[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
TO REVIEW OUTCOMES
OF 1996 WELFARE REFORMS
=======================================================================
HEARING
before the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
JULY 19, 2006
__________
Serial No. 109-74
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
E. CLAY SHAW, JR., Florida CHARLES B. RANGEL, New York
NANCY L. JOHNSON, Connecticut FORTNEY PETE STARK, California
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM MCCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. MCNULTY, New York
PHIL ENGLISH, Pennsylvania JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona XAVIER BECERRA, California
JERRY WELLER, Illinois LLOYD DOGGETT, Texas
KENNY C. HULSHOF, Missouri EARL POMEROY, North Dakota
RON LEWIS, Kentucky STEPHANIE TUBBS JONES, Ohio
MARK FOLEY, Florida MIKE THOMPSON, California
KEVIN BRADY, Texas JOHN B. LARSON, Connecticut
THOMAS M. REYNOLDS, New York RAHM EMANUEL, Illinois
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia
JOHN LINDER, Georgia
BOB BEAUPREZ, Colorado
MELISSA A. HART, Pennsylvania
CHRIS CHOCOLA, Indiana
DEVIN NUNES, California
Allison H. Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
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C O N T E N T S
__________
Page
Advisory announcing the hearing.................................. 2
WITNESSES
Gingrich, Hon. Newt, Gingrich Group.............................. 17
Santorum, Hon. Rick, a U.S. Senator from the State of
Pennsylvania................................................... 10
Thompson, Hon. Tommy G., Partner, Akin, Gump, Strauss, Hauer &
Feld........................................................... 25
______
Haskins, Ronald, Brookings Institution........................... 43
O'Neill, June, Zicklin School of Business, Baruch College, New
York, NY....................................................... 61
Parrott, Sharon, Center on Budget and Policy Priorities.......... 71
Rector, Robert, Heritage Foundation.............................. 82
Riley, Bishop Roy, Conference of Bishops for the Evangelical
Lutheran Church of America, Trenton, NJ........................ 58
SUBMISSIONS FOR THE RECORD
Sykes, Russell, Office of Temporary and Disability Assistance,
Albany, NY, statement.......................................... 119
United States Conference of Catholic Bishops, DiMarzio, Nicholas,
letter......................................................... 124
TO REVIEW OUTCOMES
OF 1996 WELFARE REFORMS
----------
WEDNESDAY, JULY 19, 2006
U.S. House of Representatives,
Committee on Ways and Means,
Washington, DC.
The Committee met, pursuant to notice, at 10:35 a.m., in
room 1100, Longworth House Office Building, Hon. William M.
Thomas (Chairman of the Committee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
June 15, 2006
FC-22
Thomas Announces Hearing
To Review Outcomes of 1996 Welfare Reforms
Congressman Bill Thomas (R-CA), Chairman of the Committee on Ways
and Means, today announced that the Committee will hold a hearing to
review the outcomes of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (the ``1996 welfare reform law,'' P.L. 104-
193). The hearing will take place on Wednesday, July 19, in the main
Committee hearing room, 1100 Longworth House Office Building, beginning
at 10:30 a.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only.
Witnesses will include Administration officials, among others. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing.
BACKGROUND:
The 1996 welfare reform law made dramatic changes in the Federal-
State welfare system designed to aid low-income American families. The
law repealed the former Aid to Families with Dependent Children
program, and with it the individual entitlement to cash welfare
benefits. In its place, the 1996 legislation created a new Temporary
Assistance for Needy Families (TANF) block grant that provides fixed
funding to States to operate programs designed to achieve four
purposes: (1) provide assistance to needy families; (2) end the
dependence of needy parents on government benefits by promoting job
preparation, work, and marriage; (3) prevent and reduce the incidence
of out-of-wedlock pregnancies; and (4) encourage the formation and
maintenance of two-parent families. The law also included individual
time limits and work requirements intended to reinforce the new focus
on work and independence for families needing assistance as part of
broad reform efforts.
Since passage of the 1996 welfare reform law, welfare caseloads
have dropped by more than 60 percent as nearly 8 million parents and
children have left the welfare rolls. The share of adults on welfare
who work has more than doubled and this increased work has meant higher
wages and earnings for welfare recipients. Key poverty rates--White,
African-American, and Hispanic--all declined in the wake of the 1996
reforms, resulting in 1.4 million fewer children living in poverty. The
1996 welfare reform law and associated reforms also included numerous
provisions designed to end waste, fraud and abuse in welfare programs--
such as ending ``disability'' checks for drug addicts and alcoholics--
resulting in billions of dollars in savings to taxpayers.
The TANF program and related reforms originally were authorized
through fiscal year 2002, requiring Congress to review and reauthorize
the 1996 welfare reforms. Following years of debate, House passage of
three comprehensive welfare reauthorization bills, and enactment of 12
short-term extensions of current law, comprehensive welfare
reauthorization provisions were included in the Deficit Reduction Act
of 2005 (P.L. 109-171), which the President signed on February 8, 2006.
This legislation reauthorized the TANF program through 2010, increased
the effective share of welfare recipients expected to engage in work or
other activities, provided for a $1 billion increase in mandatory child
care funding, and created new healthy marriage and responsible
fatherhood promotion programs, among other changes.
In announcing the hearing, Chairman Thomas said, ``Welfare reform
has been a success in helping low-income parents work and better
support their families. This hearing will allow us to take stock of
what went right and what else needs to be done to promote more work,
stronger families, and better outcomes for more families with
children.''
FOCUS OF THE HEARING:
The hearing will focus on the outcomes of the 1996 welfare reforms.
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Chairman THOMAS. If we could ask our guests to find seats,
please. Good morning. Today the Committee will examine the
outcomes of a decade of welfare reforms. The Personal
Responsibility and Work Opportunity Reconciliation Act 1996
(P.L. 104-193) was signed into law on August 22nd, 1996. These
reforms made significant changes in our Nation's cash welfare
system and these changes have successfully lifted millions of
Americans out of poverty and away from welfare dependence.
Today, nearly 8 million parents and children are no longer
dependent on welfare checks for support. As dependents declined
and work increased, poverty had been reduced. Compared with
1996, today 1.4 million fewer children live in poverty. These
improvements contrast sharply with some of the harsh
predictions from the opponents of our reform efforts.
The positive outcomes of welfare reform confirm welfare
recipients share in the American dream of wanting to work,
build a better life for themselves and their children. Families
want the dignity of collecting a paycheck instead of a welfare
check because they see that work is the only true permanent
path out of poverty.
Thus, today we have adopted a new measure of compassion,
how successful we are in reducing dependence and helping low
income parents go to work. As we have seen, these two goals are
closely related and lead to independence.
Earlier this year the President signed the Deficit
Reduction Act (P.L. 109-171), which extends and strengthens the
1996 welfare reforms. It encourages more recipients to work,
which will further lessen dependence and poverty while
providing increased funding and tools to help families make the
transition to work.
Today, the Committee will review the progress of helping
our Nation's low income families to find and keep jobs. We are
pleased to welcome back several familiar faces to discuss these
important issues.
Prior to yielding to my colleague from New York, I will
briefly recognize the current Chairman of the Subcommittee on
Human Resources, the gentleman from California, Mr. Herger.
Mr. HERGER. Thank you, Mr. Chairman. I am pleased we are
meeting today to reflect on the outcomes of the 1996 welfare
reform law which yielded unprecedented increases in work and
earnings and declines in poverty and welfare dependence. We are
honored to be joined today by key figures behind the 1996
reforms.
Mr. Chairman, I ask that my longer statement be included in
the record, and I would like to thank all our witnesses for
being here today.
[The opening statement of Mr. Herger follows:]
I am pleased we are meeting today to reflect on the outcomes of the
1996 welfare reform law, which yielded unprecedented increases in work
and earnings and declines in poverty and welfare dependence.
We are honored to be joined today by key figures behind the 1996
reforms, including:
former House Speaker Newt Gingrich,
former Wisconsin Governor Tommy Thompson,
our former Ways and Means Committee colleague--and fellow
lead Republican on the Human Resources Subcommittee, I would note--
Senator Rick Santorum,
and others intimately involved in crafting the 1996
reforms.
In the early nineties, welfare increasingly became a trap,
ensnaring a record five million families per month by 1994. Almost none
of the parents on welfare worked, studied, trained, or otherwise
prepared for the future in exchange for their checks. By remaining
dependent on welfare, they and their families were ensured to remain in
poverty so long as they collected benefits. Recipients back then
collected welfare for an astonishing average of 13 years, with each
year spent in poverty.
Starting in the early 19nineties, innovative States attempted to
correct this problem by promoting more work and personal responsibility
among low-income parents. Of particular note, Wisconsin, led by former
Governor Tommy Thompson, was at the forefront of this trend.
Many of these policies--such as requiring work or training in
exchange for welfare benefits, enhancing funding for child care and
other work supports, placing time limits on receipt of benefits--
provided a roadmap for the National reforms approved by this House 10
years ago this month.
Our purpose today is to reflect on what has happened in the 10
years since National welfare reforms were enacted, especially in terms
of the families and children affected.
Here's a short summary of the profound impacts these reforms had on
our society:
First, welfare dependence has been reduced by 64 percent, as nearly
eight million parents and children no longer depend on welfare checks
for support.
Second, the number of adults on welfare who work has doubled, and
there has been a 34-percent rise in work among never-married mothers
who comprise the group most likely to go on welfare.
Third, as dependence declined and work and earnings increased,
poverty has been reduced. Today there are 1.4 million fewer children
who live in poverty than 10 years ago.
Fourth, efforts to reduce fraud and abuse have ended inappropriate
benefits for literally thousands of individuals--including fugitives,
prisoners, drug addicts, alcoholics, and non-citizens.
Before 1995, many measured America's compassion for low-income
families by how much money government spent on welfare and associated
benefits. Yet as welfare spending and poverty grew sharply in the early
nineties, that case became progressively harder to make. Today, we have
adopted a new measure of compassion--not how much money we spend, but
how successful we are in reducing dependence and helping low-income
parents support their families with a paycheck instead of a welfare
check.
When it comes to spending, no one can argue we have done reform on
the cheap. We guaranteed states record Federal welfare funds, we
doubled funding available for child care, and we required states to
maintain a high commitment of state funding for welfare and child care
needs. In fact, total taxpayer resources for welfare and child care
increased from $7,000 per family on welfare in 1995 to about $16,000
per family today.
Reform also ended the entitlement to benefits that encouraged self
destructive behavior. Today welfare benefits are contingent on
recipient behavior, including going to work or limiting benefit receipt
to no more than 5 years in a recipient's lifetime. Those changes have
had dramatic effects, including changing recipients' attitudes about
welfare benefits and their need to collect them. Literally millions
have chosen work over welfare. That is a remarkable turn.
This hearing gives us a chance to examine the success of past
welfare reforms. But it also provides an opportunity to consider what
these lessons suggest for future reforms in a variety of other
programs.
I'm delighted that the Committee has decided to review these
important reforms and I thank all our distinguished guests for being
here to share their insights.
Chairman THOMAS. Thank the gentleman. The Chair now
recognizes the gentleman from New York, Mr. Rangel, for any
statement he may wish to make.
Mr. RANGEL. Thank you so much, Mr. Chairman. With all due
respect to the Senator, I really look forward to seeing Speaker
Gingrich, and my good Governor, things that we had done
together, and rather than get involved in who has done the
best, all I can say is that I look forward to working with both
of you as you accumulated enough knowledge and expertise and
experience to know that we have got close to 40 million people
today that are in poverty, 13 million kids, and we all agree
that we are going to have to do something because poor folks
are terribly expensive and a heck of a burden for any society
to be carrying. We can't even get half of our kids eligible for
the military because they are sick and uneducated, and poverty
has a lot to do with it.
So, I have worked with Speaker Gingrich briefly in getting
technology to hospitals, and I want to thank him for his
cooperation. I can't thank you enough for kicking off the
African bill. You were the first witness for that. It meant all
the difference in the world in breaking down the concept of
partisanship because people basically can get together unless
they make up their minds ahead of time that they are not going
to. I will be trying to work with you to get your ideas, as to
how we can have a better educated population, get rid of
poverty the best we can, have a healthier community, and I am
convinced that it is in our National security to do just that.
So, thank you. It is good to see you both again. I would
like to yield to Mr. McDermott, who is dealing with the subject
matter before us today, but it is really great seeing both of
you.
Mr. MCDERMOTT. Thank you, Mr. Chairman. Thank you, Mr.
Rangel. This is a strange political world in which we celebrate
putting 5 million more people on poverty than the day when
President Bush came into office. You can spin it all you want,
but that is what has happened. It has gone up every year since
the President took over.
You can't congratulate yourself for adding a million and a
half kids to the poverty rolls. They are there and we know it.
Whether we choose to be honest with ourselves and the American
people or not, that is the fact.
Now across America parents are working harder and playing
by the rules but they are falling behind. They are earning less
today than they earned yesterday. Their wages can't keep pace
with inflation, let alone the soaring increases in health care
costs or housing or home energy or gasoline for their cars.
Now the Republicans may want to declare victory on the war
on poverty here, but given the fact that Temporary Assistance
for Needy Families (TANF) cash assistance caseloads have
fallen, that seems to be the only measure that matters. The
caseloads have fallen.
This is really a time for commitment, not for celebration.
Instead of growing America's middle class, today's economy, the
disadvantaged class is the one that is really growing. We need
to learn why.
I would like the Committee to turn their attention to the
monitors for a second. Slide one will tell you some interesting
things. You can see the blue lines, those are where poverty was
going down. Now it started in 1993.
In 1990 the Democrats put in the earned income tax credit
(EITC), in 1993 they increased the EITC. In 1996 the
Republicans tried a number of times--and finally Mr. Clinton
got a bill that made some sense and we did make some changes.
In 1997 we increased the minimum wage for the last time. You
haven't done anything with the minimum wage since then.
What you see is it was going down; there was a strong
economy under Mr. Clinton and things went down to 2000 and they
have gone up every year since. Now we have passed tax cuts for
the wealthy in 3 out of the 4 years.
Next slide, please. What we have not done is deal with the
minimum wage. The minimum wage measured against the Federal
poverty line is at the lowest level ever. For anybody to have a
victory party on children in poverty when you leave this kind
of a minimum wage up there is simply laughable.
Welfare reform was supposed to encourage and support work,
but wages are falling and the Federal backstop is a broken
promise. Now that is why you see child poverty rising. We know
of millions of Americans that their wages can't beat inflation.
Even the Chairman of the Federal Reserve seems unable to beat
the inflation, which is presenting a serious threat to the
economy. Workers who are earning the minimum wage cannot keep a
family out of poverty. So, what is left to support work?
Next slide, please.
Chairman THOMAS. The gentleman's time has expired. How many
more slides?
Mr. MCDERMOTT. Just one. Let me talk about this one. This
slide shows what has happened to the reason why people continue
to slide into poverty. We talked about minimum wage. The
funding for TANF has decreased by 9 percent, the child care
funding has declined by 7 percent, social service block grant
has declined by 11 percent, and the workforce investment
funding is still declining.
Now you can't take those parts out of the welfare reform
program and have it work. You are going to continue to put more
kids into poverty. Welfare is about kids. The reason we have
welfare is to give kids something, and the fact that more and
more--another million and a half kids are in poverty in this
country simply does not deserve a welfare victory lap.
Thank you, Mr. Chairman.
[The exhibits follow:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman THOMAS. Thank the gentleman. It is now my
pleasure, with assistance from some Members of the Committee,
to welcome the panel in front of us, the Honorable Rick
Santorum, U.S. Senator from the State of Pennsylvania and in a
previous life was a Member of the Committee on Ways and Means.
To provide a formal introduction the Chair will recognize the
gentlewoman from western Pennsylvania, Ms. Hart.
Ms. HART. Thank you, Mr. Chairman. I am actually honored to
have my colleague before the Committee, especially as someone
who served this Committee well and this House well in working
on a number of very difficult issues that are easily demagogued
but never backing down from doing the right thing.
As I think my colleagues know, Rick served here for 4 years
before he moved over to the Senate, which I still say is the
wrong side of the Capitol, but you are making it as good as it
can be and we are pleased to have you before us today.
Mr. Chairman, if you didn't know this, both Rick and I
started our public service careers the same year, 1991, as I
was sworn into the State Senate, where Rick had already made a
mark as an executive director of a Committee, and he decided
that he had done enough there and was time to come down here. I
am pleased to continue working with him and I am really pleased
that he is before us today to share a lot of the work that he
has done and discuss some of the things that we can do to make
it better. I yield back.
Chairman THOMAS. Thank the gentlewoman. Thank you, Senator.
Very few of us can say that we have spent our entire life
in a State and almost during our entire lifetime there was only
one Governor for that State, but the gentlemen from Wisconsin,
Mr. Ryan, can come close to making that statement with one of
our other panelists at the dais.
Mr. RYAN. It's a pleasure. Thank you, Chairman. Back home
in Wisconsin we call Tommy Thompson ``Governor.'' Here in
Washington most people call him ``Secretary.'' I think what is
probably most fitting today is to call him a pioneer, because
Tommy Thompson is the pioneer of welfare reform.
Tommy Thompson got elected to Governor when I was 16. I
think our friendship is strong enough where we can say this. To
watch what Tommy did in Wisconsin is an incredible story. It is
an incredible story of achievement, what he did here as HHS
Secretary, but the achievements of welfare reform in Wisconsin
was the prime example that was used to implement welfare reform
here, and for serving as Governor for 14 years, Secretary for 4
years and now on to bigger and better things, it is a pleasure
to introduce Tommy Thompson.
Chairman THOMAS. Thank you very much. I will reserve the
honor of introducing the other panelist, the Honorable Newt
Gingrich.
When I came to the House of Representatives in the 96th
Congress, we shared a number of activities together, early on,
and I was pleased to see that culminating his Congressional
career he was selected Speaker of the House, which allowed
Members of his party to be Chairmen of Committees. So, to the
greatest amount of credit for my being able to introduce him as
Chairman of the Committee on Ways and Means, I want to welcome
my friend, my roommate, my colleague, and someone who I am
pleased to say in a very positive way has made a difference,
the gentleman from Georgia, Speaker of the House, Mr. Gingrich.
All of your written testimony will be made a part of the
record. You can address this Committee in any way you see fit
in the time you have available. We will start with the Senator
and then move from my left to your right across the panel.
Senator Santorum.
STATEMENT OF THE HONORABLE RICK SANTORUM, A U.S. SENATOR FROM
THE STATE OF PENNSYLVANIA
Senator SANTORUM. Thank you, Mr. Chairman. It is a pleasure
for me.
Chairman THOMAS. Prior to beginning could I turn the Chair
over to the then Chairman of the Subcommittee on Human
Resources, the gentleman from Florida, Mr. Shaw, which will
make it a complete old home week. Senator.
Senator SANTORUM. Mr. Chairman, that is exactly what I was
going to mention first out of the box. It is great to be back
here in the Committee on Ways and Mean and it is great to be
here with the team that I think began welfare reform, the team
here at this table, as well as many of the people on the dais
here today, led by Clay Shaw in his role as Subcommittee
Chairman back in 1995 and 1996, and prior to that a working
group that was put together when I was the Ranking Member of
the Subcommittee on Human Resources on this Committee as a
freshman Member. Then the whip of the minority, Newt Gingrich,
asked us to put a task force together to develop a welfare bill
and Nancy Johnson and Dave Camp, our two Members here, Clay
Shaw, many others who are not here today, but who worked
diligently, Mike Castle and Jim Talent, many others, worked
together and came up with a bill that became part of the
Contract with America, and Newt was an instigator behind it and
I will tell you that Governor Thompson was someone that we
consulted with very closely in our work in trying to develop
this piece of legislation.
So, to have all of those Members present here today I think
shows you the kind of tremendous talent that was at the table
to put this together, and as the Chairman was just referring,
the tremendous success.
I find it somewhat remarkable that the gentleman from
Washington would put up a chart showing a huge decline in child
poverty and say that is a problem with this bill. What we have
seen is the Great Society policies of the sixties, which were
defended here so adamantly during the debates on welfare--I
remember looking at those numbers in 1965, 21 percent of
American children under the age of 18 were in poverty, and
after several trillion dollars later in 1995 21 percent of the
American children were still in poverty. That was the ``great
success'' of the Great Society. We saw very little change in
between those two times.
The bottom line is that we did not see much good come from
these well-intentioned, but I believe fundamentally harmful
programs of government dependency.
In the area of African-American poverty, which is one that
I was most concerned about and most watched, at no time during
that 30-year period in 1965 to 1995 did poverty among African-
American children drop below 40 percent. At no time did it drop
below 40 percent.
We were confronted with a bill, if I recall, in which
incredible statements were made. Senator Kennedy on the floor
of the Senate called the bill that we were passing in 1995,
committing legislative child abuse. The Ranking Member of this
Committee on the floor of the House said, and I will quote him,
``This is a cruel piece of legislation.'' Sam Gibbons said,
``It punishes children, the innocent children, because of the
errors of their parents. It punishes them not at birth, but it
punishes them for a lifetime and it certainly punishes others
through all of their childhood era. It will deprive them of
food, of clothing, of housing, of education, of love.'' As if
the government can provide love for children.
So, parents are the problem, government is the solution.
No. No, that was wrong. We did something about what was wrong
and we, in fact, put a commitment in there that said that we
actually believe that parents can provide for their children.
We believe that poverty is not the ultimate disability, but in
fact a temporary condition that can change if people are given
the opportunity to work and in some cases the requirement to
work. I can't tell you the number of people that have come up
to me, knowing my role in welfare reform, who were on welfare
and who came up and said thank you, I would still be on welfare
today if I wasn't required to work; I just needed that in my
life.
So, we made dramatic progress as a result of the
legislation that we put forward. We continue to build on that.
One of the things I am most proud of is the fact we didn't just
sit back and say well, we did the impossible.
I have my chart. This is the chart on poverty among
African-American children. That poverty level that never
dropped below 40 percent dropped to below 30 percent in the
year 2001. Yes, it went up slightly, slightly vis-a-vis what it
had been during the recession that happened in the early part
of this Administration, but it is on its way back down as the
economy strengthens.
It is a fundamental shift. The baseline is different
because we believe in people and parents and their ability and
desire to help take care of themselves and take care of their
children instead of relying on government to do so.
I believe that and I tried to experience it in my own
office. When I came to the U.S. Senate after working 2 years on
this bill, one of the things I committed myself to doing was
hiring people off welfare in my Senate office. I have hired
nine people off welfare in my Senate office.
I can tell you story after story of success and, yes,
sometimes failure. Yes, sometime they didn't make it. Sometimes
it didn't work well, but there were many, many more successes.
A woman I talk about often is Michelle Turner, who came
into my office from an abusive relationship and out of the
People's Emergency Center in West Philadelphia. She went on to
work in my office, first as a receptionist, caseworker, senior
caseworker, and then she managed the entire casework operation
in the eastern part of my State. Now she left my office for a
much higher paying job outside of government and is doing very
well. She was single, she had two children, two different
fathers, now she is married and she has another child with her
new husband, and they are raising all those children in a
stable home.
That is the difference believing in people. That is what
this Committee was all about and that is what this effort was
all about. I am glad to see that you are focusing on it, you
are concentrating on those successes. We built upon those in
the Deficit Reduction Act--and this will be my final comment, I
know I am over time--and that is that we understood that yes,
we were successful economically but families are still in
trouble. There are still no dads in far too many homes.
So, the Deficit Reduction Act provided money for fatherhood
programs and money for a marriage initiative. I would say to
this Committee if there is an area that I believe we need to
continue to focus concern on, is that fundamental problem that
Patrick Moynihan talked about 40 years ago, which is the
breakdown of the family in the inner city. If you go to poor
neighborhoods there is one commonality no matter where you go
or what ethnicity, what race--if you go to a poor neighborhood
there is overwhelmingly one thing you will not find, dads. That
has got to change. If we are really going to have a profound
impact on the future of poverty in America, we have got to
change that. That is I think our great challenge. I think we
have taken a step in the right direction, but there is more
that we need to do. Thank you, Mr. Chairman.
[The prepared statement of Senator Santorum follows:]
Statement of The Honorable Rick Santorum, U.S. Senator from the State
of Pennsylvania
Chairman Thomas, Ranking Member Rangel, and distinguished
colleagues. I appreciate the opportunity to be with you today, back
where we started the roots of the 1996 welfare reforms. Some of you may
recall that I sat on this Committee in 1994 as we worked to begin the
process of crafting a proposal I will discuss more below. It was that
experience that gave me the opportunity to help push this issue through
the Senate in 1996.
I am immensely proud that I helped author the first major attempt
to infuse conservative solutions into the American social welfare
system in the 1996 Personal Responsibility and Work Opportunity
Reconciliation Act (PRWORA), and even more pleased that the law has
resulted in the greatest social welfare success in American history. As
I have said in the past, and repeat here today, we all knew that it was
just a start because we needed to improve not only the welfare mother's
balance sheet, but her family and social environment. We needed to
build up the ties that bind, because ties that bind are also the ties
that support, the helping hands of neighbors, friends, and family who
care--in ways that government bureaucrats never can.
Nonetheless, we changed welfare in this bill, and we did it over a
long process. I know some suggested at the time that the bill was just
something that was thrown together at the last minute, but I have to
believe that those individuals failed to recognize the work that was
put into this bill, the time and the effort to learn and examine the
issues, the hours of the debate on the floor of both the House and the
Senate and in the conference committees--all to write a carefully
crafted bill that is truly compassionate.
Granted, this bill is not compassionate in the sense that the
Federal Government is going to go out and take care of every person's
need who is poor because it is not truly compassionate when the Federal
Government becomes the replacement for those whose responsibility it
truly should be to take care of a child. That is not compassion.
Compassion is having a system that builds families, providing an
environment where children can flourish. Compassion is a system that
supports neighborhoods and civic organizations, mediating institutions
that provide the values and community support for families that they
need to help take care of children, to create the neighborhoods where
children are no longer afraid to go out and play. No, this bill was
about reversing the dependency on government handouts and instead
providing a meaningful and effective hand up.
Before being completely revamped by the Republican Congress in
1996, our welfare system was successful at nothing except maintaining
poverty. It demonstrated the complete failure of relying on a policy of
income redistribution, of focusing solely on giving people money and
expecting nothing in return. That approach stands in stark contrast to
providing the mix of opportunities and obligations necessary to build a
future.
Ron Haskins of the Brookings Institution, who you will hear from
later today, is one of the nation's leading experts on welfare and
welfare reform. Ron and I worked closely to craft the 1994 welfare
reform bill that was part of the Contract with America. He taught a
great me a great deal about American welfare prior to 1996.
First, studies showed that welfare was anti-work.\1\ When welfare
benefits are high and it is easy to get on welfare, it is less likely
that low-income single mothers would work. This result shows up over
and over in the research and has rarely been even cause for debate.
---------------------------------------------------------------------------
\1\ See generally ``How Welfare Harms Kids'' by Robert E. Rector
and Patrick F. Fagan, Backgrounder #1084, June 5, 1996, and
specifically endnote number three.
---------------------------------------------------------------------------
Second, welfare before 1996 was an unlimited entitlement. It
demanded nothing, absolutely nothing, of the recipient. For context it
is important to reflect back to the late 1930s when welfare first
began. At that time there was debate over whether the program should
include never-married mothers. Many policy experts at the time
contended it should be limited to only the children of widowed or
deserted women because they feared the unintended social consequences
of government paying never-married mothers. Others experts argued that
children of never-married mothers must be covered, since every
individual needed coverage--essentially arguing that family norms did
not matter.
Welfare before 1996 was all about the subtle economic incentives
that not only enabled women not to work and to have children out of
wedlock, but also gradually removed the social stigma attached to such
behavior. The fact that the entitlement welfare failed is beyond
dispute.
From the 1960s to the 1990s, total social welfare spending nearly
tripled.\2\ So what did we get for this increase? Poverty maintenance
and family dissolution. There is no way to call this program prior to
1996 a success. The percentage of American adults living in poverty in
1995 was almost a full percentage point higher than the percentage
living below the poverty line in 1966. In 1965, 21 percent of all
Americans children under the age of 18 lived in poverty. Over the years
it fluctuated slightly up and down, but in 1995, the percentage was
20.8 percent. In 1974, the percentage of African-American children
living in poverty was 39.8 percent. Between then and 1995, it never
again dipped below 40 percent, and stood at 41.9 percent in 1995.\3\
---------------------------------------------------------------------------
\2\ According to ``It Takes a Family,'' page 129, ``In 1968, about
three years into the Great Society programs, total social welfare
spending in the United States was $226 billion (in inflation-adjusted
dollars). By 1990, it had risen to $614 billion.'' In addition, Robert
Rector said ``In just three years--from 1965 to 1968--yearly welfare
spending more than doubled, from $38.3 billion to $80.5 billion in
today's dollars.'' See ``Welfare: It Keeps Growing and Growing and . .
.'' from June 29, 1995, at http://www.heritage.org/Press/Commentary/
ED062995b.cfm. Also, according to Michael Tanner of Cato, ``In 1990
total social welfare spending by federal, state, and local governments
(for major means-tested programs) topped $226 billion, a total
equivalent to $5,790 for every poor person, or $23,160 for every family
of four below the poverty level.'' See ``Ending Welfare As We Know
It,'' Cato Policy Analysis No. 212, Michael Tanner, CATO, July 7, 1994.
\3\ U.S. Census Bureau, Housing and Household Economic Statistics
Division, Last revised: December 14, 2005, http://www.census.gov/hhes/
www/poverty/histpov/hstpov3.html.
---------------------------------------------------------------------------
And if that is not enough, from 1960 to 1995, the percentage of
births occurring out of wedlock among the total population rose
sharply. In 1960, 5.3 percent of all births in this country were to
unmarried mothers. By 1995, the figure was 32.2 percent.\4\
---------------------------------------------------------------------------
\4\ Department of Health and Human Services, Center for Disease
Control, National Health Center of Statistics, 2001, http://
www.cdc.gov/nchs/data/statab/t001x17.pdf.
---------------------------------------------------------------------------
Pick a number, statistic or social impact--the result remains the
same. Welfare, prior to 1996, was a disaster. The program was
misguidedly based on the belief that poor people could not or would not
work. It merely served as a means for income transfer. Although some on
the other side of the aisle argued that this program was
``humanitarian,'' there was nothing humanitarian about the
intergenerational poverty it sustained, the destruction of the natural
family it brought, or the way it removed hope in our poorest
communities. In terms of the human lives wrecked, human potential
wasted, marriages destroyed or discouraged, and children denied a
future, it was the greatest social policy debacle in American history.
After the election of 1994 Republicans took control of the Senate
and the House and this dysfunctional welfare system was changed. The
ultimate changes that were signed into law had their roots in a group I
chaired when I was a member of the House Ways and Means Committee's
Humans Resources Subcommittee, of which I was then the ranking minority
member. Our Minority Whip Newt Gingrich asked me to get together a
group of members to draft our own welfare reform bill. The bill we
drafted was an integral part of the now famous Contract with America. I
went around and talked with women on welfare and the people that worked
in and around the welfare system in Pennsylvania. The more I learned,
less sense our welfare system made.
When we introduced our bill, the liberals called it cruel,
heartless, and mean-spirited. We had actually had the audacity to call
for time limits on welfare and we wanted recipients to work as a
condition of receiving benefits. Despite the criticism, we knew that
such measures were necessary if we were to help people move from
government dependency to the dignity of a paycheck.
Our bold proposal became the starting point for innovative ideas in
the 104th Congress, by which time I was in the Senate. Even though I
was not on the committee of jurisdiction, I began working with the
chairman of the Finance Committee, Bob Packwood, to help him craft a
new welfare reform bill. The House had already passed its version of
the welfare reform bill when the Senate moved a bill out of committee.
Just before the bill was scheduled for action on the Senate floor,
Chairman Packwood resigned from the Senate leaving Republican Leader
Bob Dole searching for a new floor manager. I volunteered to take the
helm since I was one of the few Republicans senators who knew anything
about welfare. I ended up managing most of the bill on the Senate
floor.
My role as floor manager for the welfare reform debate remains not
just one of my proudest accomplishments, but also one of the most
surreal. I remember a welfare rights organization that bussed in
welfare recipients and caseworkers to a church near Capitol Hill. The
group invited me to discuss the changes being contemplated by Congress.
The best way I can describe the atmosphere of this event was like being
the meat thrown into the lion's den. I was not able to finish a single
sentence without being interrupted, but beyond the anger I encountered
there was a distinct undercurrent--fear. The recipients had been locked
in this dysfunctional system for so long they had convinced themselves
that welfare was the best they could hope for. In the end, this display
of anger was but the last roar of the Great Society drug-peddlers,
those who had addicted generations of poor Americans to the narcotic of
dependency.
When Republicans scrapped the Aid to Families with Dependant
Children (AFDC) and replaced it with Temporary Assistance for Needy
Families (TANF), liberals howled. For example, the Urban Institute
predicted that the bill would cause 2.6 million people to fall below
the poverty line, including 1.1 million children.\5\ However, these
critics miscalculated a bit.
---------------------------------------------------------------------------
\5\ Potential Effects of Congressional Welfare Reform Legislation
on Family Incomes, by Shelia R. Zedlewski, Sandra J. Clark, Eric Meier,
and Keith Watson for the Urban Institute, July 26, 1996, http://
www.urban.org/url.cfm?ID=406622.
---------------------------------------------------------------------------
Welfare reform worked. Welfare caseloads are down 64 percent, and
the number of families on welfare has declined 57 percent.\6\ The
overall poverty rate dropped as has the child poverty rate.\7\ Compared
to 1996, 1.4 million fewer children lived in poverty in 2004.\8\ The
number of adults on welfare who are working has more than doubled since
1996.\9\ The results speak for themselves--and the policies of the 1996
welfare reforms are a success.
---------------------------------------------------------------------------
\6\ ``A Decade Since Welfare Reform: 1996 Welfare Reforms Reduce
Welfare Dependence,'' Report from the House of Representatives
Committee on Ways and Means, Subcommittee on Human Resources, February
26, 2006, http://waysandmeans.house.gov/media/pdf/welfare/
022706welfare.pdf.
\7\ ``A Decade Since Welfare Reform: 1996 Welfare Reforms Produced
Remarkable Success,'' Report from the House of Representatives
Committee on Ways and Means, Subcommittee on Human Resources, July 11,
2006, http://waysandmeans.house.gov/media/pdf/welfare/
071106welfaresuccess.pdf.
\8\ Ibid.
\9\ Ibid.
---------------------------------------------------------------------------
Statistics are telling, but nothing tells the story better than
real life. A young mother spoke to me at a hearing on the progress we
had made with welfare reform and recounted that when she got her first
paycheck, her children were unusually excited to go to the store. When
she asked them why, they explained that they could not wait to go to
the checkout line and not feel shame as people stared at them for using
their food stamps. Self-respect is being restored.
Another young man told me that he had gained renewed admiration for
his mother for holding it all together--her job, their home, and their
family. He never thought she could do it. Respect for others is being
restored.
Finally there is Billy Jo Morton. When I was sworn into the Senate
in 1995, I decided that since I was going to take an active role in
reforming welfare, I had better see how it actually works firsthand. I
hired five people who were on welfare--at that time about 10 percent of
my staff--to work in my Pennsylvania offices. Billy Jo worked for me in
my Harrisburg office for her first job off welfare. She told me that
until she was forced to move off the rolls she thought she was stuck
with two kids at home and no chance for a better life. Billy Jo was a
great employee. After a while, we provided her a flexible schedule that
allowed her to attend community college part-time. Later she was
offered a scholarship to finish her degree, which she did in education.
I am pleased to report that she is now working as a teacher. And hope
is being restored.
This is what happens when you have enough faith in people to help
them rise up to take responsibility for their lives and to make the
right choices. With welfare reform, the government stopped enabling
destructive behavior. The 1996 reforms prevented prisoners and
fugitives from collecting welfare benefits, saving at least $250
million in SSI benefits and contributing to more than 40,000 arrests
since 1996.\10\ It ended the destructive practice of giving
``disability'' checks to drug addicts and alcoholics. The bill also
prohibited non-citizens from collecting welfare benefits, which reduced
the receipt of SSI benefits by non-citizens by 14 percent, food stamps
by 61 percent and cash welfare by 82 percent.\11\ We changed the
paradigm for government programs from life-long government support, to
hard work and sacrifice.
---------------------------------------------------------------------------
\10\ ``A Decade Since Welfare Reform: Ending Waste, Fraud and Abuse
of Welfare Benefits,'' Report from the House of Representatives
Committee on Ways and Means, Subcommittee on Human Resources, June 1,
2006, http://waysandmeans.house.gov/media/pdf/welfare/
060106welfarereport.pdf
\11\ Ibid.
---------------------------------------------------------------------------
There is only one conclusion to draw from all of this. Before 1996
the American welfare system was a mammoth federal income-transfer
program that acted as a barrier between low-income families and
independence in the U.S. economy. Our economy had the jobs for welfare
recipients. The problem was, the liberal welfare policies neither
encouraged nor required recipient to get anywhere near those jobs--
until we passed welfare reform.
I gave you a few anecdotes earlier, but this one last story may
give you a better understanding of what has happened since 1996. It is
the story of one of my employees, Michelle Turner. Michelle came to
work for us in 1996 as a staff assistant in Philadelphia. Prior to
that, she had been on and off welfare for about five years. She had
left home as a teenager, mostly because she never got along with her
father. She ended up living with a man who would be the father of her
first two children, both girls. Although she says he never actually hit
her, the stress of the situation finally caused her to pack up her two
daughters and leave.
Michelle ended up living in a Philadelphia shelter for recovering
substance abusers--something she was not but it was the only place she
could go. She decided to stay there until she could afford her own
place. In an effort to get out of the building and off welfare, she
took a class at Drexel University and updated her resume.
``I just had to get off welfare,'' Michelle said. ``The people at
the welfare office who would give you the check, their attitude was
that it was their money. They would talk to you in such a demeaning
manner. Plus, it wasn't enough to live on.''
Michelle ended up getting an internship at the People's Emergency
Center, a domestic abuse shelter, as part of their welfare-to-work
program. From there, Michelle took a job as a staff assistant in my
office which in her words was ``a glorified receptionist.'' Soon, she
became a caseworker and eventually she became my Director of
Constituent Services. She's been married since the Spring of 2000 and
has given birth to a third daughter. In 2003, after nine years, she
left my office to take a job at Drexel as the administrative assistant
for a surgeon. She and her husband recently bought a new house.
When I asked Michelle how her life would have been different if she
stayed on welfare instead of getting a job, she quickly answers, ``I
would probably be married, but I probably would have repeated what I
had found myself falling into--an abusive relationship. I never would
have ended up working in a Senate office, and never would have had the
confidence to get a good husband and buy a house. I would have ended up
working in some dead end.''
The power of work, and people who believed in her, gave Michelle
Turner the break she needed. She did the rest herself.
The next iteration of welfare reforms came in the Deficit Reduction
Act of 2005 (DRA) \12\ These provisions were designed to build on the
1996 reforms. For example, one of the main reforms was to update the
work participation rates to the more relevant date of 2005, ensuring
that the intent of the 1996 Welfare Reform Act that at least half of
all welfare recipients engage in work activities is realized.\13\ Why
is this change important? It is important because prior to this bill it
was reported that Pennsylvania was last among all of the states in 2004
in the percentage of welfare recipients who are working or were in
approved programs.\14\ Just seven percent of the caseload in my state
was working! We owe it to the people in our states that need a hand up
to actually provide the opportunities to better themselves rather than
allowing them to lose hope.
---------------------------------------------------------------------------
\12\ Deficit Reduction Act of 2005, P.L. 109-171, signed into law
on February 8, 2006.
\13\ Ibid, at Section 7102.
\14\ ``Welfare applicants pushed to find jobs sooner,'' by Joe
Fahy, July 14, 2006, http://www.post-gazette.com/pg/pp/06195/
705797.stm.
---------------------------------------------------------------------------
I am also very pleased that the DRA includes $100 million annually
for healthy marriage promotion, and $50 million annually for the
promotion of responsible fatherhood.\15\ As I mentioned early on, we
must provide families with the necessary support systems to succeed--
the helping hands of neighbors, friends, and family who care. We know
that children growing up in married, two-parent homes are less likely
to be victims of abuse, engage in high-risk behaviors, and suffer from
emotional problems--the studies are overwhelming. It is therefore
important that we communicate the value of the role of families and
particularly the role of fathers in our society. This important funding
will create opportunities to strengthen families through various
programs which support marriage and responsible fatherhood in our local
communities. I am grateful to have worked closely with many of you on
this Committee to add this important element to the welfare reform
process.
---------------------------------------------------------------------------
\15\ Deficit Reduction Act of 2005, Section 7103.
