The Center's work on 'Welfare Reform / TANF' Issues


It’s Time to Bolster TANF

October 21, 2013 at 1:53 pm

Cash assistance benefits for the nation’s poorest families with children fell again in purchasing power in 2013, we explain in our annual update of state benefits under the Temporary Assistance for Needy Families (TANF) program.  Seven states increased TANF grant amounts last year — and encouragingly, no state cut benefits — but most kept family grant levels unchanged, allowing inflation to continue eroding the benefits’ value.

TANF is often the only source of support for participating families and, without it, they would have no cash income to meet their basic needs.  Yet, this critical safety net program supports fewer families — and its benefits are worth less — than ever before. Consider:

  • In 2012, just 25 of every 100 poor families received TANF benefits, down from 68 of every 100 in 1996, the year policymakers created TANF to replace the former Aid to Families with Dependent Children program.
  • TANF benefit levels are at least 20 percent below their 1996 levels in 37 states, after adjusting for inflation.
  • As of July 1, 2013, every state’s benefits for a family of three with no other cash income were below 50 percent of the federal poverty line, measured by the Department of Health and Human Services 2013 poverty guidelines (see map).  Benefits were below 30 percent of the poverty line in most states.


A few of the states that increased TANF benefits in 2013 were following through on past commitments to modestly raise benefits or adjust them for inflation. Three states — Connecticut, Ohio, and Wyoming — increased TANF benefits through annual cost-of-living adjustments (COLAs).  Such an automatic mechanism, built into state law, is the best way to prevent the value of TANF benefits from falling and to keep them even with inflation.

These are promising steps, but still more states should consider similar policy changes.  It’s time for states to halt the erosion of TANF benefits and slowly restore some of the purchasing power the grants have lost over the past 17 years.

Click here for the full paper and 50-state data.

New Evidence That Subsidized Jobs Programs Work

September 9, 2013 at 3:31 pm

Thirty-nine states and the District of Columbia used $1.3 billion from the TANF (Temporary Assistance for Needy Families) Emergency Fund to place more than 260,000 low-income adults and youth in temporary jobs in the private and public sectors during the Great Recession.  Now, from the Economic Mobility Corporation (EMC), there’s new evidence that these subsidized jobs programs did what they were supposed to do:  help disadvantaged individuals during hard economic times to boost their incomes and improve their chances of finding unsubsidized jobs when the subsidized jobs ended.

The EMC study shows that these programs helped businesses as well as job-seekers weather the worst of the recession.  It found:

  • Participation in subsidized employment programs led to significant increases in employment and earnings. Participants in four of the five programs covered by the study were much more likely to have an unsubsidized job in the year after working in a subsidized job than in the year before joining the program.  The findings from Florida are especially noteworthy because researchers could compare participants with applicants who were eligible for the program but didn’t receive a subsidized job.  There, participants earned an average of $4,000 more in the year after the program than in the year before it, compared to a $1,500 increase for people in the comparison group.
  • The programs were especially effective for the long-term unemployed. In Mississippi and Florida, average annual earnings of the long-term unemployed rose by about $7,000 after participating; in Los Angeles and Wisconsin, they rose by about $4,000.  In all four sites, earnings rose much more among the long-term unemployed than among people who had been unemployed for shorter periods.
  • Employers reported hiring more workers than they would have otherwise and workers with less experience than their usual hires. Two-thirds of the employers interviewed for the study said that they created new positions for subsidized workers.  Over half said they hired people with less work experience than their usual hires. 

  • Most participating employers reported multiple benefits from the program. These included expanding their workforces, serving more customers, and improving their productivity.     

We’ve called the TANF Emergency Fund, which expired three years ago, a “win-win-win” because of its benefits for unemployed people, businesses, and communities.  This new study provides hard evidence of the program’s accomplishments.  It’s not too late to build on that success.

This year, at least five states — Nebraska, Colorado, California, Minnesota, and Rhode Island —expanded state funding or provided new funding for subsidized employment for TANF recipients or other disadvantaged individuals.

