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Saturday, December 05, 2009

"Why Welfare Reform Fails its Recession Test"

Was welfare reform enacted during the Clinton administration a mistake?:

Why welfare reform fails its recession test, by Peter Edelman and Barbara Ehrenreich, Commentary, Washington Post: We all like to imagine that there'll be something to stop our fall if we hit hard times. ... "There's always welfare, isn't there?"
Actually, no. When President Bill Clinton signed welfare reform into law, he didn't just end welfare as we knew it. For all practical purposes,... he brought an end to cash help of any kind for families with children in much of the country. While welfare reform was long ago declared a success in some quarters, it was deeply flawed from the beginning. The recession has shown how seriously unprepared it left us for hard times. ...
Clinton ended the legal right to cash assistance and imposed a five-year limit on federally financed help to any given family. Welfare reform also provided the states with nearly complete discretion over how to administer benefits. Most states responded with gusto, reducing welfare rolls nationally by two-thirds in just a few years.
So when the Great Recession came along, the government safety net for families with children was in tatters. The United States was no more prepared for massive unemployment than New Orleans had been prepared for its levees to fail. Some important government programs, including unemployment insurance and food stamps, have started to rise to the challenge...
By contrast, the caseload for TANF (Temporary Assistance for Needy Families, the name we now give welfare) is ... still just a little over a third of what it was 15 years ago, before welfare reform. ... And so welfare, generally speaking, has not cushioned the impact of the recession.
We can see the results: According to the National Law Center on Homelessness & Poverty, the number of homeless ... is up by 61 percent since the recession began... That figure will only continue to rise. The number of people living in poverty increased by 2.5 million during the first year of the recession, and it has surely risen further in 2009. The government reported recently that nearly 50 million Americans are experiencing what it delicately calls "food insecurity."
We are among the co-authors of a forthcoming report ... which documents the government's inadequate response to the human suffering caused by the recession and describes the excruciating choices people now face between feeding their families and paying the rent.
Both of us were critical of the new approach to welfare when it was enacted in 1996. ... But some advocates of welfare reform seemed to consider poverty a voluntary condition, one curable with a quick kick in the pants and the opportunity to work for minimum wage. There were not enough jobs even then, but, blinded by the economic boom of the 1990s, the authors of TANF seemed to think that the business cycle had been abolished and that prosperity would take us only onward and upward.
In the rapidly expanding service economy of the 1990s, many former welfare recipients did find jobs, but most did not escape poverty, and a significant number were pushed off the rolls without finding work. Research showed that one in five former recipients ultimately became disconnected from any means of support: They no longer had welfare, but they didn't have jobs. They hadn't married or moved in with a partner or family, and they weren't getting disability benefits. And so, after a decline in the late 1990s, the number of people living in extreme poverty ... shot up by more than a third... Nationally, the fraction of poor children getting help plummeted from almost two-thirds to less than a third. A number of states reduced their welfare rolls by 90 percent.
Perversely, many observers welcomed these huge declines as proof that welfare reform was working. They didn't bother to follow these families as they moved into ever more crowded living situations, pieced together patchworks of part-time jobs or left their children alone while they went to work. ...
Nationwide, there has been no increase in federal welfare funding since the 1996 law was enacted, so thanks to inflation, the value of that funding has eroded by about a third. There is an emergency fund for TANF in the stimulus package Congress passed in February, but little of it has been spent, primarily because it requires a match that fiscally strapped states are unable to put on the table. Most states in effect adopted a welfare policy of ignoring the recession. ...
It's time to acknowledge that America's 1996 experiment with welfare reform was based on reckless assumptions about the economy, as well as a callous disregard for the realities of sustaining a family. We need a massive emergency relief package not only to fund new jobs but to repair the grievous holes in our national safety net. Fifty million people need help now -- not in three months or six months, but today. [The full article is quite a bit longer.]

    Posted by on Saturday, December 5, 2009 at 01:08 PM in Economics, Social Insurance | Permalink  TrackBack (0)  Comments (102)


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