---------------------------------------------------------------------------
Throughout my years in the U.S. Senate, I have worked to implement
programs designed to decrease the hardships that far too many Americans
endure. While I believe that the Deficit Reduction Act is a step in the
right direction, and I remain committed to ensuring that work remains a
gateway to opportunity for all Americans. I want to draw your attention
to something I have developed as the Chairman of the Republican
Conference and with my Senate colleagues--the Senate Anti-Poverty
Agenda.\16\ The Senate Anti-Poverty Agenda revolves around Work,
Investment and Neighborhoods or WIN. The WIN Anti-Poverty Agenda
reflects the proactive anti-poverty agenda of the Senate Republican
Conference which embraces the critical role of work, investment, and
neighborhood-based solutions in the effort to empower families in need,
create opportunity, and reduce poverty. It includes twelve specific
legislative action items that we believe will serve to reduce poverty.
I have included a copy of this document with my testimony and hope that
each of you will look at these items and reach out to work with us to
make a real impact in our communities. Mr. Chairman, I would be remiss
if I did not note that two of these particular items are currently
under review in the context of tax extenders and the pensions
conference, and ask that you and the other members of this Committee
weigh these items heavily as you move to conclude the conversations on
those bills.
---------------------------------------------------------------------------
\16\ The Senate Anti-Poverty Agenda may be found at http://
src.senate.gov/public/_files/graphics/povertybook0.pdf.
---------------------------------------------------------------------------
Ladies and Gentlemen, we have made great progress since 1996, and
we improved the program just this year, but we still have work to do to
continue to lift families out of poverty and provide them with
opportunities to better their lives and those of their children. I
stand ready to work with you as we continue this important effort.
Thank you again for this opportunity to be with you today.
Mr. SHAW. [Presiding.] Thank you. Speaker Gingrich.
STATEMENT OF THE HONORABLE NEWT GINGRICH, FOUNDER, GINGRICH
GROUP, AND FORMER SPEAKER, U.S. HOUSE OF REPRESENTATIVES
Mr. GINGRICH. Thank you very much, Mr. Chairman. I do want
to repeat what Senator Santorum said, and say that under your
leadership, Chairman Thomas, Congressman McCrery, Congresswoman
Johnson, Congressman Camp, Congresswoman Jan Meyers, I think
back to all the people who were deeply involved in a period of
growing these ideas and developing them, and it was remarkable.
I want to both praise Congress and challenge Congress, and
talk on three levels; how we achieved welfare reform, the
current results, and the challenges for helping those who have
been left out of the American dream in the pursuit of
happiness.
I want to start by quoting Abraham Lincoln, who, faced with
the need to explain the purposes of government in his message
to Congress, July 4, 1861 said: The leading object of
government is to elevate the condition of men, to lift
artificial weights from all shoulders, to clear the paths of
laudable pursuit for all, to afford all an unfettered start and
a fair chance in the race of life.
I think, as a person who had been born into extraordinary
poverty, who had taught himself how to read, who had a total of
one year of schooling in his entire life, Lincoln felt very
deeply the obligation of government to create opportunities. I
want to look at welfare reform in that context and meet part of
the challenge that, legitimately I think, Congressman McDermott
had raised.
Let me say, first of all, how do we get this done. I have
one of the people who made it possible sitting to my left. The
fact is that in the States, Governors Thompson, Engler and
Leavitt had already done an extraordinary level of
experimentation. Much of what we did stood on their shoulders
and it is totally appropriate that Governor Thompson be here
today.
Without their leadership and experimenting we would not
have had the baseline, but it went beyond that. Part of what
made the Congress different in 1995 and 1996 is that the
Governors actually came to Washington, brought the people who
were running the programs--we locked the door, and we had State
level people who actually were doing the job in the same room
with legislative drafters at the Federal level and we argued as
equals and we hammered out a program we thought would work; and
it was a level of practicality which I think has seldom been
achieved and which cut away all of the normal situations like
this--where Washington is on one side of the table and the rest
of the country is on the other. We were all in the same room
with our sleeves rolled up and it was a remarkable practical
collaboration.
We were also helped because beginning with Ronald Reagan's
first campaign for Governor in 1966 when he talked about a
creative society, Reagan had begun to lay the base for the
country to talk about welfare reform.
In two books in particular, one, Charles Murray's Losing
Ground and the other, The Tragedy of American Compassion, those
two books had helped intellectually win the case. By the time
we passed welfare reform in 1996, 92 percent of the country
favored welfare reform, including 88 percent of the people on
welfare.
So, the country had spoken and it was a combination of
creative collaboration at a practical level, sound principles
developed over 20 years, and, kind of the will of the American
people being imposed, even if many people in Washington were
resistant to it.
The results have been pretty amazing. Kay Hamowitz's
article in City Journal and Ron Haskins's new book and the
testimony he will give you later on will give you a real
framework of this. Let me point out a couple of things. First
of all, in response to Congressman McDermott's explanation of
reality, it is pointed out by Kay Hamowitz that of the single
mothers who have gone to work under welfare reform only about 4
percent are still at the minimum wage level. There is a pattern
by which if you go to work and you learn a trade and you become
more valuable, as you just pointed out, for somebody you just
lost to the private sector, you get a better job. If you think
of minimum wage as the beginning wage rather than as a
permanent wage, it turns out that most Americans pass through
that period and rise; and there is zero question that the
welfare reform worked.
As Kay Hamowitz says: ``The poverty rate for single women
with children fell from 42 percent in 1996 to 34 percent in
2002. Before 1996 it had never in recorded history been below
40 percent.'' I say with sadness to some of my friends I would
have thought that a program which gave us the lowest level of
child poverty rate in history would be seen as a success from
which we could build better and even more important steps in
the right direction, but sometimes partisanship doesn't make
that possible.
I would also point, as Secretary Leavitt, one of the three
horsemen who we brought in to help create this, said in a
recent speech, I am quoting Secretary Leavitt, ``employment
among single mothers has increased dramatically, reaching 63
percent today, the highest level ever.'' Child support
collections have nearly doubled. Nearly a million and a half
fewer children live in poverty than a decade ago. Child poverty
among African-Americans has declined from 40 percent to 33
percent, among Hispanics from 40 percent to 29 percent.
All of these, it seems to me, are good things in the right
direction and to the degree that it has already positively
affected people, this was an important, powerful step.
I want to pick up on Congressman Rangel's concern for
Americans trapped in poverty because he is exactly right to be
concerned, and I would hope that we could work together in a
genuinely bipartisan manner to find real solutions.
Let me tell you where I am coming from. We have to help the
poor, the powerless and those who have been left out of the
American dream. Our Declaration of Independence declares all
are created equal and are endowed by their Creator with
certainly inalienable rights. Among these are life, liberty and
the pursuit of happiness. Yet it is clear, if we are going to
be honest, that tragically too many Americans today lack the
education, the personal skills, the habits and the
opportunities to pursue happiness; to be productive and
therefore to be prosperous.
Now I think we have to continue the successful welfare
reform policies but I think we have to go beyond that. I think
we have to apply the successful lessons of welfare reform to
two areas that people absolutely rely on government to get
right, education and health. Without a proper education and
without adequate health and health care, people simply cannot
achieve success.
I want to underline this. I think our goal should be to
enable every person in America to have a sufficiently high
level of education, and sufficiently good health that they are
able to be productive and prosperous because they are in fact
productive. Productivity in the 21st century is a function of
knowledge. Yet, we have to face our crisis in education.
The study sponsored by the Bill and Melinda Gates
Foundation recently reported results that should bother every
American. They reported, for example, that in the Detroit
school system, which was the lowest-scoring major school
system, only 21 percent of students who enter public high
school, graduate.
Now we need to confront this. If we are cheating four out
of every five children who enter the ninth grade, we are going
to continue to have a crisis and the crisis represents itself
in pain that Congressman Rangel is all too familiar with at a
personal level. He knows that in his district all too many
young men are going to be in prison instead of being in
college. He knows that across the country in the inner city all
too often we fail people.
If you think of the tragedy of the Detroit schools where
four out of five children, young people who enter school as
freshman will not graduate, we have to profoundly change the
system.
I just want to suggest to you if we made saving the
children a central theme of the next few years and if we were
truly serious about rolling up our sleeves and breaking
through, saving young people who are today just entering
school, saving people who are trapped in Medicaid programs that
frankly don't meet their health needs and therefore don't leave
them prepared physically and mentally to be able to get good
educations, but beyond that, rethinking the entire structure of
our prison systems so that no one goes through prison without
becoming fully educated, which will be a totally different
model than the warehousing and coercion model we have today.
I just want to say on behalf of all the people who helped
develop the remarkable welfare reform 1996 that I think we now
have both an obligation as citizens and an opportunity as
leaders to develop a similar scale of reform and apply it
across all the aspects of government which relate to trapping
people in poverty and give people a chance to acquire
education, productivity, and as a result, prosperity. I
appreciate very much the chance to testify.
[The prepared statement of Mr. Gingrich follows:]
Statement of The Honorable Newt Gingrich, Founder, Gingrich Group, and
Former Speaker, U.S. House of Representatives
``[the] leading object [of government] is to elevate the condition
of men--to lift artificial weights from all shoulders; to clear the
paths of laudable pursuit for all; to afford all an unfettered start
and a fair chance in the race of life.''
--Abraham Lincoln, Message to Congress, July 4, 1861
______
Chairman Thomas, Ranking Member Rangel, and members of the committee:
I appreciate the opportunity to testify today about the outcome of
the historic welfare legislation that was passed ten years ago. The
national debate leading up to the enactment of welfare reform in August
1996 and the results of its implementation since then afford the
country a set of profound lessons about how ``we the people'' can bring
about profound change that dramatically improves the lives of millions
of our fellow citizens.
In the last several months I have been drawn to reading a number of
books about Abraham Lincoln. I was particularly struck by the message
that Lincoln delivered to Congress four short months after he took
office and on the first Independence Day during an unfolding Civil War.
The civil division in the country no doubt prompted Lincoln to
reflect deeply on the essential nature and purposes of government. His
historic task was to define the form and ends of the Union for which he
would ultimately rally and lead his countrymen to preserve. In one
section of the speech he wrote that the leading of object of government
``is to elevate the condition of men--to lift artificial weights from
all shoulders; to clear the paths of laudable pursuit for all; to
afford all an unfettered start and a fair chance in the race of life.''
I cite this passage because I believe it to be not only an eloquent
statement of the republican principles upon which the nation was
founded but also a fair description of the spirit that animated those
leaders in the states and the Congress who led a three decade long
effort to reform the welfare system.
We were determined to lift the ``artificial weights'' of a
bureaucratic system of welfare that drained individual initiative and
energy and hurt the very people it was designed to help. In its place,
we were determined to clear a path of work and opportunity that would
develop the habits of success that would lead to self-sufficiency.
This effort has been largely successful. Welfare rolls have
declined nearly 60% in the past ten years and fewer families are on
welfare than at any time since 1969. Nearly a million and a half fewer
children live in poverty than ten years ago, with child poverty rates
among African Americans and Hispanics down markedly. At the same time,
employment among single mothers has increased dramatically, reaching 63
percent today, the highest ever.
There are many other measurable outcomes from this reform
legislation that warrant your close assessment. We should make every
effort to see what has worked well--so we can continue it--and what has
worked less well--so we can make adjustments and improve it. But I
leave the bulk of this statistical assessment of the outcomes to the
very talented scholars whom you have assembled for your panel who have
labored far more than I in measuring the precise impact of welfare
reform from a myriad of angles.
Instead, I would like to share the 10 big lessons that I have drawn
from the successful effort to design and implement welfare reform and
suggest that we should apply these lessons to developing a next wave of
reforms in order to lift the artificial weights from--and elevate the
condition of--our fellow citizens.
TEN LESSONS FROM WELFARE REFORM
1. Successful Reform Always Starts with a Big Idea of How to
Improve the Lives of Individuals. It has been said that nothing is more
powerful than an idea whose time has come. Often a powerful idea can
take many years before it is accepted and adopted. In the case of
welfare reform, the powerful idea of replacing dependence and welfare
with personal responsibility and work took 30 years before it became
the law of the land. The idea was first put forward by candidate Ronald
Reagan running for Governor of California in 1966. In a memorable
campaign speech, Reagan called for replacing the Great Society with the
Creative Society and ensuring that we had not settled on a welfare
policy that was perpetuating poverty with a ``permanent dole''. Then in
1970, Reagan proposed welfare reform at the National Governor's
Association. No one supported him. It would take another 26 years
before the big idea of replacing welfare with work finally became a
reality.
2. Then Key Step is Deciding Whether to Repair or Replace. The
first and absolutely unavoidable step in designing large scale domestic
policy reform legislation is to decide whether to dedicate energies to
marginally improving the current system or whether to develop a series
of replacements for the laws, the regulations, and the bureaucratic
culture and governmental structures.
Our current system of bureaucratic public administration is
incapable of meeting the delivery requirements of the 21st century. The
male clerk with a quill pen and an open inkwell sitting on a high stool
at a high desk was the standard when the civil service laws were
codified in the 1880s. That process oriented, red tape ridden system is
now mutated through 125 years of further laws and regulations. It is
impossible for it to match the expectations of speed, accuracy,
flexibility and efficiency inherent in the world of UPS and FedEx.
Successful reformers will have to replace bureaucratic public
administration with entrepreneurial public management as a new system
of rules, regulations, incentives, and metrics.
The difference in orientation between what we are currently focused
on and the real change we should be advancing can be illustrated
vividly.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Of course, it is not possible to reach the desired future in one
step. It will involve a series of transitions, which can also be
illustrated.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Every aspect of Washington (and for state government of the state
capital; and for local governments of city hall, the county building or
the board of education building) tends to focus on marginal ``reforms''
of the current bureaucratic systems with which they are comfortable.
The news media, the lobbyists, the bureaucracies themselves all are
chanting ``be reasonable,'' ``be responsible,'' ``be practical;'' the
pressure to sustain the status quo will always be overwhelming.
If we had followed that advice in 1994 we would not have developed
The Contract with America, we would not have insisted on voting on the
entire contract in the first 93 days of taking office, we would not
have insisted on welfare reform, we would not have driven through the
first consecutive large balanced budgets since the 1920s.
Similarly, if President Reagan had been `reasonable',
`responsible', `practical' and `prudent' he would not have said his
vision of the outcome of the Cold War was `we win, they lose,' he would
not have called the Soviet Empire `the evil empire' and he would not
have said ``Mr. Gorbachev tear down this Wall'' (which required the
President to personally write it back in three times after the State
Department bureaucracy took it out each time).
3. Great Change Always Comes from Outside Washington, D.C. Great
changes come from the country to the capital and are imposed by the
American people on the politician-lobbyist-bureaucracy-news media
system despite their resistance. Governing systems always focus on and
cue off the American people. They begin to decline when they start
shifting their focus to the power structures of the capital (state or
federal). As one Reagan official said in 1972, ``when people in
Sacramento start saying `we' and mean California state government we
know they have been here too long. `We' means the people of
California.'' And in fact it was the American voter who insisted on
real change in 1994. Nine million more Americans turned out in 1994
(from 1990) to support a positive agenda of reform, including 1994's
crowning achievement of welfare reform. It was the American people who
demanded welfare reform by 92% (including 88% of those on welfare). It
was not the experts, the bureaucracy, or the lobbyists.
4. Cheerful Persistence is Required. To successfully deliver large
scale reform in a free society, it is necessary to have cheerful
persistence. It is necessary to have a positive vision of a better
future. Americans have always been stunningly optimistic and the
optimistic positive leadership has almost always beaten the negative
pessimistic leadership. It is also important to describe this better
future in personal terms. It is necessary to describe what it will mean
for you, your family, your children, and your grandchildren.
5. Far Reaching Collaboration is Critical. Developing politically
popular, philosophically correct, implementable in reality reform is
very complex. It takes a longer time horizon, a more decentralized
process of parallel effort, and a more collaborative system for the
Executive-Legislative branches (including members of the Ways and
Means, Agriculture, and Education and Workorce Committees) and the
Federal-State systems to work together. The 1995 involvement of key
Governors and their staffs in drafting the welfare reform bill is a
classic case study in a collaborative approach that reached across
formal boundaries to build an informal team for a specific purpose.
This approach was absolutely necessary for the practical reason that it
was the Governors themselves, and through them state governments, that
would actually implement the policy reforms. Moreover, several key
Governors, like Tommy Thompson (Wisconsin), John Engler (Michigan), and
Mike Leavitt (Utah), had already started to lead the way in figuring
out the type of welfare reforms that would work. It made complete sense
to involve those who knew who to practically accomplish results. Their
staffers were in the room with Congressional staffers bringing
practical solutions to turn public policy ideas into reality. It was
important to get the ideas from among the fifty laboratories of
democracy in order to diffuse the best approaches across the country.
It would have been impossible to craft a system which helped 60 percent
of the people on welfare move into jobs or classes without the active
help of the governors and those in their states who knew the realities
of getting the job done at the local level.
6. Big Change Always Requires Winning the Argument. Successful
reformers understand the Margaret Thatcher rule that `first you win the
argument, then you win the vote.'' They understand that defining the
argument, choosing the right words, organizing the effort to educate
and rally the country makes possible victories in elections or in
Congress that would not otherwise be possible. Conversely, successful
reformers are very sensitive to starting to lose arguments because they
know that their votes will then be put at risk. From 1966 when Reagan
first proposed it to 1996 when we passed it we had won the argument.
Intellectual effort mattered. Charles Murray's Losing Ground and Marvin
Olasky's The Tragedy of American Compassion were especially important
in creating that victory.
7. Words Matter. Successful reformers know that words really
matter. Successful reformers MUST acquire the skills to communicate
good policy. Any large scale reform initiative involves learning a new
glossary and grammar. The new approach has to be outlined in words
which the public either understands or has to learn. Then the words are
connected together with a grammar which enables the new language to be
used to communicate the reform vision.
Again and again the right words to evoke the right images and the
right choices make a big difference in the ability to win the argument.
It is important that successful reformers define words that describe
the desired future that people already understand and desire.
Our vision for welfare reform was one where independence replaced
dependency, where opportunity replaced poverty, where responsibility
replaced irresponsibility, where self-sufficiency replaced
helplessness, where caring replaced caretaking. Over time more and more
Americans heard and believed in that vision.
8. The Reforms Sought Must Be Consistent with Broad American
Values. Successful reform can only be achieved if the goals advanced
are consistent with broad American values.
a. America is an Incentive Based Society. Americans are very
responsive to incentives and very hostile to penalties or punishments.
In America when your leaders make your life more difficult or more
expensive your first reaction is to fire them. This intense opposition
to being ``put upon'' runs deep in the American psyche. The
Revolutionary War flag with a rattlesnake the slogan, ``don't tread on
me'' is typical of this self reliant, populist suspicion of authority.
It is a major reason tax increases as a strategy has done so badly
since 1978 (when Proposition 13 in California first signaled a broad
middle class resentment). In the absence of an undisputed crisis it is
essential for successful reformers to find incentives to pull people
into new behaviors and to avoid penalizing or punishing people out of
the undesired behavior. To put the principle simply: Americans elect
leaders to make their lives better and they will fire leaders who make
their lives worse.
b. America is an Entrepreneurial Society. The potential to have an
incentive led program of reform is increased dramatically by the core
nature of American society. It is the nature of America's
entrepreneurial free market system based on science and technology to
create MORE choices of HIGHER quality at LOWER cost. This historic fact
is one reason rationing has never been a problem in America except when
government interfered. This principle is also a great opportunity for
successful reformers to provide better learning, better health, a
better environment, and a more effective general system of government
than any bureaucratic centralized red tape ridden model could produce.
9. Opponents of Reform Must Be Forced To Carry the Burden of Their
Positions. It is necessary to put opponents of popular reform on the
defense, forced to explain the logic of their position. In the case of
welfare reform, it meant that opponents had to defend a system that
kept recipients of welfare in a hopeless system of poverty in which
they were told not to help themselves, not to look for work, but to sit
there and be quiet and wait for the next check. At some point, the
opponents could no longer bear the burdens of their own position. So
much so that by 1996, polls showed that 92% of the country favored
welfare reform, including 88% of the people on welfare. When only 8% of
the country agrees with you, it is hard to sustain a position even if a
large part of that 8% is in the news media, the academic world, and the
bureaucracy. By then, it was virtually impossible for the Congress to
avoid passing it or the President to avoid signing it, which he did
after vetoing it twice.
10. Successful Reform Must be Citizen Centered. Successful reform
on the scale of the 1996 welfare reform has to be citizen centered and
movement driven. People have to decide it is ``their plan'' improving
``their future''. Social Security in 1935 was not about FDR. It was
about the American people. Welfare Reform was not about the Republican
Party. It was about giving the poor a much better future. People in
power have to constantly remind themselves that they are advocating the
interests of the American people and not merely their own interest, If
something is not working at the grassroots it may be that we need to
rethink what we are doing. To repeat Joseph Napolitano's injunction
``Never underestimate the intelligence of the American people nor
overestimate how much information they have.''
APPLYING THESE SUCCESSFUL LESSONS TO SAVING THOSE WHO ARE STILL POOR,
POWERLESS, AND LEFT OUT OF THE AMERICAN DREAM
The 1996 welfare reforms marked a dramatic change in American
social policy. Yet, we cannot stop there if we are to advance the real
change required to help the poor, the powerless and those who have been
left out of the American Dream. Our Declaration of Independence
declares ``All . . . are created equal . . . and endowed by their
Creator with certain unalienable Rights, that among these are Life,
Liberty and the pursuit of Happiness.'' It is clear that tragically too
many Americans today lack the education, the personal skills, the
habits, and the opportunities to pursue happiness, to be productive and
therefore be prosperous.
First, we must continue the successful welfare reform policies and
pass any required modifications and extensions.
We must then apply the successful lessons of welfare reform to two
areas that people absolutely rely on government to get right: education
and health. Without a proper education and without adequate health and
health care, people simply cannot achieve success.
We Must Save Our Children From Failing Schools.
We must face our crisis in education. A study sponsored by the Bill
and Melinda Gates Foundation recently reported results that are deeply
troubling.
The study looked at graduation rates on a district-by-district
level and found that they are shockingly lower than previously reported
by the education bureaucracy. In big-city public school districts like
Cleveland, Los Angeles, Miami, Dallas and Denver, fewer than 50 percent
of high school students graduate on time. In three districts, the
public schools graduate fewer than 40 percent of their students: In New
York City, the graduation rate is 38.9 percent; in Baltimore, it's 38.5
percent; and in Detroit, incredibly, only 21.7 percent of students who
enter public high schools will graduate.
Consider this finding for a moment. If only 21.7 percent of
students graduate from Detroit schools on time, that means that 78.3
percent of students fail to graduate. Almost 80 percent of students--
four out of five--are failed by our educational system. Why do we
tolerate this level of failure? Cheating the children is wrong. The
fact is, in most aspects of life, we don't. If a private company took
the money from its customers and then failed 80 percent of them, it
would be closed in a day.
One of the most basic measures of the success of our school system
is high school graduation. A high school diploma is the minimum
requirement for successful participation in American life. The failure
of our high schools to graduate their students isn't limited to Detroit
or to our big cities. Nationwide, it is estimated that three of every
10 students who start high school won't graduate on time. For
minorities, these numbers are far worse. One of every two African-
American and Latino students won't graduate on time or graduate at all.
So dramatic is the failure that today it is estimated that there are
more African American males in prison than there are in college--a fact
that is a national disgrace.
We've all heard the rallying cries of ``Save the Whales'' and
``Save the Rainforest.'' My view is that reports on our public schools
like this latest one should have us all shouting ``Save the Children.''
Every time we allow policies that favor the education bureaucracy over
our children, we not only hurt our children, we hurt our country and
our prospects for future safety and prosperity.
America abounds with more energy, resourcefulness and innovation
than any nation in the history of mankind. We deserve an education
system that nurtures and develops these qualities. ``Save the
children'' isn't just a slogan, it's a call to win the future for all
Americans, starting with our children. Let's not wait to get started.
We Must Save Lives and Save Money by Transforming Medicaid.
Medicaid is a mess. It is an obsolete 1965 welfare state system
with an assumption of irresponsibility and dependency on the part of
the recipients and a micromanaged centralized bureaucratic control
system with both state and federal layers of bureaucracy. Its thousands
of pages of state and federal complexity are impossible to manage and
make innovation very difficult and very slow.
For forty years the combination of the U.S. Congress, the Federal
CMMS bureaucracy and fifty state legislatures have interacted to
produce a dance of loophole exploitation by states followed by loophole
closings by the federal government followed by clever consultants
finding new ways to cost shift.
The result has been a money oriented red tape ridden culture which
is a major contributor to health disparities, a significant source of
cost shifting to private payers, and a significant burden on doctors
and hospitals.
As Medicaid has grown in size and cost, its implications for both
the federal and state budgets have grown. We are entering a period when
Medicaid will be an unavoidable major issue in our political-
governmental system.
Today, 26 percent of the federal government's budget is spent on
health-related programs. Healthcare spending will continue to rise
disproportionately relative to other federal and state budget
priorities. We simply cannot balance the federal budget over the long
term if we do not deal intelligently with health. There will not be
enough dollars or doctors to take care of us on our current trajectory.
State budgets will not be able to cope either.
A properly transformed Medicaid system should have at its core the
principles of individual ownership, personal health, and the right to
know price and quality of health and healthcare services. These would
form the basis of a system centered on wellness, prevention, early
testing, and incentives for healthy behaviors before, during, and after
any illness.
We must develop a genuine momentum for creating a 21st Century
Responsible Citizen Medicaid System which will truly eliminate health
disparities, improve health for the poor, maximize independent living
and quality of life for people with disabilities, improve the
satisfaction and lives of providers, and lower long term costs for the
taxpayer.
Finally, we must continue to assert the basic American values that
have made this country a unique center of freedom and opportunity for
people everywhere. Welfare reform was an important first step. We must
continue to unleash the genius of free men and women, encourage
dreamers, and create incentives for greatness.
Mr. SHAW. Thank you, Speaker Gingrich. Governor Thompson.
STATEMENT OF THE HONORABLE TOMMY G. THOMPSON, PARTNER, AKIN,
GUMP, STRAUSS, HAUER & FELD, AND FORMER SECRETARY, U.S.
DEPARTMENT OF HEALTH AND HUMAN SERVICES, AND FORMER GOVERNOR,
WISCONSIN
Mr. THOMPSON. Thank you very much, Mr. Chairman. I have
submitted my report and I want to tell you that welfare reform
is something that just didn't happen. It was a dreary, long
work in progress. I would like to take the opportunity at this
point in time to thank Senator Santorum for his dedication and
his passion and trying to get things accomplished, and he has,
and I am very supportive of what he has done and is trying to
do.
Newt Gingrich, the Speaker, I had the privilege of working
with him and other Governors throughout the whole process in
getting things done, and I certainly have to thank you, Mr.
Chairman, because I don't know how many hours I spent in your
office talking to you on the telephone about welfare reform
during 1995 and 1996 and also had the opportunity to debate my
good friend, Mr. Rangel, on welfare reform on national
television more times than I care to recount, but you have
always been a wonderful ally and sometimes a nemesis but it is
always a pleasure to see you, Congressman Rangel. Many other
people on this Committee on Ways and Means worked so hard
during those times to come up with a bill.
When I started back in 1987 on welfare reform, I started
because people had been coming from all over the country to
Wisconsin because we had high welfare payments. People were
making a joke out of the fact that you can, from Chicago, get
on a bus for $18 and go to Wisconsin and increase your welfare
payments by $225. We had national TV programs talking about the
people that were coming into Wisconsin to get on welfare.
I sat down with several individuals and decided that I was
going to really try and reform welfare. How I did it, Mr.
Chairman and Members, is I used to bring in welfare mothers
into the executive residence, when I was Governor, and I would
ask them to have lunch, just with welfare mothers, and I would
ask them ``why are you on welfare,'' and they said the reason
we are on welfare is because it is the way for us to get health
care.
I said if I provided you with health care would you take a
job and get off of welfare. The response was well, we have to
have somebody to take care of our children. We can't get off of
welfare if we don't have somebody taking care of our children.
So, I said, and rightly so, if I provided health care and
day care, would that be enough of an impetus for you to get a
job and get off of welfare. They said yes, it would be, except
we have no training. We haven't got the training. We don't have
the education. I dropped out of school when I was 13 or 14. I
was pregnant. I have never been back to school and I have never
had a job.
So, I said if I provided you with training, would you take
a job. They said yes, but most of the jobs are away from where
I live. I need transportation.
So, I sat down and developed a program which would provide
for health care, day care, transportation and training. As a
result of that I went to Washington because I had to get
waivers, and I started in 1987 with President Reagan. I am the
only Governor I believe that had waivers in existence from
President Reagan, the first President Bush, and President
Clinton.
We developed welfare programs along those waivers. Those
waivers started to work and people started to stand up and take
notice. Then in the nineties and 1991 and 1992 John Engler and
Mike Leavitt got elected and they also then started working on
welfare reform. We started a movement across America trying to
compete with developing better and more exciting, innovative
welfare programs to help individuals get out of poverty, and be
able to have a job.
I created a State EITC compatible with the Federal one, so
it really made it worthwhile for an individual to have a job.
As a result of that we were very successful in Wisconsin. We
went from over 100,000 families, and the day I left we were
down below 7,000. We had over a 90 percent reduction off of
welfare in the State of Wisconsin. Not all, but a vast majority
of those mothers who had children on welfare had a job that was
paying much more than the minimum wage. They were much better
off. Plus, having the Federal EITC, plus the State EITC, they
were then able to have a decent life. They were able to then
reduce childhood poverty in the State. We also became the State
in which other States tried to copy.
Then I had the privilege to work with you in Congress, with
Speaker Gingrich, and other individuals to come up with the
TANF program. I really sincerely believe it was a giant step
forward in regard to reducing childhood poverty, and allowing
individual mothers to have a way out of poverty and have a job.
As a result of that, Congress has continued to work on it.
I want to compliment you--I want to compliment this
Committee on being able to pass the recent proposal that the
President signed, in which you once again redirected the
attention to those individual mothers who are not working and
allowing for some type of intervention in order to help them
get a job.
I would like to also compliment Speaker Gingrich on his
ideas, but I would like to take them one step further. I think
if you are really going to be serious about welfare reform you
are going to also have to consider how are you going to be able
to make sure that mothers who are still on welfare are able to
get the skills necessary to get a job.
One of the best ways to do that I believe is by taking a
look at the EITC, the vocational acts, and by giving mothers
the opportunity, the training, the skills necessary in order to
get jobs and also to focus in areas where the jobs are badly
needed, especially in health areas.
You could set up a program in which you could steer welfare
mothers and be able to give them the encouragements to get into
nursing, get into lab work, get into hospitals. We know there
is a huge shortage out there. Hospitals are dying for that kind
of capabilities and opportunities to have people trained in
those kind of jobs.
You can use the Welfare to Work Act, use the Vocational Act
in order to really get mothers trained in those fields and
those areas and you would be able to help them get off of
welfare and get them the kind of income all of us would like to
have. You would be making a giant step forward to getting
mothers out of poverty and helping children.
The second thing is I think you should also try to
encourage other States, like Wisconsin, to have an EITC. It has
worked out extremely well for individuals starting out in a
minimum wage job in order to get off of welfare and be able to
get the kind of training necessary to do it.
I would just like to continue to compliment you, to
continue to look at ways in which you are going to be able to
help mothers find ways, find the training and the skills
necessary to get off of welfare.
I would like to thank my Congressman, Paul Ryan, for the
introduction but also thank him for his leadership on this
Committee and his leadership in Congress and compliment all of
you on a bipartisan basis to bring this subject back in front
of the American people so that we once again can focus on it,
focus on poverty, focus on mothers and children and be able to
give them the skills necessary to get off of welfare.
I thank you for this opportunity, for me to come back in
front of the Committee on Ways and Means and talk about a
subject that I have been involved in now for well over 20 years
and a subject that badly needs continued attention and
nourishing from this Committee on a bipartisan basis.
[The prepared statement of Mr. Thompson follows:]
Statement of The Honorable Tommy G. Thompson, Partner, Akin, Gump,
Strauss, Hauer & Feld, and Former Secretary, U.S. Department of Health
and Human Services, and Former Governor of the State of Wisconsin
Introduction
Good morning Chairman Thomas, and Members of the Committee. I am
honored to appear before you this morning to discuss the tremendous
successes of the bipartisan 1996 welfare reform law, and ways to
further build on the remarkable progress this initiative has had in
terms of empowering families and individuals to become self-sufficient,
all issues that I am so passionate and optimistic about.
I would like to commend you, Mr. Chairman, and your colleagues for
the role you have played in helping to focus attention on this
important issue.
I have been blessed to have had the opportunity to witness first-
hand the enormous impact welfare reform has had in helping families and
individuals dependent on welfare obtain the tools and skills necessary
to find lasting work that puts them on the path toward economic
independence. As Governor of the state that led the nation in adopting
innovative welfare reform policies and most recently as Secretary of
Health and Human Services (HHS), the federal government's department
responsible for implementing the country's welfare policies, I have
seen with my own eyes the compassion that these reforms have provided.
Ten years ago, the federal government took bold steps to put an end to
the failed government assistance programs that perpetuated a cycle of
dependency, non-work and non-marriage. For years, we followed this path
and we knew where it led--generation after generation dependent on
welfare--ongoing poverty and dependence.
The federal government's welfare overhaul was modeled in large part
after the dramatic success the state of Wisconsin had in helping
families to end their dependency on welfare and achieve self-
sufficiency. Just as Wisconsin's reforms helped recipients of the
program succeed beyond all expectations in terms of entering the
workforce and reducing the state's caseload, America also has seen
incredible progress because of the 1996 reform; national welfare
caseloads have declined by almost 60 percent and nearly eight million
parents and children no longer receive welfare; the overall poverty
rate has dropped 7 percent and the child poverty rate has dropped 13
percent, while the number of adults on welfare who work has more than
doubled.
Wisconsin's Welfare Reform
Let me tell you a little bit about what occurred in Wisconsin. In
1996, as Governor, I signed into law Wisconsin Works, also known as W-
2, a landmark welfare-to-work program. The program required
participants to work, while at the same time providing the services and
support to make the transition to work feasible and permanent. W-2
provided a safety net through child care, health care, transportation
and training assistance. Wisconsin's monthly welfare caseload declined
by more than 90 percent, while the economic status of those taking part
in W-2 improved significantly.
Welfare reform in Wisconsin began with one simple premise: ``for
those who can work, only work should pay.'' The challenge we faced was
to support people in their efforts to work within their abilities. The
key was to invest in a system that aimed to reinforce behavior that led
to independence and self-sufficiency, instead of sending checks out
once a month and in effect not addressing the underlying cause of
dependency. To me, the latter is not compassion. Expecting nothing in
return and offering no real help is hardly compassionate. That is
apathy. In Wisconsin, we refused to allow a morally bankrupt system to
continue ruining lives; we scraped a decades-old system that had sadly
become entrenched in our society. As Governor, I could not stand to
lose one more generation to a welfare system that certainly made
families no better off and often left them worse off than before they
entered the system, a system that robbed families of their self-worth
and dreams. So we did something. We decided to give these families a
ladder so they could climb out of poverty; we gave them a ladder of
opportunity called employment. Welfare told generation after generation
of families they weren't worth anything and unfortunately, these
families believed the naysayers. Nonsense. I believed, and continue to
believe that every single person in this great county of ours is
capable of contributing something to our society. Everyone has
something they can do.
Undeniably, Wisconsin's success in welfare reform is a reflection
of how the federal government has listened and reacted to the needs of
each and every state in this nation. It can also be said that the
federal government's direction on welfare reform is a reflection of
Wisconsin's welfare movement. Although from a national level, it
appears that changes to state welfare policy took place within the
larger context of federal welfare reform, it may be more accurate to
say that changes to federal welfare policy took place within the
context of Wisconsin welfare reform. The success in Wisconsin provided
a blueprint for the Temporary Assistance for Needy Families (TANF)
program. Together, the federal government and state governments have
offered hope and opportunity to those most in need, and now more than
ever, we must work together to continue to help those still in need by
delivering them opportunities to find self-sustaining work.
Commend Congress for Its Leadership in Strengthening the 1996 Act
I would like to commend Congress for its leadership in making
comprehensive welfare reform part of the Deficit Reduction Act of 2005
which was signed by the President in early 2006. In particular, the
modifications to the caseload reduction credit included in the Deficit
Reduction Act of 2005 will essentially require all states to achieve
the goal of engaging at least 50 percent of those receiving cash
assistance in work and work-related activities designed to promote
self-sufficiency. This as well as other modifications to the 1996 law
will help further guarantee that the underlying principle of successful
welfare reform--that efforts should be focused on providing needy
individuals and families with the opportunity to achieve self-
sufficiency through work and not simply cash transfers--is further
strengthened.
I can tell you that TANF has been a remarkable example of a
successful Federal-State partnership. States were given tremendous
flexibility to reform their welfare programs and as a result, millions
of families have been able to end their dependency on welfare and
achieve self-sufficiency. These new improvements to the TANF work
requirements are a further example of the federal government working
with states, and redoubling efforts to reach out to those in need.
Commend HHS Over its New Rulemaking to Address Welfare Reform's
Unintended Consequences
The extraordinary success of the 1996 welfare reform in reducing
caseloads brought about with it unintended consequences. Because of a
caseload-reduction credit contained in the original 1996 act, fewer
caseloads meant a corresponding decrease in the percentage of adult
welfare recipients that were required to join the workforce.
Thanks to Congress' action on this front, along with the hard work
of those at the Department of Health and Human Services in issuing
regulations in June of this year, participants in state welfare
programs funded through the federal TANF block are more likely to
secure real, meaningful work and stay on path to becoming self-
sufficient. By issuing these regulations and more precisely defining
activities that qualify as work, HHS went a long way in helping to
maintain the 1996 welfare reform law's intent to provide states with
incentives to reduce caseloads. The regulations issued by HHS require
education and training to be directly related to a specific job; allow
participation in substance abuse, mental health and other
rehabilitation services to count under the ``job search/job readiness''
work category; and further stimulate work by allowing countable
participation to include actual hours and limited excused absences. In
addition, the new regulations ensure greater state accountability by
requiring all work activities to be supervised in order to count toward
the participation rate; using federal reviews and the single state
audit to monitor state compliance; and implementing a penalty for non-
compliance with work verification plan.
HHS has taken a step forward in tightening worker requirement
standards and ensuring that the purpose of the 1996 reform, to get
those not working into the nation's workforce, is fulfilled.
Alarmist Rhetoric
At the time welfare reform was dominating the headlines and news in
1996, critics of the overhaul accused supporters of the reform as being
anti-family, anti-child and offered dire warnings of the consequences
of undertaking such reform, claiming that young children would be going
hungry and abandoned at higher rates. These same skeptics predicted
that the families receiving government assistance were at risk of
sinking deeper into poverty and homelessness.
Just as in Wisconsin, the federal government's efforts to improve
the nation's welfare program have resulted in enormous progress. As
mentioned earlier, the number of Americans free of public assistance
point to the overwhelming success of the 1996 reform, almost eight
million parents and children are no longer dependent on welfare. These
raw statistics do not capture the hope and optimism that welfare reform
has instilled in America's families. Instead of wallowing in the
despair, mothers and fathers have more self-esteem, have found their
dignity, and their children are doing better socially and in school.
Together our work has had a profound impact on our nation's most
vulnerable families. We have exceeded the most optimistic expectations
by assisting millions of families in moving from dependence on welfare
to the independence of work and we have provided a strong commitment to
child care to ensure parents can go to work without worrying about the
safety and well-being of their children.
A second measure of success of welfare reform must be the direct
impact the program has on its participants, their families and, most
importantly, their children. This is why Wisconsin's reform included
increases in the state's child care budget, including additional funds
for day care start--up, and the recruitment of new day care providers.
Wisconsin enacted meaningful programs that supported the recipients of
welfare in their struggle for independence--programs for child care,
health care, job search assistance and transportation.
In addition, we must make sure that those who have found employment
remain in the workforce. We must continue to make investments in
supporting those who have made this critical first step toward success.
Our bold welfare reform efforts demand that people push themselves
toward success, at the same time we enable them to do so with strong
supportive services.
It is my belief that Congress' action in including provisions in
the Deficit Reduction Act of 2005 to address harder-to-serve cases will
help greatly in reaching out to those most vulnerable and those who
have just begun employment. Congress can be proud of its leadership in
taking steps to ensure that these segments of the population are
provided with the extra help necessary to put them on the path to self-
responsibility, including: fully funding TANF and child care--making
available $175 billion for this critical program; increasing mandatory
child care funds by $1 billion; providing $750 million for healthy
marriage and fatherhood services; providing more generous child support
payment policy for families and encouraging parents in their efforts to
leave welfare for work.
Conclusion
In Wisconsin, and throughout America, welfare reform has
demonstrated that states can best solve problems when given the
flexibility and support to do so. In 1996, Congress gave the states the
freedom to design their own welfare replacement programs and the block
grants to support them. As a result, hundreds of thousands of families
are climbing out of poverty and pursuing their piece of the American
Dream. The new actions by Congress and the Department of Health and
Human Services take further steps to build on the successes of the 1996
welfare reform act.
