -- or when a recession hits. State treasuries are relatively flush at the moment, with the nation in the midst of a modest boom period. When the time limits first take effect, a large group of people in each state will fall into the abyss all at once. Otherwise the effects will be fairly gradual. Calcutta will not break out instantly on American streets.

To the extent that there are any constraints on the states in the new law, they are negative. The two largest -- and they are very large -- are the time limit and the work-participation requirements.

There is a cumulative lifetime limit of five years on benefits paid for with federal money, and states are free to impose shorter time limits if they like. One exception is permitted, to be applied at the state's discretion: as much as 20 percent of the caseload at any particular time may be people who have already received assistance for five years. This sounds promising until one understands that about half the current caseload is composed of people who have been on the rolls longer than five years. A recent study sponsored by the Kaiser Foundation found that 30 percent of the caseload is composed of women who are caring for disabled children or are disabled themselves. The time limits will be especially tough in states that have large areas in chronic recession -- for example, the coal-mining areas of Appalachia. And they will be even tougher when the country as a whole sinks into recession. It will make no difference if a recipient has played by all the rules and sought work faithfully, as required. When the limit is reached and the state is unable or unwilling to grant an exception, welfare will be over for that family forever.

Under the work-participation requirements, 25 percent of the caseload must be working or in training this year, and 50 percent by 2002. For two-parent families 75 percent of the caseload must be working or in training, and the number goes up to 90 percent in two years. The Congressional Budget Office estimates that the bill falls $12 billion short of providing enough funding over the next six years for the states to meet the work requirements. Even the highly advertised increased child-care funding falls more than $1 billion short of providing enough funding for all who would have to work in order for the work requirements to be satisfied. States that fail to meet the work requirements lose increasing percentages of their block grants.

The states are given a rather Machiavellian out. The law in effect assumes that any reduction in the rolls reflects people who have gone to work. So states have a de facto incentive to get people off the rolls in any way they can, not necessarily by getting them into work activities. The states can shift a big chunk of their own money out of the program if they want to. There is no matching requirement for the states, only a maintenance-of-effort requirement that each state keep spending at least 80 percent of what it was previously contributing. This will allow as much as $40 billion nationally to be withheld from paying benefits over the next six years, on top of the $55 billion cut by the bill itself. Moreover, the 80 percent requirement is a static number, so the funding base will immediately start being eroded by inflation.

Besides being able to transfer some of their own money out, the states are allowed to transfer up to 30 percent of their federal block grants to spending on childcare or other social services. Among other things, this will encourage them to adopt time limits shorter than five years, because this would save federal money that could then be devoted to child care and other help that families need in order to be able to go to work. Hobson's choice will flourish.

The contingency fund to cushion against the impact of recessions or local economic crises is wholly inadequate -- $2 billion over five years. Welfare costs rose by $6 billion in three years during the recession of the early nineties.

The federal AFDC law required the states to make decisions on applications within forty-five days and to pay, retroactively if necessary, from the thirtieth day after the application was put in. There is no such requirement in the new law. All we know from the new law is that the state has to tell the Secretary of Health and Human Services what its "objective criteria" will be for "the delivery of benefits," and how it will accord "fair and equitable treatment" to recipients, including how it will give "adversely affected" recipients an opportunity to be heard. This is weak, to say the least……

THE JOBS GAP

EVEN given effective advocacy, relatively responsive legislatures and welfare administrators, and serious efforts to find private-sector jobs, the deck is stacked against success, especially in states that have high concentrations of poverty and large welfare caseloads. The basic issue is jobs. There simply are not enough jobs now. Four million adults are receiving Aid to Families with Dependent Children. Half of them are long-term recipients. In city after city around America the number of people who will have to find jobs will quickly dwarf the number of new jobs created in recent years. Many cities have actually lost jobs over the past five to ten years. New York City, for example, has lost 227,000 jobs since 1990, and the New York metropolitan area overall has lost 260,000 over the same period. New York City had more than 300,000 adults in the AFDC caseload in 1995, to say nothing of the adults without dependent children who are receiving general assistance. Statistics aside, all one has to do is go to Chicago, or to Youngstown, Ohio, or to Newark, or peruse William Julius Wilson's powerful new book, When Work Disappears, to get the point. The fact is that there are not enough appropriate private-sector jobs in appropriate locations even now, when unemployment is about as low as it ever gets in this country.

