Posts Tagged ‘Safety Net Programs’

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.

Low-Income Programs Would Bear the Brunt of Ryan Cuts

March 23, 2012 at 2:31 pm

Most of the cuts in House Budget Committee Paul Ryan’s new budget would come from programs serving lower-income Americans, a new CBPP report finds.  Here’s the opening:

62% of Proposed Cuts in Ryan Plan Come from Low-Income ProgramsHouse Budget Committee Chairman Paul Ryan’s budget plan would get at least 62 percent of its $5.3 trillion in nondefense budget cuts over ten years (relative to a continuation of current policies) from programs that serve people of limited means.  This stands a core principle of President Obama’s fiscal commission on its head and violates basic principles of fairness.

Not much has changed on this front from Chairman Ryan’s fiscal year 2012 budget plan released a year ago.  Then, too, Chairman Ryan proposed massive spending cuts, the bulk of which were in programs that serve low- and moderate-income Americans.  (Compared with last year’s plan, the cuts in low-income programs are larger in dollar terms but slightly smaller as a share of the total cuts.)

Click here for the full report.

The Massive Hidden Safety-Net Cuts in Chairman Ryan’s Budget

March 21, 2012 at 4:44 pm

A key misunderstood element of House Budget Committee Chairman Paul Ryan’s budget plan is his proposed cut in spending for “other mandatory” programs  — non-discretionary programs other than Social Security, Medicare, Medicaid, and other health programs.  His plan shows almost $1.9 trillion in cuts in such programs over the next ten years compared to what President Obama’s budget proposed for such programs.  His plan does not provide any details about specific program cuts that would add up to that very large amount, although Chairman Ryan reportedly indicated that he would get a significant portion of the savings from not accepting various policies that the President proposed.

But any notion that you could get most of the $1.9 trillion in savings in this category simply by rejecting the President’s proposals for new spending would be mistaken.  In fact, the Ryan plan proposes to cut spending for non-health mandatory programs by $1.2 trillion below the spending projected for these programs under current policies.

Moreover, you cannot achieve those savings without making very deep cuts in the crucial safety-net programs in this category, such as SNAP (formerly known as food stamps), Supplemental Security Income for the elderly and disabled poor, Temporary Assistance for Needy Families, the school lunch and other child nutrition programs, and unemployment insurance.

At today’s House Budget Committee markup, Chairman Ryan’s staff indicated that his plan assumes a $133 billion cut in SNAP over the next ten years.  In a document outlining his plan — The Path to Prosperity — and in response to press questions, Chairman Ryan also suggested that cuts in farm programs and changes in federal employee retirement could contribute to the required savings (although he provided no details about the policies that he assumed or the savings they would achieve).  But these two areas could likely provide only a relatively modest amount of savings.  Total projected spending for farm programs over the next ten years is $165 billion.  While we have long supported substantial cuts in farm programs, cutting more than a modest portion of the projected spending for those programs isn’t politically feasible.  (The Bowles-Simpson commission seemed to agree; it proposed significant cuts in Social Security, Medicare, defense, and many other programs, but to cut farm programs by only $10 billion over ten years.)

The federal employee retirement program is more politically vulnerable — Bowles-Simpson recommended $93 billion in savings from changes in federal civilian and military retirement (most of which would come in the form of an increase in revenues, although Bowles-Simpson displayed the savings as a cut in mandatory spending, which Chairman Ryan presumably is assuming as well).   Assuming about $100 billion in savings from federal retirement programs, $133 billion in savings from SNAP, and $50 billion in savings from farm programs (five times what was acceptable to Bowles-Simpson commission members), an additional $900 billion in savings under the Ryan plan would have to come from non-health mandatory programs.

Of the $900 billion, a very small amount could come from increases in fees or asset sales, but the bulk would have to come from the safety-net programs that represent most of the remaining spending in this category.  Put simply, there is no way to generate the required savings without extremely severe cuts in these programs, on which the most vulnerable Americans depend.  Cutting these programs sharply would be an appalling idea — particularly while the wealthiest Americans would get big tax cuts — but House passage of a budget that requires these cuts without a full and honest debate about them, and without leveling with policymakers and the public about what cuts the Ryan budget envisions in these programs, would be a real travesty.