On the heels of the 10th anniversary of Congress' successful effort
to reform the nation's welfare system, it is appropriate to draw
attention to the urgent need to reform Medicaid. Medicaid does not
adequately meet the health care needs of the individuals who comprise
the incredibly diverse population served by the program. To help those
who need it most, we must systematically examine the fundamental
challenges faced by the Medicaid program and take concrete steps on the
road to solutions. Every day new discoveries in drugs, devices, and
medical procedures provide Americans with better, more personalized
medical care. As significant as these medical advances may be, many
Americans do not have access to lifesaving treatments and technologies
because they cannot afford them. Congress must take creative and
comprehensive action, as it did in reforming welfare, to strengthen
Medicaid's ability to meet individualized needs, to empower individuals
receiving benefits through the program, to improve the program's core
structures, and to reach out to the uninsured.
I would be happy to answer any questions you may have.
Mr. SHAW. Thank you, Governor. I recall listening to these
three witnesses. It is kind of like going back down memory
lane. Senator Santorum, thank goodness we trained you on this
side and you brought that knowledge over to the Senate, where
you certainly were not only a leader here in the House on this
particular subject but you led the way over in the Senate,
which for a young Senator or a freshman Senator is not an easy
task and I compliment you for what you did.
Newt, I think you certainly brought this out as part of the
Contract of America and a fulfilled promise to the people.
Governor Thompson, I can't thank you enough for your experience
that you shared with us in crafting this bill so that the
mistakes that we would otherwise have made were avoided.
Welfare reform was a rescue mission. It always was
considered to be a rescue mission. It never was considered to
be something punitive, as to take these deadbeats off of
welfare. People were consumed with welfare because that is all
they knew, and that is the tragedy of decades of neglect. I say
neglect. Politicians were feeling better simply because they
threw money out there. They didn't look into the problem and
try to solve it. I think that is probably one of the brightest
days in the Congress when we started really looking at it.
Tommy, how you questioned these welfare mothers in finding out
about why they were on welfare and going through the checklist
is exactly what this Congress followed.
These are very fragile people and we worked hard to see
that they were not disadvantaged or they were not in any way
punished for falling into a system that was not of their own
creation.
Paying people not to work, to have kids and not to get
married is one of the most destructive formulas for behavior
that I can possibly think of, and yet this government for so
many years followed that route.
When I was Mayor of Fort Lauderdale we ran some of these
welfare programs and I found that--these were work programs;
programs that were supposed to put people to work. I found that
the biggest problem that we had is that there was always an
alternative, and that was welfare, to finding a job.
So, you had--so early on I realized that the enemy was
really the Federal Government that was paying people to stay
where they were. I will pay you to stay where you are; just
don't get a job, don't get married, and continue to have kids
and every year you will get a bigger check. That is absolutely
unforgivable that Congress did that for so many years and they
stood idly by and watched that happen.
I remember some of the earlier days, and Tommy, I don't
know whether you remember this or not, but you and I met on
many, many occasions, but one of the first times, you expressed
astonishment that Members of Congress were asking you for
advice; you said that you didn't have to come up here and kiss
anybody's ring. I said you don't have to kiss anything up here,
you are our expert, you are the one that we are going to rely
on to help us draft these things. There were other Governors.
My own Governor Chiles of Florida, I talked to him.
One of the earlier recollections I had of welfare reform, I
called during the election process President George Bush, the
older George Bush, and told him that I would very much like to
see him put into his campaign welfare reform, and he
indicated--at that time, he was way ahead of the polls--that
they pretty much had their script written.
It wasn't a month later that I woke up one morning to
listen to President, or then Governor Clinton, say how he was
going to change welfare as we know it today, and I just sat up
in bed and I said that is our idea.
That is the way it was. Even though President Clinton did
veto it twice, much to his credit he finally signed it. I will
say this, even though he had resignations within the White
House, people were madder than hell that we were going to touch
the unthinkable, do the unthinkable thing and touch the welfare
system, actually expect more out of people and believe in the
human spirit and push people forward. There were people
resigning from his staff at the White House, but much to his
credit, after he signed the bill, I remember Donna Shalala who
fought us all the way, as soon as he signed it she set out to
make it work, and she did. She now is President down at the
University of Miami and I applaud her for her efforts in
getting this thing jump started.
We have talked about statistics. I think, Senator Santorum,
I think you pointed out correctly the error in the statistics
that we were talking about. The welfare caseloads are down 64
percent, nearly 8 million parents and children no longer
receive welfare. The overall poverty rate has dropped 7
percent, the child poverty rate has dropped 13 percent, and
poverty among children and female head of families, a group
most likely to go on welfare, dropped 15 percent from 1996 to
2004. I choose those years because those are the years that Mr.
McDermott chose to put on the chart.
We have given people a life. We have made these welfare
recipients into role models for their kids. I will always
remember one of the--I think it was Ms. Anderson from
California, one of the State welfare directors who was telling
us a story at the hearing about how this youngster went to
school and was raising his hand, wanting to get recognized, and
the teacher finally recognized him and said what do you want.
He said my momma went to work today.
You think these kids don't notice those things? Yes, they
do. Now that kid has a role model and somebody to measure his
life with. I think it is a wonderful thing.
So, I think today is a day we celebrate, not just by
patting ourselves on the back. The real champions of welfare
reform are the single moms, those that had to do a scary thing:
get rid of a life that they had become so comfortable in, and
begin a new one that was adventuresome and was going to require
that they actually leave the home.
It was a great success, they are a great success, and I
think they are the people we should be honoring for the work
that we did. Mr. Rangel.
Mr. RANGEL. I am so choked up, Chairman Shaw, by your
remarks that I just have to take a deep breath. The Senator is
leaving.
Mr. SHAW. That was prearranged.
Mr. RANGEL. It is a Republican rally. I can understand. You
have got to campaign. There is nothing wrong with this. I
really think it is exciting to see that we can praise the
Republican leadership, and I had hoped that we would have
Senator Clinton here. She might have had some recollections of
the White House since statistically poverty went down each and
every year that Clinton was in office and has gone up each and
every year since it has changed.
I don't think we can afford the luxury of all this patting
each other on the back. I am so moved by what the Governor said
and what Speaker Gingrich has said that I am prepared to take
this to a new level because, let's face it, those who are still
in poverty and still feel the pain would hardly be invited to
attend this Republican rally, notwithstanding how good you feel
about yourself.
What we have to do, as we are doing in New York, is to have
those who care, the churches, the synagogues, the Mayors that
say we can do something about this. As Newt Gingrich has said,
education, competition, good health, all of these things we
have to come together, not as Democrats or Republicans. I do
hope, Speaker Gingrich, that we can get together soon so that
we can get you hooked up with what Bloomberg is trying to do
because you can go to any poor neighborhood and know that
poverty is so contagious; the schools are collapsed, kids make
kids, people lose self-esteem. They don't work; they are
unemployable. Half the kids can't even get in the Army if they
wanted to get in.
So, whether it starts with lack of education or the
breakdown of the family or bum neighborhood, it doesn't make
any difference. I can tell you I have come from a community of
bums that were forced to volunteer in the Army, and the Army
gets it. The Army gets it. Which shows that no matter how dumb
you are, given support, you can be productive. That is what
this country needs. We can't afford to have incompetents in
jail, living off of the society and not being able to do
anything.
So, I am anxious to see how we can establish a vehicle of
communication. I am not offended that this is a Republican
rally. Do what you have to do. The polls look bad, and I
understand, Mr. Shaw, but after that, or before then, people
who are poor, poverty, they don't care whether we are
Republican or Democrats. They want to be productive Americans.
They want to be able to choose between the parties, and I want
that to happen.
So, I am glad that the Senator had to leave because he
brings out the partisanship in me. I can't help myself, but
you, Governor Thompson, you were never a Republican Governor to
me. Your sincerity in trying to work out something was never
challenged by anybody while you served with your government.
Newt has gone out since he has left office, and you didn't
have to remind us that we lost all the Chairmanships. I
remember that far too well. So, I didn't need that, but you
have done so much work in education, in medical experiences,
that we can't afford to let our party labels interfere with the
obligation that we have to the American people, so that I will
be reaching out to you, Speaker Gingrich, to see what work you
have done in making certain that education is not considered a
local responsibility but a national priority.
We cannot go into globalization, we cannot go into fair
trade, we cannot even challenge a whole lot of these countries
unless our country is prepared to say that we are productive,
we are competitive. So, it has been a great experience for me,
and it is not unusual that I have attended Republican rallies
and something positive has come out of it. So, thank you for
calling it. Thank you, Mr. Chairman.
Mr. SHAW. Thank you, Mr. Rangel. I just point out to you
when this bill got to the floor on July 18th, 1996, the
President in the middle of a debate, a Democrat, President
Clinton, came on the television and said he was going to sign
it. After that 99 Democrats voted with the Republican majority
in passing this bill. Because of that, I would say that the
Democrats could certainly enjoy this victory lap along with the
Republicans.
Mr. RANGEL. Why weren't they invited to the party? We
didn't have any witnesses up there. Why didn't you have Mrs.
Clinton here?
Mr. SHAW. You could have invited President Clinton. You
know how the game is played.
Mr. RANGEL. The game is played.
Mr. SHAW. Mrs. Johnson.
Mrs. JOHNSON. Thank you, Mr. Chairman. Welcome to our two
special guests who were extraordinarily important to this
process. In fact, I don't think this could have happened
without the two of you sitting there, and I join my esteemed
colleague, the kid from Wisconsin, in commending his
description of you, the Honorable Secretary Thompson, as a
pioneer. I don't want the moment to pass without noting that
you have been an unequally aggressive and important pioneer in
reforming Medicare, and while Members don't understand it, we
actually -we have changed Medicare as radically as the welfare
reform bill changed welfare. It just takes longer to do.
With your leadership and our dedication we have moved
Medicare to a preventive health and wellness system that is
going to be far ahead any public or private system out there
and is going to lead America into the future and give it the
capacity to afford high quality, cutting edge health care, at a
price we can afford.
So, your leadership as the pioneer has been consistent
throughout your public service.
To Mr. Gingrich, this is not a Republican rally. We had
some very good participation by Democrats; half the Democrats
voted for it. This is an important anniversary because it
doesn't just take a majority in the House to make change when
change means breaking with the past. Medicare modernization
broke with the past. Medicare isn't going to be an illness
treatment system any more, it is going to be a health care
system now. Welfare reform broke with the past. That is why top
advisers in HHS resigned their jobs. They couldn't see the
future.
So, leadership was key to this, your leadership at the
dais, the leadership of Congressman Clay Shaw on the Committee,
and many Members. Mark my word, breaking through to change is
hard.
Now we have tried to break through the next level of change
and what I am asking is what do you think the next steps are.
In our next bill, which we had to compromise it down to get
something passed, but it took this issue of work far more
seriously. Work isn't just about today and tomorrow, it is
about a career ladder, it is about rising salaries, it is about
dealing with mental health so you can actually get into that
work. It is about dealing with drug assistance.
We were counting all those things as work. Tragically, we
had to settle for a bill that didn't count clearly mental
health treatment as work, drug assistance as work, career
ladder, better career ladder building.
Now, those are the only three things I have been able to
think of that could dynamically change the current system to be
more progressive and more aggressive in helping people move out
of poverty to firm middle class independence. I am interested
in your thoughts about what could be done, some progressive
States are doing things, and I turn it over to you, Mr.
Gingrich, and then to you, Mr. Thompson.
Mr. GINGRICH. Let me also apologize for Senator Santorum
having to leave. I want to pick up what you asked, Mrs.
Johnson, and pursue what Mr. Rangel said, because I want to
pursue where we could go from here. I think it is actually
based on something the Governor said, which is, if you listen
carefully to how he parsed through all the different problems a
person who was poor had, they didn't fit one particular
Committee. So, here is my initial observation about serious
long-term change.
If you could find a bipartisan group, and I think it has to
be bipartisan, and it has to be Members who are prepared to
spend long hours working with each other and getting to
understand each other because this stuff is hard; you need to
understand it may be a several year project. It is not going to
be quick and easy.
I would recommend that you start, that you agree in the
conference and caucus that this is a big deal, that if we truly
take as our goal, every American having the opportunity to
pursue happiness, and we mean it, then that means you have to
say all right, let's take the life of 5 or 10 poor
neighborhoods, some big city, some small town, some rural, and
let's go through exactly as Governor Thompson described. What
are all the components that inhibit them today from pursuing
happiness, and let's do it, and we did this, as Chairman
Johnson will remember, we did this with Medicare reform in 1996
where we had two major Committees work jointly in one room. We
also did it as part of welfare reform because we had--pieces of
welfare reform were in the Committee on Agriculture; food
stamps, and pieces were over here in Ways and Means. We cut
across boundaries.
I just want to suggest to you that if you were to put
together a genuinely bipartisan working group of people willing
to put aside ideology and put aside partisanship, and go to the
root of what blocks the poor from having the kind of future we
want every American to have, you would be startled in a matter
of months at how many things would surface, and how many
potential opportunities there were for dramatic change.
It won't happen though, if Republicans decide it has to be
ideologically conservative and it won't happen if liberals
decide you can't threaten any interest group. I think we have
to decide, are we really prepared to say that saving the
children and saving Americans who are currently outside the
opportunity to pursue happiness is actually worth getting in a
room, closing the door, working together as Americans, and
trying to come up with truly bold solutions even if they cut
across Committee jurisdictions, even if they cut across
Department jurisdictions.
I think that is the only way you can make the scale or
breakthrough that you need to make. I yield to my good friend
the Governor because he inspired that.
Mr. THOMPSON. I would have to agree with Newt--Speaker
Gingrich. I think you if you could set up a Committee that is
bipartisan and is really going to focus on big issues to
address, you can come up with some very positive solutions.
I would like to just take it one step further, and that is,
there are so many segments of our economy that are lacking with
needs, and need employees and need talented employees, and I
would strongly -as I mentioned in my testimony, I would
strongly take a look at the health fields.
In the health field--we have this huge problem in health
care, and one of the big problems is we have no people, a lack
of people, going in to being doctors, being dentists, being
pharmacists, being lab technicians, and being nurses. There is
huge need out there.
Use the vocational programs, the apprenticeship programs to
go the next step forward in welfare reform. In using the
apprenticeship program, the vocational programs, there are
opportunities to train people in these skills, and you would be
able to give them good jobs, but at the same time, fulfill a
badly needed situation in our health care field.
Health care is not the only one. There are so many other
segments of our economy that are lacking; that if we really
started positioning our educational system to try to accomplish
that, training people, educating people in that arena, you
would be able to bring out a lot of individuals that are going
to break down the walls of poverty, improve the opportunities,
and improve the education system.
It really gets back to education, Congresswoman Johnson. It
is health care and an education that are the two big issues
facing America. Poverty is the overall looming situation, but
the solutions are education and health care, and that is what
this Committee needs to address.
Mr. SHAW. Mr. Stark.
Mr. STARK. Thank you, Mr. Chairman. I am sorry that
Santorum had to run away, but I wanted to crown him as the
champion Pennsylvania Welfare Queen of all time. He took almost
$100,000 from a Penn Hill School District near Pittsburgh to
send his kids, who live in Virginia, to a cyberschool, and they
are still trying to collect his overpayments back from him.
Also, Santorum has been quoted as saying daycare money is
excessive, unnecessary, and not the problem out there in
America. He further says, Santorum says, child care is a
Washington-based issue, it is not an issue in the States. I
don't know about the State he lives in, but I think it is a
state of dream world.
Santorum's double standard is pretty obvious. He says, too
many families with young children, both parties are working, if
they took an honest look at their budget, they might find they
both don't need to work. Then he says, poor women, who he
believes should not be at home with their children, he has said
they ought to go out and go to work. He has voted consistently
for work-first legislation, against training and education
opportunities for welfare recipients, of which I remind you, he
is one of the largest welfare recipients from the State of
Pennsylvania. I would like now to yield to the gentleman from
Illinois Mr. Emanuel.
Mr. EMANUEL. I would like to thank Mr. Stark. Some of us
were there, both in 1991, when President Clinton gave the first
speech he gave on the three pieces of the covenant, one of
which was on welfare reform--and he didn't steal any ideas, Mr.
Chairman, he offered his own ideas. It wasn't any Republican
ideas. He was actually there in 1989 when President Reagan was
negotiating the first welfare reform bill.
Second, if you want bipartisanship on this issue, you don't
start off with a partisan hearing.
Third, when Newt Gingrich was there in 1996 and told
President Clinton, if he vetoed the welfare reform bill, Newt
Gingrich said to President Clinton, we will make you the
stumbling block to welfare reform. Bill Clinton said, and I
quote, ``Throw me into that briar patch.''
It took two vetoes before you got a bill that had child
care, health care, transportation assistance, and a work
requirement and child support collection.
Governor, you were in the room with Governor Carper and
Governor Engler, who thanked President Clinton for giving 43
waivers out of 50 States to put welfare reform in, and to force
the Congress to finally move.
Now, we can have a lot of rewriting of history, and we can
have pompoms, but this man over here does not have long-term or
short-term memory. What has happened here, welfare reform was a
bipartisan issue that got done because President Clinton also
led. A lot of other work happened in the Congress, but it was
Democrat and Republican Governors, and you know that.
Mr. THOMPSON. It was.
Mr. EMANUEL. Now, you want to all thank each other and do
your back-slapping, go ahead, but it did not happen without a
President who showed leadership and without Members. I was in
that room when that happened, and you thanked him for 43
waivers that put welfare reform on the level at the State, so
every State could do what it had to do. In addition to what was
in that bill----
Mr. THOMPSON. If the gentleman will yield.
Mr. EMANUEL. No. Now, wait a second, Governor. Just wait 1
second. What I saw here, some of us were present at history,
and we are very, very fortunate for that. You did have a big
leadership role, as did Governor Carper, now Senator Carper,
who thanked President Clinton because there were 43 States that
were launching welfare reform before that bill was signed. When
that bill was signed, it allowed those States to go forward.
Newt Gingrich, who told President Clinton, if you veto this
bill, you are going to be a stumbling block, it took two vetoes
until you increased child support. It gave parents who work 1
year of transition Medicaid health care, gave them $790 billion
for transportation assistance to move people from where they
lived to where the jobs were, child support collection to make
sure single mothers got a chance at work and provided for their
kids, and it also included children's health care, which is why
kids had health care that could go up, the only group in
America over that 1996 to 2000. It included an increase in the
minimum wage, doubling the EITC in 1997, expanding the EITC
from 1993.
So, extra pieces besides welfare reform were all key in
reducing poverty, raising incomes, and getting 3 million
children out of poverty. You cannot whitewash that history. It
was not done as just a bunch of little Republican Caucus groups
starting in 1989. I take offense that there would be an attempt
to rewrite one of the great bipartisan acts, and that this
Committee would start off with a partisan act, which was a good
moment for bipartisanship.
Second----
Ms. HART. Will the gentleman yield?
Mr. EMANUEL. No, I will not for this second, and I will
finish with this thing. The irony that somebody would use the
analogy in a welfare reform hearing to talk about the Medicare
bill, which introduced an extension of corporate welfare, as a
great analogy is ironic to me. If you want to talk about
welfare reform, the next two stages are frontiers, and, I would
agree with Senator Santorum, would be the father, which is
absent. The first generation of welfare reform dealt with the
single mother. If you want to really build on welfare reform,
you would start with the father, and the absent father.
Second of all, you would begin on corporate welfare,
because asking one element of our society to assume
responsibility and to leave the second element of society, the
corporate America, off of the welfare reform agenda would be
unfair to what our country is, which is we all go forward
together. I appreciate the time, Mr. Chairman.
Mr. SHAW. I would tell the gentleman from Illinois that in
my comments I mentioned Governor Chiles. I also will concede
that I kept in close contact with Governor Carper of Delaware
during this period of time. I also mentioned in my opening
statement that President Clinton ran on this subject back
before the bill was actually passed.
So, I think your charge that this is a partisan move is
drastically unfair. Plus, I would like to point out to the
gentleman that both requests the Democrats have made for
witnesses are on the second panel. So, you could have brought
Mrs. Clinton in here or you could have brought in the
President.
As a matter of fact, at a press conference I held
yesterday, I invited Mr. Kleczka, who was on this Committee,
who I think was a lone supporter on this Committee, as well as
Governor Carper to that press conference, in order to talk
about the 10 year anniversary. Mr. Herger.
Mr. HERGER. I thank you, Mr. Chairman. I think it is
regrettable that, at least in the last few minutes, the
direction that this hearing seemed to be going in. There has
been talk that it is a rally, and I would like to get back to
that rally, but it is a rally not for one party or another
party, the rally is really for the 64 percent of that welfare
population that used to be on welfare that is now out being
productive individuals in our society today; that are out there
paying taxes; that are working with their families; that are
beginning to realize the American dream. That is who the rally
is really for, and the fact that, for the decades prior to
1996, each decade since the sixties, the welfare rolls
increased.
Mr. THOMPSON. That is right.
Mr. HERGER. They increased not only during the bad times,
during the recession times, but they increased--even during the
boom years of the eighties they increased.
So, Mr. Secretary, Secretary Thompson, I want to thank you,
and I want to thank everyone. I want to thank President Clinton
for signing the bill and any Democrat that was involved, or
anyone, period, who was involved for coming up with what I feel
is the most gratifying issue that I have been involved with in
the 20 years I have been in Congress, which is to be able to be
out and seeing people helping themselves; to see that joy comes
with people feeling that self-gratification when they are able
to improve not only their own lives, but the lives of their
family.
Now, having said that, Mr. Secretary, I would like to ask
you, someone who has been involved from the very beginning,
what you feel the most important outcomes are of the 1996
welfare reform.
Mr. THOMPSON. Thank you very much. I would just like to
answer Congressman Emanuel as he walks out. I would just like
to point out that I mentioned in my opening remarks not once,
but five times about being bipartisan.
Second, I would like to refresh your memory, since you are
talking about historical revisionism. It was Tom Carper and
myself, appointed by President Clinton, to go all over the
country and talk about welfare reform, and Tom Carper and I are
still talking, on a bipartisan basis, about welfare reform. So,
I think your comments directed at Newt Gingrich and me were
absolutely off base, and I just wanted to point that out.
In regards to your question, I think the fact that the
American public recognized that there was a problem. I think
the second thing that Congressman Shaw pointed out was that it
was really the welfare mother that is the person that needs to
be complimented for standing up and asking for help and getting
help from States, and then the Federal Government.
The fact that the Welfare Reform Act 1996 gave poor women
an opportunity to get out of poverty is by far the best thing.
It was the goal of the TANF legislation, and it absolutely did
work; not in every case, but in a vast majority of the cases it
did work. It gave that mother an opportunity to have a job, it
gave her an opportunity to show to her children that there was
a different way than just being dependent upon the Federal
Government and the State government.
Those are the laudable goals, and they did work, and I want
to compliment you, Mr. Herger, because it would not have been
possible without your support, Congresswoman Johnson, and
especially Congressman Shaw, and a lot of other individuals and
a lot of bipartisan effort around this Committee that supported
it.
Mr. HERGER. Well, thank you, Mr. Secretary. Again, I can't
give enough good compliments for the Chairman of that
Subcommittee who led the charge with the brutal type of
criticism that he received, Chairman Shaw at that time, but it
has certainly been my privilege to be able to follow him as
Chairman of the Subcommittee on Human Resources on
reauthorizing this.
Mr. THOMPSON. You did a great job.
Mr. HERGER. Our big challenge now--we are talking about
that 64 percent, two out of three who were on welfare back
prior to 1996, but are no longer on welfare now--of course, our
big challenge now is that that one out of three that is left,
that is remaining, to ensure that we help those individuals
also find that same American dream. Thank you, Mr. Chairman.
Mr. SHAW. Mr. Levin.
Mr. LEVIN. I am next?
Mr. STARK. If the gentleman would yield, I just wanted to
commend the Governor of my natal State, who was Governor Heil
at the time I was 16, but for staying and sharing with us his
experience in this wonderful field. Thank you for the work you
have done, Governor, and that is going to cost you some wall-
eyed pike from Wisconsin this time, not Canada.
Mr. THOMPSON. Thank you very much, Congressman Stark. I
appreciate that comment very much.
Mr. LEVIN. I want to join in thanking you for staying here.
Governor, you mentioned bipartisanship, but this whole
atmosphere here has been one of partisanship. It was on the
floor yesterday, and it is regrettable. I think it is
unflattering for you all to participate in a process of
flattering, rewriting history, and forgetting why the vetoes
occurred. They occurred because there wasn't adequate child
care, and there wasn't adequate health care. That is why the
vetoes were brought about. Mr. Shaw, your being so partisan in
approaching this doesn't do the cause of welfare reform any
good whatsoever. Mr. Thompson, you have tried to divorce
yourself from it.
Mr. SHAW. Will the gentleman yield?
Mr. LEVIN. No, I won't.
Mr. SHAW. I didn't think so.
Mr. LEVIN. I won't. Mr. Gingrich tried the same, but the
whole atmosphere has been let's celebrate 10 years, as if
President Clinton wasn't around, as if there weren't other
Democrats who worked on this, as if there weren't legitimate
differences about the absence of child care and health care in
the bills that were vetoed and a product that eventually
included them.
The gentlewoman from Connecticut, you mentioned, and I want
to now talk a bit about the future, the regret for there not
being what was passed here, mental health, substance abuse, and
career ladder provisions. You wrote that bill.
We had an alternative that would take welfare reform to the
next step and allow the States flexibility on mental health, on
substance abuse, and, indeed, training for the career ladder
opportunities. There was zero effort, Governor, to try to put
together a Democratic and a Republican proposal. Zero.
I will tell the reason why it was important to do this,
and, Governor, I want to ask you about the analysis of the
Wisconsin welfare reform program, and I ask you this without
diminishing your effort.
Here is what the Chapin report concluded: ``Even using this
most inclusive measure of income,'' and that is all kinds of
benefits, ``three out of four applicant families were still
poor.'' In other words--and the other data shows the same
thing. I can cite the Leaver material that shows that a
substantial number of people who have moved from welfare to
work remain in poverty, right?
Mr. THOMPSON. Yes.
Mr. LEVIN. So, the Democratic proposal was that we now take
the next step and try to shape a program so that people who
move from welfare to work move out of poverty. So, if you would
comment on that Chapin Hall report.
Mr. THOMPSON. Well, Congressman, there is no question there
are still people on poverty and still people that are failing
on the TANF program, but there is a lot more that are
succeeding on it than are failing. You are never going to have
complete success.
Mr. LEVIN. No, but how about programs, minimum wage
increases and others, so that people who move from welfare to
work move out of poverty? How about more education opportunity?
Mr. THOMPSON. I am a big supporter of increased education
in the welfare.
Mr. LEVIN. The bill we passed here limits the State's
flexibility in terms of education provision for people who are
moving from welfare to work.
Mr. THOMPSON. You have to examine the education programs
and find out if the education is going to be able to be
utilized to get that individual or the group of individuals off
of welfare into a job, and there needs to be more of that.
There needs to be more targeted education, more vocational
education, more apprentice education type of things in order to
assist people in poverty to get into the jobs that are
available.
That is why I think a more targeted approach in education
is a much better way to get people moved from welfare into a
meaningful place of employment. I think there is a big
difference between just giving, offering across-the-board
education. I am looking at targeted education to get them out
of welfare.
Mr. SHAW. The gentleman's time has expired. Mr. McCrery.
Mr. MCCRERY. Thank you, Mr. Chairman. I was also present
during this history being made, and I can tell you that, yes,
Democrats were involved, and certainly some Democratic
Governors were involved in a very productive way, but for those
of us who were promoting, at the time from a Federal level, a
rather radical change in social policy, we did endure a lot of
name-calling, a lot of accusations from the Minority that were
not meant to be bipartisan. We endured that, and we finally got
it done.
Yes, there were some slight changes to the bill that the
President finally signed, but as one of the Minority's
witnesses on the next panel wrote in 1996: ``As noted, the
Urban Institute projected the House version of the bill would
push an additional 1.1 million children and a total of 2.6
million people, including adults, into poverty. The provisions
of the House bill that were central to the Urban Institute's
analysis were changed only slightly in the final legislation.''
Now, that is the Minority's witness on the next panel, what she
wrote.
So, let us not completely rewrite history. We are thankful
for getting nearly 50 percent of the Democrats in the House to
vote for the final conference report, and I hope we can get at
least 50 percent of the Democrats to work with us to improve
what we have already done.
If the opening statements we heard this morning, especially
those from my friend from Washington, were simply meant to
denigrate the results of the Welfare Reform Act, then I
strongly disagree with those assertions. On the other hand, if
their remarks were meant to underscore what Speaker Gingrich
said in his opening remarks, that there is more to be done, and
we need to work together to accomplish more, then I am on
board, and I want to work with everybody on this panel,
Democrat and Republican alike, to make further improvements in
social policy in this country that will further reduce the
benchmark for poverty in this country, like the Welfare Reform
Act clearly did.
So, I appreciate very much all the witnesses, Mr. Chairman,
that came before us, and I would like to yield to my colleague
from Michigan, Mr. Camp.
Mr. CAMP. I thank the gentleman for yielding and would just
say, having been here at the beginning on this, that his
comments are right on. The central character of the three
welfare reform bills remained unchanged through the legislative
process, and that was to break the entitlement lock and to
really have families move into independence. So, there really
were some relatively minor changes. If that gave what we know
as political cover to people to vote in the end, that was fine,
but I am more interested in moving forward and how we do that
in a way with Democrats and Republicans.
Mr. Secretary, I know we are running out of time, but just
in your opinion, the unfinished work of welfare reform, is it
strengthening families and marriage, is it shoring up the roles
of fathers, about which we've heard a lot of comments today? Is
there anything that you see as something key we should be
working forward on in the months ahead?
Mr. THOMPSON. There is no panacea out there, as you know,
Congressman. You have to block and tackle. It is in education,
it is in bringing fathers back into the family, it is doing
something about reforming our prisons, it is improving the
quality of education, it is targeting education, it is doing
more in the vocational areas than we have done before. All of
these things have to be done in order to get people out of
poverty and move welfare to the next step.
You have said it as well as anybody, you and Congressman
McCrery. We need to do this. We need to do it on a bipartisan
basis. Hopefully, as you said, there is more work to be done.
Let us get it at and let us see what we can do. It is a giant
step forward.
There is nobody asking to go back to AFDC, and I think that
is always the test. Nobody is putting in a bill to go back to
the failed policies, which would indicate to me that it is the
right thing we did. We are moving ahead, and now we have to
make some further innovations and further changes.
Mr. CAMP. Also, the innovations all the way through the
States, in terms of the work first programs, rather than having
people just write checks, they actually try to find skills for
folks and get them to work.
Mr. THOMPSON. Absolutely.
Mr. SHAW. Thank you, Mr. Camp, and I want to compliment the
gentleman on his work on this.
We have just a couple of minutes to get to the floor,
Governor, but I want to thank you for being with us. You have
made your mark here in Washington, and we very much appreciate
it.
Mr. THOMPSON. Thank you all, as always.
Mr. SHAW. We will commence this hearing after a couple of
votes, and we will start with the second panel.
[Recess.]
Mr. SHAW. The meeting will come to order. We now have our
second panel: Ronald Haskins, a Ph.D., codirector of the Center
on Children and Families at the Brookings Institute; we have
Bishop Roy Riley, Chair of the Conference of Bishops for the
Evangelical Lutheran Church of America, from Trenton, New
Jersey; we have June O'Neill, who is Wollman Professor of
Economics and Finance and director of the Center for the Study
of Business and government, Baruch College, at the City
University of New York, and she is the former Director of the
Congressional Budget Office; we also have Sharon Parrott, who
is the director of Welfare Reform and Income Support Division,
Center on Budget and Policy Priorities; and Robert Rector,
senior research fellow, welfare and family issues, Heritage
Foundation.
We have each of your full statements, which will be made a
part of the record, and if you could try to keep your remarks
to 5 minutes, we would appreciate it.
Our first speaker will be Ron Haskins, who was the staff
director of the Subcommittee on Human Resources during the
writing of the welfare reform bill. We have heard a lot about
history today. He has recorded it in his new book that has not
even hit the shelves yet, but which I have twisted a copy out
of his hand a while ago; and I can tell you, too, that we would
not have had welfare reform had it not been for Ron Haskins.
Ron?
STATEMENT OF RONALD HASKINS, CODIRECTOR, CENTER ON CHILDREN AND
FAMILIES, BROOKINGS INSTITUTION
Dr. HASKINS. Thank you, Mr. Chairman, for those generous
comments and mentioning that wonderful book.
I am greatly honored to be here today before the Committee
on Ways and Means to mark the 10th anniversary of welfare
reform. It is the most important social legislation of our time
and the most important achievement of the Republican revolution
1994.
I want to make five points. The first one is that this is
clearly the most important social reform of our age. Years ago
a famous program evaluator, many people consider the father of
program evaluation, proposed what he called the iron law of
social program evaluation. The iron law was that the expected
intervention, the expected effect of any social intervention
was zero. He wrote that because so many programs were not
successful.
We now have a random assignment study of Head Start, for
example, that shows even Head Start, one of the most vaunted
programs in the war on poverty, produces very, very modest
effects.
Against that record, now we come to welfare reform passed
in 1996, and here are the effects that we should pay attention
to, I believe.
The rolls are reduced by 60 percent, the first continuous
decline in the rolls. They have now declined for 11 years. Only
once previously had they even declined 2 years in a row.
Second, an unprecedented increase in employment for unwed
mothers, about 40 percent over a 4-year period between 1995 and
1999.
Third, huge increases in earnings for poor and low-income
mothers. According to the Census Bureau data, every year
between 1993 and 2000 their income from welfare declined every
single year, housing, food stamps, cash and so forth; and their
income from earnings increased every year. At the end of the
period, in constant dollars, they are better off by 25 percent.
As a result of that, of course, poverty declined about 35
percent.
We had a lot of discussion about poverty this morning.
Black child poverty reached its lowest level ever. The most
important fact is that poverty among female heads reached by
far its lowest level ever.
So now, even after 4 years of continuous increases, we are
still 20 percent below the poverty level that characterized the
country in 1993. So, this is a huge achievement for low-income
mothers and for American social policy.
Second point. It saved money. The Congressional Budget
Office estimated the bill would save $54 million, and it is
very difficult to estimate, but I am virtually certain the bill
saved more money than that. We can get into that in detail, if
you want to, but especially the SSI provisions and the
noncitizen provisions, I believe, in the long run, have saved
much more money than originally estimated. So, all those
achievements, but it saved money.
Third, it wasn't just welfare reform that did it. We also,
over the course of many years, the Congress, with this
Committee right in the middle of all these legislative changes,
created something I call the work support system. I think that
is absolutely vital to understanding the impacts of this bill.
The EITC, Medicaid changes, even changes in food stamps, a
whole new child tax credit, the characteristic of all of these
programs is that they support low-income working families.
Before the mid-eighties, if you were on welfare and you took a
job, you lost almost everything, including your Medicaid. By
1996, when we passed this legislation, you were much better off
if you took a job, because you got the EITC, you still get
Medicaid, food stamps, and so forth. We more than doubled the
spending on child care. So, there was a lot of support for
working families.
Point four: We always talk about welfare reform as
tantamount to replacing the AFDC with TANF, but guess what,
there were other provisions in the bill that--I see somebody up
there might recognize quite a bit--and those, too, have been
remarkably successful. The child care block grant has more than
doubled the funding in child care; and, get this, as the rolls
declined, the States had to spend the money on low-income
families. That was part of our legislation. In 1 year, they
used $4 billion of the very dollars that used to go to support
mothers not to work to pay for child care so other mothers
could work. Because of that and other provisions we put in the
bill, child care more than doubled.
Child support enforcement collections have more than
doubled over the period. Paternity establishment has increased
very substantially, about 50 percent. In 1 year we actually
established more paternities than kids were born outside
marriage, because we were establishing paternities from the
past. So, it was another immensely successful outcome.
Then, SSI for children, that we worked on very hard in this
Committee. A recent RAND study estimated the SSI provisions for
children themselves are now saving $2 billion a year because we
were not admitting children to SSI who had extremely moderate--
and I even hesitate to use the word ``moderate''--disabilities.
The General Accounting Office, of course, supported us on that
judgment.
The non-citizen provisions have worked exactly as planned.
There is still a lot of partisan difference about this, but if
you believe noncitizens should not be supported by taxpayers,
they are not. They have fallen like a rock on all the welfare
programs.
Then, finally, drug addicts and alcoholics. There is no SSI
benefits for drug addicts and alcoholics.
I would like to draw the Committee's attention to one
problem. I think there are several problems that are important,
but I think the most important one is that there is a group of
mothers at the bottom that I believe are worse off as a result
of welfare reform. This is totally plausible. In the old days,
they used to be able to go on welfare and stay forever. They
can't do that anymore. They have addictions, they have lots of
kids, and they have a lot of problems, some of which were
discussed in a previous panel. I think the Committee should not
forget those mothers, and we should urge HHS to do research on
these families and find out more about them and try to help
them.
So, here is the bottom line. What works is work. Thanks to
the provisions that were largely developed in this Committee
and passed by this Committee, the world now agrees that what
works is work. What we are developing now is work and not
welfare dependency. Thank you.
[The prepared statement of Dr. Haskins follows:]
Statement of Ronald Haskins, Ph.D., Co-Director, Center on Children and
Families, Brookings Institution
Chairman Thomas and Members of the Committee:
It has been ten years since the welfare reform law was signed by
President Clinton amid predictions of disaster from the left. Thanks to
provisions in the legislation itself that provided millions of dollars
for research, to an unprecedented level of research sponsored by
foundations, to data reported by states to the federal government, and
to national data collected and reported on a routine basis by the
Census Bureau, a tremendous volume of information bearing on the
effects of the legislation has been produced. In fact, there is
probably more information about the effects of the 1996 welfare reform
law than any other piece of social legislation enacted in recent
decades.
The most important reform was the replacement of the old Aid to
Families with Dependent Children (AFDC) program with the Temporary
Assistance for Needy Families (TANF) program.\1\ The research on TANF
yields a coherent picture that will almost certainly stand the test of
time. With its emphasis on work, time limits, and sanctions against
states that did not place a large fraction of its caseload in work
programs and against individuals who refused to meet state work
requirements, TANF was a historic reversal of the entitlement welfare
represented by AFDC. If the 1996 reforms had their intended effect of
reducing welfare dependency, a leading indicator of success would be a
declining welfare caseload. TANF administrative data reported by states
to the federal government show that caseloads began declining in the
spring of 1994 and fell even more rapidly after the federal legislation
was enacted in 1996. Between 1994 and 2005, the caseload declined about
60 percent. The number of families receiving cash welfare is now the
lowest it has been since 1969, and the percentage of children on
welfare is lower than it has been since 1966.\2\ Although it is often
reported in the media that cash welfare caseloads increase during
economic recessions and decline during recoveries, this claim is mostly
false. In the forty-one years between 1953 and 1994, the number of
families on AFDC declined in only five Only once--between 1977 and
1979--did the caseload decline (by about 2 percent) two years in a row.
By contrast, 2005 was the eleventh year in a row that the caseload
declined. Clearly, we are in a new era of welfare use.\4\
---------------------------------------------------------------------------
\1\ A remarkable characteristic of the 1996 welfare reform law was
its breadth. Here I examine results only for the new TANF program. But
in a forthcoming book (Ron Haskins, Work Over Welfare: The Inside Story
of the 1996 Welfare Reform Law, Washington: Brookings, 2006), I review
evidence on the effects of the law's provisions on family composition,
Supplemental Security Income (SSI) for Children, SSI for drug addicts
and alcoholics, public benefits for noncitizens, child care, and child
support enforcement. In each of these social policy domains, the 1996
law has had effects that range from substantial to dramatic. Among the
more notable are a substantial reduction in the number of children with
mild disabilities receiving SSI; a complete end to SSI benefits for
drug addicts and alcoholics; an unprecedented reduction in the number
of noncitizens receiving TANF, food stamps, SSI, and Medicaid; a
doubling of funds for child care and extensive use of saving from
welfare payments to pay for child care; and a doubling of child support
payments and a substantial increase in paternity establishment. The
original estimate of savings from the 1996 law by the Congressional
Budget Office was $54 billion over seven years (Congressional Budget
Office, ``Federal Budgetary Implications of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996,'' CBO Memorandum,
December 1996). Although there are technical problems with trying to
estimate the accuracy of the CBO forecast, I have no doubt that the
actual savings were several billion above the CBO estimate.
\2\ Because the population increases every year, data on the number
of children or families on AFDC or TANF over time can be misleading.
Both the number of children and the percentage of all U.S. children on
AFDC or TANF fell dramatically after 1994. The percentage of children
on AFDC peaked in 1993 at 14.3 percent. It fell every year thereafter
until reaching 5.3 percent in 2002. See House Committee on Ways and
Means, 2004 Green Book, pp. 7-31. By way of comparison, in 1970 the
percentage of children on AFDC was 8.8 percent, more than 65 percent
higher than in 2002 (see Annual Statistical Supplement, Social Security
Bulletin 13-11700 (Department of Health and Human Services, 2005),
table 9.G1.