Congress should follow their lead.  One place to start would be to redesign the TANF Contingency Fund as an employment fund that states could use to provide subsidized jobs or otherwise invest in evidence-based employment programs that significantly increase the job prospects of people receiving or eligible for TANF.  That would help redirect scarce resources to states with the greatest need for jobs and help create jobs for those whom the tepid recovery has left behind.

Cato’s Fundamentally Flawed Analysis

August 22, 2013 at 3:34 pm

The Cato Institute released a report this week that argues that people on “welfare” are better off than low-income working families.  In reality, that couldn’t be further from the truth, as we explain in our recent commentary.

Cato’s analysis makes two fundamental errors:

  • It substantially overstates the help that poor jobless families receive. Cato assumes that when a parent is out of work, the family can readily access cash welfare benefits, housing assistance, nutrition assistance through SNAP (formerly food stamps) and WIC (for pregnant and new mothers, infants and young children), and Medicaid.  But, very few families get that much help.  Just one-third of families that are eligible for cash assistance in the state they live in actually receive it.  Among those who do get help from TANF, Cato’s own figures show that just 15 percent also receive housing assistance.
  • It substantially understates the help that low-income working families get. Cato ignores the fact that low-income working families are eligible for, and receive, assistance through programs such as SNAP, Medicaid, housing assistance, and WIC.  These are important supports that help working families make ends meet.  For example, 86 percent of children who get health insurance through Medicaid or the Children’s Health Insurance Program (CHIP) are in working families.  And, more than half of able-bodied adults in households with children receiving SNAP work while receiving assistance.  When families leave welfare for work, the other forms of assistance they receive — such as SNAP and housing assistance — continue and only begin to fall if the family’s earnings exceed the amount it received from cash welfare benefits.

Moreover, due to changes to the safety net over the last few decades, these programs now do much more to promote work and support low-income working families.  They help keep millions of working parents and their children out of poverty.  To be sure, many working families still struggle to make ends meet, particularly if they face high child care costs, but Cato offers no policy proposals to improve these families’ financial security.

The changes to the safety net haven’t all been positive:  contrary to the picture that Cato’s report paints, these programs now do much less to help poor families in which parents are out of work.  This has led to an increase in the number of children living in deep poverty, which Cato’s policy recommendations would worsen.

Ultimately, the fact that so many families work to provide for their children is the real evidence that Cato’s analysis is misguided.  Looking at children in families below 150 percent of the poverty line in 2010, 15.7 million of them lived in working families that did not receive any TANF cash assistance that entire year.  By contrast, there were only 2 million children in TANF families without significant earnings that year.  These hard-working families seem to understand a lot more about the value of work than Cato does.

Click here to read our commentary.

States Taking the Lead in Making Work Supports More Efficient

July 31, 2013 at 3:45 pm

Some federal lawmakers have been ramping up their attacks on public benefit programs, most recently at a House Ways and Means hearing today on the need to reform the programs to get people “real help.”  Fortunately, at the same hearing, lawmakers heard that a number of states are already doing this — streamlining and better coordinating the programs and services that support low-wage work.

Illinois Health and Human Services Secretary Michele Saddler outlined the state’s transformation of several key programs — like SNAP (food stamps), Medicaid, and child care — to help low-income families keep and maintain jobs.

With the support of Work Support Strategies, a foundation-funded initiative, Illinois is simplifying and aligning policies across programs and investing in new technology to make it easier for families to apply and easier for the state to verify their information.  (CBPP leads the technical assistance for Work Support Strategies.)

The goal is simple yet powerful:  people seeking assistance need only tell their story once to get the supports they need.  As Saddler explains:

When I began, our benefit delivery system was broken. Families had to apply multiple times to get the assistance their family desperately needed. They had to take hours or even days off of work to sit in a local office to get help, potentially losing the very work we encourage. Our focus has been on finding and creating efficiencies in this system, seeking a better environment for customers and staff. A more efficient and accessible system leads to greater stability for families and ultimately saves the government future costs of benefits and administration.

Colorado, Idaho, North Carolina, Rhode Island, and South Carolina also participate in Work Support Strategies.  Together, they are showing that states that differ politically, geographically, and demographically can find common ground in maximizing efficiency and improving access to critical work supports.

