Off the Charts Blog | Center on Budget and Policy Priorities

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.

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.

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.

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.

A congressional hearing this morning examined the Administration’s policy of giving states waivers to test new ways to help recipients of Temporary Assistance for Needy Families (TANF) move from welfare to work.  Unfortunately, this focus on waivers takes policymakers’ attention away from what really needs to happen:  improvements in the program’s complex and rigid work requirements, which can force states to design their TANF programs in ways that compromise the goal of connecting recipients to work.

In fact, one of the biggest limitations of the work participation rate — the key measure by which the federal government judges states’ TANF programs — is that states don’t need to move TANF recipients into actual paid work to meet the rate.  TANF is likely the only federal or state employment program in which getting participants into paid employment is not a key measure of success.

Many states say that, with more flexibility, they could operate more effective work programs.  As we explain in a new paper, policymakers have several options to give states more flexibility while strengthening the work provisions and making them more effective.

1. Give states the option to be accountable for employment outcomes (i.e., jobs) instead of the work rate. Policymakers could empower the federal Department of Health and Human Services (HHS) to authorize a limited number of demonstration projects that would give states that option.  Such a demonstration project would give states the flexibility to design work requirements that better reflect the needs of their TANF caseload and take account of local labor market needs.
2. Simplify the work requirements and reduce paperwork burdens. States spend lots of time tracking what activities can count toward the work rate and how many weeks or months individuals have already participated — as well as verifying every hour of participation.  They could better spend the time focused on improving employment outcomes.  Simplification efforts could include streamlining countable activities by easing complex limits on when certain activities can count, and allowing participation in more education activities to count.
3. Focus states’ incentives on improving actual employment placements. Currently, a state gets no more recognition for preparing and placing a recipient in employment than for excluding a family from its caseload and giving it no employment help.  States should get credit for successful employment outcomes, not for failing to serve needy families and children.  Possible steps include:  eliminating or limiting the credit that states get for simply reducing their caseloads; providing an employment credit in lieu of the caseload reduction credit; or allowing a state to count people who have left TANF for employment toward the work rate for a period of time.
4. Redesign the work measures to support engagement of all recipients in activities that will prepare them for work. Policymakers could:  allow a wider range of activities, including those addressing serious barriers to employment, to count (separate from the job search/job readiness category, which has severe restrictions); lift certain limits on when particular activities, like vocational education or job search, can count; and allow partial credit for recipients who are engaged in activities for less than the required 20 or 30 hours per week.
5. Require greater investments in work activities. Policymakers should require states to spend a specified share of their TANF resources on activities designed to prepare recipients for work.  In addition, states that do not meet applicable performance measures should be required to invest additional funds in work-related activities.  The current penalty structure withdraws federal funds from state TANF programs, further shrinking state resources to meet families’ employment needs.  Rather than pay a fiscal penalty, a state that fails to meet performance measures should be required to increase the share of its state and federal TANF spending that goes to work-related activities for families receiving assistance.