\3\ Department of Health and Human Services, Administration for
Children and Families, ``Cash Assistance for Needy Families, Aid to
Families with Dependent Children (AFDC) and Temporary Assistance to
Needy Families (TANF), Average Monthly Families and Recipients for
Calendar Years 1936--2001,'' May 10, 2002, available at
www.acf.dhhs.gov/news/stats/3697.htm.
\4\ House Committee on Ways and Means, 2004 Green Book, section 7,
pp. 27-37; Department of Health and Human Services, Indicators of
Welfare Dependence: Annual Report to Congress, 2003 (Government
Printing Office, 2003), appendix A, table TANF 1; for welfare caseloads
information, see the Administration for Children and Families,
www.acf.hhs.gov/newstat2.shtml.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Although caseload decline is an important outcome measure of the
1996 reforms, how families fare after leaving welfare is of great
importance. The next reasonable test of welfare reform, then, is
whether mothers leaving welfare are working. Again, there is abundant
information to answer this question. In fact, three lines of evidence
can be aligned to produce a consistent story. The first set of evidence
is dozens of welfare-to-work studies conducted since the 1980s. These
gold-standard studies almost uniformly show reductions in caseloads and
increases in employment attributable to work requirements, as long as
the programs included job search requirements.\5\ The second line of
evidence comes from more than forty state studies conducted since 1996
of adults who left welfare.\6\ On average, these studies show that a
little less than 60 percent of the adults leaving welfare were employed
at any given moment and that over a period of several months or longer
about 70 percent held at least one job (although there is good evidence
that the share of leavers who were working declined somewhat since the
recession of 2001).\7\
---------------------------------------------------------------------------
\5\ Judith M. Gueron and Edward Pauly, From Welfare to Work (New
York: Russell Sage, 1991); Jeffrey Grogger, Lynn Karoly, and Jacob Alex
Klerman, Consequences of Welfare Reform: A Research Synthesis (Santa
Monica, Calif.: Rand, 2002).
\6\ House Committee on Ways and Means, 2000 Green Book, pp. 1471-
74, 1500-10. See also Gregory Acs, Pamela Loprest, and Tracy Roberts,
Final Synthesis Report of Findings from ASPE's ``Leavers'' Grants
(Washington: Urban Institute, 2001), pp. 23-47.
\7\ Acs, Loprest, and Roberts, Final Synthesis Report, chap. 3.
---------------------------------------------------------------------------
A third line of evidence, and the most definitive, is statistics on
female employment for the nation as a whole.\8\ Census data shows
historic changes in employment (defined as any earnings during the
year) by single mothers, especially low-income single mothers (Figure
1). From 1993 to 2000 the portion of single mothers who were employed
grew from 58 percent to nearly 75 percent, an increase of almost 30
percent. Even more pertinent to assessing the effects of welfare
reform, employment among never-married mothers, most of whom join the
welfare ranks within a year or two of giving birth, grew from 44
percent to 66 percent.\9\ Before 1996 never-married mothers were the
ones most likely to be school dropouts, to go on welfare, and to stay
on welfare for a decade or more. Yet their employment over this period
grew by 50 percent. Employment changes of this magnitude over such a
short period for an entire demographic group are unprecedented in
Census Bureau records.
---------------------------------------------------------------------------
\8\ See the Bureau of Labor Statistics, http://stats.bls.gov/cps/
home.htm, for labor force statistics from the Current Population
Survey. All the measures discussed in this section are point-in-time
measures.
\9\ Gary Burtless of the Brookings Institution, unpublished
calculations using U.S. Bureau of Labor Statistics data.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
So employment of poor mothers heading families has increased
dramatically. But what about their income? One of the most frequent
criticisms of the 1996 reforms was that mothers and children would be
destitute. Members of the House of Representatives and the editorial
boards of many of the nation's leading newspapers who opposed the
welfare reform bill, used exceptionally colorful language to describe
the afflictions to which the legislation would subject poor families
and children.\10\
---------------------------------------------------------------------------
\10\ Democrats on the floor of the House referred to the Republican
bill as ``extreme,'' ``harsh,'' ``cruel,'' ``abusive,'' and ``mean-
spirited;'' they also said the bill ``attacked children,'' ``lashed out
at children,'' and ``punished children;'' Bob Herbert of the New York
Times said the bill conducted a ``jihad'' against the poor, that it
``makes war on the kids of this country,'' and that it would
``deliberately inflict harm'' on children and the poor. See Ron
Haskins, Work Over Welfare, Chapter 8.
---------------------------------------------------------------------------
Census Bureau data for female-headed families in the bottom 40
percent of the income distribution for female-headed families (those
below about $21,000 in 2000) show that their pattern of income shifted
dramatically between 1993 and 2000.\11\ In 1993 earnings accounted for
about 30 percent of the income of low-income, female-headed families,
while welfare payments, including cash, food stamps, housing, and
school lunch, accounted for nearly 55 percent. By 2000 this pattern had
reversed: earnings had leaped by an astounding 136 percent, to
constitute nearly 60 percent of income, while welfare income had
plummeted by over half, to constitute only about 23 percent of income
(Figure 2). As a result of the growth in earnings and legislated
expansions of the EITC, income from the EITC more than tripled. Thus
with earnings and EITC payments leading the way, the total income of
these low-income families increased by about 25 percent over the period
(in dollars adjusted for inflation).\12\ Even after the recession of
2001, earnings remained above their 1993 level. The predictions of doom
turned out to be wrong.
---------------------------------------------------------------------------
\11\ These figures are from unpublished tables of demographic and
economic characteristics of female family heads, distributed by income
quintile, that are prepared by Richard Bavier of the Office of
Management and Budget using the Census Bureau's Current Population
Survey. Bavier makes these tables available to anyone who requests
them. All figures are given in 2004 dollars.
\12\ A study by two other researchers, using longitudinal data from
the Survey of Income and Program Participation, shows the same pattern
of increased work and earnings and declining poverty among families
leaving welfare. See June O'Neill and M. Anne Hill, ``Gaining Ground,
Moving Up: The Change in the Economic Status of Single Mothers under
Welfare Reform,'' Civic Report 35 (Manhattan Institute Center for Civic
Innovation, 2003).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The pattern is clear: earnings up, welfare down. This is the very
definition of reducing welfare dependency. Most low-income mothers
heading families appear to be financially better off, although work
expenses and Social Security taxes consume part of their earnings,\13\
because the mothers earn more money than they received from welfare.
Taxpayers continue making a contribution to the well-being of these
families through the EITC and other work support programs, but the
families earn a majority of their income. This explosion of employment
and earnings constitutes an enormous achievement for the mothers
themselves and for the nation's social policy.
---------------------------------------------------------------------------
\13\ Jeffrey Grogger and Lynn A. Karoly, Welfare Reform: Effects of
a Decade of Change (Harvard University Press, 2005), p. 156.
---------------------------------------------------------------------------
Members of this committee will recall that one of the most
frequently used arguments against the welfare reform legislation was
that it would throw over a million children into poverty. This claim
was based on a study conducted by the Urban Institute at the request of
the President Clinton's Department of Health and Human Services.\14\ It
is doubtful that any measure of the condition of the nation's children
receives more attention than the poverty rate. Thus, the impact of
welfare reform on poverty has great substantive and political
importance.
---------------------------------------------------------------------------
\14\ Sheila Zedlewski and others, ``The Potential Effects of the
Budget Reconciliation Bill on Family Incomes'' (Washington: Urban
Institute, 1995).
---------------------------------------------------------------------------
Although child poverty dropped during the 1960s, after the early
1970s it gradually drifted upward, primarily because an increasing
percentage of American children were being reared in female-headed
families, the family type with the lowest work output and the highest
poverty rate.\15\ However, between 1994 and 2000, child poverty fell
every year and reached levels not seen since 1978 (Figure 3). In
addition, by 2000 the poverty rate of black children and of children in
female-headed families was the lowest it had ever been. The percentage
of families in deep poverty, defined as half the poverty level (about
$7,000 for a mother and two children in 2000), also declined until
2000, falling about 35 percent during the period.\16\ Even after four
consecutive years of increasing child poverty between 2001 and 2004,
poverty was still 20 percent below it 1993 peak.
---------------------------------------------------------------------------
\15\ David J. Eggebeen and Daniel T. Lichter, ``Race, Family
Structure, and Changing Poverty among American Children,'' American
Sociological Review, 56 (1991): 801-17.
\16\ Bernadette D. Proctor and Joseph Dalaker, Poverty in the
United States: 2002 (Census Bureau, 2002), table 5; Douglas J.
Besharov, ed., Family and Child Well-Being after Welfare Reform (New
Brunswick, N.J.: Transaction, 2003), figure 4; Bureau of the Census,
Poverty and Health Statistics Branch, Current Population Survey, Annual
Social and Economic Supplements, December 14, 2005, table 3, available
at www.census.gov/hhes/www/poverty/histpov/hstpov3.html.
---------------------------------------------------------------------------
A special analysis by the Department of Health and Human Services
(HHS) and the Congressional Budget Office provides a clear
understanding of the impact of work on poverty rates among families
headed by poor mothers. The analysis examined the changing impact of
earnings and government taxes and transfer payments on poverty during
the 1990s. In 1990 the poverty rate among children in households with
an unmarried female head before any taxes or government transfers was
50 percent. But in 1999 this poverty rate (which might be thought of as
the market poverty rate, because it is computed without regard to
government taxes or benefits) fell by 20 percent, to a little over 39
percent. Virtually all this decline in poverty is attributable to
increased employment and earnings by mothers during the 1990s.\17\
---------------------------------------------------------------------------
\17\ This analysis retains the same thresholds as the official
poverty index (about $13,300 for a family of three in 1990) but uses a
broader definition of income than the official measure. House Committee
on Ways and Means, 2004 Green Book, table H-21.
---------------------------------------------------------------------------
The analysis then added various combinations of government
transfers and taxes to market income among these unmarried mothers. One
of the analyses shows that in 1990, before welfare reform, the
combination of all government non-tax transfers such as cash welfare
and food stamps reduced poverty by about 12 percentage points, from
around 50 percent to a little more than 37 percent. Although the market
poverty rate in 1999 was 11 percentage points lower than in 1990,
government cash and in-kind transfers in 1999 still reduced poverty by
almost an additional 10 percentage points, to a little under 30
percent.
The final step in the analysis was to examine the effect on poverty
when income from the EITC was added and federal tax payments were
subtracted from income. Not surprisingly, given the relatively low
level of work and earnings in 1990, adding the EITC increased income
only enough to reduce poverty by less than 1 percentage point. By
contrast, in 1999 adding the EITC to income and subtracting federal
taxes reduced the poverty rate by 4.50 percentage points. Based on
total income, including both market earnings and all government taxes
and transfers, poverty among single mothers and children was therefore
36.8 percent in 1990, compared with 25.1 percent in 1999, a decline of
nearly one-third. If the 1999 poverty rate had been the same as the
1990 rate, nearly 4.2 million more single mothers and children would
have been poor. The prediction that welfare reform would lead to major
increases in child poverty was flawed.
Promoting child well-being was a major goal of all participants in
the 1995-96 welfare reform debate. Republicans argued that increased
work by mothers on welfare would lead to positive impacts on children
because mothers would be setting an example of personal responsibility,
would impose schedules and order on chaotic households, and would
increase family income. By contrast, many Democrats thought that
welfare reform would be disastrous for children. They believed that
mothers would not be able to find and maintain work, would hit time
limits or be hit by sanctions, and would experience serious declines in
family income, driving them into destitution. Perhaps the most frequent
charge, based on a reputable study by the Urban Institute, was that
welfare reform would throw a million children into poverty.\18\ There
were also predictions that more children would be removed from their
parents and placed in the child protection system.
---------------------------------------------------------------------------
\18\ Zedlewski and others, ``The Potential Effects of the Budget
Reconciliation Bill on Family Incomes.''
---------------------------------------------------------------------------
Several types of research evidence are now available to make
informed judgments about which predictions have come true. A reasonable
place to begin is with broad survey data on the well-being of American
children. As we have seen, poverty not only did not increase but
actually declined every year between 1994 and 2000, with black child
poverty reaching its lowest level ever. Although poverty increased
after 2000, it remained well below its 1994 level. So great was the
decline in poverty that, as Paul Jargowsky and Isabel Sawhill show, the
number of neighborhoods with concentrated poverty fell precipitously,
as did the number of neighborhoods classified as underclass because of
the concentration of poverty and the high frequency of problems such as
school dropout, female-headed families, welfare dependency, and labor
force dropout by adult males. The authors conclude that the 1990s were
a ``remarkable decade in which substantial progress was made.'' \19\
---------------------------------------------------------------------------
\19\ Paul A. Jargowsky and Isabel V. Sawhill, The Decline of the
Underclass, policy brief, Center on Children and Families (Brookings,
2006), p. 6.
---------------------------------------------------------------------------
Besides measures of poverty and underclass neighborhoods, a host of
additional measures of child well-being is available. One of the best
collections of national indicators is the Child and Youth Well-Being
Index (CWI), published annually by Ken Land of Duke University with
support from the Foundation for Child Development. The Land index
reports twenty-eight key indicators of child well-being; these
indicators are based on nationally-representative surveys, most of
which have been administered annually since 1975. The overall index
shows a clear pattern of changes over the past three decades. After a
few years of modest changes in no clear direction, in 1982 the index
showed a decline in well-being that lasted almost continuously until
1995. Since 1995, the index shows an improvement in well-being in
almost every year, more than recovering the ground lost in the 1980s
and early 1990s. Using 1975 as the base year, the index descended to
about 75 percent of its original level by 1995. Since then, it has
increased by about 30 percentage points, to about 5 percent above its
1975 level. The CWI is organized into seven domains, each of which
measures an important dimension of child well-being such as economic,
health, safety, and emotional and spiritual well-being. Most of these
domains reflect the overall CWI pattern of continuous increases since
1995. Only the health domain shows a decline, and this only because
child obesity increased dramatically. Other measures of child health
showed improvement. As Land concludes, ``Children are faring better in
recent years.'' \20\
---------------------------------------------------------------------------
\20\ Kenneth Land, Child and Youth Well-Being Index (CWI), 1975-
2004 with Projections for 2005, available at www.soc.duke.edu/cwi/.
---------------------------------------------------------------------------
A similar conclusion is reached by the Federal Interagency Forum on
Child and Family Statistics.\21\ The forum presents many of its
indicators separately for various income and ethnic groups. In nearly
every case in which indicators are presented in this way, low-income
and minority children reflect the pattern of general improvement, often
showing even greater improvement than white children and children from
wealthier families. Similarly, Donald Hernandez of the State University
of New York has studied ethnic differences in the Land index. Compared
with the huge differences in the early 1990s between white children and
both black and Hispanic children, both minority groups closed the gap
with whites by about one-third over the last decade, both groups
narrowing the gap on six of the seven index domains.\22\
---------------------------------------------------------------------------
\21\ Federal Interagency Forum on Child and Family Statistics,
America's Children: Key National Indicators of Well-Being 2005
(Government Printing Office, 2005).
\22\ Donald J. Hernandez and Suzanne E. Macartney, ``Measuring
Social Disparities: A Modified Approach to the Index of Child Well-
Being (CWI) for Race-Ethnic, Immigrant-Generation, and Socioeconomic
Groups with New Results for Whites, Blacks, and Hispanics,'' paper
prepared for the forum, ``Review of the Child Well-Being Index,''
Brookings Institution, May 10, 2006.
---------------------------------------------------------------------------
Another feared effect of welfare reform was an increase in the
number of children taken from their destitute families by the foster
care system.\23\ By the mid-1990s, the national foster care caseload
had increased every year for fourteen consecutive years, rising from
262,000 in 1982 to 507,000 in 1996. The caseload then increased over
the next three years at approximately the same rate as in previous
years. Then in 2000, for the first time in two decades, the foster care
caseload began to decline and has declined every year since then,
falling from 567,000 in 1999 to 518,000 in 2004, a fall of almost 10
percent.\24\ Similarly, the incidence of child maltreatment of all
types has declined in most years since 1993, falling by over 20 percent
between 1993 and 1999, before rising somewhat beginning in 2000.
However, the rate in 2001 was still well below the rate of the early
1990s.\25\
---------------------------------------------------------------------------
\23\ House Committee on Ways and Means, Contract with America:
Overview, Serial 104-20, January 5, 10, 11, and 12, 1995, pp. 58-93.
\24\ House Committee on Ways and Means, 2004 Green Book, section
11, table 23; Department of Health and Human Services, Administration
for Children and Families, Children's Bureau, ``Trends in Foster Care
and Adoption, FY2000-FY2004,'' September 2005, available at
www.acf.hhs.gov/programs/cb/stats--research/afcars/trends.htm.
\25\ House Committee on Ways and Means, 2004 Green Book, section
11, figure 1.
---------------------------------------------------------------------------
In addition to these broad indicators of child well-being, there is
a growing body of scientific research on the direct effects of welfare
reform on children, including gold standard studies based on random
assignment. Most of these studies were initiated before the 1996
legislation, but nonetheless examined the effects of work programs
similar to those mounted by states both before and after the 1996
reforms. Pamela Morris of MDRC and her colleagues have reviewed the
impacts on young children of seven random-assignment demonstrations,
including thirteen employment programs in the United States and two in
Canada, yielding data on 30,000 low-income children.\26\ Morris and her
colleagues confined their review to children who were between the ages
of two and nine when the programs began (between four and fifteen at
the point of final data collection). Five results are notable: positive
impacts on school achievement were evident among children whose mothers
were in certain work programs; impacts were confined to children age
five and under at the beginning of the studies; impacts were confined
to work programs that increased family income by providing earnings
supplements; impacts faded after three years; and positive impacts on
school achievement were related to attendance at center-based child
care programs during the preschool years. These results are broadly
consistent with the large literature on effects of maternal employment,
including the finding that when mothers' work leads to increased family
income, young children often show modest improvement on measures of
social and intellectual development.\27\
---------------------------------------------------------------------------
\26\ Pamela Morris, Lisa A. Gennetian, and Greg J. Duncan,
``Effects of Welfare and Employment Policies on Young Children: New
Findings on Policy Experiments Conducted in the Early 1990s,'' Social
Policy Report 19 (2005): 3-22.
\27\ For reviews of the literature on the effects on children of
working mothers, see E. Harvey, ``Short-Term and Long-Term Effects of
Early Parental Employment on Children of the National Longitudinal
Survey of Youth,'' Developmental Psychology 35 (1999): 445-59; Martha
J. Zaslow and Carol A. Emig, ``When Low-Income Mothers Go to Work:
Implications for Children,'' Future of Children 7 (1997): 110-15.
---------------------------------------------------------------------------
A similar review by Lisa Gennetian of MDRC and her colleagues on
the effects of work programs on adolescents complements the Morris
review.\28\ The Gennetian review is based on pooled data from seventeen
random-assignment programs. The nearly 6,600 participating children
were between ages ten and sixteen at the beginning of the studies; at
the point of final data collection they were between twelve and
eighteen. Averaged across all the experiments, mothers participating in
work programs, compared with mothers in the control programs, rated
their children as performing below average in school. In addition,
children in the experimental programs were slightly more likely to
repeat a grade and to be enrolled in special education classes. They
were not, however, more likely to be expelled from school, to drop out,
or to have had (or have fathered) a baby. Data from the individual
studies provide some evidence that the negative effects on school
performance seemed to be concentrated in adolescents with younger
siblings, suggesting that the poor school outcomes might be associated
with early assumption of adult responsibilities because working mothers
shared child care with their older children. Similar negative effects
of maternal employment on adolescents have been noted by several other
researchers and reviewers.\29\ Although these effects are modest and
were not found in all of the individual studies, there is nonetheless
reason for concern. Gennetian and her colleagues call for ``more
investigation rather than . . . an immediate policy response.'' \30\
---------------------------------------------------------------------------
\28\ Lisa A. Gennetian and others. How Welfare and Work Policies
for Parents Affect Adolescents: A Synthesis of Research (New York:
MDRC, 2002).
\29\ Greg J. Duncan and P. Lindsay Chase-Lansdale, ``Welfare Reform
and Children's Well-Being,'' in The New World of Welfare, edited by
Rebecca M. Blank and Ron Haskins (Brookings, 2001); Jennifer L. Brooks,
Elisabeth C. Hair, and Martha J. Zaslow, ``Welfare Reform's Impact on
Adolescents: Early Warning Signs'' (Washington: Child Trends, 2001).
\30\ Gennetian and others, How Welfare and Work Policies for
Parents Affect Adolescents, p. 22.
---------------------------------------------------------------------------
Taken together, the survey and experimental information available
on the well-being of poor, low-income, and minority children in the
decade following welfare reform does not justify the fears expressed by
liberals. With some exceptions, measures of child well-being show that
children, and especially poor and minority children, have generally
lived under improved conditions and have shown modest gains on
indicators of development since 1996. On the other hand, the hopes of
conservatives about the impact of welfare reform on children have not
been vindicated either. High-quality studies of welfare reform show
that preschool children of families participating in welfare-to-work
studies may experience modest gains in their development and behavior,
but equally good studies show that adolescents experience modest
problems in school performance. From the perspective of one decade, it
does not seem likely that welfare reform will alleviate the serious
lags in development and performance shown by children from poor and
minority families. Direct interventions with these children will be
necessary if the nation is to close the ability and education gaps
between them and more advantaged children.
Although welfare reform is a major cause of the dramatic rise in
earnings and the decline in welfare dependency and child poverty, at
least two other factors account for the improving financial well-being
of female-headed families. First, the economy of the 1990s was
exceptionally strong. By 2000 almost 137 million Americans had jobs, up
by more than 16 million since 1993. Before the recession hit in 2001,
64.4 percent of all noninstitutionalized adults in the United States
were working, the highest share ever. Not surprisingly, the
unemployment rate fell from 6.9 percent in 1993 to 4.0 percent in 2000,
the lowest in several decades.\31\ Sophisticated statistical studies
have been conducted by economists to determine the relative
contribution of the economy, of welfare reform, and of other factors to
the dramatic rise of work and earnings by low-income mothers heading
families.\32\ These studies all show that both welfare reform and the
booming economy are important, but there is little agreement about the
relative contributions of each factor. However, previous economic booms
did not lead to either the reduction in welfare rolls or the increase
in work by low-income mothers heading families that were seen in the
1990s.\33\ Without welfare reform cajoling and where necessary pushing
mothers into the labor force, a growing economy would have had a more
modest effect on the employment and earnings of these mothers, as was
in fact the case during all previous economic expansions.
---------------------------------------------------------------------------
\31\ Census Bureau, Statistical Abstract of the United States,
2004--2005, p. 371.
\32\ Rebecca M. Blank, ``Declining Caseloads/Increased Work: What
Can We Conclude about the Effects of Welfare Reform?'' Economic Policy
Review 7 (2001): 25-36; James P. Ziliak and others, ``Accounting for
the Decline in AFDC Caseloads: Welfare Reform or the Economy?'' Journal
of Human Resources 35 (2000): 570-86.
\33\ It is difficult to discern a clear effect of the 1991
recession on the welfare caseload. When the recession hit, the caseload
had already grown in five of the previous six years, rising from 3.69
million families in 1985 to 4.38 million families in 1991, during the
healthy economy of the 1980s. The caseload continued to increase over
the next three years, rising from 4.38 million families in 1991 to 5.05
million in 1994, before its prolonged decline during the welfare reform
period. By contrast, as we have seen, the welfare caseload continued to
decline throughout and following the recession of 2001. Between 1983
and the peak employment year of 1991, the employment-to-population
ratio for never-married mothers rose from 34.5 to 44.0, or by 9.5
percentage points. During the expansion of the 1990s, the comparable
ratio rose from 43.4 in 1992 to 65.8 in 2000, an increase of 22.4
percentage points. Clearly a lot more poor mothers went to work during
the expansion of the 1990s than the expansion of the 1980s. Employment
data is from unpublished calculations by Gary Burtless using Census
Bureau data. Caseload information is from the Administration for
Children and Families, available at www.acf.hhs.gov/news/stats/
newstats2.shtml.
---------------------------------------------------------------------------
Second, beginning more than a decade before the 1996 reforms, the
federal government made existing benefit programs friendlier to low-
income working families and created entirely new programs designed to
help working families. These actions include expansions of child care,
creation of the child tax credit, changes in the standard deduction and
the personal exemption in the income tax code, changes in Medicaid, and
above all several expansions of the EITC. Two studies by nonpartisan
and highly respected congressional agencies--the Congressional Budget
Office (CBO) and the Congressional Research Service (CRS)--provide an
idea of the magnitude of these changes.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
At the request of the Ways and Means Committee in 1997, CBO
undertook a study to determine whether federal policy changes between
1984 and 1998 had resulted in more support for low-income working
families. CBO examined several major entitlement programs that help
working families, including child care, the EITC, Medicaid, and the
child tax credit. Taken together, we can label these and similar
programs the nation's work support system, because the programs provide
financial and in-kind support to poor and low-income working families.
CBO calculated the benefits that would have accrued to low-income
working families from the work support system under 1984 law and
compared that level of support to the level under 1999 law. Because
every work support program examined by CBO had been expanded or created
since 1984, the analysis was expected to show an increased commitment
by federal policymakers to low-income working families. But it is fair
to say that even experts were surprised by the finding that if the work
support system had remained as it had been in 1984, working families in
1999 would have received only around $6 billion in government work
support benefits (Figure 5). By contrast, the 1999 version of the work
support system--that is, the one that actually existed in 1999--
provided nearly $52 billion in support to working families. In other
words, the expansions in the work support system after 1984 resulted in
working families receiving $46 billion more in cash and other benefits
than they would have received if Congress and a series of presidents
had not expanded the work support programs. It would be difficult to
exaggerate the extent to which the nation's social policy to help low-
income families has shifted from one that provided most of its benefits
to families dependent on welfare to one that provides enormous benefits
to working families.\34\
---------------------------------------------------------------------------
\34\ Congressional Budget Office, Policy Changes Affecting
Mandatory Spending for Low-Income Families Not Receiving Welfare
(1998).
---------------------------------------------------------------------------
The second study, based on information computed by CRS, strengthens
the CBO conclusion. Whereas the CBO study provides an estimate of
changes in aggregate federal spending on work support programs, the CRS
data can be used to compare the financial work incentive for a typical
mother with two children on welfare in a typical state (Pennsylvania)
in 1986 and 1997.\35\ For years, a major charge against the welfare
system was that it posed a substantial disincentive to work because
families that accepted jobs could be worse off working than on welfare.
A mother and two children in a typical state in 1986 received about
$8,970 in cash welfare and Food Stamps (all figures are in constant
1997 dollars). If the mother worked and earned $8,000, her welfare
income would fall drastically, to $1,900. She would also pay nearly
$1,200 in federal taxes but would gain about $540 from the EITC. Thus
for working full-time she would have net income of about $9,275, or
about $350 more than if she had stayed on welfare. In addition, both
the mother and children would lose their Medicaid coverage, the
insurance value of which would be around $3,000, after nine months, and
the mother would get very modest if any government help paying for
child care. Clearly, a mother who elected to stay on welfare rather
than accept a low-wage job in 1986 would be making a financially
rational decision. By contrast, because of the broadening of the work
support system and changes in welfare laws, by 1997 this same mother
with a $10,000-a-year job (roughly equivalent to $8,000 in 1986) would
have net income of around $15,350, or $7,550 more than the $7,800 she
would have received if she had stayed on welfare. The EITC alone was
worth an additional $3,000 in cash, and changes in federal income tax
law had removed the mother entirely from paying income tax. Further,
the mother would have Medicaid coverage for one year, and the children
would be covered as long as the mother had low income. Finally, there
was much more money available for child care in 1997 than in 1986. All
in all, the work support system had made work a more attractive option
for welfare mothers in 1997 than in 1986.\36\ Given that the EITC is
pegged to inflation, that funds for child care have expanded
dramatically since 1996,\37\ and that the child tax credit was made
partially refundable in 2001, it seems likely that the work support
system is even more generous today than it was in 1997. In any case, at
the time the 1996 reforms were enacted, as well as today, the work
support system provides compelling financial incentives for mothers to
leave welfare even for low-wage jobs.
---------------------------------------------------------------------------
\35\ House Committee on Ways and Means 1986 Green Book, p. 369;
House Committee on Ways and Means 1998 Green Book, p. 408.
\36\ House Committee on Ways and Means, 1996 Green Book, section 8,
p. 399, table 3.
\37\ Douglas J. Besharov and Caeli A. Higney, Federal and Sate
Child Care Expenditures (1997-2003) (College Park, MD: Welfare Reform
Academy, University of Maryland, May 2006).
---------------------------------------------------------------------------
The positive impacts of the 1996 reforms on income, earnings, and
poverty have been pervasive and, in some cases, profound. However, no
policy produces all benefits and no costs. Although the 1996 law did
not produce the failures predicted by its critics, it nonetheless has
created challenges that states and the federal government should
address. In my view, the most important of these challenges is the
finding that there is a group of mothers at the bottom of the income
distribution who appear to be floundering under the new and more
demanding welfare system. Generally, these are mothers who live without
another adult in their household and who do not have income from cash
welfare, from employment, or from unemployment insurance. In the past,
these troubled parents could stay on welfare for many years. Under the
old AFDC program, the average length of spells for adults on the rolls
at any given moment was twelve years. It would be naive to believe that
all these welfare-dependent parents were suddenly capable of finding
and retaining jobs for $7 or $8 an hour. A demanding welfare system
requires at least some minimum level of competence and motivation, and
not all parents have these minimum levels.
There are several types of evidence that a number of mothers are in
fact floundering. Surveys show that about 60 percent of the mothers who
leave welfare are working at any given moment and that around 70
percent have held at least one job since leaving welfare.\38\ The 40
percent who do not work regularly raise some concern, but the 30
percent who have not worked at all since leaving welfare raise even
more serious concern. States frequently use sanctions and thirty-six
states have policy that allows them to completely terminate cash
benefits for rule infractions. At least one study found that mothers
who were sanctioned off the rolls had characteristics that make it less
likely they will be able to get and hold a job. More specifically, they
are less likely to have a high school degree or job experience and more
likely to have substance addictions, mental health problems, or three
or more children than other welfare mothers.\39\ Also of concern are
poor mothers heading families who are financially worse off since
welfare reform passed. Kasia Murray and Wendell Primus have compared
Census income data for mothers for the 1993-96 and the 1996-2000
periods and found that that mothers in the bottom 10 percent of single
earners actually lost income during the latter period.\40\ These
findings are placed in a broader context by Rebecca Blank and Robert
Schoeni from the National Poverty Center at the University of Michigan.
Blank and Schoeni, using data from the Census Bureau's Current
Population Survey, compared the change in income between the 1992-95
period (before TANF) and the 1997-2000 period (after TANF). Controlling
for factors such as family size and inflation, they plotted income for
two groups: all families with children and families with children
without both parents present. Blank and Schoeni find that all but the
bottom 2 percent of families with children had improved their income in
the late 1990s relative to the mid-1990s. Even in the case of children
living outside a two-parent family, 92 percent of families improved
their income. However, the bottom 8 percent declined.
---------------------------------------------------------------------------
\38\ House Committee on Ways and Means, 2004 Green Book, pp. L24-
L31.
\39\ Andrew J. Cherlin and others. ``Operating within the Rules:
Welfare Recipients' Experiences with Sanctions and Case Closings,''
Social Services Review 76 (2002): 387-405.Thirty-six states have a
policy that allows them to completely terminate cash benefits for rule
infractions. See Department of Health and Human Services, Temporary
Assistance to Needy Families Program (TANF): Fourth Annual Report to
Congress, May 2002, p. 346. But see Jeffrey Grogger and Lynn A. Karoly,
Welfare Reform: Effects of a Decade of Change (Harvard University
Press, 2005), pp. 235-36, who conclude that there are too few studies
to draw firm conclusions about the effect of sanctions.
\40\ Kasia O'Neill Murray and Wendell E. Primus, ``Recent Data
Trends Show Welfare Reform to Be a Mixed Success: Significant Policy
Changes Should Accompany Reauthorization,'' Review of Policy Research
22 (2005): 301-24.
---------------------------------------------------------------------------
Blank and Schoeni explicitly tied their analysis to welfare reform
by comparing states with strong cash work incentives (which allowed
mothers who went to work to retain relatively more of their welfare
benefit) and strong penalty incentives (strict time limits and strong
sanctions) and found that both cash and penalty incentives were
associated with higher income. The authors conclude that ``it is the
more lenient states with softer penalties where children's income seems
to have grown the least.'' \41\ Although the authors interpret their
findings as ``good news,'' their work is similar to Murray and Primus's
in showing that there is a group of mothers at the bottom--in this case
about 8 percent of the distribution of female-headed families--that is
worse off now than before welfare reform. This finding is reinforced by
Census Bureau data analyzed by Richard Bavier of the Office of
Management and Budget. Bavier finds a disconcerting increase in the
number of mothers in the bottom fifth of income for female heads of
families who report zero earnings and zero income from cash welfare
(ignoring SSI). The number of mothers in this category increased in
every year between 2000 and 2004, jumping by 60 percent over the
period.\42\
---------------------------------------------------------------------------
\41\ Ibid., pp. 307, 308.
\42\ These figures are from unpublished tables of demographic and
economic characteristics of female family heads, distributed by income
quintile, that are prepared by Richard Bavier of the Office of
Management and Budget using the Census Bureau's Current Population
Survey. All figures are given in 2004 dollars.
---------------------------------------------------------------------------
Several other researchers, including Robert Moffitt and Katie
Winder at Johns Hopkins; Pamela Loprest, Sheila Zedlewski, and others
at the Urban Institute; Sandra Danziger and Sheldon Danziger of the
University of Michigan; and Robert G. Wood and Anu Rangarajan at
Mathematica Policy Research report similar findings on increased
hardship among mothers who leave welfare, live in a household without
another adult, and do not have earnings.\43\ The studies by Wood and
Rangarajan and the Danzigers and their colleagues are especially
interesting because they both have many years of longitudinal data
(data collected on the same subjects over time) on mothers who had been
on welfare. Wood and Rangarajan followed a representative group of
2,000 recipients who had received welfare in 1997 or 1998 in New
Jersey. Although the group that was off welfare and employed increased
from about one-third to one-half over the fifty-four-month follow-up
period, the group of greatest concern--those who were off welfare but
without a job--was consistently a little more than one quarter of the
sample. Of this group, about 60 percent had other sources of income,
including SSI, unemployment compensation, a working spouse or partner,
or recent employment. Thus the mothers who were the least financially
stable constituted about 40 percent of those who were off welfare and
unemployed, or around 11 percent of the total sample.
---------------------------------------------------------------------------
\43\ Robert Moffitt and Katie Winder, ``Does It Pay to Move from
Welfare to Work? A Comment on Danziger, Heflin, Corcoran, Oltmans, and
Wang,'' Journal of Policy Analysis and Management 24 (2005): 399--409;
Pamela Loprest, ``Disconnected Welfare Leavers Face Serious Risks,''
Report 7, Snapshots of America's Families III (Washington: Urban
Institute, 2003); Sandra Danziger, Elizabeth Oltmans Ananat, and
Kimberly G. Browning, ``Childcare Subsidies and the Transition from
Welfare to Work,'' Family Relations 52 (2004): 219--28; Robert G. Wood
and Anu Rangarajan, ``What's Happening to TANF Leavers Who Are Not
Employed?'' Issue Brief 6 (Princeton, N.J.: Mathematica Policy
Research, 2003).
---------------------------------------------------------------------------
All the evidence reviewed above, showing that mothers and children
at the bottom of the distribution experience hardship, is based on
income data. Surprisingly, consumption data provide a different
picture. In studies using two nationally representative data sets,
Bruce Meyer and James Sullivan show that the material conditions of
low-income mothers, as measured by their consumption, improved somewhat
after welfare reform.\44\ On the other hand, a large part of the
additional consumption in the late 1990s appears to be related to work.
More specifically, the mothers spent more on housing, food away from
home, and transportation. Additional housing costs could well be
explained by the fact that the federal housing programs in which many
of these mothers participate charge families 30 percent of their
income, with the remainder of the family's rent being paid by the
government. If mothers earn additional money, they must pay 30 percent
of it on housing: in effect, federal housing policy all by itself
imposes a 30 percent tax on increased earnings. Additional spending on
food away from home and transportation could also be associated with
mothers working and needing to use some of their increased earnings to
get to work and to eat out because of time pressures.\45\
---------------------------------------------------------------------------
\44\ Bruce D. Meyer and James X. Sullivan, The Well-Being of
Single-Mother Families after Welfare Reform, Policy Brief 33, Welfare
Reform & Beyond (Brookings, 2005).
\45\ Christopher Jencks, Scott Winship, and Joseph Swingle,
``Welfare Redux,'' American Prospect 17 (2006): 36-40.
---------------------------------------------------------------------------
Evidence on the well-being of mothers and children can also be
gleaned from information on food consumption. Christopher Jencks, one
of the major critics of the 1996 reforms, and his colleague Scott
Winship conducted extensive analyses on the Food Security Supplement to
the Current Population Survey for the years 1995-2001. Based on twenty-
eight questions related to food security, Jencks and Winship conclude
that single mothers had fewer problems related to food in 2001 than in
1995, the last year before welfare reform. Further analyses shows that,
although the number of low-income mothers receiving welfare between
1995 and 1999 fell from 58 percent to 29 percent, food-related problems
dropped dramatically. The decline in food problems leveled off in the
1999-2001 period, but food problems in 2001 were still substantially
below the level of problems reported in 1995. Similarly, based on the
Department of Agriculture's definition of food security, the percentage
of food-insecure female-headed families declined from around 31 percent
in 1995 to about 27 percent in 1999, as the welfare rolls were
declining rapidly. Even during the period following the mild recession
of 2001, the percentage of food-insecure families did not increase
significantly, remaining below the 1995 level. The authors conclude
that ``single mothers' material standard of living probably improved
more during [the economic expansion of the 1990s] than during earlier
ones.'' \46\ In an op-ed piece published in the Christian Science
Monitor, the authors state flatly that their study of food problems led
them to conclude that ``welfare reform worked.'' \47\
---------------------------------------------------------------------------
\46\ Scott Winship and Christopher Jencks, ``How Did the Social
Policy Changes of the 1990s Affect Material Hardship among Single
Mothers? Evidence from the CPS Food Security Supplement,'' Faculty
Research Paper RWP04-027 (Cambridge, Mass.: John F. Kennedy School of
Government, 2004), p. 2.
\47\ Scott Winship and Christopher Jencks, ``Welfare Reform Worked:
Don't Fix It,'' Christian Science Monitor, July 21, 2004, p. 9.
---------------------------------------------------------------------------
Income data thus suggest that there was a group of single mothers,
comprising perhaps 10 percent of all single-mother families that had
been on welfare, who were worse off following welfare reform. Data
based on consumption and on food insecurity tend to offset this
conclusion, although even here there is some evidence of problems at
the bottom of the distribution. On balance, it seems prudent to
conclude that scholars should examine this problem in much greater
detail and search for solutions that will help mothers hold jobs. Given
the research reviewed above showing an increase in the number of poor
mothers with no obvious sources of income, more public and private
funds should be devoted to conducting research and demonstration
programs to determine how these floundering mothers can be helped. The
trick will be to maintain a demanding welfare system that strongly
discourages welfare dependency while simultaneously allowing states,
counties, and cities enough flexibility to identify and help these
mothers. Some mothers may never be able to achieve steady employment.
Welfare programs should figure out how to help them without reducing
the pressure on more capable mothers to leave welfare for work or to
avoid welfare in the first place.
Compared to any major change in social policy in the last several
decades, I think it fair to conclude that welfare reform stands out as
federal legislation that actually met its goals. The entire political
spectrum was in agreement that mothers on welfare should become self-
sufficient. All but the left-most part of the spectrum agreed to
support legislation that terminated entitlement cash welfare and
replaced it with a system that required work. The data summarized above
show that poor mothers on welfare responded exactly as they were
expected to do--they went to work in droves. In addition, as
Republicans predicted, they increased their family income and reduced
the poverty rate of their children in the process. They left welfare
for work, but government continues to support their efforts through
child care subsidies, health insurance, food stamps, and above all, the
Earned Income Tax Credit. There's something here for everybody to like:
both more work and lots of government support--except now the bulk of
government support is for those working, not those avoiding work. The
results of major changes in public policy rarely work out this well.
Now the question is: What's next? The obvious part of the answer is
that states must continue to aggressively implement the work
requirements in the TANF program. This Committee wisely led the way to
fixing a glitch in the 1996 legislation that weakened the work
requirement in the 1996 law. The first priority of this committee
should be to ensure that states aggressively implement the new
requirements. A second priority should be for this committee to work
with the Agriculture Committee and the Banking Committee to strengthen
the work requirements in the Food Stamp program and create strong work
requirements for able-bodied adults in housing programs. If work
requirements are successful in one program, I can see no reason why
they cannot be successful in other programs.