Chairman Ryan’s Call for “Welfare Reform, Round Two” Ignores Inconvenient Facts About Round One

March 21, 2012 at 3:06 pm

House Budget Chairman Paul Ryan said yesterday that his budget aims to begin “welfare reform, round two.”  According to Chairman Ryan, “That means block-granting means-tested entitlements — like food stamps, like housing assistance — back to the states so they can customize these benefits, have time limits, work requirements, the kinds of successful policies that made welfare reform so successful.”

But the statistics he cites about welfare reform’s “success” come from the early years of welfare reform, when the unemployment rate was exceptionally low — in April 2000 it fell to 3.8 percent, below what economists consider full employment.  Since a safety net is supposed to help people during times of economic need, the true measure of success is how it does during the worst of times, not the best of times.  And, 15 years after Congress enacted welfare reform, we can see clearly that it is not the resounding success that Chairman Ryan claims.

The facts speak for themselves:

  • 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 2009, it had fallen to 54 percent — the same level as in 1997, which was the first full year of welfare reform implementation (see graph).  It remained at 54 percent for 2010.
  • 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:  Temporary Assistance for Needy Families (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.  As our recent report showed, TANF serves only 27 families for every 100 families in poverty, down from 68 families for every 100 families in poverty before welfare reform.  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 used their flexibility under TANF’s block grant to undermine, not strengthen, the safety net for poor families. 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.  They failed.  The national TANF caseload rose by just 13 percent during the downturn, even though the number of unemployed doubled, and caseloads in 22 states rose little or not at all.  In contrast, the national SNAP (food stamp) caseload rose by 45 percent and kept 5 million people out of poverty in 2010 under a measure of poverty that counts non-cash benefits.  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 reducing already low benefits further, leaving the poorest families poorer.

The real agenda for “welfare reform, round two” should be to fix the failings of round one and build on successes like the TANF Emergency Fund, which states used to place 250,000 people in temporary jobs and provide basic and emergency assistance to many others.  It shouldn’t be to extend a failed model to other critical programs.

TANF Weakening as a Safety Net

March 14, 2012 at 4:17 pm

Many policymakers see the 1996 welfare law’s creation of Temporary Assistance for Needy Families (TANF) as a major success and cite TANF’s structure — a block grant with fixed federal funding but broad state flexibility— as a model for other safety net programs.

But when we analyzed state-by-state data to examine how well states have maintained TANF’s role as a safety net, the results were sobering.  TANF now provides a safety net for relatively few poor families with children.

TANF Weakening as a Safety Net For Poor FamiliesIn 1996, TANF provided cash aid to 68 families for every 100 families with children living in poverty.  By 2010, this “TANF-to-poverty ratio” had plummeted to 27 (see first graph).

TANF-to-poverty ratios have fallen dramatically in all states since the mid-1990s (see second graph):

  • In 1994-95, almost half of the states had a ratio higher than 75.  In 2009-10, none did.
  • In 1994-95, no state had a ratio lower than 25.  In 2009-10, half of the states did.

TANF-to-poverty ratios fell so far not because the number of poor people fell but, instead, because TANF caseloads fell.  From 1994-95 to 2009-10, caseloads declined by at least 27 percent in every state and by over 50 percent in 36 states.  During that same period, the number of families with children in poverty rose by at least 10 percent in over half the states.  But TANF failed to respond to the increased need.

Georgia provides a striking example.  Between 1994-95 and 2009-10, Georgia’s TANF-to-poverty ratio dropped from 98 all the way to 9.  TANF caseloads fell by 85 percent even as the number of poor families rose by 92 percent.  Caseloads fell largely because of state policies designed to make it harder for families to get TANF and easier to remove families from the program.

TANF’s block grant structure contributed significantly to these problems, although TANF’s work requirements also played a big role.  For example, when TANF caseloads fell amidst the hot economy of the late 1990s, states took advantage of the flexibility that the block grant gave them to shift TANF funds to other purposes — in some cases replacing state dollars previously used for these purposes.  But when the need for cash assistance rose during recessions, states generally didn’t reclaim those dollars to aid the growing number of families needing help.

Also, the TANF requirement that states place a certain share of TANF families in work activities gives states an incentive to focus on helping only families with the best chance of finding jobs.  As a result, the families that most need help are often the families that states least want to serve — and states have adopted policies that keep many of them off the rolls.

When Congress renews TANF — which could occur in 2012 — it should address these and other problems to strengthen the program as a safety net for very poor families.

TANF's Role as a Safety Net Has Declined in Every State