That should be no surprise.  After all, every state has faced challenges stemming from the Great Recession, including increased need, budget cuts, and staff reductions, so every state stands to benefit from making its work supports more efficient and its low-income residents more successful.  Let’s hope Congress hears the news.

Anti-Poverty Programs’ Success Refutes Rep. Ryan’s Claims

July 26, 2013 at 11:19 am

Well, we knew this was coming.  Just last week, our Senior Fellow, Arloc Sherman, wrote a blog that began this way:

Next year, the nation will mark the 50th anniversary of the War on Poverty, which President Johnson proclaimed in his State of the Union address of January 1964.  Sadly, we should expect to hear a drumbeat of attacks claiming that, as President Reagan said long ago, we fought a war on poverty and “poverty won.”  Indeed, House Budget Committee Chairman Paul Ryan said recently of the anti-poverty effort, “We don’t have much to show for it.”

So, right on cue, Chairman Ryan said yesterday:

Next year marks the 50th anniversary of the War on Poverty.  We’ve spent approximately $15 trillion and the question we ought to be asking ourselves is, ‘where are we?’  With a 15 percent poverty rate today — the highest in a generation — and with 46 million people in poverty, I would argue it’s not working very well.

Needless to say, we have a different take.  Here, in anticipation of such attacks, is the rest of what Arloc Sherman wrote last week:

The truth is very different.  A number of anti-poverty programs — including some key efforts that have their origins in the War on Poverty and some that came later, often the product of bipartisan agreement — have an impressive record of achievement.  Together, programs such as food stamps (now known as the Supplemental Nutrition Assistance Program, or SNAP), the Earned Income Tax Credit (EITC), Medicaid, college financial assistance and broader based programs such as Medicare, have reduced poverty and malnutrition, expanded access to health care, and opened doors of opportunity for millions of people.  To be sure, poverty remains a serious problem in the United States and remains higher here than in many western industrialized countries.  And, not every program begun in the 1960s or more recently has been effective.  But, a bumper sticker analysis of the War on Poverty and today’s safety net that implies that “poverty won” misses the mark.

Take SNAP.  Chairman Ryan’s budget would cut the program by $135 billion over the next ten years.  Yet, the program is a prime example of a major national accomplishment.  Before food stamps and other nutrition programs were widely available, it was not hard to find large numbers of children in very poor areas of America with distended bellies or other indications of malnutrition.  That’s no longer the case.

A recent academic study looked back at the babies who benefited from the introduction and expansion of food stamps in the 1960s and 1970s and found that they grew up to be healthier and more likely to finish high school than their peers born in counties where the program had not yet been instituted.

Medicaid, created in 1965 as another core piece of the War on Poverty, also continues to make a major difference in people’s lives, improving health and reducing infant mortality and childhood deaths.  The program now provides health coverage to nearly 65 million low-income Americans, including children, parents, seniors, and people with disabilities.

Various newer programs also have been effective in reducing or alleviating poverty.  Consider, for example, the EITC, a program for working families created under President Ford and expanded under President Reagan and later presidents and congresses of both parties.  Not only does the program directly reduce poverty — this tax credit kept more than 6 million Americans above the poverty line in 2011, including more than 3 million children — but research has shown that it increases employment among single mothers and helps lead to better academic achievement among low-income children in participating families.

Those who claim that we don’t have much to show from anti-poverty programs often cite the fact that the poverty rate under the government’s official measure of poverty is similar now to what it was in the mid-1960s.  Such a comparison, however, is grossly misleading.  The official poverty measure counts only families’ cash income before taxes.  It fails to count food stamps, the EITC, rental subsidies, and the like.  As a result, it counts the forms of assistance that have shrunk dramatically since the 1960s such as cash welfare payments to poor families with children, while leaving out the key forms of assistance that were created or expanded during this period and have powerful anti-poverty effects.