Beyond these obvious next steps, I think this committee has already
taken the most important action that holds great promise for further
reductions in poverty and improvements in child development and well-
being; namely, stimulating a national marriage movement. Years of
research on poverty have convinced me that there are only three ways to
reliably reduce poverty: economic growth, increased work, and increased
marriage rates. Unfortunately, primarily because of low and often
declining wages at the bottom of the income distribution, economic
growth is less effective than in the past at reducing poverty.\48\
However, the nation's experience with increasing work levels following
the 1996 welfare reforms shows unequivocally that increased work by
mothers heading families drives down the poverty rate. Now comes
marriage. Work that we have undertaken at Brookings provides solid
evidence that increasing marriage rates to the level the nation enjoyed
in 1970 would reduce poverty by almost 30 percent.\49\ In addition, as
shown in a recent volume of the Future of Children, published by
Brookings and Princeton University, the academic world is in almost
unanimous agreement that increasing marriage rates would be good for
children. This committee should provide strong oversight of its recent
legislation that provides $150 million per year to stimulate healthy
marriage and responsible fatherhood programs around the nation. In
addition, the Committee should keep a close eye on the ground-breaking
experimental research the Department of Health and Human Services is
funding to test marriage education and other approaches to
strengthening marriage. If some of these programs are successful, the
Committee should make funds available to expand them throughout the
nation. I believe the evidence strongly supports the view that if we
can increase the nation's marriage rates, especially among poor and
minority parents, the parents themselves, children, and the nation will
greatly benefit. Not least among these benefits will be a declining
need for government welfare programs.
---------------------------------------------------------------------------
\48\ Sheldon Danziger and Peter Gottschalk, Diverging Fortunes:
Trends in Poverty and Inequality (New York: Russell Sage Foundation,
2006).
\49\ Ron Haskins and Isabel Sawhill, ``Work and Marriage: The Way
to End Poverty and Welfare'' (Brief #28), Washington, DC, Brookings
Institution, September 2003; and Adam Thomas and Isabel Sawhill, ``For
Richer or for Poorer: Marriage as an Antipoverty Strategy,'' Journal of
Policy Analysis and Management, 2002, 21 (4), 587-599.
---------------------------------------------------------------------------
Mr. SHAW. Bishop Riley.
STATEMENT OF BISHOP ROY RILEY, CHAIR, CONFERENCE OF BISHOPS FOR
THE EVANGELICAL LUTHERAN CHURCH OF AMERICA, TRENTON, NEW JERSEY
Bishop RILEY. Thank you. On behalf of the Evangelical
Lutheran Church in America, the ELCA, a church of 5 million
members and 10,000-plus congregations, we are truly grateful
for this opportunity to testify about the implications of the
Welfare Reform Act of 1996.
I am Roy Riley. I serve as the Lutheran Bishop in New
Jersey and as Chair of the ELCA Conference of Bishops,
including 65 dioceses spread across the 50 States and the
Caribbean. More importantly, I represent a faith community that
is on the ground, engaged daily with people who live in
financial poverty.
In addition to those 10,000-plus congregations, Lutheran
Services in America provides over $8 billion in services
annually, services that touch the lives of 1 in 50 Americans.
Lutheran Social Ministries in New Jersey has been the largest
nonprofit provider of affordable housing in our State for a
number of years. Individual congregations provide food and band
together to provide shelter for the homeless, after-school
programs for latchkey children of working parents, and the list
goes on and on, but these determined efforts are not enough to
stem the increasing tide of hungry, poor, and uninsured people
in our communities.
The Welfare Reform Act 1996 marked a fundamental shift in
the way our government addresses antipoverty spending and seeks
to help millions of Americans living in poverty. Among its
stated aims were the strengthening of American families through
various initiatives and the promotion of a work first culture.
The question for the ELCA in 1996 was not about the necessity
of welfare reform, nor in 2006 about maintaining a culture of
reform. Our concern was then and is now the welfare reform that
truly operates to strengthen American family life and creates
meaningful work opportunities, moving people from poverty to
sustainable livelihood. The spirit of this testimony,
therefore, cannot be a celebration of unqualified success, but
an acknowledgment of important commitments made but not yet
realized.
Our Christian faith communities--and here with your
permission I will add a statement prepared by the leaders of
five of these communities, Episcopal, Methodist, Church of
Christ, Presbyterian, and Lutheran, our faith communities--
understand the witness of scripture to God's concern for the
poor and oppressed and God's call to us to speak for them. The
Bible describes the ministry of Jesus as good news for the poor
and calls us to care for the least among us, but we are falling
short of what God asks of us.
Thirty-seven million Americans live below the poverty line,
and 13 million of them are children. We have seen a 13 percent
increase in requests for emergency food assistance. Many of the
people that we are feeding in our soup kitchens are working
poor, many of them working two jobs trying to make ends meet.
Currently the national minimum wage of $5.15 per hour is
about 68 percent of the poverty line, a $4,000 annual shortfall
for a single parent with two children. The truth is that in
most of our States, people cannot live on what we have defined
as the poverty line.
That welfare caseloads have been reduced dramatically is
not finally the proof of successful welfare reform. Yesterday
morning I was in Camden, New Jersey, the second poorest city in
this country. Pastor Margaret Hertz Lane has served there for
25 years in Camden, and she told me that one of the best
components of the Welfare Reform Act was the job training
programs that came early on, but in recent years, funding for
those have been reduced.
Child care, safe, affordable child care, has been critical
to helping parents move from welfare to work. Thankfully, the
funding for child care was increased for this year. Even so,
due to inflation, this will not be sufficient to maintain the
present levels of service.
Finally, the stark realities are these: Many people in this
Nation, especially the working poor, are only one health crisis
and one missed paycheck away from homelessness and hunger. Too
many families have one or both parents working two jobs because
of the minimal hourly wage they earn, most of them without
health insurance. That is not good for a family, and it is not
good for children not to have that needed time with their
parents.
There will always be people in our society who need
assistance because of mental and emotional challenges,
addictions of all kinds. Some will not be able to support
themselves. These are the chronically homeless. Welfare reform
will never be a zero sum game. Our society will always have to
maintain a safety net for the least of these. That is what
compassion is all about. At the end of the day, the bottom line
is this: Nearly 20 percent of the children in this, the richest
Nation in the world, nearly 20 percent of the children live in
poverty. Whatever else we have accomplished, whatever claims we
make for our reforms, that fact remains.
We can end poverty. We can do this together, government and
faith communities together, but we must stay focused on the
bottom line: It is those children. They are the first priority.
The gap between the rich and the poor in this country gets
wider every year. We must not hide from that truth.
I thank you for your attention and your help.
[The prepared statement of Bishop Riley follows:]
Statement of Bishop Roy Riley, Chair, Conference of Bishops for the
Evangelical Lutheran Church of America, Trenton, New Jersey
Good Morning Chairman Thomas, Ranking Member Rangel, Distinguished
Committee Members and Fellow Panelists. On behalf of the Evangelical
Lutheran Church in America (ELCA), a church of 5 million members and
10,000 congregations, we are truly grateful for the opportunity to
testify about the implications of the Personal Responsibility and Work
Opportunity Reconciliation or ``Welfare Reform'' Act of 1996. I am Roy
Riley, Bishop of the New Jersey Synod of the ELCA, and Chair of the
ELCA Conference of Bishops, our national governing board of 65 Bishops.
1. The Welfare Reform Act of 1996 marked a fundamental shift in the
way our government addresses anti-poverty spending and seeks to help
the millions of Americans living in poverty. Among its stated aims were
the strengthening of American families through various initiatives and
the promotion of a work-first culture--a reminder that the Temporary
Assistance to Needy Families (TANF) block grant is indeed a temporary
means of support for people moving from welfare caseloads.
As a national church with ministries including advocacy, education,
grant-making and social service, the question for the ELCA in 1996 was
not about the necessity of reform nor in 2006 about maintaining a
culture of reform. We can in principle support an emphasis on healthy
family relations and the personal value of meaningful work and did so
in our 1994 document ``Working Principles for Welfare Reform''.
Instead, our concern was then and is now for welfare reform that truly
operates to strengthen American family life and create meaningful work
opportunities; that resulting policies truly improve the economy and
move people from poverty to opportunity, from mere existence in
forgotten alleys and shelters into meaningful and productive life
together.
The spirit of this testimony, therefore, unfortunately can not be a
celebration of unqualified success but an acknowledgement of important
commitments set down but not yet realized.
2. The Scriptural witness on which the Lutheran tradition stands
declares thematically God's concern for the poor and oppressed and
God's call to speak for them. The Bible describes the ministry of Jesus
as ``good news for the poor'' and details the content of biblical
judgment as our awareness and treatment of ``the least among us.'' It
bears noting that this well-known passage about judgment found in
Matthew refers precisely to a gathering of nations, not individuals,
and bears out Jesus' sense of concern that political and economic
powers keep in mind the interests of those struggling to be heard.
In addition, the long development of Lutheran theology envisions
government structures as God's own potential good gift and instrument
for ordered societies when it works from the broad interests of the
common good. From our perspective therefore, public programs and
government structures can be means to the greater ends of economic and
social opportunity--particularly for the poor and oppressed whom God
favors.
From this biblical perspective, we can support welfare reform
policies that aim to give families more meaningful time together and
that seek to define work opportunities as valuable for the human
experience. Our document ``Working Principles for Welfare Reform''
affirms that ``human beings have been created with moral agency and
freedom and a power to act responsibly in light of particular
circumstances.'' It also outlines the importance of work for human
dignity and well-being. However, from this same Christian perspective,
we can neither support nor celebrate welfare policy that maintains and
expands a perpetual working underclass in our nation--that is, a
significant part of American society pushed into jobs that keep
families vulnerable and in low-income conditions, often below the
poverty line itself.
We are also in long-standing alliance with Lutheran Services in
America, a health and human services network of almost 300 members
providing services throughout all 50 states and the Caribbean. Its
members deliver over $8 billion in services annually. A significant
part of their important work is funded with public dollars and these
are used efficiently and effectively to transform lives. However, even
their courageous effort is not enough to stem the increasing tide of
hungry, poor and uninsured people in our society.
3. According to recent Census figures, the number of Americans
living below the poverty line has increased every year since 2000 from
11.3% in 2000 to 12.7 % in 2004. This now represents 37 million
Americans. More particularly, this number includes about 13 million
children representing about 18% of all children in the U.S. We also saw
a 13% increase in requests for emergency food assistance, 54% of which
came from families and 40% of which came from people with jobs. The
Catholic Campaign for Human Development reports that in 2003, the
middle year of the current poverty increase, more than two-thirds of
all poor families with children included one or more individuals who
worked. These individuals typically worked for combined family totals
of 46 weeks per year.
Yet our Lutheran state policy offices report dramatic reductions in
state caseloads. In this context, it is difficult to herald caseload
reduction as a measure of success. People are leaving welfare caseloads
in dramatic numbers--so much is true. But where are they going? That
question should haunt us and propel us forward toward better solutions.
4. Helpful ways forward should relate to the current network of
work supports to make work more meaningful and truly strengthen
families of all shapes and sizes by giving them meaningful time
together.
Real wage values for low-wage workers have been stagnant at best
and have fallen slightly since 2001 after a significant increase 1996-
2000. An emphasis on the importance of work therefore would be helped
by raising the real value of the minimum wage on which most people
cycling off of welfare rely. Currently, the national minimum wage of
$5.15 is about 68% of the poverty line, a $4,000 annual shortfall, for
a single parent with two children. Even states with a higher minimum
wage could do more to reward work with an expanded Earned Income Tax
Credit (EITC).
In this same period, programs providing money for child care
(CCDBG), social services (SSBG), and job-training (WIA) have lost value
while the federal government has continued to impose restrictions--most
recently work participation guidelines--that will squeeze state budgets
further. We were pleased to see an increase for child care this year
but note that this will not even meet present levels of service plus
inflation. The new work participation guidelines for states are a
strange development given the touted catalyst of state empowerment for
the 1996 TANF law. In addition to those reductions mentioned, our
annual budget process has further decreased benefits making it harder
for TANF itself to make work work and support family life.
5. In summary, welfare reform principles represent the best of our
common purpose as Americans--supporting those who need help,
emphasizing the dignity and importance of work, and attempting to
strengthen family life. The ELCA affirms these principles and would
like to testify to their manifestation among us. Unfortunately the
economic reality in 2006 undermines broad claims at success. Families
are stretched to the breaking point while working full-time for wages
that keep them in a low-income status. There are an increasing number
of poor, hungry, and uninsured Americans. Family and work are not well-
served by these policies and we can do better by our fellow citizens.
The ELCA is grateful for the opportunity to testify this morning
among these distinguished panelists. Our faith compels us to speak
about social policy to civic leaders in terms of their own instrumental
purpose and power. More specifically, however, we are compelled as
Christians by Jesus who first publicly defined his own ministry in the
words of the prophet Isaiah, ``I have been anointed to bring good news
to the poor . . .'' Let's work to reshape welfare reform policy toward
its own best intentions so that the poor among us also might see it as
good news.
Mr. SHAW. Thank you.
STATEMENT OF JUNE O'NEILL, WOLLMAN PROFESSOR OF ECONOMICS AND
FINANCE, DIRECTOR OF THE CENTER FOR THE STUDY OF BUSINESS AND
GOVERNMENT, BARUCH COLLEGE, CITY UNIVERSITY OF NEW YORK, AND
FORMER DIRECTOR, CONGRESSIONAL BUDGET OFFICE, NEW YORK, NEW
YORK
Dr. O'NEILL. Mr. Chairman and Members of the Committee, I
am pleased to be here today to comment on the outcomes of the
1996 Welfare Reform Act. The 1996 legislation fundamentally
changed welfare in the United States, and I believe the results
have been truly gratifying.
Within 5 years after enactment of reform, the number of
families receiving welfare nationwide fell by half and continue
to decline, despite the recession that began after 2000. Even
in New York City, with its long history of high welfare
participation, the caseload plummeted. In 1996, 10 percent of
the city's population received welfare, double the national
level. By 2006, the caseload in New York had declined by more
than 60 percent.
Initially many were concerned that efforts to move families
off welfare would lead to wide-scale increases in child
poverty, but those fears have not been realized. Single mothers
increased their work participation, and their increased income
from employment helped to reduce child poverty significantly.
In short, the 1996 Welfare Reform Act worked in stark contrast
to the decades of failed attempts.
Why did the 1996 reform succeed when those before it had
failed? The main policy response to the growth in welfare
participation over the years was the provision of employment
and training programs for welfare recipients, but those
programs were ineffective because they never changed the
incentives that encouraged welfare participation.
Under the AFDC program, an eligible family was entitled to
an income from welfare as long as it had a child under the age
of 18 present in the home. Although the cash benefit provided
by the program was usually modest, it was enhanced over the
years by the addition of noncash benefits such as food stamps,
Medicaid, and housing subsidies. Incidentally, those programs
are not counted in the official poverty definition. A
definition that includes those shows quite different
percentages in poverty.
At the same time, there were no demands made on adult
recipients to work. The AFDC program was started in the
thirties, when few women with children worked, and was intended
to lend assistance when the father's support was lost through
death or disability. Then and now the caseload has been mainly
made up of female-headed families with children. Over the years
the reason for lack of a father's support changed dramatically,
and the vast majority of cases became eligible as a result of
having had no marriage tie.
The growth of the AFDC caseload was likely influenced by
many factors; however, the financial incentive of the
guaranteed income with no work requirement was clearly
important.
The welfare caseload grew explosively during the sixties
and seventies, as the total benefit package was enhanced and
eligibility liberalized. A large increase in the number of
single-mother families was an important force sustaining
caseload growth. A key issue, however, is the extent to which
the AFDC program encouraged the formation of single-mother
families, particularly those formed as a result of out-of-
wedlock childbearing.
The 1996 reform brought a radical change to welfare,
building on State experiments begun under AFDC waivers. Under
the new law, welfare is no longer an entitlement either in
terms of its financing or its philosophy. The TANF program is a
block grant, and it is intended to serve as a temporary helping
hand. Benefits are now restricted to a lifetime limit of 5
years, and all adult recipients must fulfill a strict work
requirement. The option of long-term welfare support has been
eliminated, and work responsibilities now limit discretionary
time while receiving benefits.
My prepared statement reports in detail on the changes that
have occurred in single mothers' welfare and work
participation, wages and income, as well as on child poverty
and the relation between those outcomes and welfare reform. I
will note here only that there is now considerable agreement
among those who have studied these issues that the positive
outcomes we have observed are attributable, in large part, to
welfare reform.
By reducing welfare participation and increasing work
participation, the 1996 welfare reform has succeeded in
connecting a significant number of disadvantaged single mothers
with the mainstream culture. In addition to increasing family
income, one hopes that the broader knowledge and experience
that comes from work will help these mothers become better role
models for their children, thereby improving their life
chances.
Mothers who struggle with work are more likely to see the
rewards that come from persistence in school and from
appropriate behavior and will therefore provide wiser guidance
for their children. This result is probably the single most
important outcome. It is difficult, however, to care for a
family as the lone provider and care giver. Although the
increase in female-headed families has abated, we have not yet
observed a significant increase in marriage and a decline in
out-of-wedlock child bearing.
The rise in out-of-wedlock births and the welfare culture
that were at the center of the underclass did not occur
overnight. I remain optimistic that the fading of welfare will
in time spur an increase in marriage and planned marital
births. There has been a sharp decline in teenage births,
particularly among black teenagers, and that decline should
enhance options for increased education and a more promising
future for these young women. The recent spread of enthusiasm
for reform in children's education also should be helpful for
future generations.
The reauthorization of the legislation and the continued
emphasis on strict work requirements will help to sustain the
gains that have already been made. Thank you.
[The prepared statement of Dr. O'Neill follows:]
Statement of June O'Neill, Ph.D., Wollman Distinguished Professor of
Economics, Zicklin School of Business, Baruch College, New York, New
York, and Former Director of the Congressional Budget Office
Mr. Chairman and Members of the Committee, I am pleased to be here
today to comment on the outcomes of the landmark welfare legislation of
1996.
The 1996 legislation fundamentally changed welfare in the United
States. The results in many respects have exceeded the expectations of
even the most optimistic supporters of the reforms. The most immediate
and dramatic effect was the decline in the welfare caseload. After
decades of caseload growth, within five years after enactment of the
legislation, the number of families receiving welfare nationwide fell
by 50% (Figure1). Despite the recession that began after 2000, welfare
caseloads have continued to decline. Concerns that the emphasis on
reducing welfare participation would result in wide scale increases in
child poverty have not been realized. Single mothers increased their
work participation and their increased income from earnings helped to
sharply reduce child poverty. In short, the 1996 welfare reform worked,
in stark contrast to the decades of failed attempts to reform the AFDC
program (Aid to Families with Dependent Children)--the nation's prior
welfare program, in place since the 1930s and terminated by the 1996
welfare reform. In my testimony today I will summarize the findings of
research that I and my colleagues have conducted analyzing the changes
that have occurred in the economic well being of single mothers and
their children and the role played by welfare reform after factoring in
the effects of the economic expansion of the 1990s and other trends.
Why did the 1996 reform succeed when so many before it had failed?
The goal of welfare reform is to reduce welfare dependency by
encouraging those already on welfare to find jobs and discouraging
welfare entrance by reducing the incentive to go on welfare in the
first place. The AFDC program as it was structured, however, encouraged
welfare dependency. Under AFDC an eligible family was entitled to an
income from welfare as long as it had a child under the age of 18
present in the home. Although the cash benefit provided by the program
was usually modest, it was enhanced over the years by the addition of
non-cash benefits--food stamps, Medicaid, housing subsidies, WIC
benefits. Moreover, no demands were put on the adult recipient to work.
AFDC was started in the 1930s when few women with children worked
and was intended to lend assistance when the father's support was lost
through death or disability. Eligibility then and now has been based on
both family structure and income; and the composition of the caseload
has been mostly made up of female-headed families with children under
the age of 18. But over the years the reason for lack of the father's
support changed and the vast majority of cases became eligible as a
result of having had no marriage tie.\1\
---------------------------------------------------------------------------
\1\ Dave M. O'Neill and June E. O'Neill, ``Lessons for Welfare
Reform: An Analysis of the AFDC Caseload and Past Welfare-to-Work
Programs,'' W.E. Upjohn Institute for Employment Research, Kalamazoo,
Michigan, 1997.
---------------------------------------------------------------------------
The growth of the AFDC caseload was likely to have been influenced
by many factors--demographic, economic, cultural and programmatic.
However, the financial incentive of a guaranteed income with no work
requirement was clearly important. The welfare caseload grew
explosively during the late 1960s and 1970s as welfare benefits were
enhanced and eligibility liberalized.\2\ The increase in the number of
single-mother families was an important force sustaining caseload
growth. A key issue, however, is the extent to which the AFDC program
encouraged the formation of single-mother families, particularly those
formed as a result of out-of wedlock childbearing by teenage girls.
---------------------------------------------------------------------------
\2\ O'Neill and O'Neill. Ibid. (Ch.2).
---------------------------------------------------------------------------
The main policy response to AFDC caseload growth over the years was
a series of initiatives providing employment and training programs for
welfare recipients. The hope was to encourage caseload reduction by
enhancing the skills and therefore the potential earnings of welfare
recipients. In addition, new financial incentives to work were provided
by ``disregarding'' a portion of earnings in determining financial
eligibility. But these programs never proved effective because they
provided no real incentive to leave welfare for work.\3\
---------------------------------------------------------------------------
\3\ There is reason to believe that the disregards actually
increased the caseload. O'Neill and O'Neill, ibid.
---------------------------------------------------------------------------
The 1996 welfare reform brought a radical change to welfare,
building on experiments begun under AFDC waivers in a number of states.
Under the new law, welfare is no longer an entitlement either in terms
of its financing or its philosophy. As its name suggests, TANF
(Temporary Assistance to Needy Families) is intended to serve as a
temporary helping hand. TANF benefits are restricted to a lifetime
limit of five years and all adult recipients must fulfill a strict work
requirement. It is no longer possible for a single mother to count on
guaranteed long-term income support without any work responsibilities.
The choice of being on welfare is ultimately eliminated and work
responsibilities limit discretionary time.
The discussion that follows reports on the changes that have
occurred in single mothers' welfare and work participation, their
earnings and income, child poverty and the relation between those
outcomes and welfare reform.\4\
---------------------------------------------------------------------------
\4\ The research reported on here is based on a series of Civic
Reports published by the Manhattan Institute, suitably updated: June
O'Neill and M. Anne Hill, ``Gaining Ground? Measuring the Impact of
Welfare Reform on Welfare and Work,'' Civic Report #17, July 2001; June
O'Neill and M. Anne Hill, ``Gaining Ground, Moving Up: The Change in
the Economic Status of Single Mothers Under Welfare Reform,'' Civic
Report #35, March 2003; June O'Neill and Sanders Korenman, ``Child
Poverty and Welfare Reform: Stay the Course,'' Civic Report #44
December 2004.
---------------------------------------------------------------------------
Changes in Welfare Participation and Work Participation
Figure 2 depicts the dramatic decline in welfare participation and
rise in the work participation of single mothers after the introduction
of welfare reforms (indicated by the line showing the percentage of
single mothers exposed to state welfare waivers prior to the
implementation of TANF and then to TANF, which was universally
implemented by the start of 1998). The pattern of change suggests that
the economy alone is unlikely to have been the motivation for the
changes after 1996. Welfare participation only slightly declined and
work participation only slightly rose during the expansion of the 1980s
and then reversed course during the weaker economy of the early 1990s.
With the improvement of the economy aided somewhat by the
implementation of state waivers after 1992, welfare participation again
began to decline and employment to rise. But the changes after the
implementation of TANF are of much larger magnitudes than had been seen
before. The welfare participation rate dropped from 34% in 1995 to 10%
in 2001 and has since remained at about that level.\5\ The percent
employed rose from 61% in 1995 to 73% in 2000. With the weakening in
the economy after 2000, the percent employed declined to about 69% in
2003 and has remained at about that level through 2005. That is still a
remarkable change from 1995 when the unemployment rate was 5.6%, about
the level of the past three years.
---------------------------------------------------------------------------
\5\ The rise in 2003 to 12.6% was undoubtedly influenced by the
recession and likely reflects receipt of state funded public assistance
as well as TANF. The welfare participation rate is based on receipt of
welfare or cash public assistance reported to the census. The caseload
data shown in figure 1 are based on the number of recipient families on
the AFDC/TANF caseload as shown on state administrative records
---------------------------------------------------------------------------
Single mothers with weak work related skills and other deterrents
to labor market success have always had the highest rates of welfare
participation. It was commonly thought that these women would lag
behind as they were expected to have the greatest problems finding and
keeping jobs. Yet disadvantaged groups have experienced larger declines
in welfare participation and larger increases in work than more
advantaged single mothers. In the decade before the 1996 reform more
than half of single mothers who are high school dropouts were typically
on welfare; by 2004, only 19% were on welfare--more than a 60% decline.
At the same time, the employment of these women rose sharply. Only
about a third of single mothers who were high school dropouts were
employed before the reform. In the last three years close to half were
employed.
The trends in welfare and work participation by race are shown in
Figures 3 and 4. In the years before welfare reform, black and Hispanic
single mothers were much more likely to be on welfare than white non-
Hispanic women. The decline in their welfare participation after reform
was huge, narrowing the racial difference. The gains in employment made
by black and Hispanic mothers are equally impressive. Between 1995 and
2005, Hispanic single mothers increased their employment participation
by 17 percentage points (from 47% to 64%); black single mothers
increased their employment rates from 55% to 65%. Single mothers who
are white and non-Hispanic increased their employment rates over the
same period by only four percentage points--from 69% to 73%. But their
employment participation had always been higher and their exposure to
welfare lower.
Earnings and Income
How has the large exodus from welfare influenced the economic well
being of single mothers? Do they earn enough to compensate for the loss
of welfare benefits? Women on welfare typically have less education
than the general population, and if they have been on welfare for a
number of years and have little work experience they are likely to
start with low wages when they do go to work. Yet despite the influx of
former welfare recipients into the workforce of single mothers, the
average hourly earnings of single mothers did increase moderately after
1995 (Fig. 5). Among all single mothers ages 18-44, the hourly wage
increased by 7% after adjusting for inflation. Among single mothers
with the least education--high school dropouts--the real wage increased
by 4%.
The Earned Income Tax Credit (EITC) is an important supplement to
the incomes of low wage earners. The total cash income of single
mothers including enhancement from the EITC increased by 12 % between
1995 and 2004 after adjusting for inflation, even though the percent
receiving welfare declined from 29% to 10% (Table 1). Single mothers
also receive non-cash benefits and many live in a household with a
partner or relatives. These other sources greatly increase the
resources available to single mothers. In 2005 the comprehensive
measure of income--what I call ``full income'' added 70 percent to the
mother's own cash income (line 5 of Table 1).
Among single mothers who were high school dropouts the percent
receiving welfare benefits declined sharply and the percent receiving
earnings rose from 48% in 1995 to 59% in 2004. Also as shown in Table
1, their total cash incomes including the EITC increased by 10% in real
terms over the 1995-2004 period. Again, their cash incomes were
substantially enhanced by non-cash benefits and by income from partners
or others with whom they shared a household.
Child Poverty
The poverty rate of children in single-mother families has always
been higher than the poverty rate of children in married couple
families, in part because of the obvious fact that married couples
potentially, and nowadays mostly, have two earners (Figure 6). In
addition, the relative dependence of single mothers on welfare for a
long time meant that a major source of the cash income of single
mothers was a relatively low benefit that was unlikely to grow with the
economy. During the 1980s and early 1990s the poverty rate of children
in single mother families was close to 50% compared to about 10-12% for
children in married couple families. Starting in 1994, the poverty rate
of children in both kinds of families began to decline with the onset
of economic recovery. But this time the poverty rate of children in
single mother families fell more rapidly, narrowing the gap in poverty
between the two groups of children. Between 1995 and 2000 the child
poverty rate for those in single mother families declined from 43% to
33%. With the weakening of the economy the poverty rate of children in
single mother families increased to 35% in 2003 and rose a bit more in
2004. but still remains well below the child poverty rate that
prevailed in the pre-TANF period.
In evaluating poverty rates it is important to note that the way
income is measured substantially affects the rate. Figure 6 shows
poverty calculated two ways. One is based on a definition of income
that counts only the cash income of the household. The other is based
on ``full household income,'' a measure that includes the EITC and the
value of non cash benefits and also deducts tax payments. The
percentage of children in poverty is considerably lower based on the
full income definition, particularly for children in single mother
families.
The poverty rates of black and Hispanic children have long been
considerably higher than the poverty rates of white non-Hispanic
children in part because of lower earnings of parents but also
importantly because of the higher proportion of single mother families
and their greater reliance on welfare. The sharpest declines in child
poverty have been among black and Hispanic children (Table 2).
The Contribution of Welfare Reform
The close association between the enactment of the 1996 reforms and
the ensuing decline in welfare participation, the rise in the
employment of single mothers and the decline in child poverty point to
the reform as a prime mover in these trends. The particularly
pronounced changes in these outcomes for groups with greater welfare
participation reinforces the point. The fact that the recession that
began after 2000 did not erode these gains strongly suggests that the
economy was not the main reason for the changes, although it
undoubtedly was a contributing factor. It is difficult statistically to
estimate the effect of a program change over time. Nonetheless, I and
others have conducted analyses to estimate the contribution of reform,
the economy and other forces to the various outcomes of concern.
Although the estimates vary, most find that reform has been a major
force.\6\
---------------------------------------------------------------------------
\6\ See the review in Rebecca Blank, ``Evaluating Welfare reform in
the United States,'' Journal of Economic Literature, Vol. 40, No.4,
1105-1166. Dec. 2002.
---------------------------------------------------------------------------
Concluding Thoughts
By reducing welfare participation and increasing work
participation, the 1996 welfare reform has succeeded in connecting a
significant number of single mothers with the mainstream culture. In
addition to increasing family income, one hopes that the broader
knowledge and experience that comes from work, will help these mothers
become better role models for their children, thereby improving their
life chances. Mothers who struggle with work are more likely to see the
rewards from persistence in school and appropriate behavior, and
provide wiser guidance to their children.
It is difficult, however, to care for a family as the lone provider
and caregiver. One of the outcomes that many have hoped would emerge
from welfare reform is an increase in marriage and decline in out-of-
wedlock childbearing as the marriage alternative of long-term
government support was significantly weakened. A surge in marriage has
not occurred, though the increase in female--headed families has
abated.
Most encouraging though is the sharp decline in teen birth rates,
which fell by 33% between 1991 and 2004 (by nearly 50% for black
teenage girls). Women with an out-of-wedlock first birth as teenagers
have had a high probability of going on welfare and of becoming welfare
dependent.
The rise in out-of wedlock-births and the welfare culture that was
at the center of the underclass did not occur overnight. I remain
optimistic that welfare reform will spur a reversal of those trends.
The recent spread of enthusiasm for reform in children's education
should be helpful along those lines as well.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. SHAW. Thank you, Dr. O'Neill. Ms. Parrott.
STATEMENT OF SHARON PARROTT, DIRECTOR, WELFARE REFORM AND
INCOME SUPPORT DIVISION, CENTER ON BUDGET AND POLICY PRIORITIES
Ms. PARROTT. Good afternoon, Mr. Chairman and Members of
the Committee, and thank you for this opportunity to appear
before you today.
I am Sharon Parrott, and I am the director of welfare
reform and income support policy at the Center on Budget and
Policy Priorities. The center is a nonpartisan research and
policy organization here in Washington.
The last decade has seen significant changes, both positive
and negative, in the system of supports for low-income families
with children. Many of the successes have been detailed by
other panelists, so in my limited time I will concentrate on
some of the more troubling trends, because those are an
important part of the story and framework for future
improvements.
I will make three key points. First, the effects of the
1996 welfare law have been more mixed than many people may
realize. Second, States adopted some policies that promoted
work and others that restricted poor families' access to
assistance. Finally, there are steps Congress can and should
take that could help ensure that fewer families are left
behind.
Point one: The traditional story told about TANF--caseloads
fell, employment rates rose, child poverty fell--is incomplete.
Throughout the nineties, TANF caseloads and child poverty did
both fall. The reasons for this are varied. Welfare reform was
certainly one piece of the story, as was the strong economy and
the expansions in those work supports that both Dr. Haskins and
Governor Thompson talked about this morning. After 2000, when
the economy fell into recession and the labor market softened,
unemployment rose, and child poverty, including deep child
poverty, children living below half the poverty line,
increased.
During that period, though, TANF caseloads continued to
fall. This meant an increasing number of very poor families
with children did not receive TANF assistance or the
employment-related help that should come with that assistance.
The TANF program now serves a much smaller share of the
families that are poor enough to qualify to receive it as
compared to the former AFDC program.
In the mid-nineties, 80 percent of families poor enough to
qualify for AFDC and meet the other eligibility requirements
participated in the program. In 2002, just 48 percent of
families poor enough to qualify for TANF under their State's
eligibility rules received that assistance. As a result, a
growing number of single mothers now fall into a no work and no
welfare category.
In fact, and this key point is not widely understood, more
than half of the decline in the number of families receiving
TANF reflects a drop in TANF receipt among families poor enough
to qualify for it, rather than a drop in the number of families
poor enough to qualify for TANF.
Now my second point. Over the past decade States have
adopted a number of generally positive TANF-related policies
that promote work. These include expanding welfare-to-work
programs, adopting make-work-pay policies, and expanding child
care assistance, as well as improving the collection of child
support.
States also have adopted some policies that restrict poor
families' access to assistance, such as making it difficult for
families to complete the application process and aggressive
sanctioning of families off of TANF when they don't meet
program requirements.
Now, what is important about the sanctions story is that
research has consistently shown that a significant share of
those sanctioned have serious barriers to employment that are
impeding their ability to meet program requirements. These are
not, the research tells us, primarily families that are
thumbing their noses at requirements, but families with serious
problems that aren't getting the help they need.
Unfortunately, the inflexible nature of the TANF
requirements in the recent Deficit Reduction Act and
restrictive new regulations increases the risk that States will
adopt new strategies for reducing TANF caseloads rather than
reducing need.
Simply stated, the cheapest and easiest way for a State to
meet the new work requirements is to help fewer poor families.
States may or may not act accordingly, but the incentive is
quite clear.
A recent report by Mathematica Policy Research,
Incorporated, provides new information about the problems faced
by the families left behind by welfare reform. This was a study
of long-term TANF recipients in St. Paul, Minnesota, and it
found that a large share of these recipients had low levels of
basic cognitive functioning, IQs of less than 80, as well as
high rates of serious mental and physical health problems, and
very little education. Some parents could not read simple
words, some could not lift a gallon of milk, some could not
leave their homes due to anxiety disorders or had debilitating
bouts of depression, and some were unable to follow simple
instructions or tell time.
In many cases, parents with these kinds of problems around
the country have been terminated from the TANF program. If we
are serious about ensuring that children's basic needs are met,
then the very real limitations of some of the poorest parents
in our country, as well as their capabilities, will have to be
addressed. States will need both resources and flexibility to
do the right thing.
The final point I would leave you with is that there are
steps the Federal Government can and should take to ameliorate
some of the negative consequences of the 1996 law that will not
undermine some of the positive effects the law has had.
Most States clearly do not think that the Deficit Reduction
Act and the new TANF regulations give them the flexibility they
need to create appropriate employment programs for those
hardest to serve. It is not too late to revisit the inflexible
nature of these Federal rules, or, at the very least, monitor
their impacts closely.
Congress also can promote welfare reform goals by improving
other supports outside of TANF, including the unemployment
insurance system, so low-wage workers can qualify; and doing
more to provide work supports, like child care, health care,
and housing assistance; and expanding training opportunities,
as Governor Thompson talked about, for both low-skilled mothers
as well as men.
Finally, the 1996 law's treatment of legal immigrants was
quite troubling. I want to commend to the Committee H.R. 899, a
bipartisan bill introduced by Representatives Cardin and
English, which would provide a modest extension of the SSI
eligibility period for refugees and other humanitarian
immigrants who are elderly or have serious disabilities. The
1996 law set an artificially short deadline for refugees to
naturalize, one that is particularly inappropriate in a post-9/
11 world.
Thank you again for the opportunity to testify today.
[The prepared statement of Ms. Parrott follows:]
Statement of Sharon Parrott, Director, Welfare Reform and Income
Support Division, Center on Budget and Policy Priorities
Good morning, Mr. Chairman and Members of the Committee, and thank
you for this opportunity to appear before you today.
My name is Sharon Parrott, and I am the Director of Welfare Reform
and Income Support Policy at the Center on Budget and Policy
Priorities. The Center is a nonpartisan research and policy
organization based in Washington, D.C. I have researched and analyzed
welfare reform issues for more than 12 years. In addition to my work at
the Center, in 1999 I was detailed for almost two years to the District
of Columbia's Department of Human Services, where I helped to implement
the 1996 welfare law and was able to get a first-hand look at the
opportunities and challenges that the law created.
The 1996 Personal Responsibility and Work Opportunity
Reconciliation Act (PRWORA) established the Temporary Assistance for
Needy Families block grant, changed the way in which child care
assistance was financed, created new tools for collecting child support
owed to families and changed how child support collections are
distributed, and made a set of cuts in other low-income programs,
including the Food Stamp Program and the Supplemental Security Income
program. Over the past ten years, a number of changes have been made to
these provisions. Some (though certainly not all) of the cuts in
benefits to certain legal immigrants have been restored; some cuts to
the Food Stamp Program have been reversed; regulatory changes have been
made that reduced the number of children who could have lost SSI
benefits under the 1996 law; and the recent Deficit Reduction Act has
made important changes to TANF in reauthorizing the program.
The impacts of all of these aspects of the 1996 law are important
and worthy of discussion, but this hearing--and this testimony--focus
on the impact of the TANF-related aspects of the legislation. This
testimony discusses four areas:
Trends in TANF caseloads, employment rates, and poverty:
It is widely known that TANF caseloads have dropped dramatically since
1996. It is not well known that more than half of this drop reflects a
sharp decline in TANF receipt among eligible families, rather than a
decline in the number of families poor enough to qualify for TANF. TANF
caseloads have continued to decline since 2000, despite increases in
poverty and deep poverty (families living below half of the poverty
line) and declines in employment among single mothers that have
occurred since 2000. In other words, TANF has become less effective at
serving those who are eligible for the program and need help both in
making ends meet and preparing for employment.
The choices states have made in their TANF programs:
Under TANF, states have adopted various policies to promote employment
among single mothers. These include new employment and training
activities, income-disregard policies that help ``make work pay,''
expanded work supports (most notably child care assistance), and
improved child support enforcement. Some of these policies also
benefited low-income families not receiving TANF benefits, helping them
remain employed and off of TANF. Some states also have adopted policies
and procedures that have served to restrict poor families' access to
assistance, including aggressive sanction policies and policies that
make it difficult for families to apply for assistance.
How families that find employment, and those that do not,
are faring: In part as a result of TANF, employment rates among single
mothers are higher today than in the mid-1990s (though they have fallen
in recent years). Most TANF recipients who find jobs are financially
better off than when they were on TANF. However, most earn low wages
and experience periods of joblessness. Many other families are unable
to move from welfare to work; some join the growing group of poor
families that have neither jobs nor assistance from TANF or another
income support program. Research shows that a large share of families
that are unable to move from welfare to work have serious barriers to
employment, including significant physical and mental disabilities.
Next steps for improving outcomes for families and
children: Many of the TANF provisions included in the Deficit Reduction
Act (DRA) passed earlier this year could exacerbate the decline in TANF
participation among eligible families and further increase the number
of poor families with neither a job nor income support. The DRA gives
states a strong incentive to assist fewer families--especially the
families that most need help, those with barriers to employment--
because it raises states' work participation targets while
simultaneously narrowing the range of welfare-to-work activities that
can be counted toward those targets. These restrictions will make it
considerably harder for states to design welfare-to-work programs
tailored to recipients' needs.
Congress can take a number of steps to ameliorate the DRA's
potential negative effects and address some of the disturbing trends
that have emerged over the last decade. It can revisit some of the
detailed rules related to the work participation rate and, in
particular, give states more flexibility in designing welfare-to-work
activities. Congress also can take steps to require that state TANF
programs are measured not only by how well they engage recipients in
work activities, but also by how well they provide a safety net for the
most vulnerable children. Congress also can strengthen work supports
such as child care assistance and health care, change Unemployment
Insurance rules so that more low-wage workers qualify, invest in
building workers' skills, and raise the minimum wage. And, Congress
should modify the punitive time limit on SSI assistance that the 1996
law imposed on extremely poor refugees and asylees who are either
elderly or have serious disabilities.
