Those Pesky Facts: The Reality of Safety Net Budget Cuts

Safety Net Budget Cuts

One of my earliest research projects when I entered academia focused on an element of the “Personal Responsibility and Work Opportunity Reconciliation Act of 1996,”  (PRWORA) aka welfare reform. I looked at the consequences of the measure’s invitation to (undefined) Faith-Based Organizations to help government agencies provide welfare services.

Needless to say, the “armies of compassion” envisioned by George W. Bush failed to materialize, since the invitation was based largely on fanciful–indeed, “faith-based”–beliefs about the capacities of the invitees.

I mention this in order to explain my heightened interest in a recent “spat” between Peter the Citizen and Arthur Brooks.

In “The Dignity Deficit: Reclaiming Americans’ Sense of Purpose,” Arthur Brooks, president of the American Enterprise Institute (AEI), emphasizes the importance of work requirements for welfare programs and suggests that the 1996 welfare reform law provides a model for other safety net programs:

Putting more people to work must also become an explicit aim of the social safety net. Arguably, the greatest innovation in social policy in recent history was the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The PRWORA, which became synonymous with the phrase “welfare reform,” made several major changes to federal policy. It devolved greater flexibility to the states but established new constraints, such as a limit on how long someone could receive federal welfare benefits and a work requirement for most able-bodied adults.

As Peter points out, PRWORA changed a number of programs, but what Brooks is lauding is TANF (Temporary Assistance for Needy Families). Peter, like Brooks, is a political conservative; he was a  former member of the Reagan Administration whose “portfolio” was welfare programs.

And he begs to differ.

For the past two years, I have been writing papers as a citizen to highlight TANF’s many problems. My hope is that conservatives will adopt more “rigor” in their assessment of the 1996 law and use evidence rather than ideology in developing reform proposals.

Brooks claims that TANF reduced poverty, and that its “lessons” about “the dignity of work” should be extended to other poverty programs. Peter convincingly demolishes the first assertion, and provides copious data to prove his point. Although he clearly agrees that there are “lessons” to be learned,  the content of those lessons differs significantly from what Brooks suggests.  I really encourage readers to click through and read the entire paper. The exchange illustrates the difference between ideology and intellectual integrity–between seeing what you want to see and seeing what the evidence shows.

What really caught my eye, however, were the following observations (emphasis mine):

TANF’s block grant structure creates a situation in which states don’t have the resources to run meaningful welfare-to-work programs, as the amount is not adjusted for inflation or demographic changes. This problem is exacerbated when state politicians divert scarce funds to plug budget holes….

In fiscal year (FY) 2015, just 25 percent of TANF funds were used to provide basic cash assistance and just 7 percent were for work-related activities, despite the fact that the number of poor families with children was higher in 2015 than in 1996. In many states, TANF has become a slush fund used to supplant state spending and fill budget holes…

Since TANF’s inception, states have used tens of billions of federal TANF dollars to simply replace existing state spending. For example, Jon Peacock of the Wisconsin Budget Project explains how “a significant portion of the federal funding for … assistance is being siphoned off for use elsewhere in the budget, to the detriment of the Wisconsin Works (W-2) program and child care subsidies for low-income working families.” It would be one thing if poverty had declined in Wisconsin since TANF’s enactment, but the poverty rate for children in Wisconsin grew from 14.3 percent in 1997 to 18.4 percent in 2011. If the supplanted funds were used to fund other programs for poor families, the practice would be less harmful, but that doesn’t seem to be what happens in Wisconsin. According to Peacock, “That shell game uses TANF funds to free up state funds [general purpose revenue] (GPR) to use for other purposes, such as the proposed income tax cuts.”

Trump’s budget–which combines utter fantasy with gratuitous cruelty (eliminating Meals on Wheels!?)– contains deep cuts to Medicaid and proposes to fund what’s left through block grants, facilitating–and probably ensuring– precisely the sort of “shell game” that the states have played with TANF.

Anyone who thinks that the monies sent to the states via Medicaid block grants would all be applied to the costs of providing medical care for poor people is smoking something, and it’s hallucinogenic.

[Originally published at SheilaKennedy.net on March 17, 2017]

Sheila Kennedy is a former high school English teacher, former lawyer, former Republican, former Executive Director of Indiana’s ACLU, former columnist for the Indianapolis Star, and former young person. She is currently an (increasingly cranky) old person, a Professor of Law and Public Policy at Indiana University Purdue University in Indianapolis, and Director of IUPUI’s Center for Civic Literacy. She writes for the Indianapolis Business Journal, PA Times, and the Indiana Word, and blogs at www.sheilakennedy.net. For those who are interested in more detail, links to an abbreviated CV and academic publications can be found on her blog, along with links to her books..

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