That’s why analysts from a variety of political perspectives prefer the government’s newer Supplemental Poverty Measure (SPM), which includes both cash assistance and “non-cash” benefits such as SNAP, the EITC, and rental assistance, and which also nets out income and payroll taxes that people must pay.  The SPM shows that without the safety net, the percentage of Americans in poverty would be nearly double what it is:  29 percent of Americans would have been poor in 2011, rather than the 16 percent who were poor when safety net programs are taken into account.  SNAP alone kept 4.7 million above the poverty line (see chart).

As we approach the 50th anniversary of the War on Poverty, we’ll have more to say about anti-poverty programs.  Stay tuned.

Get Ready for Unfounded Attacks on the War on Poverty

July 15, 2013 at 9:00 am

Next year, the nation will mark the 50th anniversary of the War on Poverty, which President Johnson proclaimed in his State of the Union address of January 1964.  Sadly, we should expect to hear a drumbeat of attacks claiming that, as President Reagan said long ago, we fought a war on poverty and “poverty won.”  Indeed, House Budget Committee Chairman Paul Ryan said recently of the anti-poverty effort, “We don’t have much to show for it.”

The truth is very different.  A number of anti-poverty programs — including some key efforts that have their origins in the War on Poverty and some that came later, often the product of bipartisan agreement — have an impressive record of achievement.  Together, programs such as food stamps (now known as the Supplemental Nutrition Assistance Program, or SNAP), the Earned Income Tax Credit (EITC), Medicaid, college financial assistance and broader based programs such as Medicare, have reduced poverty and malnutrition, expanded access to health care, and opened doors of opportunity for millions of people.  To be sure, poverty remains a serious problem in the United States and remains higher here than in many western industrialized countries.  And, not every program begun in the 1960s or more recently has been effective.  But, a bumper sticker analysis of the War on Poverty and today’s safety net that implies that “poverty won” misses the mark.

Take SNAP.  Chairman Ryan’s budget would cut the program by $135 billion over the next ten years.  Yet, the program is a prime example of a major national accomplishment.  Before food stamps and other nutrition programs were widely available, it was not hard to find large numbers of children in very poor areas of America with distended bellies or other indications of malnutrition.  That’s no longer the case.

A recent academic study looked back at the babies who benefited from the introduction and expansion of food stamps in the 1960s and 1970s and found that they grew up to be healthier and more likely to finish high school than their peers born in counties where the program had not yet been instituted.

Medicaid, created in 1965 as another core piece of the War on Poverty, also continues to make a major difference in people’s lives, improving health and reducing infant mortality and childhood deaths.  The program now provides health coverage to nearly 65 million low-income Americans, including children, parents, seniors, and people with disabilities.

Various newer programs also have been effective in reducing or alleviating poverty.  Consider, for example, the EITC, a program for working families created under President Ford and expanded under President Reagan and later presidents and congresses of both parties.  Not only does the program directly reduce poverty — this tax credit kept more than 6 million Americans above the poverty line in 2011, including more than 3 million children — but research has shown that it increases employment among single mothers and helps lead to better academic achievement among low-income children in participating families.

Those who claim that we don’t have much to show from anti-poverty programs often cite the fact that the poverty rate under the government’s official measure of poverty is similar now to what it was in the mid-1960s.  Such a comparison, however, is grossly misleading.  The official poverty measure counts only families’ cash income before taxes.  It fails to count food stamps, the EITC, rental subsidies, and the like.  As a result, it counts the forms of assistance that have shrunk dramatically since the 1960s such as cash welfare payments to poor families with children, while leaving out the key forms of assistance that were created or expanded during this period and have powerful anti-poverty effects.

That’s why analysts from a variety of political perspectives prefer the government’s newer Supplemental Poverty Measure (SPM), which includes both cash assistance and “non-cash” benefits such as SNAP, the EITC, and rental assistance, and which also nets out income and payroll taxes that people must pay.  The SPM shows that without the safety net, the percentage of Americans in poverty would be nearly double what it is:  29 percent of Americans would have been poor in 2011, rather than the 16 percent who were poor when safety net programs are taken into account.  SNAP alone kept 4.7 million above the poverty line (see chart).