This testimony focuses primarily on TANF programs (and programs
funded with maintenance-of-effort [MOE] funds) that provide basic
income assistance to poor families with children. It is important to
note, however, that the TANF block grant and associated MOE funds are
used to fund a broad array of human service programs, including child
care and other work supports, services to abused and neglected children
and families at risk of abuse and neglect, youth development programs,
and more. Nationally, spending on cash assistance and welfare-to-work
programs comprised just 41 percent of overall TANF and MOE spending in
2004 (the last year for which data are available). While the federal
rules for programs that provide TANF or MOE-funded income assistance to
low-income families with children are very detailed, there are few
rules and little oversight on how states spend TANF and MOE resources
in other areas. A discussion of the issues related to how TANF and MOE
funds are spent in other program areas is outside the scope of this
testimony, however.
Trends: Caseloads, Employment, and Poverty
Most discussions of TANF focus on three sets of trends--the decline
in the TANF caseload, the increase in employment rates of single
mothers during the 1990s and the subsequent decline in employment rates
since 2000, and the decline in child poverty during the 1990s and the
subsequent increase in poverty since 2000.
While important, these three sets of trends miss important
additional information about the functioning of the TANF program and
the impacts on low-income families over the last decade. Examining a
broader set of indicators reveals these important facts:
Child poverty fell during the 1990s, but has increased
significantly in recent years as has the number of children living
below half the poverty line. This suggests that a combination of
economic factors and benefit policies have resulted in worsening
conditions for the poorest families with children in recent years. This
trend also suggests that the TANF program is not serving as an
effective bulwark against deep poverty for many families. Overall child
poverty remains lower today than in the mid-1990s.
Employment rates among single mothers are higher today
than in the mid-1990s, but they have fallen in recent years. This shows
that both public policies and the broader labor market are both
important factors affecting the employment rate for this group.
TANF programs now serve a smaller share of very poor
families than were served in the former AFDC program. This means that
there is a growing number of poor families in which the parent is not
working and the family is receiving neither income assistance nor help
in finding employment through TANF. Indeed, more than half (57 percent)
of the decline in the number of families receiving assistance through
AFDC or TANF since 1996 is attributable to the decline in the
proportion of families eligible for assistance who are served by TANF,
rather than to a decline in the number of families poor enough to
qualify for TANF.
The following is a more detailed description of the important
trends related to employment rates, caseloads, and poverty:
Caseloads: As has been well documented, the number of
families receiving assistance (in either a TANF--or MOE-funded program)
has fallen dramatically since 1994. Caseload decline began prior to the
enactment of PRWORA and accelerated after the enactment of PRWORA.
Caseloads continued to fall after 2000, even as poverty--and deep
poverty--among children began to rise. Between 2000 and 2004, the
number of children living in families with cash incomes below half of
the poverty line increased by 758,000, while the number receiving
assistance through TANF or MOE programs fell by 509,000. In other
words, at a time of rising need, states' TANF programs were assisting
fewer children.
Employment rates: Employment rates among single mothers
rose during the late 1990s, from 61.7 percent in 1995 to 73 percent in
2000. Since 2000, though, employment rates among this group have
fallen, reaching 69.1 percent in 2005.
Poverty: Child poverty overall and poverty among single
mother families fell during the 1990s. In 1993, some 22.5 percent of
children were poor according to the official Census definition of
poverty; in 2000, child poverty stood at 15.9 percent. After 2000,
however, poverty began to rise. In 2004--the latest year for which data
are available--child poverty had risen to 17.5 percent, still below its
levels in 1993 and 1996, but significantly above its 2000 level.
Between 2000 and 2004, an additional 1.4 million children fell into
poverty.
Deep poverty: In recent years, the number of children
living below half of the poverty line has increased substantially.
Between 2000 and 2004, the number of children with cash incomes below
one-half of the poverty line increased by 758,000. These are the
families that could most benefit from TANF assistance programs and
associated welfare-to-work programs, but as the number of children
living in these very poor families increased since 2000, the number of
children receiving TANF (or MOE funded) assistance declined. (Even when
other noncash benefits such as food stamps are counted, the number of
children in families with incomes below half the poverty line increased
substantially over this time period.)
Proportion of families eligible for TANF assistance who
receive aid: Since the 1996 law was enacted, the proportion of families
eligible for state TANFassistance that actually receive assistance has
fallen dramatically. During the first half of the 1990s, data from the
Department of Health and Human Services (HHS) show that more than 80
percent of families that met the eligibility criteria for the former
AFDC program received assistance through that program. AFDC's
participation rate had remained at about this level since at least
1981, the first year for which data are available. By 2002--the last
year for which data are available--just 48 percent of families eligible
for assistance received help through TANF or a separate MOE-funded
state program.\1\
\1\ U.S. Department of Health and Human Services, Indicators of
Welfare Dependence 2005, http://aspe.hhs.gov/hsp/indicators05/
ch2.htm#ch2_4.
This is a dramatic change. It means that fewer than half of the
families that are poor enough to qualify for TANF--which, in most
states, means that the family has income well below the poverty line--
actually receive assistance from the program. Very poor families that
do not receive TANF miss out not only on the income assistance that
could help these families meet their children's basic needs, but also
on programs that could help them prepare for and find employment.
The decline in the proportion of families eligible for TANF that
receive assistance from the program is a significant factor behind the
decline in the TANF caseloads. In fact, if TANF programs continued to
serve the same proportion of eligible families that they did in the mid
1990s, the number of families receiving TANF (or aid through an MOE-
funded program) would stand at roughly 3.2 million, rather than the
current levels of roughly 2 million.
Stated another way, more than half--57 percent--of the decline in
TANF caseloads since 1996 is due to a decline in the extent to which
TANF programs serve families that are poor enough to qualify, rather
than to a reduction in the number of families who are poor enough to
qualify for aid. Despite this dramatic change, little research has been
done to understand why the change occurred and what it means for poor
families and children.
Single-mother families that are jobless and not receiving
TANF (or MOE) assistance: As the proportion of very poor families that
receive assistance through TANF programs has fallen in recent years,
the number of single-mother families that are jobless and are not
receiving TANF benefits has increased markedly. A recent Center
analysis of TANF administrative data and Department of Labor data
suggests that the average monthly number of single mothers who are
neither employed nor receiving assistance through TANF increased by
more than 1 million from 1995 to 2002. Similarly, annual Census survey
data show a rise in jobless single mother families that do not receive
assistance through TANF, Supplemental Security Income, Unemployment
Insurance, or Social Security. Even after adjusting for the known
problem of the undercounting of TANF and unemployment insurance
recipients in the Census data, the number of single mothers working
less than half the year and receiving no assistance from these income
support programs increased by more than 700,000 between 1995 and 2004.
The Role of TANF and other Factors
The trends discussed above have no single cause. Several
researchers have tried to disentangle the causes of the rise in
employment rates and declines in TANF receipt among single mothers
during the 1990s. Most have concluded that a combination of factors
contributed to the increased employment rates, including the strong
labor market, TANF policies, improved work supports such as increased
child care assistance, a strengthened EITC, and the expansion of
Medicaid and SCHIP to children in low-income working families.
Determining the relative importance of each factor and the synergy
among them has proven difficult, but conservative and progressive
researchers alike typically ascribe less than half of the increase in
employment rates to TANF-related policies.\2\ (The ways in which TANF
programs promoted work is discussed in more detail below.)
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\2\ See, for example, ``The Effects of Welfare Policy and the
Economic Expansion on Welfare Caseloads: An Update,'' Council of
Economic Advisors, August 3, 1999, http://clinton4.nara.gov/WH/EOP/CEA/
html/welfare/nontechv3.html; Gary Burtless, ``The Labor Force Status of
Mothers Who Are Most Likely to Receive Welfare: Changes Following
Reform,'' Brookings Web Editorial, March 30, 2004; and ``The Past and
Future of Welfare Reform,'' by Douglas Besharov, the Public Interest,
Winter 2003.
---------------------------------------------------------------------------
Similarly, the poverty trends discussed above--including both the
reduction in child poverty in the 1990s, the rise in child poverty
since 2000, and the increase in children in single-mother families
living below half the poverty line--have multiple causes. These include
the broader labor market and the effectiveness of assistance programs
such as TANF, food stamps, EITC, the Unemployment Insurance program,
and SSI in reducing the extent and depth of poverty.
The importance of work-promoting policies outside of TANF--such as
the expansions of the EITC in 1990 and 1993, the Medicaid and SCHIP
expansions of the late 1980s and 1990s that enabled parents to leave
welfare for work without jeopardizing their children's health care
coverage, and increased support for child care assistance (through both
CCDBG and TANF funding)--should not be underestimated. These policies
created an environment where work was rewarded and supported.
Unfortunately, progress on this ``make work pay'' agenda has stalled in
recent years. Funding shortfalls have resulted in a contraction of
child care assistance, state and federal law changes may make health
care for children in low-income working families less, rather than
more, available, and the real value of the minimum wage now stands at
its lowest level since 1955.
While TANF's role in some of the other recent trends--such as the
extent to which families that are poor enough to qualify for TANF do
not participate in the program--is easier to determine, it is not
entirely clear which state programmatic choices have led to this trend.
Many TANF programs now send a clear signal to applicants and recipients
that the program is temporary and that they should do everything they
can to find jobs and stay off the program. Some states discourage
families from applying for assistance, place requirements on families
before their TANF application can be approved, quickly terminate
assistance to families for missing appointments with caseworkers or not
completing paperwork, and/or end assistance to families that do not
meet work or other requirements. Such policies and procedures can
reduce the extent to which eligible families receive assistance from
TANF.
State TANF Policies Designed to Help Families Move from Welfare to Work
While work participation had long been required of many welfare
recipients under AFDC, TANF brought a renewed emphasis that recipients
were required and expected to participate in work activities. The work
participation rates in the 1996 law spurred states to revamp their
welfare-to-work programs. While the caseload reduction credit (which
reduced the work participation rate that a state was required to meet)
ultimately meant that the participation rates were not difficult for
states to achieve, state employment and training programs often were
designed around meeting the work rates and achieving caseload
reduction.
States sought to enforce a strong work message and help families
find work in several ways: through employment and training activities,
policies that ``make work pay,'' supportive services that helped make
work possible for many families (most notably child care assistance),
and improved child support enforcement (which helped some families
leave TANF due to a combination of earnings and child support). Some of
these policies, such as expanded child care assistance and improved
child support collections, also benefited low-income families not
receiving TANF benefits, helping them remain employed and off of TANF.
Employment and training activities: States increased
their employment and training activities under TANF, although state
investments were still limited--states spent less than 10 percent of
federal TANF and state MOE funds on work-related programs in FY 2004,
according to HHS data. Some states developed innovative programs to
help those with the greatest barriers to employment prepare for and
find jobs and to help recipients build their skills so they could
secure more stable employment, with better wages and advancement
opportunities. Others did little in these areas, focusing their
programs on a narrow set of job search activities.
Making work pay: Under AFDC, when a parent found a job
the family's AFDC benefit was soon reduced nearly dollar-for-dollar to
offset the increased earnings. This meant that few AFDC recipients were
employed, because even very low earnings made a family ineligible.
Under TANF, in contrast, nearly all states expanded their earnings
disregard policies (many had done so through waivers even before the
1996 law was passed) so that more families could work without losing
eligibility for cash welfare, although families still lose eligibility
in many states when their earnings reach very low levels.
Research has shown consistently that expanded earnings disregards
improve employment outcomes for TANF recipients. Moreover, evaluations
by the research institute MDRC show that the only welfare-to-work
programs that consistently improve employment outcomes, reduce poverty,
and improve children's education outcomes are those that increase
assistance to working families. The increased earnings disregards
states put in place are one reason that among TANF recipients engaged
in work activities, the most common activity they are participating in
is private employment.
It is important to note that the make-work-pay policies that states
adopted in their TANF programs supplemented a much large set of make-
work-pay policies initiated at both the federal and state levels, such
as Medicaid and SCHIP expansions and expansions in the EITC, discussed
above.
Child care and other work supports: The total amount
spent on child care assistance for both TANF recipients and low-income
working families increased substantially in the years following the
enactment of PRWORA, though this progress has stalled in recent years.
In 1997, some $4 billion was spent on child care. This increased to
$11.9 billion in 2004. (The amount spent on child care actually peaked
in 2003 and then declined somewhat as states began to reduce the amount
of TANF spent on child care.) \3\
\3\ These figures reflect nominal spending on child care and are
not adjusted for inflation. If the figures are adjusted for inflation,
the real increase in child care spending over this period totals more
than 150 percent.
States increased child care assistance primarily for families not
receiving TANF cash assistance. (Prior to the 1996 law most states
provided child care assistance to AFDC recipients who were working or
in employment programs.) Increasing the availability of child care to
low-income working families--those who had recently left welfare for
work as well as those who had not recently received TANF--helped those
families retain employment. Research has shown that child care
assistance improves employment outcomes and can help families stay
employed and off welfare.\4\
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\4\ For a brief review of the research on the impact of child care
assistance programs on employment, see, ``Child Care Assistance Helps
Families Work: A Review of the Effects of Subsidy Receipt on
Employment,'' by Hannah Mathews, Center for Law and Social Policy,
April 2006.
---------------------------------------------------------------------------
In addition to child care, some states provided other forms of work
supports to families transitioning from welfare to work and other
working-poor families. These supports, which included transportation
assistance, help purchasing a car, and one-time help to cover work
expenses such as new uniforms, were less widely available and extensive
than child care assistance programs.
Improved child support enforcement: As noted above,
PRWORA made important changes to the child support enforcement program
that significantly enhanced states' ability to collect child support
from noncustodial parents. A report by the Center for Law and Social
Policy summarized the results:
Child support collection rates have more than doubled since 1996,
when Congress overhauled the program as a part of welfare reform. In
2004, 51 percent of families in the child support program received
child support, up from 20 percent in 1996. Collected dollars increased
from $12 billion to $22 billion. This amounts to an 82 percent increase
in collections, despite an 18 percent decline in the child support
caseload.\5\
---------------------------------------------------------------------------
\5\ Vicki Turetsky, ``The Child Support Program: An Investment that
Works,'' July 2005.
---------------------------------------------------------------------------
The improvement in child support collections has enabled some
families to leave TANF and other families to avoid applying for TANF
assistance. Research has shown, for example, that former TANF
recipients that receive child support payments are less likely to
return to TANF and that families that receive child support income have
better employment outcomes.\6\
---------------------------------------------------------------------------
\6\ Ibid.
---------------------------------------------------------------------------
In addition to these policies, states also used time limits and
sanction policies to limit assistance to families and to enforce work
requirements. Research on time limits is surprisingly limited and may
reflect the fact that caseload declines were driven largely by policies
other than time limits. There is substantial research on sanction
policies--both on their effectiveness at improving participation in
required activities and on the characteristics of sanctioned families.
While sanctions appear an important part of enforcing work
requirements, there is no research to suggest that full-family
sanctions--which most states have now adopted--are more effective than
partial sanctions at gaining compliance with work requirements. And, as
is discussed below, there is substantial evidence that a significant
share of recipients who are sanctioned for failing to comply with
program activities have barriers to participation that may be impeding
their ability to comply.
How Families That Left Welfare for Work--and Families Left Behind--Are
Faring
As discussed above, employment rates among single mothers have
increased since the mid-1990s, and TANF policies and programs played a
role in that increase. During the 1990s, HHS sponsored a series of
studies of families that left TANF programs. Taken together, these
studies showed that about three in five former TANF recipients were
employed at any given time during the year after they left TANF, and
about three-quarters worked at some point during that year. Only about
one-third worked all four quarters of the year.
Wages of former TANF recipients were low--typically $7 to $8 per
hour--but employed former recipients nonetheless had higher incomes
than when they were on TANF. Most former recipients worked nearly full
time in the months in which they were employed.\7\ Employed former
recipients benefited from an expanded EITC and other work supports that
were strengthened in the 1990s.\8\
---------------------------------------------------------------------------
\7\ Gregory Acs and Pamela Loprest, ``Final Synthesis Report of
Findings from ASPE 'Leavers' Grants, Urban Insitute, 2001.
\8\ The HHS-sponsored studies of former recipients were completed
prior to the economic downturn and the subsequent rise in poverty and
decline in employment rates among single mothers. Given the recent
declines in employment rates among single mothers, employment rates
among former TANF recipients may also be somewhat lower now than in the
late 1990s.
---------------------------------------------------------------------------
Most recipients who left TANF and found jobs saw some wage
advancement, but it was typically limited, and many experienced
significant spells of joblessness after leaving welfare for work.
Evaluations have shown that, designed properly, welfare-to-work
programs that include strong job development and skill-building
components can improve the likelihood that recipients find ``better''
jobs--that is, jobs that pay higher wages, provide some benefits, and
offer opportunities for advancement.
The highly successful welfare-to-work program evaluated in
Portland, for example, was able to help recipients secure higher paying
jobs that offered more opportunities for advancement than the jobs that
recipients typically find. The Portland program was able to do this by
working with recipients to identify their career interests and job
skills, providing training opportunities to recipients that enabled
them to secure occupational certificates for high-demand jobs, and
linking job training and job search activities so recipients were
pursuing jobs that matched their new skills.
Families Left Behind
While many families make the transition from welfare to work,
others do not. Some of these families become part of the growing group
of poor families that are jobless and do not receive assistance from
TANF or another income support program, while other families continue
to receive TANF over long periods of time. Some families cycle between
periods in which they receive TANF, periods in which they do not
receive TANF and are working, and periods when they are neither working
nor receiving TANF assistance (or aid from another income support
program).
Families that are sanctioned for failing to comply with TANF
program rules (typically work program requirements) often become part
of the ``no work, no welfare'' group, at least for a period of time. An
extensive body of research has emerged to suggest that these families
often have serious barriers to employment--including disabilities--that
may limit their ability to meet program requirements. For example, a
study of sanctioned families in Illinois and South Carolina by
Mathematica Policy Research, Inc. found that recipients with mental and
physical health problems, those caring for family members or friends
with health problems, and those with less education were significantly
more likely to be sanctioned than other recipients.\9\
---------------------------------------------------------------------------
\9\ LaDonna Pavetti, et al., ``The Use of TANF Work-Oriented
Sanctions in Illinois, New Jersey, and South Carolina,'' Mathematica
Policy Research Inc., April 2004.
---------------------------------------------------------------------------
Research also has shown that families whose benefits are terminated
for noncompliance with program requirements often remain jobless;
employment rates are much lower for sanctioned families than for
families that left TANF for other reasons.\10\ Many families experience
significant material hardships after being sanctioned off TANF. A
Mathematica review of research on sanctioned families concluded,
``Sanctioned recipients are more likely to experience material
hardships than their non-sanctioned counterparts. Material hardships
TANF recipients face include borrowing money to pay bills or falling
behind on payments, not having enough food, problems paying for medical
care, and experiencing a utility shut-off, among others.'' \11\
---------------------------------------------------------------------------
\10\ For a review of this research, see `` Review of Sanction
Policies and Research Studies,'' by LaDonna Pavetti, 2003.
\11\ Ibid, page 17.
---------------------------------------------------------------------------
Research on long-term TANF recipients also sheds light on the
characteristics of families that are not successfully making the
transition from welfare to work. A recent in-depth study of long-term
TANF recipients in St. Paul, Minnesota found that a large share of
long-term recipients--those about to reach the 60-month time limit--had
low cognitive functioning (defined as an IQ of below 80) and serious
physical ormental health problems that limited their ability to hold a
job. The problems documented by caseworkers were severe. One parent was
unable to lift a gallon of milk because of health problems; another
suffered from depression so severe that she was unable to maintain
basic hygiene. Some parents had such low cognitive functioning that
they could not read simple words, identify numbers, or tell time.\12\
It is important to note that families with these characteristics
sometimes are among the long-term TANF recipients and sometimes are
part of the ``no work, no welfare'' group, depending on a particular
family's circumstances and the time limit, sanction, and other policies
in place in the state.
---------------------------------------------------------------------------
\12\ LaDonna A. Pavetti and Jacqueline Kauff, ``When Five Years Is
Not Enough: Identifying and Addressing the Needs of Families Nearing
the TANF Time Limit in Ramsey County, Minnesota,'' Mathematica Policy
Research, Inc, 2006.
---------------------------------------------------------------------------
Some states have developed innovative programs to help recipients
with disabilities and other barriers move toward employment. Vermont's
TANF agency, for example, has partnered with the state's vocational
rehabilitation agency to develop a set of specialized services for TANF
recipients with disabilities. At a recent meeting of the American
Public Human Services Association, a state agency official from Vermont
noted that programs exist that can help many TANF recipients with
disabilities, but they take time and resources. She noted that
recipients who participate in the vocational rehabilitation agency's
program spend an average of 15 months in the program; many require
modifications to the standard TANF work requirements because of their
disabilities.
The Next Ten Years
The TANF reauthorization provisions included in the Deficit
Reduction Act (DRA) passed earlier this year are forcing states to
reexamine their TANF programs. Renewed interest in welfare reform and
innovation is welcome. However, many of the DRA's provisions could
exacerbate the more troubling trends discussed above.
The DRA requires states to meet significantly higher work
participation rates and, when coupled with the interim final
regulations recently issued by HHS to implement the new law, will
considerably reduce states' flexibility to design welfare-to-work
programs tailored to the needs of individual recipients. In fact,
programs that are designed to address two of the biggest problems that
have emerged over TANF's first decade--that parents who leave welfare
for work often earn low wages and have unstable employment, and that
many families with the greatest barriers to employment are being left
behind--often will no longer count toward states' TANF work
participation requirements.
The new regulations severely restrict the extent to which
states can receive credit toward the participation rate for welfare-to-
work activities that are designed to help those with the greatest
barriers to employment become job ready. The regulations give states no
credit toward their work requirements when parents with disabilities
participate in welfare-to-work activities that have been modified
(either the activity itself or the number of hours it must be
performed) to reflect the recipients' disabilities. The regulations
make clear that HHS wants states to try to help TANF recipients with
disabilities prepare for employment and that states are obligated under
the Americans with Disabilities Act to ensure that their programs make
reasonable accommodations to ensure that program requirements are
appropriate for individuals with disabilities. Yet the rules,
themselves, inhibit states in both of these areas.
The DRA statute and regulations significantly restrict
the extent to which states can count programs designed to improve
parents' skills toward the work rate. The statute limits vocational
educational training programs to 12 months, and to no more than 30
percent of a state's welfare-to-work program participants. The
regulations place further restrictions on the types of skill-building
programs that can qualify as vocational educational training.
The new work participation rates in the DRA are not accompanied by
any significant new resources. The $200 million per year in additional
child care resources included in the DRA is not even sufficient to
ensure that federal child care funding simply keeps pace with
inflation. In fact, the Administration's own 2007 budget documents show
that it expects the number of low-incomechildren receiving child care
assistance to fall to 1.8 million in 2011, down 650,000 from the 2.45
million children who received child care assistance in 2000. This
represents a projected 26 percent decline in the number of children
projected to be served in child care assistance programs.
The rigidity of states' new work rules, coupled with a lack of
additional resources, gives states a clear incentive to reduce their
caseloads further, regardlessof whether the number of families in need
declines as well. The cheapest and easiest way for a state to meet the
new work rules and avoid fiscal penalties is to assist fewer poor
families. As the last decade has shown, it is entirely possible for
many states to implement policies and procedures that will drive very
poor families from the TANF program and swell the already large group
of families that are jobless and not receiving income assistance from
TANF or other cash aid programs.
Over the past six months, I have talked to numerous state officials
and others around the country about the new DRA requirements. All
understand the incentives embodied in the law to reduce caseloads by
any means. While many state officials express concerns about taking
steps to further restrict access to assistance for poor families, the
message being sent by the federal legislation and regulations is clear.
When asked what I think states should do in light of the DRA, I
recommend that states consider their own welfare reform and anti-
poverty goals and then design programs to meet those goals, with the
federal work requirements as a constraint but not the driving force
behind their decision making. With ingenuity and hard work, states can
develop a set of programs--some supported by TANF and MOE funds, others
entirely state funded--that can serve the needs of poor families and
help the state meet its federal TANF requirements.
TANF, and in fact welfare reform in general, is at a crossroads. If
states simply seek to meet the new TANF rules in the simplest and least
expensive manner, then increasingly the nation's poorest families will
not be able to obtain basic assistance and those with the greatest
needs will be left further behind. If, on the other hand, states take
this opportunity to establish high-quality programs that help parents
build their skills, address barriers to employment, and provide needed
income support to families when they need it, perhaps some of the most
disturbing trends discussed above, such as increases in deep poverty,
could be ameliorated.
Unfortunately, without modifications to the DRA or the recently
released interim final regulations, federal law will not encourage
states to follow the better of the two paths.
Promoting Employment and Improving the Safety Net for the Poorest
Families
There are steps Congress can take to ameliorate the DRA's potential
negative effects and, more broadly, address some of the disturbing
trends that have emerged over the last decade.
Provide states with greater flexibility to design
welfare-to-work activities that can help recipients build skills so
they can secure better jobs, including activities that can help those
with the greatest problems overcome their barriers to employment.
States should be held accountable for helping parents find employment,
but they should be given more latitude to develop programs that work
and should then be judged on the outcomes.
Measure TANF programs not only by how well they engage
recipients in work activities, but also by how well they provide a
safety net for the most vulnerable children. Some families need only
temporary help during short periods of unemployment; others need help
for longer periods of time; still others face very serious challenges
that limit their ability to earn enough to support a family. While one
goal of TANF is to help parents move from welfare to work, another
should be to serve as a bulwark against deep poverty. State TANF
programs should be measured to see how well they serve this safety-net
function. Caseload declines that do not result from reductions in need
should not be rewarded.
Ensure that the TANF block grant does not continue to
lose pace to inflation. The basic TANF block grant already has lost 22
percent of its purchasing power since 1996 and by 2011 its inflation-
adjusted value will fall 30 percent below its 1996 level. As the value
of the block grant erodes, states will have fewer resources to provide
welfare-to-work, child care, and basic assistance to poor families with
children.
Strengthen work supports. Research has consistently shown
that policies that make work pay and provide supports to working
families--such as child care assistance that enables parents to work--
improve employment and earnings among low-income families. Yet only a
minority of families that qualify for child care assistance receive it,
primarily as a result of the limited child care funds available. This
limits parents' employment prospects and reduces low-income children's
chances of receiving high-quality early education.
Providing more resources for child care and early education would
promote employment and broadly shared education goals. Similarly, many
low-income working parents lack health insurance; they are priced out
of the private health insurance market and are ineligible for publicly
subsidized coverage. Expanding health care coverage to these parents
would help them get the health care they need to be more effective
employees.
Improve the Unemployment Insurance program so more low-
wage workers can qualify for UI during temporary periods of
joblessness. Many low-wage parents who lose their jobs must turn to
TANF for help because they do not qualify for UI benefits as a result
of the program's outdated rules. By changing UI rules related to the
``base period'' that is used to calculate UI eligibility, part-time
workers, and the circumstances under which people who leave their jobs
for family and other reasons can receive UI benefits, Congress could go
a long way toward ensuring that low-wage workers who lose their jobs
qualify for UI benefits.
Invest in skill building. The data are clear:
increasingly, the U.S. economy demands workers with skills. Workers
without skills are consigned to low-wage jobs, often with declining
real wages and few opportunities for advancement. Against this
backdrop, it is important that we develop new ways to ensure that
individuals of all ages--children, young adults, and adults--have
opportunities to develop the skills needed to succeed in the workplace,
including access to meaningful and quality vocational educational
training, certificate programs, and college.
Raise the minimum wage. The minimum wage has remained
frozen since 1997 and has fallen to its lowest inflation-adjusted level
since 1955. Available evidence suggests that modest increases in the
minimum wage will not result in employment losses and will provide a
needed pay raise to millions of low-wage workers.
A final area of needed improvements concerns legal immigrants. A
large share of the budget cuts contained in PRWORA fell on legal
immigrants, many of whom were made ineligible for benefits such as food
stamps and SSI. Immigrants are nearly twice as likely to experience
poverty as citizens. Congress and both President Bush and President
Clinton have taken some action over the last decade to curb some of
these cuts, such as in SSI and food stamps. More needs to be done,
however, to ensure that legal immigrant families have access to work
supports that can help them make ends meet if they earn low wages, as
well as a safety net if they fall on hard times.
Among the most vulnerable immigrants are extremely poor refugees
and asylees (and other immigrants admitted for humanitarian reasons)
who either are elderly or have serious disabilities. Under PRWORA, they
were limited to seven years of SSI benefits unless they became
naturalized citizens. The rationale behind the time limit was that
refugees and other humanitarian immigrants should be able to complete
the citizenship process in seven years.
Unfortunately, it often takes significantly longer than seven years
to become a citizen--particularly after the events of September 11,
which have placed new burdens on the immigration system. Some elderly
individuals and individuals with severe disabilities face formidable
challenges to completing the naturalization process within the time
allotted. (Securing a waiver of this requirement can be difficult and
time-consuming.) Currently pending before the committee is H.R. 899, a
bipartisan bill introduced by Representatives Cardin and English, which
would provide a modest extension of the SSI eligibility period for
refugees. The Cardin-English bill would help to address the problems
the time limit poses for these refugees and thereby to help an
extremely poor and vulnerable group to avoid utter destitution.
Mr. SHAW. Thank you. Mr. Rector.
STATEMENT OF ROBERT RECTOR, SENIOR RESEARCH FELLOW, WELFARE AND
FAMILY ISSUES, HERITAGE FOUNDATION
Mr. RECTOR. Thank you, Chairman Shaw.
The Welfare Reform Act 1996 had four principal goals: The
first, to reduce debilitating long-term welfare dependence; the
second, to increase employment among single mothers; the third,
to reduce or at least slow the rapid increase of out-of-wedlock
childbearing; and the fourth, to reduce child poverty.
The act was a resounding and unprecedented success in
respect to all four of those measures, especially when compared
to the old system of welfare which created a system of
permissive entitlement which was very resilient and very, very
difficult to change.
The Minority Members of this Committee had 25 years to
alter that old system, and under that old system, child poverty
over a quarter of a century actually increased. It is in that
context of 25 years of unmitigated failure that the assessment
of this welfare reform has to take place.
First of all, on caseloads, we are all aware that the
caseload post-welfare reform dropped by 60 percent, but it is
important to look back, all the way back to 1950, and to
recognize that this was the first time the caseload had ever
seriously declined. A lot of people attribute that caseload
decline to a good economy, but in the charts I provided in my
written testimony, we see eight periods of prior economic boom
in which the caseloads either remained flat or actually
dramatically increased during some of those periods. It is only
in the nineties that the caseload goes down.
What is the difference? The difference is that welfare
reform changes the incentive system. It makes it no longer
possible to receive a welfare check by remaining idle, and it
requires constructive activity as on obligation of receiving
aid. As soon as you do that, the caseload begins to drop, and,
more importantly, the number of new entrants into the new
system goes down.
While the caseload is going down, coincident with that we
see an unprecedented surge in the employment of single mothers
that has been spoken to and documented overwhelmingly by many,
many different witnesses, and as that employment goes up, the
welfare caseload goes down.
Remember that every mother that was on AFDC was, by
definition, poor, because the benefits weren't sufficient to
raise the income above poverty.
As the caseload goes down, what we see is an unprecedented,
absolutely historically unprecedented, decline in child
poverty, particularly black child poverty, which had remained
virtually unchanged for a quarter of a century. All of a sudden
it drops from around 42 percent in 1995 down to 30 percent in
2001. Poverty of children in single-mother families, again, was
basically unchanged for a quarter of a century, and drops an
unprecedented 10 percentage points in about 5 years.
This is quite contrary to the predictions that were made by
most of the Members of this Committee on the Minority and most
opponents of this act. For example, Ms. Parrott predicted that
the act would result in a large increase in poverty, especially
among children, and that this increase in poverty would not
occur during a recession, but it would actually occur even
during good economic times.
If we were to look at the impact of this reform overall
over the 10 years since it was enacted, what we see is that
during the period of economic expansion, it was an
unprecedented success in reducing poverty. Nothing could
compare to it previously in the history of this program.
During the period of recession and recovery, the recession
beginning in 2001, what we have to recognize is that in every
previous period of recession, child poverty went up. In most
recessions it went up quite sharply, particularly among black
children.
So, how did this recession differ? Well, with the reform
system, child poverty did go up, but it went up quite modestly,
probably less than in most previous recessions. So, overall we
could say that in the period of boom, the system dramatically
outperformed pre-reform welfare. In the period of recession, it
did at least as well if not better than the pre-reform system.
This was overwhelmingly a huge success.
Finally, I would say something that we really haven't paid
attention to. At the time of reform, one out of three children
was born out-of-wedlock. The out-of-wedlock birthrate had been
rising at roughly 1 percentage point per year for close to 25
years. Senator Moynihan used to say it looked like a line drawn
with a ruler, going virtually straight up. In the mid-nineties,
that straight-up increase all of a sudden pauses, and it goes
up very little over the next 10 years.
If in fact the increase in out-of-wedlock childbearing
continued in the pre-reform rate--today, we have 34 percent of
children born out of wedlock--if it had continued in the pre-
reform rate, we would today have around 43 or 44 percent of
children born out of wedlock.
As a result of the change in the growth of out-of-wedlock
births that occurred in the mid nineties, there have been 1.4
million fewer children born out of wedlock over the last 10
years. That is a huge success and one that is rarely talked
about, but is of enormous importance. I would conclude by
saying that the next step we have to do is look further in
finding ways to increase marriage and reduce out-of-wedlock
childbearing. Thank you.
[The prepared statement of Mr. Rector follows:]
Statement of Robert Rector, Senior Research Fellow, Welfare and Family
Issues, Heritage Foundation
My name is Robert Rector. I am Senior Research Fellow in Welfare
and Family Issues at The Heritage Foundation. The views I express in
this testimony are my own, and should not be construed as representing
any official position of The Heritage Foundation.
Ten years ago, President Bill Clinton signed legislation
overhauling part of the nation's welfare system. The Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L.
104--193) replaced the failed social program known as Aid to Families
with Dependent Children (AFDC) with a new program called Temporary
Assistance to Needy Families (TANF). The reform legislation had three
goals: (1) to reduce welfare dependence and increase employment; (2) to
reduce child poverty; and (3) to reduce illegitimacy and strengthen
marriage.
At the time of its enactment, liberal groups passionately denounced
the welfare reform legislation, predicting that it would result in
substantial increases in poverty, hunger, and other social ills.
Contrary to these alarming forecasts, welfare reform has been effective
in meeting each of its goals.
Child poverty has fallen. Although opponents of reform
predicted it would increase child poverty, some 1.6 million fewer
children live in poverty today than in 1995.
Decreases in poverty have been greatest among black
children. In the quarter century prior to welfare reform, the old
welfare system failed to reduce poverty among black children. Since
welfare reform, the poverty rate among black children has fallen at an
unprecedented rate from 41.5 percent in 1995 to 32.9 percent in 2004.
Unprecedented declines in poverty also occurred among
children of single mothers. For a quarter-century before welfare
reform, there was little net decline in poverty in this group.
Povertywas only slightly lower in 1995 (50.3 percent) than it had been
in 1971 (53.1 percent). After the enactment of welfare reform, the
poverty rate for children of single mothers fell at a dramatic rate,
from 50.3 percent in 1995 to 41.9 percent in 2004.
Welfare caseloads were cut in half. The AFDC/TANF
caseload dropped from 4.3 million families at the time PRWORA was
enacted to 1.89 million today.
Employment of single mothers has surged. The employment
rate of the most disadvantaged single mothers increased from 50 percent
to 100 percent.
The explosive growth of out-of-wedlock childbearing has
come to a near standstill. For thirty years prior to welfare reform,
the percentage of births that were out-of-wedlock rose steadily at
about one percentage point per year. The out-of-wedlock birthrate was
7.7 percent in 1965 when the War on Poverty started; by 1995 it had
reached 32.2 percent. Following welfare reform, the long-term rapid
growth in out-of-wedlock birth rate ended. Although the rate has
continued to inch up slowly, the increase is far slower than in the
pre-reform period.
Some attribute these positive trends to the strong economy in the
late 1990s. Although a strong economy contributed to some of these
trends, most of the positive changes greatly exceed similar trends that
occurred in prior economic expansions. The difference this time is
welfare reform.
Predictions of Social Disaster Due to Welfare Reform
Ten years ago, when the welfare reform legislation was signed into
law, Senator Daniel Patrick Moynihan (D-NY) proclaimed the new law to
be ``the most brutal act of social policy since reconstruction.'' \1\
He predicted, ``Those involved will take this disgrace to their
graves.'' \2\
---------------------------------------------------------------------------
\1\ Cited in Arianna Huffington, ``Where Liberals Fear to Tread,''
August 26, 1996, at http://www.arianaonline.com/columns/files/
082696.html.
\2\ Cited in ``Welfare as They Know It,'' The Wall Street Journal,
August 29, 2001, p. A14.
---------------------------------------------------------------------------
Marian Wright Edelman, president of the Children's Defense Fund,
declared the new reform law an ``outrage . . . that will hurt and
impoverish millions of American children.'' The reform, she said,
``will leave a moral blot on [Clinton's] presidency and on our nation
that will never be forgotten.'' \3\
---------------------------------------------------------------------------
\3\ Children's Defense Fund, ``Edelman Decries President's Betrayal
of Promise `Not to Hurt Children','' July 31, 1996.
---------------------------------------------------------------------------
The Children's Defense Fund predicted that the reform law would
increase ``child poverty nationwide by 12 percent . . . make children
hungrier . . . [and] reduce the incomes of one-fifth of all families
with children in the nation.'' \4\
---------------------------------------------------------------------------
\4\ Children's Defense Fund, ``How the Welfare Bill Profoundly
Harms Children,'' July 31, 1996.
---------------------------------------------------------------------------
The Urban Institute issued a widely cited report predicting that
the new law would push 2.6 million people, including 1.1 million
children, into poverty. In addition, the study announced the new law
would cause one-tenth of all American families, including 8 million
families with children, to lose income.\5\
---------------------------------------------------------------------------
\5\ Cited in ``Urban Institute Study Confirms that Welfare Bills
Would Increase Child Poverty,'' Center on Budget and Policy Priorities,
July 26, 1996.
---------------------------------------------------------------------------
The Center on Budget and Policy Priorities asserted the new law
would increase the number of children who are poor and ``make many
children who are already poor poorer still. . . . No piece of
legislation in U.S. history has increased the severity of poverty so
sharply [as the welfare reform will].'' \6\
---------------------------------------------------------------------------
\6\ David A. Super, Sharon Parrott, Susan Steinmetz, and Cindy
Mann, ``The New Welfare Law,'' Center on Budget and Policy Priorities,
August 13, 1996.
---------------------------------------------------------------------------
Patricia Ireland, then president of the National Organization for
Women, stated that the new welfare law ``places 12.8 million people on
welfare at risk of sinking further into poverty and homelessness.'' \7\
---------------------------------------------------------------------------
\7\ Quoted in Lisa Bennet-Haigney, ``Welfare Bill Further Endangers
Domestic Violence Survivor,'' National NOW Times, January 1997.
---------------------------------------------------------------------------
Peter Edelman, husband of Marian Wright Edelman and then Assistant
Secretary for Planning and Evaluation at the Department of Health and
Human Services, resigned from the Clinton Administration in protest
over the signing of the new welfare law. In an article entitled ``The
Worst Thing Bill Clinton Has Done,'' Edelman dubbed the new law
``awful'' policy that would do ``serious injury to American
children.''\8\
---------------------------------------------------------------------------
\8\ Peter Edelman, ``The Worst Thing Bill Clinton Has Done,'' The
Atlantic Monthly, Vol. 279, No. 3 (March 1997), pp. 43--58.
---------------------------------------------------------------------------
Peter Edelman believed the reform law would not merely throw
millions into poverty, but also would actively worsen virtually every
existing social problem. ``There will be more malnutrition and more
crime, increased infant mortality, and increased drug and alcohol
abuse,'' claimed Edelman. ``There will be increased family violence and
abuse against children and women.'' Moreover, the bill would fail even
in the simple task of ``effectively'' promoting work because ``there
simply are not enough jobs now.'' \9\
---------------------------------------------------------------------------
\9\ Ibid.
---------------------------------------------------------------------------
What Actually Happened
In the decade since the welfare reform law was enacted, social
conditions have changed in exactly the opposite direction from that
predicted by liberal policy organizations. As noted above, child
poverty, black child poverty, and poverty of single mothers have
declined substantially. Employment of single mothers increased
dramatically, and welfare rolls plummeted.
Opponents of reform would like to credit many of these positive
changes to a ``good economy.'' However, according to their predictions
in 1996 and 1997, liberals expected the welfare reform law to have
disastrous results during good economic times. They expected reform to
increase poverty substantially even during periods of economic growth;
if a recession did occur, they expected that far greater increases in
poverty than those mentioned above would follow. Thus, it is
disingenuous for opponents to argue in retrospect that the good economy
was responsible for the frustration of pessimistic forecasts since the
predicted dire outcomes were expected to occur even in a strong
economy.
Plummeting Welfare Dependence
The designers of welfare reform were concerned that prolonged
welfare dependence had negative effects on the development of children.
Their goal was to disrupt inter-generational dependence by moving
families with children off the welfare rolls through increased work and
marriage. Welfare reform produced unprecedented reductions in welfare
dependence.