For some people, staying on welfare was dictated by economics, because it involved a choice between the "poor support" of welfare, to use the Harvard professor David Ellwood's term, and the even worse situation of a low-wage job, with its take-home pay reduced by the out-of-pocket costs of commuting and day care, and the potentially incalculable effects of losing health coverage. With time limits these people will no longer have that choice, unappetizing as it was, and will be forced to take a job that leaves them even deeper in poverty. How many people will be able to get and keep a job, even a lousy job, is impossible to say, but it is far from all of those who have been on welfare for an extended period of time.

The labor market, even in its current relatively heated state, is not friendly to people with little education and few marketable skills, poor work habits, and various personal and family problems that interfere with regular and punctual attendance.

People spend long spells on welfare or are headed in that direction for reasons other than economic choice or, for that matter, laziness. If we are going to put long-term welfare recipients to work -- and we should make every effort to do so -- it will be difficult and it will cost money to train people, to place them, and to provide continuing support so that they can keep a job once they get it. If they are to have child care and health coverage, that will cost still more. Many of the jobs that people will get will not offer health coverage, so transitional Medicaid for a year or two will not suffice. People who have been on welfare for a long time will too often not make it in their first job and will need continuing help toward and into a second job. Both because the private sector may well not produce enough jobs right away and because not all welfare recipients will be ready for immediate placement in a private-sector job, it will be appropriate also to use public jobs or jobs with nonprofit organizations at least as a transition if not as permanent positions. All of this costs real money.

For a lot of people it will not work at all. Kansas City’s experience is sadly instructive here. In the past two years, in a very well-designed and well-implemented effort a local program was able to put 1,409 out of 15,562 welfare recipients to work. As of last December only 730 were still at work. The efforts of Toby Herr and Project Match in Chicago's Cabrini-Green public-housing project are another case in point. Working individually and intensively with women and supporting them through successive jobs until they found one they were able to keep, Herr had managed to place 54 percent of her clients in year-round jobs at the end of five years. This is a remarkable (and unusual) success rate, but it also shows how unrealistic is a structure that offers only a 20 percent exception to the five-year time limit.

I want to be very clear: I am not questioning the willingness of long-term welfare recipients to work. Their unemployment is significantly related to their capacity to work, whether for personal or family reasons, far more than to their willingness to work. Many long-term welfare recipients are functionally disabled even if they are not disabled in a legal sense. News coverage of what the new law will mean has been replete with heartbreaking stories of women who desperately want to work but have severe trouble learning how to operate a cash register or can't remember basic things they need to master. A study in the state of Washington shows that 36 percent of the caseload have learning disabilities that have never been remediated. Many others have disabled children or parents for whom they are the primary caretakers. Large numbers are victims of domestic violence and risk physical retaliation if they enter the workplace. These personal and family problems make such people poor candidates for work in the best of circumstances. Arbitrary time limits on their benefits will not make them likelier to gain and hold employment. When unemployment goes back up to six or seven or eight percent nationally, as it will at some point, the idea that the private sector will employ and continue to employ those who are the hardest to employ will be even more fanciful than it is at the current, relatively propitious moment.

When the time limits take effect, the realities occasioned by the meeting of a bottom-line-based labor market with so many of our society's last hired and first fired will come into focus. Of course, a considerable number will not fall off the cliff. An increased number will have obtained jobs along the way. The time limits will help some people to discipline themselves and ration their years of available assistance. Some will move in with family or friends when their benefits are exhausted. The 20 percent exception will help as well.

But there will be suffering. Some of the damage will be obvious -- more homelessness, for example, with more demand on already strapped shelters and soup kitchens. The ensuing problems will also appear as increases in the incidence of other problems, directly but perhaps not provably owing to the impact of the welfare bill. There will be more malnutrition and more crime, increased infant mortality, and increased drug and alcohol abuse. There will be increased family violence and abuse against children and women, and a consequent significant spillover of the problem into the already overloaded child-welfare system and battered-women's shelters….