As we approach the 50th anniversary of the War on Poverty, we’ll have more to say about anti-poverty programs.  Stay tuned.

Welfare Reform’s No Model for SNAP

June 28, 2013 at 11:11 am

As House leaders consider next steps on the farm bill (which the House rejected last week), a key question is the fate of its punitive Southerland amendment, which would reward states that end SNAP benefits for unemployed families that want to work.

House Majority Leader Eric Cantor (R-VA) defended the amendment on the House floor by linking it to the 1996 welfare reform law, which created Temporary Assistance for Needy Families (TANF).  But, in reality, the amendment is not the same as the work requirements in programs like TANF, and the facts don’t support Rep. Cantor’s claim that the welfare law’s “results were nothing but a success”:

  • Fact #1:  Single mothers’ employment rose during the early years of welfare reform, but it started losing ground in 2000 and, now, nearly all of those gains have been lost. The share of poorly educated single mothers with earnings rose from 49 percent in 1995 to 64 percent in 2000 but has since fallen or remained constant every year.  By 2011, it had fallen to 52 percent — lower than in 1997, which was the first full year of welfare reform implementation (see first graph).
  • Fact #2:  Welfare reform contributed only modestly to the rise in employment for single mothers during the 1990s. A highly regarded study by University of Chicago economist Jeffrey Grogger found that welfare reform accounted for just 13 percent of the total rise in employment among single mothers in the 1990s.  The Earned Income Tax Credit (which policymakers expanded in 1990 and 1993) and the strong economy were much bigger factors, accounting for 34 percent and 21 percent of the increase, respectively.
  • Fact #3:  TANF, the centerpiece of welfare reform, helps many fewer poor families than its predecessor, Aid to Families with Dependent Children (AFDC). Welfare reform’s modest contribution to raising employment among single mothers came at a very high price.  TANF serves only 27 for every 100 families in poverty, down from 68 for every 100 families in poverty before welfare reform, as our report shows (see second graph).  Many children face bleaker futures as a result:  in 2005, TANF lifted just 650,000 children out of “deep poverty” (that is, raised their family incomes above half the poverty line); ten years earlier, AFDC lifted 2.2 million children out of deep poverty.
  • Fact #4: States did not respond to higher need during hard economic times. The Great Recession provided the ultimate test of whether states could do a better job than the federal government of providing a safety net for poor families, as welfare reform’s proponents suggested they could.  They failed.  While the number of unemployed Americans doubled during the early years of the downturn, the number of TANF recipients rose by just 13 percent and caseloads in 22 states rose little or not at all.  When the need for cash assistance rose during the recession, states responded by scaling back their TANF programs to save money — shortening and otherwise tightening time limits and further cutting already low benefit levels, leaving the poorest families poorer.  As a result, TANF is emerging from the downturn as an even weaker safety net.

Immigration Bill’s “Back Taxes” Amendment Much Harder to Implement than Senator Hatch Suggests

June 14, 2013 at 2:50 pm

As our new report explains, some senators are proposing amendments to the immigration bill that would make its long and difficult path to citizenship far more difficult — in some cases undermining the fundamental goal of enabling undocumented workers to legalize their status.

One such proposal, from Senators Orrin Hatch (R-UT) and Marco Rubio (R-FL), would require immigrants seeking legal status to prove they have paid all of their taxes since they entered the country before adjusting to a legal status.

On the Senate floor Wednesday, Senator Hatch claimed that the IRS is well-positioned to determine such individuals’ tax liability, even when workers lack earnings and tax records:

The IRS is well experienced at estimating the tax liabilities for people who, for whatever reason, lack the records that normally support a tax return. . . .  Using bank records, credit card statements, housing records, and other evidence of an individual’s lifestyle, the IRS is able to construct returns and estimate tax liabilities for nonfilers who are U.S. citizens and resident aliens.  The same process can be used for immigrants looking to certify they no longer owe any Federal taxes.  That is not a tough thing to do…

But the IRS does not routinely try to use such records to guesstimate people’s incomes.  These are extreme methods, which it resorts to in only a very small number of cases each year.