The caseload in the former AFDC (now TANF) program reached its all
time high of 5.04 million families in March of 1994; it fell modestly
over the next two years as states experimented with welfare to work
programs in anticipation of the federal reform legislation. By the time
PRWORA was enacted in August 1996, the caseload had fallen to 4.3
million. Passage of the national reform legislation was followed by a
further dramatic plunge in caseloads By June 2005, the caseload had
fallen to 1.89 million, less than half the level at the time PRWORA was
enacted.
Contrary to conventional wisdom, the decline in welfare dependence
was greatest among the most disadvantaged and least employable single
mothers--the group with the greatest tendency toward long-term
dependence. Specifically, dependence fell most sharply among young
never-married mothers who have low levels of education and young
children.\10\ This is dramatic confirmation that welfare reform
affected the whole welfare caseload, not merely the most employable
mothers.
---------------------------------------------------------------------------
\10\ June E. O'Neill and M. Anne Hill, ``Gaining Ground? Measuring
the Impact of Welfare Reform on Welfare and Work,'' Manhattan Institute
Civic Report No. 17, July 2001, pp. 8, 9.
---------------------------------------------------------------------------
Some would argue that the positive effects noted above are the
product of the robust economy during the 1990s rather than the results
of welfare reform. However, the evidence supporting an economic
interpretation of these changes is not strong.
Chart 1 shows the AFDC caseload from 1950 to 2004. On the chart,
periods of economic recession are shaded, and periods of economic
growth are shown in white. Historically, periods of economic growth
have not resulted in lower welfare caseloads. The chart shows eight
periods of economic expansion prior to the 1990s, yet none of these
periods of growth led to a significant drop in AFDC caseload. Indeed,
during two previous economic expansions (the late 1960s and the early
1970s), the welfare caseload grew substantially. Only during the
expansion of the 1990s does the caseload drop appreciably.
How was the economic expansion of the 1990s different from the
eight prior expansions? The answer is welfare reform.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Chart 1 does show that the national TANF decline has slowed
appreciably during and after the last recession, which began in March
2001. Critics of reform might argue that this shows the state of the
economy has been the dominant factor in the reduction of dependence.
While it is true that the slowdown in the economy has affected the
decline in caseload, however, it is important to note the vast
difference in trends before and after welfare reform. Prior to the mid-
1990s, the AFDC caseload remained flat or rose during economic
expansions and generally rose to a substantial degree during
recessions. Since welfare reform, the welfare caseload has plummeted
downward during good economic times and declined slowly during the
recession.
Thus, while the state of the economy does have an effect on AFDC/
TANF caseloads, irrespective of economic conditions, the difference in
caseload trends before and after reform is enormous. This difference is
clearly due to the impact of welfare reform policies.
Another way to disentangle the effects of welfare policies and
economic factors on declining caseloads is to examine the differences
in state performance. The rate of caseload decline varied enormously
among the 50 states. If improving economic conditions were the main
factor driving down caseloads, the variation in state reduction rates
should have been linked to variation in state economic conditions. On
the other hand, if welfare polices are the key factor behind falling
dependence, the differences in reduction rates would have been linked
to specific state welfare policies.
A 1999 Heritage Foundation study, ``The Determinants of Welfare
Caseload Decline,'' examined the impact of economic factors and welfare
policies on falling caseloads in the states.\11\ This analysis showed
that differences in state welfare reform policies were highly
successful in explaining the rapid rates of caseload decline. By
contrast, the relative vigor of state economies, as measured by
unemployment rates, changes in unemployment, or state job growth, had
no statistically significant effect on caseload decline.
---------------------------------------------------------------------------
\11\ Robert E. Rector and Sarah E. Youssef, ``The Determinants of
Welfare Caseload Decline,'' Heritage Foundation Center for Data
Analysis Report No. CDA99--04, May 11, 1999.
---------------------------------------------------------------------------
One reason for the reduction in caseload decline after 2001 was a
lack of vigor in state work programs in recent years. By 2001 most
states had met their federal goals for caseload reduction. In the
absence of federal pressure to further reduce dependence and increase
work, state welfare bureaucracies slackened their efforts and many
began to drift back toward a traditional role of mailing out welfare
checks.
Welfare Reform and Increased Employment
Welfare reform coincided with dramatic increases in the employment
of single mothers. Contrary to conventional wisdom, employment has
increased most rapidly among the most disadvantaged, least employable
groups. During the late 1990's:
Employment of never-married mothers increased nearly 50
percent.
Employment of single mothers who are high school dropouts
rose by two-thirds.
Employment of young single mothers (ages 18 to 24) nearly
doubled.\12\
\12\ O'Neill and Hill, ``Gaining Ground? Measuring the Impact of
Welfare Reform on Welfare and Work,'' pp. 10--14.
Thus, against conventional wisdom, the effects of welfare reform
have been the greatest among the most disadvantaged single parents--
those with the greatest barriers to self-sufficiency. Both decreases in
dependence and increases in employment have been most dramatic among
those who have the greatest tendency to long-term dependence; that is,
among the younger never-married mothers with little education.
How important was a strong economy to these employment increases?
Dr. June O'Neill, former Director of the Congressional Budget Office,
examined changes in welfare caseload and employment from 1983 to 1999.
Her analysis showed that in the period after the enactment of welfare
reform, policy changes accounted for roughly three-quarters of the
increase in employment and decrease in dependence. By contrast,
economic conditions explained only about one-quarter of the changes in
employment and dependence.\13\
---------------------------------------------------------------------------
\13\ Ibid., Table 4, p. 22.
---------------------------------------------------------------------------
Welfare Reform and Reductions in Child Poverty
Mothers on welfare are automatically poor since in no state are
welfare benefits high enough to give a family an income above the
official poverty thresholds. Consequently, it should be no surprise
that, as families left welfare and the employment of single mothers
dramatically increased, poverty decreased. The decrease in poverty
among the two groups most affected by reform, black children and
children of single mothers, was steep and unprecedented.
Less Child Poverty. The child poverty rate has fallen
from 20.8 percent in 1995 to 17.8 percent in 2004. Though liberals
predicted that welfare reform would throw more than 1 million
additional children into poverty, there are some 1.6 million fewer
children living in poverty today than there were when welfare reform
was enacted.\14\
---------------------------------------------------------------------------
\14\ U.S. Census Bureau, Income, Poverty, and Health Insurance
Coverage in the United States: 2004, August, 2005, p. 52.
---------------------------------------------------------------------------
Less Black Child Poverty. The decline in poverty since
welfare reform has been particularly dramatic among black children. As
Chart 2 shows, for a quarter-century prior to welfare reform, there was
little change in black child poverty. Black child poverty was actually
higher in 1995 (41.5 percent) than in 1971 (40.4 percent).
With the enactment of welfare reform in 1996, black child poverty
plummeted at an unprecedented rate, falling to 30.0 percent in 2001.
Over a six-year period after welfare reform, 1.2 million black children
were lifted out of poverty. In 2001, despite the recession, the poverty
rate for black children was at the lowest point in national
history.\15\ In the last few years, the recession and its aftermath has
pushed the black child poverty rate up slightly (to 32.9 percent in
2004), but the rate remains roughly one fifth lower than in the period
prior to reform.
---------------------------------------------------------------------------
\15\ Ibid., pp. 53, 54. The figures in the text refer to black
``related children in families.'' These figures are used because they
are the only figures for black child poverty that are available back to
1970. The poverty rates for black ``related'' children are nearly
identical to the poverty rate figures for all black children but are
consistently 0.2 to 0.4 percentage points lower.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Less Poverty Among Children of Single Mothers. Since the
enactment of welfare reform, the drop in child poverty among children
in single-mother families has been equally dramatic. For a quarter-
century before welfare reform, there was little net decline in poverty
in this group. Povertywas only slightly lower in 1995 (50.3 percent)
than it had been in 1971 (53.1 percent). After the enactment of welfare
reform, the poverty rate for children of single mothers fell at a
dramatic rate, from 50.3 percent in 1995 to 39.8 percent in 2001. In
2001, the poverty rate for children in single-mother families was at
the lowest point in U.S. history.\16\ Although the poverty rate for
children of single mothers has inched up slightly during the recent
recession and its aftermath, reaching 41.9 percent in 2004, it still
---------------------------------------------------------------------------
remains far below the pre-reform levels. (See Chart 3.)
\16\ Calculated from the Historical Poverty Tables, Table 10, on
the U.S. Census Bureau Web site at www.census.gov/hhes/poverty/hispov/
hstpov10.html.
What was the contribution of a strong economy to the dramatic drop
on child poverty in the late 1990's? Overall, the health of the economy
in the mid and late 1990s did serve as a positive background factor
contributing to positive changes in welfare dependence, employment, and
poverty. It is very unlikely, for example, that dramatic drops in
dependence and increases in employment would have occurred during a
prolonged recession. However, it is also certain that good economic
conditions alone would not have produced the striking changes that
occurred in the late 1990s. It is only when welfare reform was coupled
with a growing economy that these dramatic positive changes occurred.
Further Research on Welfare Reform and Child Poverty
An important paper by Dr. Rebecca M. Blank, former member of the
Council of Economic Advisers in the Clinton White House, examined the
link between welfare reform and child poverty.\17\ Professor Blank
analyzed the income of families with children from 1992 to 2000 and
found that incomes rose for all but the bottom 2 percent of families
with children. Moreover, poor families showed greater income gains than
higher-income families, ``suggesting that most poor families
experienced larger income gains than did most middle and upper-middle
income families.'' \18\
---------------------------------------------------------------------------
\17\ Rebecca M. Blank and Robert F. Schoeni, ``Changes in the
Distribution of Children's Family Income over the 1990's,'' paper
prepared for annual meetings of the American Economic Association,
Washington, D.C., January 2003.
\18\ Ibid., pp. 3, 4.
---------------------------------------------------------------------------
Dr. Blank's analysis showed a direct link between state welfare
reform policies and rising incomes among poor families. States with
welfare reform programs that offered ``strong work incentives'' showed
greater increases in the income of single parents with children than
did states with weak work incentives. Moreover, at the bottom of the
distribution, states with strong work incentives have the smallest
share of children in families with negative changes in income, while
states with the weakest work incentives show the highest share of
children with [decreases in income].\19\
---------------------------------------------------------------------------
\19\ Ibid., p. 7.
---------------------------------------------------------------------------
In other words, states with strong welfare work incentives had
fewer families that lost income than did states with weak welfare work
incentives. Blank found that these income differences were the result
of state welfare policies rather than differences in state economies.
In addition, Dr. Blank examined the effects of tough welfare reform
``penalties'' on the incomes of poor single-parent families. Examining
the impact of stricter time limits and strong sanction policies that
``provide a strong enforcement mechanism for women to participate in
welfare-to-work programs,'' she found that tough welfare policies had a
positive effect in raising the incomes of poor families. Overall,
states with stricter time limits and stronger sanction policies were
more successful in raising the incomes of poor children than were
states with lenient policies. Dr. Blank concluded that states with
strict or moderate penalties for not working consistently show higher
income gains among poor children throughout the income distribution
than do states with lenient penalties. . . . [I]t is the more lenient
states with softer penalties where children's income seems to have
grown least.\20\
---------------------------------------------------------------------------
\20\ Ibid., pp. 8, 9.
---------------------------------------------------------------------------
Welfare Reform and the Recent Recession
When welfare reform was enacted, liberal opponents predicted that
it would yield sharp increases in poverty even in good economic times;
the effects of reform during a recession were expected to be
disastrous. As noted, liberal predictions about the negative effects of
reform during good economic times have been proven completely
erroneous. In addition, the disastrous effects expected of welfare
reform during an economic downturn failed to materialize during the
last recession.
Historically, during a recession, overall child poverty rises by
two to three percentage points. For example, during the economic
downturn in the early 1990s, the overall child poverty rate rose from
19.6 percent to 22.7 percent. Historically, black child poverty rises
more sharply during a recession. During the back-to-back recessions in
the early 1980s, for example, black child poverty rose by more than six
percentage points, from 40.8 percent in 1979 to 47.3 percent in 1982.
During the recession of the early 1990s, black child poverty rose by
roughly three percentage points from 43.2 percent to 46.3.
By historic standards the increase in child poverty during the last
recession has been fairly modest. Overall child poverty rose by 1.6
percentage points from 16.2 percent in 2000 to 17.8 in 2004. Black
child poverty actually declined in the first year of the recession and
then rose by almost three percentage points, from 30.0 percent in 2001
to 32.9 percent in 2004.\21\
---------------------------------------------------------------------------
\21\ U.S. Census Bureau, op. cit., pp. 52-55. Black poverty
figures are for related children in families; the 2004 black child
poverty figure is for children identified as black alone or black
combined with other races.
---------------------------------------------------------------------------
In terms of its impact on child poverty, we may assess welfare
reform as follows.
During the period of economic growth in the late 1990's
the post-reform welfare system dramatically out-performed the pre-
reform welfare in reducing poverty.
During the recent recession and slow recovery, welfare
reform did at least as well as, or slightly better than, the pre-reform
system in its impact on poverty.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Slowdown in the Rise of Out-of-Wedlock Childbearing
After the beginning of the War on Poverty, the illegitimacy rate
(the percentage of births outside of marriage) increased enormously.
For nearly three decades, out-of-wedlock births as a share of all
births rose steadily at a rate of almost one percentage point per year.
Overall, out-of-wedlock births rose from 7.7 percent of all births in
1965 to an astonishing 32.2 percent in 1995.
However, as Chart 4 shows, in the mid-nineties the explosive growth
in illegitimacy came to an end. Although the percentage of births that
were out-of-wedlock inched slowly upward, the rate of increase in
recent years has been only a fraction of the rapid annual increase that
occurred routinely in the three decades before welfare reform. Between
1995 and 2003, the overall out-of-wedlock childbearing rate rose
slightly from 32.2 percent to 34.6 percent. This was about a fourth of
the rate of increase that occurred annually prior to welfare reform.
The black out-of-wedlock childbearing rate actually fell from 69.9
percent in 1995 to 68.2 percent in 2003. The white non-Hispanic rate
rose modestly from 21.2 percent in 1995 to 23.6 percent in 2003.
As noted, between 1965 and 1995, out-of-wedlock childbearing
increased at roughly one percentage point per year. As Chart 5 shows,
if this rate of increase had been sustained, out-of-wedlock
childbearing would have risen to 41.6 percent by 2003. Due to the
slowdown from the mid-1990's on, the actual increase was far lower;
34.6 percent of children were born out-of-wedlock in 2003. The actual
rate was thus seven percentage points lower than it would have been if
the pre-reform trends had continued.
As a result of the slowdown in the rise of illegitimacy over the
last decade, around 1.4 million fewer children were born out-of-
wedlock. This has enormous positive implications for child poverty and
welfare dependence in the nation.
The shift in the growth rate of out-of-wedlock childbearing is
quite dramatic. The onset of welfare reform is the most plausible
explanation for this substantial change. Welfare reform affected out-
of-wedlock childbearing and marriage in two ways.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
First, the public debate about welfare reform sent a strong
symbolic message that, in the future, welfare would be time-limited and
that single mothers would be expected to work and be self-reliant. This
message communicated to potential single mothers that the welfare
system would be less supportive of out-of-wedlock childbearing and that
raising a child outside of marriage would be more challenging in the
future. The reduction in out-of-wedlock births was, at least in part, a
response to this message.
Critics might argue that illegitimacy initially slowed in 1994, two
years before the enactment of PRWORA. But, as noted, much of the impact
of welfare reform on childbearing was driven by strong symbolic
messages sent to young women at risk of out-of-wedlock childbearing.
These symbolic messages began well before the enactment of legislation.
Symbolically, welfare reform began when candidate Bill Clinton promised
to ``end welfare as we know it'' during his 1992 presidential election
campaign. As president, Clinton repeated the ``end welfare'' promise,
and he was the first president to speak forcefully about the harm of
out-of-wedlock childbearing. The symbolic messages of welfare reform
and personal responsibility were amplified as the Republicans took
control of the House of Representatives in 1994 and continued loudly as
reform was debated in Congress over the next two years. Thus throughout
the mid-1990's many young low income women would have been aware that a
dramatic change in welfare was ``in the air.'' This is likely to have
had a significant effect on child-bearing behavior.
Second, reform indirectly reduced welfare's disincentives to
marriage. Traditional welfare stood as an economic alternative to
marriage, and mothers on welfare faced very stiff financial penalties
if they did marry. As women leave AFDC/TANF as a result of welfare
reform, fewer are affected by welfare's financial penalties against
marriage. In addition, some women may rely on husbands to provide
income that is no longer available from welfare. Thus, as the number of
women on welfare shrinks, marriage and cohabitation rates among low-
income individuals can be expected to rise.
Future Policies
Welfare reform has been successful; however, that success has been
limited by a number of factors. First, although the federal government
operates over 50 means-tested welfare programs, reform was largely
restricted to one: Aid to Families with Dependent Children. Second, the
federal work requirements which pushed state welfare bureaucracies to
promote work and reduce dependence were always too lenient. After 2000,
most states had met their caseload reduction goals and few faced
federal pressure to further reduce dependence or increase work. As a
result, most state welfare bureaucracies coasted and began to slip back
into a traditional check-mailing mode. Third, while the law set clear
goals to reduce out-of-wedlock child-bearing and increase marriage,
nearly all state bureaucracies simply ignored these goals. In
consequence, nearly a decade was lost that should have been spent
experimenting with programs to strengthen marriage.
In the future, the following steps should be taken to advance the
goals of welfare reform.
TANF work requirements should be strengthened. In
particular, states should not be permitted to give TANF benefits to
recipients who consistently refuse to work or prepare for work.
Work requirements should be established in parallel
programs such as Food Stamps, public housing, and Medicaid.
Marriage must be strengthened. In the TANF
reauthorization passed in January of this year, Congress provided $100
million per year in funding for a healthy marriage initiative to
strengthen marriage in low income communities. This sum amounts to
about one penny for marriage for every $15.00 spent subsidizing single
parents. Future funding for the healthy marriage initiative should be
substantially increased to help develop vitally needed programs.
______
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Mr. SHAW. Thank you. I am going to commence with the
Members that did not have a chance to question in the first
round. I will start out with Mr. English.
Mr. ENGLISH. Thank you.
Dr. Haskins, it is a real privilege to have you back here.
I hadn't planned to ask this question, but there is so much
partisan smoke that seems to have intruded on this proceeding
that I think it would be important maybe to clear the air.
We had one of the Members here say that they were there at
the beginning, but I was there at the beginning, and I remember
you being there at the beginning. I understand there were a
series of versions of welfare reform that were actually vetoed
before a final version was approved.
Now, I have heard this being described as, the other side
voted against the flawed versions, but voted for the refined
version at the end. Isn't it true that what the House produced
initially included more funding for child care than the
President had originally asked for, and weren't they
essentially similar bills that were vetoed before we sent one
to the President, that he finally in the election season
approved. Is that a fair recount?
Dr. HASKINS. Yes, I believe it is. I would say the two most
important changes in the bill the President finally signed, one
was in Medicaid. The intent was the same in both cases, but the
language in the first version was a little short. It wasn't
great language. We fixed that language, so that every kid would
be covered by Medicaid. If you look at Medicaid coverages, they
have skyrocketed since the bill passed. The intent of Mrs.
Johnson and others was to make sure that no child lost
Medicaid, and that was achieved.
The other change, which was bigger, and wasn't a change in
the philosophy, was just more money for child care. I think we
added something like $3 billion or maybe $3.5 billion, but I
would point out to you that we added child care dollars to the
bill at almost every stage in the legislative process. We added
money on the House floor in Mrs. Johnson's amendment, money was
added in the Senate, and then when the President said you
needed more money, and more money was added to child care in
the Senate.
So, other than those two changes, there may have been some
fairly other cosmetic things, but I think it is correct to say
the bills were similar. I think at the time, the Center for
Budget and Policy Priorities put out a number of documents
saying that the bills were essentially similar.
Mr. ENGLISH. I want to follow up on that, Dr. Haskins. That
is, I think, an excellent objective take on what happened.
Rather than focus on the political environment, I would like to
maybe get your assessment on some of the statistics that we are
considering in evaluating welfare reform.
We have heard a lot today about poverty and how the poorest
of the poor who should be the focus of our concern continue to
struggle despite our best efforts. What troubles me is, I know
that there is also consumption data that shows that the
material conditions of low-income mothers, as measured by their
consumption, has improved significantly after welfare reform.
I wonder if you could talk a little bit more about the
consumption data that you discuss in your testimony, and what
it shows in terms of the improvements for these families; and
perhaps how income data should maybe be viewed as a statistic
that we view with a nuance. Can you respond?
Dr. HASKINS. I think there is a very substantial mystery
here. If you look at income data and compare it to consumption
data, especially at the bottom distribution, they tell a very
different story, and it is hard to understand why.
The difference in the story is exactly the one that you
mentioned. If you look at income data, there is a problem at
the bottom of the distribution. This has showed up in study
after study. Maybe 400,000 or 500,000 mothers have less income
in constant dollars than they had when welfare reform was
passed.
If you look at consumption data, their consumption patterns
are not worse. So, they are apparently not worse off. Also, I
would add at this point, one of the severest critics of welfare
reform was Sandy Jencks at Harvard, who is easily one of the
five most respected social scientists in the country, and he
recently published an article, the headline was: Welfare Redux.
That was based entirely on food consumption and food problems,
which have declined, according to him, and even are lower in
this recession than previous recessions.
So, again, if you look at consumption, the picture at the
bottom looks better. Even so, I am somewhat taken by the income
data, and I am concerned about this. I think we should be
concerned about those Moms at the bottom.
Mr. ENGLISH. My time has expired, but, Dr. Haskins, if you
could, I would welcome a citation on that study because I would
be very interested to read it.
Mr. Rector, I had intended to pose the same question to
you, but if you wish, I would welcome you to respond in
writing. Thank you, Mr. Chairman.
Mr. SHAW. Mr. Becerra.
Mr. BECERRA. Thank you, Mr. Chairman.
Thank you to all the witnesses for being here.
I wish I could have been here to ask the first panel some
questions. I was very disappointed that two of the three
panelists in the first panel were not able to stay to respond
to questions.
Mr. Chairman, I think it is important that, when people
come to testify, they don't forget that they are here also to
field questions, so we can have a full discussion of the
issues. It is unfortunate that Mr. Gingrich and Senator
Santorum did not feel it important enough to stay, at least as
long as the Members who are here, to try to respond to
questions.
Mr. SHAW. Would the gentleman yield? Both the gentlemen
told us in advance that they had schedule problems and did have
to leave early. I tried to get as many Members on both sides of
the aisle, not favoring one side of the aisle, before their
departure.
Mr. BECERRA. Mr. Chairman, I would hope we in the Committee
try to make sure that anyone who wishes to testify before the
Committee recognizes that all of us would like to ask questions
of the witnesses, especially when they make statements that we
don't fully agree with at times.
Ms. HART. Would the gentleman would yield?
Mr. BECERRA. Certainly.
Ms. HART. Too many Members decided they needed to
pontificate before the poor witnesses were allowed to speak,
and that put us behind, unfortunately. That is really what the
problem was. I yield back.
Mr. BECERRA. I would say to the gentlelady, the only folks
who spoke before the witnesses were the people that are
entitled to speak; that is the Chair, the Ranking Member, the
chair of the Subcommittee and the Ranking Member of the
Subcommittee. So, if there was pontificating, it was bipartisan
pontificating.
It strikes me as odd that about the only thing missing from
this hearing is the big banner that says ``Mission
Accomplished.'' It seems like we are patting ourselves on the
back when all the numbers tell us that the situation is getting
worse. It is almost as if we are reading the book, The Tale of
Two Cities, but in this case, the tale of two periods.
If you look at 1996 to 2000, you are right, the welfare
rolls did decrease, poverty rates did decrease, children in
poverty did decrease. Ever since 2000, in other words, ever
since this President took office, those numbers have gone back
up, so the progress that was made from 1996 to 2000 has been
lost, and now we are in reverse.
So, like the previous ``Mission Accomplished'' sign, I hope
that we recognize that there is still a great deal to do. I
believe it was Senator Santorum--I wish he had been here so I
could have asked the question, but I guess he was trying to say
that the poverty rates for black children are getting better.
Of course, if you look at this whole picture with a blurred
lens from 1996 to present, perhaps it looks that way; but if
you look at the reality of today and what is going on, the
poverty rates for African-Americans and certainly for African-
American children, as for Latino kids and Latino families and
other people of color, are on the rise, and I would be deadly
concerned about anyone who is trying to say that we have
accomplished something there with regard to people who are
struggling very hard to work and finding it very difficult.
I have a chart here that unfortunately is probably
difficult to see that talks about poverty rates among African-
American children. Again, it is the tale of two periods. From
1996 to 2000, they do drop. From 2000 to 2004, the latest
numbers that we have, they have gone back up. So, I hope that
we recognize that there is still a lot of work to do.
[The exhibit follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Most of us are very concerned that the programs that also
led toward that drop, and I think Ms. Parrott tried to make
reference to some of those, are also empty from this tale that
is being told. It is an incomplete story, as far as I am
concerned, when you don't include the fact that during that
period where we saw a decrease in poverty rates for America's
kids--if you look at this, it correlates perfectly with when we
passed an expansion of the EITC for low-income families so they
could keep more of the money that they worked so hard to earn,
and also, as was mentioned before, when we saw the last
increase in the minimum wage. That is when you can see that the
rates really begin to decline.
Unfortunately, even a modest increase in the minimum wage
and even a modest allowance under the EITC for poor families to
keep their take-home pay, at some point is eroded by inflation
and sure enough, this is what you see; it is now beginning
under the Bush years, poverty rates continue to increase.
So, I think what it says to us is, we still have lots of
work to do. It should be done on a bipartisan basis. Before we
put up that ``Mission Accomplished'' sign, I hope we recognize
that there is still much for us to do.
I would hope that, and maybe I can end with this one
question to Ms. Parrott, and that is, what do we do to try to
meld what was done through welfare reform with policies that
will help in the area of child care, which, I think, is where
we desperately need some assistance for women who are on
welfare?
Ms. PARROTT. I think there is no question that the work
support system that, again, Dr. Haskins did talk about was a
major factor in some of the improvements that we saw in the
late nineties; the EITC, as you mentioned, expansions in
Medicaid and CHIP, and also child care. The amounts on child
care went up quite substantially during the nineties and into
the early part of this decade and have since started to
decline, and in fact we are now in a situation where States are
actually cutting back their child care programs, so that they
can provide child care to fewer children in low-income working
families than they once did because of funding constraints.
As you may know, the President's 2007 budget documents
actually show a decline in the number of children that will
receive child care assistance under current funding levels. In
fact, by 2011, the number of children that would receive child
care assistance is more than 600,000 fewer children than
received it in 2004.
So, what that means is that this is a real gap. We have a
minority of children who need child care assistance, who
qualify for child care assistance under the child care
eligibility rules that get help paying for child care. That is
a problem for two reasons. It is a problem because parents, if
they don't have access to child care assistance, may not be
able to hold their jobs with stability, and it is holding a job
with stability that can help them move forward in the labor
market.
It is also a problem on the child development side, that if
we want young children in poor families to show up to
kindergarten ready to learn, they need the same kinds of
quality early education programs that their more affluent
counterparts receive.
It is really important that, at the Federal and State
levels, additional resources be devoted to child care and that
it be viewed both as a work support as well as something that
is good for education and good for child development. Thank
you.
Mr. BECERRA. Thank you, Mr. Chairman.
Mr. SHAW. Your time has expired. Mr. Beauprez.
Mr. BEAUPREZ. Thank you, Mr. Chairman. I believe my
colleague, Mr. Camp, has a question, so I will yield.
Mr. CAMP. I thank the gentlemen for yielding. I would just
like to submit for the record a 2005-2006 civil grand jury
final report in the State of California which found that up to
half of the money appropriated for CalWorks, which is the child
care program in California, is lost due to fraud and poor
oversight as estimated by the County of Los Angeles Department
of Public Social Services.
[The information follows:]
MILLIONS OF TAX DOLLARS LOST TO CHILD CARE FRAUD
EXECUTIVE SUMMARY
Millions of tax dollars have been lost to fraud from child care
funds allocated by the State of California and administered by the
County of Los Angeles Department of Public Social Services (DPSS) in a
program entitled California Work Opportunity and Responsibility to Kids
(CalWORKS). As currently administered, the program is equivalent to an
A TM for thieves. Our research included previous civil grand jury
reports, audits, contracts, other documents, and interviews with over
100 individuals involved in the CalWORKS program.
This 2005-2006 County of Los Angeles Civil Grand Jury investigation
revealed:
Only 28% of the children placed with license-exempt child
care providers were verified as present with their child care provider,
according to the April 2005 California Department of Education (CDE)
Error Rate Study Report.
Forty-nine (49) individuals who cheated the CalWORKS
child care program of $3,421,578, between September 2004 and February
2006, have been successfully prosecuted by the County of Los Angeles
District Attorney.
------------------------------------------------------------------------
DATE DISPOSITION AMOUNT
------------------------------------------------------------------------
September 9, 2004 13 Convictions $925,000
------------------------------------------------------------------------
December 9, 2004 12 Convictions $500,000
------------------------------------------------------------------------
January 26, 2006 10 Convictions $1,200,000
------------------------------------------------------------------------
February 23, 2006 14 Convictions $796,578
------------------------------------------------------------------------
Up to 50% of the more than one billion dollar CalWORKS
program may be lost due to fraud and poor oversight as estimated by
several of the DPSS personnel.
The 2005-2006 County of Los Angeles Civil Grand Jury recommends
that DPSS require verification in each step of the CalWORKS process to
ensure that parents have the work opportunity intended, that children
are cared for in healthy, safe environments while their parents are
working, and that tax dollars are used as authorized. Our study shows
that child care welfare fraud is a continuing burden on the taxpayer.
There is an urgent need for prompt and thorough implementation of our
recommendations.
BACKGROUND
In 1996, the Federal Personal Responsibility and Work Opportunities
Reconciliation Act combined Federal funds for child care for welfare
recipients. In 1998, California enacted the CalWORKS welfare to work
program to conform to this law. The CalWORKS program includes monthly
cash aid for eligible welfare recipients and former recipients,
including child care support, and monthly cash aid for certain children
until the age of 18.
CalWORKS Stage 1 is administered in the County of Los
Angeles by DPSS which receives its funds from the California Department
of Social Services (CDSS). The funds include monthly cash aid to a
parent in the welfare to work program who is enrolled in a job
training, work, or school program. In addition to cash aid, paid child
care and ancillary services are available for up to 6 months or until
work and child care become stable enough for the parent to achieve
independence. When the work income level increases to a predetermined
amount, cash aid is discontinued but child care support can continue
for up to 24 months.
CalWORKS Stages 2 AND 3, administered by the California
Department of Education (CDE), provide child care to parents whose
stable circumstances permit them to transition off cash aid but still
need child care support. CalWORKS allows parents or guardians of
eligible children under the age of 18 to receive monthly cash aid.
Until the age of 18, the child or children of an undocumented parent, a
handicapped parent, or a child being raised by someone other than the
parent, if approved for eligibility, can receive monthly payments up
to: 1 child--$359, 2 Children--$584, 3 children--$723. . . .
This 2005-2006 County of Los Angeles Civil Grand Jury chose to
study the Stage 1 program administered by the Department of Public
Social Services.
The County of Los Angeles DPSS contracts with 13 Alternative
Payment Providers (APPs) for the administration of the Stage 1 CalWORKS
program. The APPs receive $127.69 per month per case to manage the
child care program and process payments. CDE contracts with the same
APPs to administer the Stage 2 and Stage 3 programs.
The DPSS contract with the APPs provides funds for outreach to
inform the citizens of the County of Los Angeles of the availability of
this child care welfare program, in order to increase the number of
parents and children in the program. We are not aware of any DPSS
direction or any studies to evaluate the effectiveness of this outreach
program.
In Stage 1, parents are not required to sign their children in and
out at their child care provider's site, although Stage 2 and 3 have
this requirement. The absence of these attendance sheets and the
failure of DPSS to require the APPs to verify and copy only original
documents, rather than accepting copies by mail, provides an
opportunity for fraud. Verification that signatures match signatures on
file is not always done. Procedures for processing records are not
routinely followed. Our investigation found a multiplicity of
procedural errors and omissions. The APP contracts lack specificity and
controls. Widespread abuse of this process has created a program
culture that encourages fraud by parents, child care providers, and
agency employees.
Several studies have been conducted during the past two years
documenting problems with the CalWORKS program. These studies include:
1. The California Legislature directed the CDE to perform an
analysis of administrative error and the potential for fraud in the
local operations of CalWORKS and APP Child Care Programs. The CalWORKS
Error Rate Study Report completed in April, 2005 revealed the following
results.
----------------------------------------------------------------------------------------------------------------
Attendence Verified Attendence Not Verified Visit Could Not Be
------------------------------------------------------ Arranged
------------------------
Percent Number Percent Number Percent Number
----------------------------------------------------------------------------------------------------------------
Licensed Family Child Care Home 44.6 123 17.8 49 37.7 104
----------------------------------------------------------------------------------------------------------------
License-Exempt Trustline Approved 28.4 42 16.9 25 54.7 81
----------------------------------------------------------------------------------------------------------------
License-Exempt and Trustline 28.4 113 16.3 65 55.3 220
Exempt
----------------------------------------------------------------------------------------------------------------
The study included random visits during the hours the, ``. . .
child was expected to be present.'' Providers were first contacted by
phone to explain the child's name had been randomly selected, the
caller was to confirm the provider's current address, and the caller
asked permission to verify whether the, ``. . . children were in
attendance during the certified hours of care.''
``If the provider declined a visit or if the provider could not be
contacted, the reviewer classified the case as 'visit could not be
arranged.' In some instances where the provider could not be contacted,
if time were available, reviewers drove to the facility. If there was
no one at home to contact, or if the occupants did not answer the door,
cases were recorded as 'visit could not be arranged'. In a few
instances, the provider's address may have been in a locked complex
that was not accessible to the reviewer or the environment may have
posed safety issues for the reviewer. In these instances, the case was
also recorded as 'visit could not be arranged'.''
Children's attendance could be verified in 44.6% of Licensed Family
Child Care Homes and in only 28.4% of both License-Exempt Trustline
Approved and Trustline Exempt.
2. As reported to the Board of Supervisors, on August 3, 2005, DPSS
recognized a need to employ an outside auditor to study the APP payment
system. The results of this study have not yet been released.
The CalWORKS eligibility determination and enrollment process
involves: a receptionist, a case opening clerk, an eligibility worker
(screener), an intake worker, a Home Interview Program (HIP) worker, an
eligibility worker supervisor, a Greater Avenues to Independence (GAIN)
worker, and a case maintenance worker. After the case is approved, the
GAIN worker provides the orientation and appraisal: motivational
training and supportive services and evaluation of the applicant's need
for child care. If appropriate, the GAIN worker refers the parent to an
APP child care resource and referral representative. The APPs
administer the child care portion of the program as specified in a
contract between DPSS and an APP.
This complex process triggers concern about actions taken. How
often does DPSS verify that actions are performed at the proper time or
done at all? Can DPSS verify the existence of a child care facility or
that children assigned to that facility were there as reported? Do the
APPs monitor the child care provider's performance for DPSS? Does the
agreement between the APPs and the child care providers protect the
interests of the child, the parent, the County and the State?
The parents eligible for the welfare-to-work program receive
monthly cash payments and are provided with child care support
determined necessary to enable them to work and become independent.
Parents are allowed to choose the child care provider for their
children. These child care providers are considered ``an employee of
the parent.'' The providers are classified as:
(1) Non-exempt (State) Licensed Family Child Care facilities: These
child care providers are on the APPs' resource and referral list.
Parents are given a choice of child care providers from this resource
and referral list.
(2) License-exempt, Trustline approved: These child care providers
are family Members or anyone other than licensed providers chosen by
the parents to supervise their children. ``Trustline approved'' means a
background check is conducted which includes fingerprinting the child
care provider.
(3) License-exempt, Trustline-exempt: These child care providers do
not have licenses and include only: aunt, uncle, grandmother,
grandfather, great aunt, great uncle. There is no background check and
no fingerprinting.
This category requires a ``Health and Safety Self-Certification''
form. All of the information on this form is provided by the child care
provider and is approved by the parent who maintains all responsibility
for the child care provided.
MAGNITUDE OF THE CalWORKS PROGRAM
The County of Los Angeles CAO's office provided the following data
which shows the magnitude of the CalWORKS program.
Actual 2004-2005 revenue total of $1,100,359,265.00 includes:
1. State appropriation, $628,383,480.00
2. Federal appropriation, $436,583,422.00
3. Miscellaneous Revenue, $11,361,798.00, includes expired and
never cashed warrants (checks) returned by the post office and return
of overpayments.
4. Sales tax realignment, $5,304,677.00, the state sets aside sales
tax money to reimburse counties for social services and this amount is
the CalWORKS portion.
Welfare fraud in the DPSS program has been studied many times. A
July 8, 2003 study by the County of Los Angeles Auditor-Controller's
office contains 20 recommendations for improved processing of claims. A
response report dated February 7, 2006 titled ``Department of Public
Social Services Report to the Audit Committee, Regarding the Status of
Recommendations in the Welfare Fraud Prevention Program Review'' has
been carefully reviewed by this Grand Jury. DPSS states all but one of
the recommendations have been implemented for up to 3 years. In view of
this report of implementation, there should have been a considerable
decrease in the incidence of welfare fraud. THIS HAS NOT HAPPENED. Our
study shows that welfare fraud is a continuing burden on the taxpayer.
METHODOLOGY
Previous Civil Grand Jury reports and the ``CaIWORKS Error Rate
Study Report,'' prepared by the CDE, dated April 2005, show evidence of
procedural failures. We studied other audits, reports, letters,
documents, and contracts, together with information about child care
welfare fraud arrests and prosecutions. Additionally, we met with and
interviewed over 100 individuals involved in the CalWORKS process.
Visits were made to DPSS offices, GAl N offices, and several APP
facilities to observe the administrative process.
FINDINGS AND RECOMMENDATIONS
The first seven Findings and Recommendations refer to the contract
between the County of Los Angeles Department of Public Social Services
(DPSS) and the Alternative Payment Providers (APPs). By incorporating
the recommendations into the contract, mandatory contract compliance
will ensure a process that better serves the needs of all involved
parties.
Finding 1. Although the child care payment amount is based on an
approved number of child care hours, DPSS does not verify the actual
number of attendance hours and does not require the APPs in the current
contracts to verify the number of hours provided.
Recommendation 1. There should be random and unannounced visits at
least once every ninety days to the child care sites to verify the
childrens' presence. This verification should be done either by DPSS or
be required by the APPs in revised DPSS-APP contracts.
Finding 2. Although DPSS procedures require original documents from
parents and child care providers, copies are often accepted.
Recommendation 2. DPSS should require the APPs to accept only
original documents or copies that have been seen and annotated by DPSS.
Finding 3. Although the CalWORKS California-administered Stage 2
and 3 child care programs require sign-in and sign-out sheets for
children in day care, the County of Los Angeles-administered child care
Stage 1 program has no such requirement.
Recommendation 3. DPSS should require by incorporation in the APP
contract daily parental sign-in and sign-out sheets.
Finding 4. Signatures of the parent or child care provider on forms
being processed by the APPs are not always matched to other documents
in the file.
Recommendation 4. DPSS should ensure by monthly file reviews that
signatures on signature cards in files match the signatures of the
parent and child care provider. The Auditor-Controller and contracts
department of DPSS must also have access to these records for audits.
These requirements must also be included in the APP contract.
Finding 5. Agreements between the APPs and the child care providers
may not stipulate all the requirements of DPSS and the State-required
child health and safety issues.
Recommendation 5. DPSS should review the DPSS-APP contracts and
agreements to ensure that child health and safety requirements are
addressed by both the APPs and child care providers.
Finding 6. A Contract Monitoring Project and a Contract Monitoring
Division Report, both completed by the County of Los Angeles Auditor/
Controller, cited the following:
A parent reported that neither she nor her child had
received services from the child care provider for which the County was
billed $12,400.
A parent case file did not contain a copy of the day care
provider's current business license, taxpayer identification number, or
Social Security number as required by the contract.
Child care payments were made to child care providers for
parents who were not qualified or enrolled in any activity which
qualified them for benefits.
DPSS was billed twice for the same retroactive services.
Recommendation 6. Each step of the DPSS process should be verified,
and APP contracts and files should be monitored and audited: to prevent
paying for child care not provided, to ensure that parents are eligible
for child care support, to eliminate double billing, and to ensure that
documentation required by the contract is in place through random
reviews of APP files. DPSS has the primary responsibility for
verification and should request assistance as needed from the Auditor-
Controller, District Attorney and Chief Administrative Office.
Finding 7. The APP child care outreach marketing program lacks
County of Los Angeles direction. We are not aware of documentation as
to the effectiveness of this program, the reach of the marketing, media
used, or responses.
