Posts Tagged ‘Greenstein on the Safety Net Series’

Greenstein on the Safety Net, Part 3

April 19, 2012 at 12:43 pm

Our earlier excerpts from Robert Greenstein’s House Budget Committee testimony of this week looked at the safety net as a whole and the Supplemental Nutrition Assistance Program (SNAP).  This final excerpt discusses the implications of welfare reform:

The 1996 welfare law is frequently cited as a reform that transformed a key part of the safety net.  It’s often either celebrated as a spectacular success or vilified as a cruel failure.  Neither stereotype is consistent with the evidence.

Significant increases in employment among single mothers began in the early 1990s, prior to the welfare law, and continued after its enactment, with the change over the decade being quite strong.  Welfare reform was implemented at the same time that a robust expansion in the Earned Income Tax Credit was taking full effect and that the labor market was expanding rapidly, with tremendous job creation; the unemployment rate fell to 4 percent at the end of the decade.  For a number of low-income single-parent families, the result was an increase in income and a reduction in poverty.

These effects, much heralded at the time, were not the result solely (or very likely, even primarily) of the welfare law by itself.  They resulted from a combination of all three of these factors.  A highly regarded study by Jeffrey Grogger of the University of Chicago found the EITC expansion actually to have a larger effect in increasing work effort than the welfare law changes.  But the two changes reinforced each other, amounting to a combination of “carrots and sticks.”

Even in the hot labor market of the late 1990s, however, some families and children experienced significantly increased hardship in the aftermath of the welfare law.  As a group, those welfare recipients who were the most employable — often with the most education, skills, and/or work experience — made the most progress.  But too often, families with the least education and job skills and/or the deepest physical, mental health, or other problems sank deeper into poverty, ending up with neither cash assistance nor earnings to support their families.  Ironically, the welfare law both reduced poverty among many of the better equipped recipients and increased deep poverty among a number of the most disadvantaged families.

The overall results were the most favorable in the hot labor market of the late 1990s, while TANF’s weaknesses have been greatest in recent years, for three reasons — the lack of availability of jobs in the economic downturn, the inability of the block grant to respond effectively to increases in need as the economy turned down, and the effect of 15 years of erosion in federal TANF funding levels that are now lower even in nominal terms than they were in 1996, and are much lower (28 percent lower) once one adjusts for inflation.

Some of the specific results are quite disturbing.

  • In 1995, for every 100 families with children living below the poverty line, 68 received some assistance from AFDC, the cash assistance program that preceded TANF.  Today, for every 100 such poor families with children, only 27 receive any cash assistance through TANF (and that includes working-poor families that receive some assistance as a supplement to their low wages).
  • For those poor families with children that do receive assistance, benefit levels have plummeted.  In the majority of states, TANF benefits now fail to lift a family with no other cash income even to 30 percent of the poverty line (before SNAP benefits).  In no state are TANF benefits sufficient to pay the rent on a modest apartment (based on HUD’s “fair market rents”) even if the entire benefit is used for rent.
  • With federal TANF funding having fallen substantially in real terms even as need has increased, many states have cut TANF employment and training programs as well, and services to help poor parents find jobs — steps counter to the goals of welfare reform. . . .

To reiterate, I am not saying there have not also been positive effects from the welfare changes.  The results are mixed — positive for some families, negative for others — strongest in an economy where jobs are plentiful, weakest in an economic downturn.

But if the goal is both to promote work and to maintain an adequate safety net for those lacking well-paying jobs — and especially for their children, and for low-income elderly and disabled people who cannot work — then it would be a serious mistake to convert Medicaid and SNAP to block grants as well and to shrink their funding.  Doing so would magnify TANF’s weaknesses and would substantially increase the ranks of the uninsured and the deeply poor.

Click here for the full testimony.

Greenstein on the Safety Net, Part 2

April 18, 2012 at 3:20 pm

Our first set of excerpts from Robert Greenstein’s House Budget Committee testimony of this week looked at the safety net as a whole.  Today’s excerpts concern the Supplemental Nutrition Assistance Program (SNAP), formerly food stamps:

[T]he proposal in the House budget to convert SNAP to a block grant and cut it at least $133.5 billion over ten years . . . is a source of great concern.

SNAP funds go overwhelmingly for food purchases — nearly 95 percent of federal SNAP expenditures go directly for benefits to recipients.  Most of the remainder goes to determine eligibility, administer the work requirements and work programs, and approve and monitor compliance by retail food stores — costs that would largely remain under a block-grant.  The math here is inexorable — the only way to secure savings of this magnitude would be to cut eligibility, benefit levels, or both.

If the savings were to come entirely from eliminating eligibility for currently eligible households, more than 8 million people would need to be cut adrift from the program if the cuts began taking effect in 2013. . . .