Senator Hatch is essentially arguing that it would be workable — and a good use of taxpayer money — to require the IRS to conduct extensive field audits of very large numbers of undocumented immigrants seeking legal status.

The audits would be very complicated in many cases; many of these workers’ past employers will be difficult to locate, will not have records for cash transactions made years ago, and (for obvious reasons) may be reluctant to cooperate.  Moreover, many of these immigrants likely will not have bank records or credit cards, will have moved many times, and will have been working in the United States for many years or even decades, so reconstructing their records for this entire period could prove extremely difficult.

The IRS’s experience in estimating a family’s income based on its “lifestyle” is largely restricted to a very small number of generally high-income people and small businesses where there is a large disconnect between their reported income and the person’s lifestyle or the business’s spending and the IRS has reason to believe large-scale tax evasion may have occurred.  The IRS has never used this method for large numbers of low-income workers.

Given that an estimated 11 million people are eligible to legalize under the bill, the increased workload for the IRS would be tremendous.  Of the 187 million individual and business tax returns filed in 2011, the IRS examined just 1.7 million — fewer than 1 percent.  Moreover, over 70 percent of these audits were conducted by mail (where information is requested and provided by mail) and were not the complex, intensive audits that Senator Hatch envisions.

Based on the total cost of current IRS enforcement efforts and the number of returns examined each year, each field examination would clearly cost thousands of dollars.  This means that the cost of conducting vast numbers of complicated audits, as Senator Hatch evidently envisions, would run into the billions.

Senator Hatch has not proposed any new funding for the IRS to conduct such audits or indicated that large numbers of new IRS staff would be hired.  If the IRS tried to implement his proposal, it would have to divert a very large portion of its total enforcement resources, probably for a number of years, from enforcement activities that yield a much higher return for the Treasury to auditing millions of legalizing workers, most of whom have modest incomes.

In 2012, the IRS conducted 31,700 field audits of corporations, leading to a total of $20 billion in recommended additional tax assessments — an average of more than $600,000 per review.  When both individual and business field audits are considered, the average tax assessment is close to $60,000.  Diverting IRS resources away from these high-return audits to try to reconstruct earnings records from modest-earning immigrants almost surely would result in a net loss of revenues to the Treasury, not the gain that Senator Hatch suggests.

More realistically, the IRS would never be able to conduct the required audits, so the process of legalizing undocumented workers would grind to a halt for many — leaving the basic goal of the legislation in tatters.  Undocumented workers would remain undocumented and the Treasury would collect less in taxes going forward than if these workers were allowed to come out of the shadows.

Purchasing Power of TANF Benefits Fell Further in 2012

March 28, 2013 at 1:36 pm

Cash assistance for the nation’s poorest families with children fell again in purchasing power in 2012, we detail in our annual update of state benefit levels under the Temporary Assistance for Needy Families (TANF) program.  Most states left their benefit levels unchanged last year, so benefits continued to erode by inflation.

In 37 states, and after adjusting for inflation, benefits are now at least 20 percent below their levels of 1996 — the year policymakers created TANF.

For all states, as of July 1, 2012, benefits for a family of three with no other cash income were below half of the federal poverty line, measured as a share of the Department of Health and Human Services poverty guidelines for 2012 (see map).  Benefits were below 30 percent of the poverty line in the majority of states.

On the other hand, no states cut benefit levels in 2012, and a few took the opportunity to increase the benefit level or to follow through on past commitments to modestly raise benefits or adjust them for inflation.  TANF benefits increased, in nominal dollars, in New York, Ohio, South Dakota, Texas, and Wyoming.

TANF provides a safety net to relatively few poor families:  in 2011, just 27 families received TANF benefits for every 100 poor families, down from 68 families receiving TANF for every 100 in poverty in 1996.  But for the families that participate in the program, it often is their only source of support and without it, they would have no cash income to meet their basic needs.

It’s time for states to halt the erosion of TANF benefits and slowly regain some of the purchasing power that they’ve lost over the past 16 years.

Click here to read the full paper.

Greenstein on the Ryan Budget

March 12, 2013 at 7:09 pm

CBPP President Robert Greenstein has issued a statement on House Budget Committee Chairman Paul Ryan’s new budget.  Here’s the opening:

When House Budget Committee Chairman Paul Ryan released his previous budget last year, I wrote that for most of the past half century, its extreme nature would have put it outside the bounds of mainstream discussion.  It was, I wrote, “Robin Hood in reverse — on steroids,” because it would have produced the largest redistribution of income from bottom to top in modern U.S. history.  Ryan’s new budget is just as extreme.  Its cuts in programs for low-income and vulnerable Americans appear as massive as in last year’s budget, and its tax cuts for the wealthiest Americans could be larger than in last year’s.

In addition, in critical ways the budget is exceedingly vague — and, as a result, its claim to reach balance in ten years is hard to take seriously.  It leaves unspecified hundreds of billions of dollars in budget cuts as well as the several trillion dollars of needed tax expenditure savings to pay for its proposed deep cuts in income tax rates.  Thus, the budget’s fiscal claims rest on massive magic asterisks.

Click here for the full statement.

Don’t Forget Ryan’s Budget of Last Year

March 5, 2013 at 5:07 pm

House Budget Committee Chairman Paul Ryan (R-WI) will reportedly begin to release the details of his new budget proposal on Wednesday.  House Republicans have already announced their goal is to balance the budget in ten years, and some have assumed this will require even deeper cuts and more extreme policies than last year’s Ryan budget, which did not balance after a decade.  But this misses an important point:  last year’s Ryan budget already required deep cuts and extreme policies of historic proportions.

As I wrote after Ryan released his budget last year:

The new Ryan budget is a remarkable document — one that, for most of the past half-century, would have been outside the bounds of mainstream discussion due to its extreme nature. In essence, this budget is Robin Hood in reverse — on steroids.  It would likely produce the largest redistribution of income from the bottom to the top in modern U.S. history and likely increase poverty and inequality more than any other budget in recent times (and possibly in the nation’s history).

So, in assessing the budget that the Chairman will release this week, the issue is not whether it’s harsher than last year’s proposal but whether it continues to adhere to the same extreme approach that he has embraced in prior budgets.

Here are some of the more disturbing aspects of last year’s budget:

Medicaid and other low-income programs.  Last year, Ryan called for extraordinary cuts in programs that serve as a lifeline for our nation’s poorest and most vulnerable citizens, with at least 62 percent of its budget cuts over ten years coming from programs serving people of limited means. That approach violated a core principle of the Simpson-Bowles fiscal commission — that deficit reduction should not increase poverty or hardship — as well as basic principles of fairness.  The Ryan budget would have:

  • Radically restructured Medicaid by turning it into a block grant and slashing federal funding by more than one-third by 2022, as well as repealed health reform’s Medicaid expansion.  All told, it would have added tens of millions of Americans to the ranks of the uninsured and underinsured.
  • Cut SNAP (formerly known as food stamps) by over $130 billion; if the SNAP savings were achieved entirely through eligibility cuts, 8 to 10 million low-income people would have been knocked off the rolls.
  • Sharply cut other low-income programs, such as Pell Grants, by tens or hundreds of billions of dollars.  The budget documents showed that $758 billion in cuts would come from mandatory programs just in the income security portion of the budget, and the bulk of mandatory spending in that category goes for low-income programs.

Medicare.  Ryan’s budget called for converting Medicare into a premium-support voucher program and gradually raising Medicare’s eligibility age from 65 to 67, with these changes ultimately affecting people now age 55 or younger.  Raising the eligibility age to 67 while simultaneously repealing health reform’s coverage expansions would mean that 65- and 66-year-olds who could not get employer-based coverage would likely have to go without coverage, particularly if they were of modest means or had significant medical conditions.

Non-defense discretionary.  The Ryan budget imposed severe cuts in non-defense discretionary programs, putting core government functions at risk.  This part of the budget funds everything from veterans’ health care to medical and scientific research, highways, education, national parks, food safety, clean air and clean water enforcement, and border protection and other law enforcement; a significant portion of the funding goes for grants to state and local governments.  Indeed, the budget would have cut these programs about $1.2 trillion over ten years beyond the tight annual caps set in the 2011 Budget Control Act.  In fact, the Ryan budget would have cut non-defense discretionary spending substantially more than what would occur if the automatic budget cuts known as “sequestration” stay in effect for the full nine years.