If the savings were secured by cutting benefit levels instead, increased hunger and food insecurity would likely result.  Considerable research suggests that the SNAP benefit level may already be too low to enable many families to secure an adequate diet throughout the month.  (Many run out of adequate food toward month’s end.)  The Institute of Medicine is currently reviewing this matter and examining whether the current SNAP benefit level is adequate.  It would be dangerous to shrink benefit levels for needy children, seniors, and others.

Converting SNAP to a block grant at substantially reduced funding levels also would have other deleterious effects.

  • SNAP would no longer be able to respond to increased need during economic downturns, resulting in increased hardship and hunger in recessions.
  • Nor would SNAP be able to bolster the economy during recessions as it does today. . . .  Preventing SNAP from expanding automatically as the economy weakens by converting it to a block grant would remove what economists call an “automatic stabilizer” and hence likely make recessions somewhat deeper and longer.
  • Finally, a proposal like that reflected in the House budget would make deep poverty more widespread and severe, especially among children, who make up about half of all SNAP beneficiaries. . . . 

Above all else, there is the issue of children’s health.  I am old enough to remember the mid and late 1960s, when each state sets its own food stamp rules, some states cut off families at income levels as low as 50 percent of the poverty line, and some states adopted barriers that impeded participation (in some cases, with disproportionate effects on members of some minority groups).  Two teams of medical researchers conducted nutrition surveys in the late 1960s and found rates of childhood malnutrition and related diseases in some poor areas of our country that were akin to those in some third-world countries.  This led to a national bipartisan consensus — led by President Richard M. Nixon — to establish national eligibility and benefit standards for food stamps.  In the late 1970s, after the national standards had taken effect, the medical teams returned to many of the same poor areas they had studied in the late 1960s and found dramatic improvement among poor families and especially among poor children.  Child malnutrition and related conditions had become rare.  In a famous report on their findings, the medical researchers wrote.  

In the Mississippi delta, in the coal fields of Appalachia and in coastal South Carolina — where visitors ten years ago could quickly see large numbers of stunted, apathetic children with swollen stomachs and the dull eyes and poorly healing wounds characteristic of malnutrition — such children are not to be seen in such numbers.  Even in areas which did not command national attention ten years ago, many poor people now have food. …

The researchers credited food stamps as the single largest factor for this striking progress, concluding that “no program does more to lengthen and strengthen the lives of our people than the Food Stamp program.”  I believe this is a lesson we shouldn’t forget.

Click here for the full testimony.

Greenstein on the Safety Net, Part 1

April 17, 2012 at 12:08 pm

Testifying today before a House Budget Committee hearing, “Strengthening the Safety Net,” Robert Greenstein urged policymakers to “step back from the usual type of Washington debates and political battles and consider what policies would be best for ‘the least among us.’  I urge you to follow the Hippocratic oath and ‘do no harm.’  I also implore you to adopt the Bowles-Simpson principle of protecting the disadvantaged and avoiding measures that would increase poverty and hardship in a nation as abundant as ours.”

The following excerpts are from the first section of his testimony, which looks at the safety net as a whole:

The safety net is far from perfect and contains areas that merit strengthening.  Yet as a result of a series of mostly bipartisan decisions over several decades, it is functioning far better than is often understood.

Let’s start with its effect on poverty.  Analysts across the political spectrum agree that to measure the safety net’s impact on poverty, one cannot use the “official” measure of poverty — which completely ignores SNAP (formerly known as the food stamp program), the Earned Income Tax Credit, rental subsidies, and the like and also fails to adjust for taxes that are withheld from paychecks and that families thus can’t spend. . . .

In the mid-1990s, a National Academy of Sciences’ expert panel recommended use of such a broader measure of poverty, and the Census Bureau issues several alternative, broad poverty measures.  Under the measure most closely resembling the NAS recommendation, the poverty rate stood at 15.5 percent in 2010.  Yet under the same measure, the poverty rate without the safety net — that is, the poverty rate based on household incomes before government assistance is counted — was 29 percent.  In other words, the safety net cut poverty nearly in half compared to what it otherwise would be. . . .

One also can look at the Census data on how many people individual programs lift out of poverty.  In 2010, for example, the Earned Income Tax Credit and the Child Tax Credit lifted about 9 million people in low-income working families above the poverty line, including 5 million children.  SNAP lifted about 4 million out of poverty.

Among the most striking figures are those that track poverty rates over the last few years.  Given the depth and severity of the economic downturn (sometimes called the Great Recession), one would have expected poverty to have soared.  It didn’t. . . .  The “automatic stabilizer” response of programs like SNAP and unemployment insurance, supplemented by the temporary increases in assistance in various safety net programs that were provided under the Recovery Act, counteracted most of the increase in poverty that would otherwise have occurred.  This is a substantial accomplishment, and one that speaks well for our nation.

Click here for the full testimony.