What the Ryan budget did here essentially was to shield defense and shift the entire burden of the sequestration cuts onto non-defense programs.  In fact, the Ryan budget went even farther than that:  it increased defense funding by about $200 billion relative to the pre-sequestration caps and offset that increase with even deeper cuts in non-defense programs.

Tax cuts.  The Ryan budget cut the top income and corporate tax rates to 25 percent, exempted from taxation the profits that U.S. corporations earn overseas, repealed the Alternative Minimum Tax, and repealed the tax increases in health reform, at a total cost of nearly $5 trillion.  All of these revenue-losing measures would disproportionately benefit wealthy Americans.  The budget claimed it would offset the costs of these massive, regressive tax cuts with other revenue-raising measures.  But, while specifying its huge tax cuts, it did not contain a single specific proposal to narrow any particular tax break to offset even a fraction of these costs.

Chairman Ryan justified these changes in domestic programs last year as necessary because of the nation’s severe fiscal problems.  But these problems surely do not justify massive new tax cuts for its wealthiest people alongside budget cuts that would fall disproportionately on less fortunate Americans.

As I concluded then:

Under Chairman Ryan’s budget, our nation would be a very different one — less fair and less generous, with an even wider gap between the very well-off and everyone else (especially between rich and poor) — and our society would be a coarser one.

That’s a yardstick that we should use in judging his new budget proposal.

TANF Provided a Weak Safety Net During and After Recession

March 4, 2013 at 2:13 pm

Temporary Assistance for Needy Families (TANF), which provides basic assistance to families with little or no income, responded only modestly to the severe recession that began in December 2007, exposing its inadequacy as a safety net, as we explain in a new paper.

We found that:

  • Nationally, the TANF caseload rose only modestly during the downturn and began to decline while need remained high. The caseload did not begin to grow until seven months after the recession started, and it rose only 16 percent before peaking in December 2010 (see chart).  In contrast, the number of unemployed individuals rose 88 percent over this period.  Over the course of 2011, the caseload fell 5 percentage points from that peak, while the unemployment rate remained at or above 8.5 percent throughout the year.

  • Changes in states’ caseloads varied widely. Forty-five states’ caseloads grew between December 2007 and December 2009 but by widely differing amounts, ranging from 2 to 48 percent; in more than half of these states, the increase was 14 percent or less.  After the recovery began, caseloads continued to grow in some states but fell sharply in others.  Between December 2009 and December 2011, 21 states’ caseloads rose from 2 to 56 percent; in 30 states, caseloads fell from 1 to 56 percent.  From December 2007 to December 2011, caseload changes ranged from Oregon’s 81 percent increase to Arizona’s 54 percent decline.
  • Variations in unemployment do not fully explain the variation in state caseload changes. There is no overlap between the ten states with the largest percentage increases in the number of unemployed workers and the ten states with the largest percentage increases in TANF caseloads.  The three states with the largest TANF caseload increases — Oregon, Colorado, and Illinois — ranked 28, 14, and 30, respectively, in the percentage increase in the number of unemployed.  Meanwhile, the three states with the largest TANF caseload decreases — Arizona, Indiana, and Rhode Island — ranked 5, 16, and 23, respectively, in the increase in unemployed workers.
  • In most states, TANF provides a weaker safety net now than it did before the recession. The number of families with children served by TANF for every 100 such families living in poverty fell in 35 states between 2006-2007 and 2010-2011, while it rose in just five states.
  • State actions had a significant impact on TANF caseloads. In response to budget pressures, several states cut TANF benefit levels, shortened or tightened time limits, or made other cutbacks during the recession, contributing to substantial caseload declines.

Our paper on which this post is based is the second in a series on changes in TANF caseloads since the start of the economic downturn.  Click here to read the paper in full, here to read the state-by-state fact sheets, and here to read the first paper in the series.