Recommendation 7. Marketing of the APP CalWORKS child care outreach
program should be regularly evaluated by DPSS to determine its
effectiveness.
Finding 8. DPSS and the APPs communicate primarily through the GAIN
Employment Activity and Reporting System (GEARS) computer system which
is maintained by DPSS. The APPs report that when the system is down,
data communication with DPSS ends. The GEARS system is supposed to
provide the APPs with correct and current information. However, we are
told the data on the GEARS system may be out of date by as much as one
to 2 weeks.
Recommendation 8. DPSS should designate staff and a contact phone
number for the APPs to call for case information when the GEARS data
system is down and circulate a memo to all APPs with this information.
DPSS should ensure that participant data is entered into the GEARS
system daily.
Finding 9. Some personnel of DPSS and APPs advise that changes in
employment, job training, or school hours are entered into the GEARS
system by DPSS only at the beginning of the month. If any of these
hours of attendance change on the 2nd of the month or thereafter, the
full payment for child care continues until the end of the month.
Recommendation 9. Any changes in attendance should be entered daily
on the GEARS system by DPSS to eliminate overpayment.
Finding 10. The DPSS process requires that the parent report their
attendance at school or training. APP personnel and DPSS investigators
indicate that self-certification is not always reliable.
Recommendation 10. The school or the training site should send to
DPSS a monthly attendance verification based on records which are
retained by the school or training site and made available to county
auditors.
Finding 11. Any changes in the parent's schedule that would affect
child care hours are reported by the parent on a Quarterly Report (QR?)
form supplied by DPSS.
Recommendation 11. Any changes in the parent's schedule that would
affect child care hours should be reported monthly instead of quarterly
and verified by DPSS to eliminate overpayment for child care. This
monthly report and the record of its verification should also be
available to county auditors.
Finding 12. Not all DPSS forms specify that the parent or child
care provider is signing under penalty of perjury.
Recommendation 12. DPSS should require that all forms are signed
under penalty of perjury.
Finding 13. Alleged child care fraud is referred by the APPs to the
DPSS Welfare Fraud Prevention section. This section checks the referral
to ensure that all pertinent documents are attached to the referral.
DPSS investigates the allegations of fraud and may refer the case to
the County of Los Angeles District Attorney for prosecution. The Civil
Grand Jury is concerned that in a 1 year period hundreds of referrals
from the APPs to the DPSS Welfare Fraud section resulted in only ten
referrals to the District Attorney's office. Some DPSS Welfare Fraud
Prevention section personnel have inadequate training to detect
evidence of fraud.
Recommendation 13. DPSS should develop and implement an enhanced
welfare fraud detection and investigation training program for
employees in the Welfare Fraud Prevention section in conjunction with
the Los Angeles County District Attorney and receive periodic State and
local training. Personnel trained and employed by this program should
be compensated commensurate with their increased responsibilities.
Finding 14. Misrepresentation of employment is a major source of
welfare fraud:
Some parents in the welfare-to-work program earn very little
income--a few hundred dollars per month--but are reimbursed thousands
of dollars per month for miles driven and child care expenses.
The same person (child care provider) who is paid by the County to
provide child care services may also be receiving In Home Support
Services (IHSS) from the County. The IHSS worker is provided to
individuals to assist them in activities of daily living. A CalWORKS
participant/parent could be employed to provide IHSS services to the
same person (child care provider) providing their child care. There is
no cross check.
Fictitious names of employers and places of employment
have been ``verified'' by phone calls made to co-conspirators.
Some parents work as aides with the IHSS Program and
receive thousands of dollars in mileage.
Some parents claim to work for relatives.
Some parents conspire with friends or relatives to
fraudulently claim child care benefits and split the money.
Some parents claim to provide tutoring during the hours
the child is in school.
Some child care providers claim hours for care during the
hours the child is in school.
Recommendation 14. If the parent is working for cash or for
relatives, the payer should sign, under penalty of perjury, certifying
the hours, the amount paid, and the work accomplished. A cross check
between child care provider services and IHSS services, requiring
copies of tax returns, and random field checks at the employment
location should be mandatory. DPSS should eliminate child care
allowance if employment legitimacy cannot be determined.
Finding 15. DPSS has stated that: ``There is no limit, currently,
to the number of hours allowed to the parent for paid child care per
day.''
Recommendation 15. Any paid child care in excess of 10 hours per
day for 5 days per week or 12 hours per day for 4 days per week should
be monitored and verified on site by DPSS.
Finding 16. Trustline Registry Form: this form ``. . . was created
by the California Legislature to offer parents, employment agencies,
Child Care Resource and Referral Programs (APPs and DPSS), and child
care providers access to a background check conducted by the California
Department of Social Services (CDSS) which includes checks of the
California Criminal History System and Child Abuse Central Index (CACI)
at the DOC and FBI records.'' This form is processed for DPSS by the
appropriate State licensing department and the State advises that it
may take 6 weeks or more to complete.
Recommendation 16. Trustline Registry Form background check must be
approved and received by DPSS prior to any authorization for child care
(including License-exempt and Trustline Exempt). DPSS should work with
the State to expedite the Trustline Registry Form.
Finding 17. The County of Los Angeles Administrative Memorandum
Number 0010, dated 5-22-00, defines a license-exempt provider's own
children in the following way: ``The definition of a license-exempt
child care provider's own children include all grandchildren, nieces,
nephews, and first cousins for whom child care services are being
provided. These children are considered immediate family Members and
there is no limitation on the number that may be cared for. In
addition, the license-exempt provider may also provide child care
services for the children of one other family. Child care payments may
be authorized during the same time period for all of the children whose
parents are participating in CalWORKS welfare-to-work activities or
working.'' This broad, unlimited definition of license-exempt
provider's own children encourages fraud and abuse of the system.
Recommendation 17. The definition of ``own children'' should be
limited to only the biological or legally adopted children of the child
care provider. A limit should be placed on the number of children cared
for by one child care provider, based on the capacity of the provider
and the site, to provide safe and healthy child care.
Finding 18. DPSS contracts with outside agencies to provide
services for the GAIN case management in two new GAIN regional offices
to perform vital steps in the CalWORKS process. These contract worker
positions include caseworkers, supervisors, and clerk typists.
Recommendation 18. Contract agency employees should be required by
DPSS to undergo the same background checks required of DPSS employees
in the same job category.
CONCLUSION
The Los Angeles DPSS CalWORKS program, with a budget in excess of
one billion dollars, is huge and complex. The California Department of
Education Error Study Report statistics, interviews with individuals
convicted of welfare fraud, and the continuing multiple arrests by the
District Attorney's office confirm the need for immediate tightening of
program controls. As currently administered by DPSS, the CalWORKS
program invites fraud estimated at 50% by some DPSS and APP personnel.
Fraud is less likely to occur in a program with increased supervision,
regularly scheduled training, and checks and balances for each step of
the process. The citizens of Los Angeles County deserve better so their
tax dollars are used wisely and more eligible parents and children can
be helped.
GLOSSARY
APP--Alternative Payment Provider (State and County)
CACI--Child Abuse Central Index (State)
CalWORKS--California Work Opportunity and Responsibility to Kids
(State and County)
CAO--Chief Administrative Office (County)
CDE--California Department of Education (State)
CDSS--California Department of Social Services (State)
DOC--Department of Corrections (State)
DPSS--Department of Public Social Services (County)
DSS--Department of Social Services (State)
FBI--Federal Bureau of Investigation (Federal)
GAIN--Greater Avenues to Independence (County)
GEARS--Gain Employment Activity and Reporting System (County)
HIP--Home Interview Program (County)
IHSS--In Home Support Services (County)
Mr. CAMP. I am certainly sympathetic to the call for more
funding for child care. We did provide a billion dollars in
additional child care funds over the next 5 years as part of
the Deficit Reduction Act to which the President signed in
February 2006 but this report suggests a significant amount of
current child care spending in our Nation's largest State is
wasted, which is a major concern, and I think that is something
the Committee may want to take a look at. I thank the gentleman
for yielding.
Mr. BEAUPREZ. Thank you. Reclaiming my time. Something that
jumped out at me--and I honestly don't remember who made the
point in the first panel--is that government is not very good
at giving love. I saw a tragic statistic recently that in low-
income families, the children who most desperately need a
fighting chance at that thing we call the American dream--to
get a good education, earn their way out of poverty--in the
first 4 years of life they experience a total of a mere 25
hours of lap time; storytelling, reading to children.
Obviously, an education is necessary. I think the first
panel emphasized that. I think we would all agree. So, too, is
parents being parents. Bishop Riley, I am sure it is just a
constraint on time, but I would guess in your profession that
you agree with that, and that stronger marriages and especially
fatherhood a bit beyond the biological part of fatherhood is
something that you find important, strong marriages and parents
being around. Mr. Rector, you opined on that need.
I would ask both of you, from your perspectives, which I
guess is fairly expansive, now if we have made progress, and I
submit that the evidence is pretty clear we have made progress
since the 19nineties, since this act was put in place, and we
want to take it to the next level, I think that is an area to
target, improved education especially for the most needy. I
think one of the ways to do that is by giving the little ones a
fighting chance once they get to school to be ready to learn.
So, that goes back to the parental responsibility.
How can we accomplish that mission? Bishop Riley first, and
then Mr. Rector, time permitting.
Bishop RILEY. I think you are absolutely correct. I think
probably the main way is to take as much stress off of those
family situations at home as we can. One of the ways that I try
to highlight it is the fact that so many of the working poor
people, people who have jobs that are working or having to work
two jobs and so the children are getting left out. You are
absolutely right, at the youngest age, those first 4 years,
which are critical; that is when we need the parents to be at
home more.
You just can't make it at $5.50, $5.27 an hour. New Jersey
is its own case. I understand that, but the living wage in New
Jersey is between $17 and $19 an hour. That is what it costs if
you rent a house or rent an apartment and pay for food and so
forth.
Mr. BEAUPREZ. I understand that. If I can interject though,
and I am working from memory here, so pardon me if I am wrong,
but I believe in some of our minority communities, as much as
80 percent of the children are being born out of wedlock. I
don't think that raising the minimum wage is necessarily going
to solve that problem.
Don't we have a moral, cultural crisis going on in this
country? I was hoping you of all people would tell us that.
Bishop RILEY. I don't have the statistics in my own State
or across the country at hand. I can certainly get those. I
think that if children--and children are born out of wedlock; I
understand that. Part of that is because the children that are
having the children were not cared for appropriately as they
were coming up. They didn't learn what they needed to learn
coming up.
Mr. BEAUPREZ. I accept that. Mr. Rector, quickly if you
care to.
Mr. RECTOR. You have hit the absolutely critical issue; 34
percent of children are born out of wedlock. In the United
States, it is one child about every 20 seconds.
Mr. BEAUPREZ. Thirty-four in total.
Mr. RECTOR. Among minorities, 69 percent; Hispanics, 45
percent. This is the overwhelming cause of child poverty. It is
the overwhelming cause of all the social problems that this
Committee deals with, and this is the thing that we have to
begin to address.
I really think that one of the failures in the last 10
years was that State governments were supposed to experiment
with programs to increase marriage, and with the exception of
Oklahoma, most did not. We really have to pursue this much more
strongly.
I would commend to you a book called, Promises I Can Keep,
by Kathryn Edin of Rutgers University. She is a liberal
sociologist, but she is probably the greatest expert on single
parents on welfare, and effectively, when you read this book,
what you see, and out-of-wedlock child bearing is almost
exclusively restricted to the least advantaged mothers, the
ones with the lowest education, the ones that are going to have
the most difficulty going it alone; those are the ones that go
without marriage.
What you see among them is, in the middle class, typically
the history is, you develop a relationship. You get married.
Then you have children. Among the lower socio-economic white,
black and Hispanic, that is actually reversed. They have
children. They have children deliberately. It has nothing to do
with an absence of birth control. They have children
deliberately then they try to find a relationship, and then
they think about getting married in their thirties. They don't
see a problem with this. They are not hostile to marriage.
One of the most important things we can do for this group
is to say, this is a really bad life plan, particularly for
your children. You need to think about this in a different way.
I think we will have a wonderful audience once we begin to
communicate our concerns. They are looking for a better way to
raise children. We just have to start to talk to them.
Mr. SHAW. Ms. Tubbs Jones.
Ms. TUBBS JONES. I am so happy this hearing on welfare has
not become a sociological study of minority families and what
they choose to do. The reality is there is a huge issue with
regard to children being born out-of-wedlock, but we are not
going to resolve it, as to whether or not what happens with
that, in this 5 minute piece here, and I would ask my
colleagues to think about some of the statements that they have
made in this hearing and contemplate the impact that they will
have on people who are listening to what they are saying.
I am just stunned, and you have kind of taken me out of the
point where I wanted to go with this. The reality is, and I
have a study that was done at Case Western Reserve University,
which is the university that I graduated from, with regard to
what has happened to welfare leavers in Cuyahoga County--a
welfare leaver is someone who has left welfare--and the impact
that it has had.
It says that 79 percent of welfare leavers were employed at
some point during their first 6 months off welfare, but only 60
percent of the leavers were able to secure mainstream
employment having an official State wage record.
I am so tired of hearing you all talk about people are off
welfare and people are much better off. They are not better
off. They are standing in lines at churches and all kinds of
places looking for supplements for these minimum wage jobs that
they have, and they are still in poverty even at work. They are
at work without any type of support.
One of the things that we don't talk about is that if
people are not receiving a welfare check, what type of income
or support are they receiving from the government? Are they
receiving child care? Are they receiving training? Are they
receiving some type of medical care? The reality is, if we add
those numbers up, it may be greater than the welfare check that
they were receiving initially.
Let me go on to the report before I just go out of whack on
you all with regard to the statements that you are making. The
survey results indicate that low-level education, low-paying
jobs, that people leaving welfare were left to--had low levels
of education. They found low-paying jobs with limited access to
benefits and experienced all kinds of hardships following their
coming off of welfare.
They have problems with renting. They have problems with
paying their electric, their utility bills. They have problems
with being evicted. They have problems supporting their
children. Part of the reason we are talking about families with
children who have not been sat on a lap and read to, is because
many of these parents work so many long hours that, by the time
it is all over with, by the time they get home with a low
amount of education, their ability to then have a discussion
with their child may well be limited.
I would say to my colleagues, if we really want to address
this issue, if we really want to be on point of what we are
doing with low income and minority families, let's sit down
collectively. I am awaiting the opportunity as a Democratic
Member of the Committee on Ways and Means to sit down and have
a discussion with my colleagues on any issue at all on any
subject.
The 4 years I have been on the Committee, we have yet to
sit down and have a lengthy discussion with regard to
legislation. This is one of the issues that is key and very
important to me and the constituents I represent. Because I
happen to be the only African-American woman on this Committee,
it is particularly important for me to be able to be a voice
for the young minority women across this country who want to be
heard and don't want to be identified as this group that
doesn't want to go to work or this group that doesn't want to
take care of their children or doesn't want to be educated.
One of the problems with the welfare program is that--TANF
program--there are young women who want to be educated, but
because of the rulings with regard to going to school instead
of going to work, it restricts them from improving their
education. That is a real problem within the welfare program.
They can be educated, but it is not a long enough time. They
still have to go to work without having the opportunity to take
care of their children.
You all get a life here and stop identifying and pointing
out problems with minority women across this country and get on
the point of being morally correct. If you are morally correct,
then you are going to take care of the least of those in this
country. I yield back the balance of my time.
Mr. SHAW. Ms. Hart.
Ms. HART. Thank you, Mr. Chairman. I am going to yield to
Mr. Beauprez 30 seconds. He wanted to follow up on something
that wasn't quite finished.
Mr. BEAUPREZ. Dr. O'Neill, only if you have got a very
brief answer to my question. You looked like you wanted to
offer it. Otherwise, submit it for the record. Either way.
Dr. O'NEILL. It is a very brief answer. This really
pertains to--it has to do with mothers reading to their
children. I worked on an extensive research project using
national level data that also had data on children's
performance and I looked at the effect of parental background
on performance.
This is a published article, and I can send you the
citation for it. One thing that really struck me was that--this
was before welfare reform--women on the AFDC program who did
not work read to their children less than any other women,
holding constant education, race, anything that you can think
of.
So, it wasn't that they spent all their time taking care of
their children; they were less likely to take their children to
a park. They were less likely to do any kind of child
development activity, and those children turned out really very
badly. They started school so poorly prepared that it would be
extremely difficult for those children to ever catch up.
I really believe that if you could do a similar study
today, you would find that women who now work know the
importance of education and, therefore, are spending more
developmental time with their children because they don't want
their children to follow in their footsteps.
Mr. BEAUPREZ. If you could get me that article, I would
very much appreciate it. I thank the gentlelady from
Pennsylvania.
[The information follows:]
At the hearing of July 19, 2006 on the outcomes of the 1996 welfare
reform I alluded to research I had conducted on the determinants of
cognitive achievement by pre-school children, with particular reference
to disadvantaged children and those growing up in homes with welfare
dependent mothers (prior to welfare reform). The article that contains
this research is entitled ``Family Endowments and the Achievement of
young Children with Special Reference to the Underclass,'' authored by
M. Anne Hill and June O'Neill, published in the Journal of Human
Resources, XXIX.4. The relation between mother's welfare participation
and a child's achievement is discussed starting on page 1089 (section
V.4). As noted, one reason why children from welfare families had low
levels of achievement is that their mothers were less likely to read to
them than was the case in non-welfare families. (Women on welfare more
than half the years since the birth of their first child read to their
children on average 1.8 days a week compared to an average of 2.8 days
a week for mothers who were never on welfare despite the fact that
mothers with significant time on welfare worked less than other
mothers.)
Ms. TUBBS JONES. Will with gentlewoman yield?
Ms. HART. Actually, no, because I have very little time.
Sorry about that.
Ms. TUBBS JONES. I will get some time from someone else.
Thank you.
Ms. HART. Okay. I am going to have to make a statement
first, and then I am going to ask a question if I have time. I
have spent a significant amount of time as an elected
legislator on the State level while welfare reform was
happening and implementing it and, then, of course, now for the
last 6 years here, and have always held roundtables, small
intimate groups of people who are involved in social services
and also those who have been recipients of them, including
welfare, to come and sit down and tell me how it works for
them; tell me what the challenges are; tell me what the
problems are; tell me what works for them; tell me what
doesn't.
Invariably the people who have come in to talk to me who
have moved from welfare to work have had positive things to say
about their self-esteem and the confidence and hope for their
future as a result of the welfare reform. I am going to put
that out there because that is what I see; that is what I hear.
The negatives that I hear, which we have heard from the
gentlewoman from Ohio, are that these women come in and want to
have an education, and I think that is great because I wanted
to have an education, too, and so does everyone else who is
struggling and wants to move forward in the world. The
difference is, I had to work and go to school so that I could
pay for it. I think that the welfare reform's goal was to help
people understand that you need to work to get the reward.
Now that I have said that, I am going to ask Dr. O'Neill to
reflect upon a little bit of what I said, and please tell me if
you believe it has resulted in more work and also along with
that the opportunity to get--to move up the ladder, whether it
is taking some classes and getting educated or just moving up
the ladder and getting a better job where you start working.
Dr. O'NEILL. I teach at a city university, and many of my
students, I would say most of my students, work, and most of
them take classes at night. Many of the women have children--
maybe the men have children, too--and it is very difficult, but
they manage. It takes them longer to get their degrees than
somebody who is able to go full time during the day.
I agree with you; there are people struggling to get an
education, and they do so. Under the welfare reform initiatives
of the past, the policy was to provide training--various kinds
of training and education programs, but they had little or no
impact. It is difficult for the government to know what kind of
training program somebody needs.
When you go out to work, you get an idea of what it is you
might like to do, and you learn what kind of training you would
need to get there. You might work as a helper at a hospital and
say, gee, I would really like to be a nurse, a registered
nurse, and then you would have a goal for yourself. You don't
know those things if you have never had any exposure to work.
Knowing that welfare is not a long-term option in itself
will increase peoples' motivation. They know they are going to
have to do something to support themselves, and they will think
more about education. There has been an increase--the education
of single mothers has increased, just looking over the past 10
years. I wouldn't be surprised if the daughters growing up in
homes with former welfare recipients--and I would hope the
sons, too--are acquiring more education because they see what
their mothers are going through.
Ms. HART. I am sure we can actually find some statistics
that show that, but I see I have run out of time. If you can
find some.
Dr. O'NEILL. It doesn't happen overnight.
Ms. HART. Thank you. I yield back.
Mr. SHAW. Mr. Thompson.
Mr. THOMPSON OF CALIFORNIA. Thank you, Mr. Chairman, thank
the witnesses for coming.
I am really least concerned about who takes credit for
doing what and more concerned about making sure that we can
improve a welfare system that would provide opportunities for
people to go to work and help for kids who are born into these
families.
I did the--I wrote the welfare reform legislation for the
State of California when welfare reform passed back in the
early nineties, and I spent a lot of time involving myself,
trying to figure out as much as I could, spent time with
welfare recipients. I found that there were three basic types:
There were those who had fairly good support and were clearly,
with very little help, going to make it and not only leave
welfare but stay off of welfare. There were some who didn't
have the traditional family help and support, but with a little
help from the government, they had a shot at breaking the cycle
and getting into the workforce, and maybe if things fell their
way, they would be able to stay employed and stay off the
welfare rolls. The third group were people who were--just
didn't have much of a shot.
We tried to craft a program in California that helped those
folks get into the workforce and stay in the workforce. Those
people who had the least chance at all of becoming employed and
getting out and staying out, we tried to craft a program that
would certainly recognize that children shouldn't be punished
and needed to be given some direction.
We did it with bipartisan support. It was a Democratic
legislature, a Republican Governor, and we did it by really
emphasizing the need for State flexibility, something that has
worked incredibly well in California.
The thing that worries me the most is, as we move forward,
the reduction in that State flexibility. I think States have a
pretty good handle, and we heard from Governor Thompson today
who explained this specifically as it pertained to Wisconsin. I
think States have a pretty good handle on how to make this
happen. I believe if we truncate that flexibility, that we are
going to find ourselves in a bigger mess than some suggest we
were before this all happened.
The other thing that concerns me greatly is this push to
increase the work hours and how that relates to communities. I
represent some who are suffering economically right now. I have
seen a loss in jobs, no reason of their own. This is something
that has happened because of other things.
If there are fewer jobs, there are fewer work
opportunities. The same thing can be said about some of the
programs we have put in place to help in regard to substance
abuse and mental health problems. If we are going to reduce
those and expect people to go out and become employed, we are
just absolutely fooling ourselves. We need to be able to
provide that support.
It was mentioned, health care, child care, training and
transportation. If we skimp on this, it is going to come back
to revisit us in a much more costly manner than it is right
now.
So, I think whoever said it earlier, that we need to be
working together on these things, and my point is, I hope I
made clearly, that State flexibility and employment
opportunities--we are just having a press opportunity. I think
that is a grave mistake.
I yield the remainder of my time to Ms. Jones.
Ms. TUBBS JONES. Thank you very much, Mr. Thompson. I
appreciate it.
What I wanted to read to you is a story out of the
Cleveland Plain Dealer today, a study that was done by Margy
Waller. In her study, she advised on welfare issues to the
President of the United States, Bill Clinton. What her research
focused on, was how much Ohio and two other States now spend on
transportation, day care and other services that help poor
people get to work.
In 2004, for example, Ohio spent 63 percent of its welfare
budget on non-cash services. So, not only is welfare reform not
lifting Americans out of poverty, it is also keeping them
dependent on government handouts, she says. National data from
the U.S. Department of Health and Human Services backs that up.
In 1997, only 27 percent was spent, but by 2004, 57 percent was
spent on these non-cash services.
Another point is that people receiving only those noncash
benefits, such as day care, are not counted in the State's
caseload numbers, so when officials say Ohio's caseload dropped
from 186,000 families in 1996 to 82,000 last year, they are not
including families who get bus passes, job training or any of
the many other benefits besides the check.
I just want to register for the record that it is a fallacy
to say that there is a drop in numbers, caseloads, when in fact
people are still receiving benefits, so there are people who
are still on welfare and working. Thank you.
Mr. SHAW. Mr. Chocola.
Mr. CHOCOLA. Thank you, Mr. Chairman. Thank you all for
being here. Dr. Haskins, I wasn't here when welfare reform was
passed. Today's hearing reminds me of something I read
recently: They'll forgive you when you're wrong, but they'll
never forgive you when you're right.
I do have an acquaintance that is involved in welfare
reform and welfare-to-work programs every single day, and that
is the mom of my chief of staff, and she actually asked me to
pass along a story and see if she could get your insight on a
question she had.
She is the manager of a workforce development program for a
hospital in Arizona and has oversight responsibilities for a
welfare-to-work program called Learn, Earn, Advance and Prosper
(LEAP). She has seen a lot of great success stories. One of
those was a woman who was living in her car with her four
children; she had a drug dependency. She entered the 10-week
job training program under the welfare-to-work program.
She then became employed by the hospital and continued her
education and training in an 11-month program and became a
surgical tech making $14.18 an hour, which was a great success
story, but unfortunately, it didn't end there.
After a year on the job, she decided she didn't like her
work hours, and she had not used up her 5 years of eligibility
under welfare and went back on welfare because she didn't like
the hours.
So, the question that I was asked to pass along is, do any
of you see a way to strengthen welfare to make sure that those
situations don't happen where those people that have
alternatives aren't on the welfare rolls at the expense of
those that are truly needy and don't have those alternatives?
Dr. Haskins.
Dr. HASKINS. I think there is plenty of flexibility in the
legislation that now exists. The State can require that mother
to work. She doesn't have a choice; she has to work, or they
cut off her benefits. That was the thing that was the most
lacking from AFDC; the State did not have that control.
Recipients were entitled to benefits, and there was very little
you could do to force them to lose the benefit. In 36 States
now, you can lose an entire benefit. In every State, under the
Federal legislation, you must reduce the benefit if the mother
refuses to meet the work requirements. So, Arizona could
control that problem.
Mr. RECTOR. It is the same thing; the real answer there is
that you should basically try to have no period in which a
mother is simply collecting a check and required to do nothing
in exchange for that check. Once you make the precondition for
getting the check that you have to be engaged in community
service or preparation or something, then this woman's options
are to either work or get on welfare and do something that is
an awful lot like work. To the extent that you do that, people
will not stay on welfare; they will take jobs instead. That is
the core of the reform; that is what drove this reform to
success.
The problem is that it takes a lot of bureaucratic work to
have this continuous engagement. It is hard to do
administratively. So, in Arizona and most other States, at
least half the caseload is not doing anything at any given
point in time. What we have to do is continue to push them so
that from the minute someone joins the system, the system can
be more generous.
Tommy Thompson raised the TANF benefit in his State, but
from the minute they get on the system, they have to be engaged
in steps moving toward self-sufficiency. That would change the
options that that woman had, and would have moved her in a much
more positive direction.
Mr. CHOCOLA. Anybody else?
Bishop RILEY. It would be helpful to know what caused the
hours to be difficult or disagreeable.
Mr. CHOCOLA. I don't have that specific information.
Bishop RILEY. I can imagine that that created concerns at
home with her family. I think we really need to know more about
what caused that person to drop out.
Mr. CHOCOLA. I think we have learned a lot of lessons in
welfare reform. Do any of you have any suggestion on how we
could apply those lessons to other government reforms we need
to implement, such as Medicare, Medicaid?
Mr. Rector, do you have any ideas?
Mr. RECTOR. Absolutely. One thing I would like to say is, I
would commend this Committee because this Committee did welfare
reform, but this Committee only reformed one of 50 major means-
tested programs. The real failure in welfare reform was that
the same reforms that Ways and Means did on AFDC should have
been done in food stamps; they should have been done in public
housing, which covers--in many cases, it is the same person
getting both food stamps and AFDC.
We made AFDC into a work-based system with reciprocal
obligations where we said: We want to aid you; in fact, we can
even be more generous in aiding you, but we expect you to take
activities to become self-sufficient. We have not done that in
food stamps, and we have not done that in public housing, and
that is really the next step of reform, as well as really
taking the idea of trying to help couples have healthy
marriages. Those are the two next steps in reform.
Mr. SHAW. The time of the gentleman has expired.
Mr. Rangel.
Mr. RANGEL. Thank you, Mr. Chairman. Welcome back, Dr.
Haskins. Good to see you.
Dr. HASKINS. Mr. Rangel, good to see you, too.
Mr. RANGEL. If I recall, you were chief of staff in the
Subcommittee on Welfare that drafted this legislation. Why do
you think you are here this afternoon? What is this all about?
You worked with this House; there is no legislation before us,
no proposals here. Why are we here now before the election?
Dr. HASKINS. I think there is an aspect of a 10-year
celebration, which is appropriate, but if all the witnesses and
as far as I can tell most of the witnesses have done what I
did, which is seize the occasion to mention things that need to
be changed as well as things that are good; they are not
incompatible.
Mr. RANGEL. Do you think it is time for a celebration?
Dr. HASKINS. Oh, absolutely. I think the bill has been very
successful, and it can be more successful. There are still
problems remaining.
Mr. RANGEL. Was it part of the objectives of the majority
at that time to end aid to dependent children as an
entitlement?
Dr. HASKINS. Yes.
Mr. RANGEL. Then you really don't believe that the Federal
Government should have the responsibility for mothers and
children.
Dr. HASKINS. Oh, no. That is a leap that I totally disagree
with, and I have never said anything or written anything that
would be consistent with that claim. The Federal Government
still has the responsibility but does not have the
responsibility to maintain people when they don't have to work.
Mr. RANGEL. No, no. I am talking about, if you didn't
believe it should be an entitlement, that means the person is
not entitled under Federal laws; we can tell them----
Dr. HASKINS. That is correct. Two points.
Mr. RANGEL. Basically, did the basic responsibility not
shift to local and State government?
Dr. HASKINS. We still have Medicaid, still have food
stamps, school lunch. We still have a lot of entitlement
programs----
Mr. RANGEL. I am talking about welfare, Doctor.
Dr. HASKINS. They are means-tested programs.
Mr. RANGEL. Don't you think that should be ended, too?
Dr. HASKINS. No, Mr. Rangel, it was a deal. You are
familiar with deals. We will keep an entitlement for Medicaid,
for food stamps, but in the cash program, if you want the
benefit, you have to work, end of story.
Mr. RANGEL. You are talking faster than I can think. Isn't
the ultimate goal to end entitlements?
Dr. HASKINS. No, no. The ultimate goal was to end the
entitlement to the cash benefit.
Mr. RANGEL. Forget the deal. Do you think Medicare should
continue to be an entitlement?
Dr. HASKINS. Yes.
Mr. RANGEL. Medicaid?
Dr. HASKINS. Yes.
Mr. RANGEL. Welfare an entitlement.
Dr. HASKINS. What do you mean by welfare? Not cash?
Mr. RANGEL. Aid to dependent children.
Dr. HASKINS. No.
Mr. RANGEL. Okay. In other words, though, now we have
shifted the responsibility to the State government, and we will
decide how much money and under what conditions we give them.
The reason why I am not prepared for a celebration is that
everyone agrees that while you tackle one part of how families
receive resources, no one can challenge the fact that poverty,
living conditions, lack of education, unemployability, drugs
and all of these things are part of this problem; and even
though our Committee did not have jurisdiction, it is clear to
me--and I will go to Dr. Rector--that if you are so concerned
about kids having kids, isn't there a relationship, Doctor,
between poverty and kids having kids, whether they are black or
white? Isn't there a relationship between whether the parents
had kids out of wedlock, isn't there a relationship between
poor communities and bad schools with kids being out of
wedlock? Someone said it was all morals, but isn't there
statistically a connection between these things?
Mr. RECTOR. There is a strong connection between low levels
of a woman's education and low socio-economic status and having
children out of wedlock.
Mr. RANGEL. Kids who don't believe they have a future are
more inclined to do these things?
Mr. RECTOR. I think it is a little more complicated than
that, and I would really commend to you this book by Kathryn
Edin at Rutgers called, Promises I Can Keep.
Mr. RANGEL. Wouldn't she say----
Mr. RECTOR. What she says is basically that these young
women, white, black and Hispanic, are very, very pro-child.
They have children as young adults, and it is the most
important thing in the world to them.
Mr. RANGEL. Of course. My time is limited, but that is not
inconsistent with what I am saying. I have seen some of these
stupid kids. They want kids like they are dolls. They are not
going to lose anything. There is no job to be lost. There is no
college degree that is going to set them behind. So, we are
saying the same thing. What I am hoping we can do, however, is
to find some way, since you don't have just 2 years, as we do,
and you don't have limited jurisdiction, to look at the broader
question to see what we can do beyond welfare to avoid people
from having to have the children to be on welfare.
To me, you all know that poverty and lack of education play
a big role, and I don't know whether you were here when Speaker
Gingrich was here, but I think the best thing that came out of
this Committee was to talk about poverty.
Let me thank the religious leaders because sometimes,
Bishop, this St. Matthews thing about the less among us when we
are dealing with the moral majority is not included--we need a
lot of help here from our spiritual leaders, a lot of help on
the question of the lesser of our brothers and sisters. It
could help us legislatively, and I thank you for your
courageous presentation today.
Mr. SHAW. Mr. Levin.
Mr. LEVIN. As a gentleman who was actively involved in
welfare reform 10 years ago, I want to say something, why I
object to the partisan umbrella under which that has been put.
Dr. Haskins, you and I talked 10 years ago. I just wanted
to review the changes that were made from the bill that was
vetoed to the bill that was signed. You minimize it; $4 billion
in child care; that is not minimal. The provision essentially
block granting food stamps was dropped. The provision that
block granted school lunch programs was dropped. The two-tier
system for SSI was dropped. The provisions regarding Medicaid
were changed.
So, when Mr. English asked you the question, I just want to
tell you point blank that I think you are going along with this
effort to minimize the efforts that were made by the President
and others to make some substantive, significant changes in the
bill that he vetoed. I think that effort sells that effort
short, and it sells you short.
Let me give you have my second objection to the way this--
--
Dr. HASKINS. Can I make a brief comment on that?
Mr. LEVIN. Very brief because I want to make another
comment.
Dr. HASKINS. Thirty seconds: First of all, I think most of
the changes you mentioned were made before it got to the
President. A number of changes were made in the Senate,
especially about the food stamp----
Mr. LEVIN. After the veto.
Dr. HASKINS. No, no, before the veto. We will go look it
up, but I think that is correct. Second, this is the main
point; I wrote a book about this. I gave the President immense
credit at every stage along the way. I do not minimize his
credit whatsoever.
Mr. LEVIN. You certainly minimized his and other efforts in
your answer to Phil English, and it is very obvious--it was
painful for me as someone who respected your interests to hear
you go along with it. You don't need to do that. You are no
longer a Senate staffer or a House staffer.
Second, there is a legitimate issue here, and that is
whether we need a second step in welfare reform and what it
should be and whether there needs to be, now, a greater
emphasis on as people move from welfare to work, they move out
of poverty. There is a difference of opinion there.
Those of us on the Democratic side, however we voted 10
years ago, strongly feel that the facts show that there has to
be a much greater emphasis, as people move from welfare to
work, that they move out of poverty.
That is why in our bill we had different provisions for
education and different provisions for medical care and more
money for child care. I just want to refer to this data, and
there are others. This is from the new hires database: 60 to 70
percent of the people who move from welfare to work earn less
than 42 percent of the median average wage in their States.
There is a problem, as people move from welfare to work,
whether they are going to become self-sufficient, income-wise,
or whether simply you need to say to them, get to work and
automatically something will happen. I think the data and the
experience shows that it isn't automatic, and there have to be
some other support systems. There is a legitimate difference
there.
To celebrate, I think, in addition to marking the progress
to date, we have to tackle the challenge ahead, and there is a
difference of opinion here as to whether we should do that and
how we should do it. I say forthrightly that there is a
challenge ahead; there has to be a second stage. That has to be
the opportunity for people to move up the ladder and not simply
stay on the first rung. That isn't good enough; that isn't good
enough.
I hope this Committee in the future will be able to do
something we haven't done on a bipartisan basis. There was zero
consultation between the majority and the minority on the bill
that passed a few months ago, zilch, zilch, because there has
been an effort to twist welfare reform for partisan purposes,
instead of taking the next steps to make it work better.
Mr. SHAW. Mr. McDermott.
Mr. MCDERMOTT. Thank you, Mr. Chairman.
I can't help thinking about a book I read about the poor
houses during the famine in Ireland when I listen to you, Mr.
Rector. Sounds to me like that is what we ought to do is put
them in there and separate the men from the women. They didn't
get any kids born that way. It was really a very effective
system.
I can't help but listen to Bishop Riley, and when you say,
it takes $17 an hour to live at a minimum level in New Jersey.
Ms. Parrott, what I want to know from you is, we have had
increasing child poverty for the last 4 years under this
Administration, and in this budget, we cut almost $11, $12
billion from student loans; we cut $7 billion from Medicaid and
CHIP.
Tell me what needs to be done to make this system begin to
take children out of poverty, since that is really the focus
here. It is not bad mothers and teenage pregnancy and all that
stuff. That is all irrelevant. These are kids who need some
kind of something, and we leave them in poverty. How do we get
them out of it given the system that is on the ground today?
What should be the three or four things that you would put at
the top of your list?
Ms. PARROTT. I think there are pretty clearly two groups--
and people do sometimes move between these groups--that we
really need to think about when it comes to poor families with
children. One is the group of people that we have been talking
about most recently in the exchange, which are low-income
working families, working poor families, where parents work and
work relatively consistently, although most working poor
families have periods of unemployment and they remain poor,
however one defines that, below poverty, just below the poverty
line and really struggle to make ends meet.
I think there are ways we can strengthen the work support
system so that they are better able to make ends meet and have
more stability for their children, things like ensuring that
families have the child care they need, strengthening the EITC,
strengthening minimum wage.
Remember that, in the nineties, the goal was to have full-
time minimum wage work, plus the EITC, plus food stamps bring a
family to the poverty line.
Mr. MCDERMOTT. What would the minimum wage be today if it
had been indexed to inflation like our salary is in the
Congress? We get a COLA every year. What would it have been?
Ms. PARROTT. I didn't bring the numbers, but I am happy to
provide them to you and the Committee.
Because of the erosion in the minimum wage, that full-time
minimum wage work combined with EITC and food stamps now leaves
a family of four below the poverty line. We have missed that
target.
I think there are things in the work support system--and
the other thing I would mention that is quite important is
health care for parents. We have extended Medicaid eligibility
to children in working poor families, and that has been a major
improvement in our work support system. It is still the case in
most States that parents, when they leave welfare for work,
after a period of time aren't eligible for health care
coverage. That means that they don't have access to the kinds
of health care they need to remain productive employees in some
circumstances.
Mr. MCDERMOTT. You mean, there is not an entitlement across
the country for adults to receive Medicaid, that that is done
State by State, as Mr. Rector says is the way to do it?
Ms. PARROTT. The eligibility threshold is done State by
State. In most States, the eligibility threshold means you have
to be well below the poverty line, often below 50 percent of
the poverty line, in order to qualify for Medicaid. In fact,
some States have started scaling back health care coverage for
parents under budget pressure. That is certainly, I think, a
big hole in our work support system.
I think there are two other things that are important to
keep in mind when thinking about next steps, and one is this
issue of an economy that increasingly demands skills. Some of
you may have seen the Washington Post story in the last couple
of days, maybe it was last week, that talked about--at least in
this area and it is true around the country--the increasing
extent to which the economy demands skills, and people without
skills fall further and further behind.
So, I think that we have to take a step back and say, how
do we create a system, a work development system that
recognizes not everybody got the education they should have
when they were children, not everybody went to college, for a
whole variety of reasons, and how do we get people skills so
they can succeed in a high-skill-demand economy? I think there
is a lot of work to be done around that.
I do want to take a moment, though, to talk about a second
group of families, and these are the families that Dr. Haskins
mentioned and the people really left behind, the people that
are doing worse.
I think we now have a lot of research to show what kinds of
problems those families face. Very serious disabilities in some
cases, very low cognitive functioning, substance abuse issues,
domestic violence issues and that both the TANF system as well
as other supports need to take those problems seriously, and
States need both resources and flexibility to develop programs
that make sense for those families and not have a one-size-
fits-all ``everybody goes into this work program or you are
off;'' that kind of structure is what leaves very poor families
both without work and without welfare.
Mr. MCDERMOTT. Is that the work incentive block grant you
are talking about or the social services block grant that we
have cut? Are those the issues that you think should be
increased or the money should be put back in?
Ms. PARROTT. I think there are several places where those
most disadvantaged families could get more help. One is through
a more flexible TANF structure, so States could use their TANF
dollars in that way. The social services is certainly a place
where some of those social services have historically been
funded out of. On the training and workforce development side,
it has seen significant budget cuts over time.
Mr. MCDERMOTT. Thank you, Mr. Chairman.
Mr. SHAW. The time of the gentleman has expired.
Ms. Parrott, in reviewing your testimony before the Center
on Budget and Policy Priorities, you stated that most TANF
recipients who find jobs are financially better off than when
they were on TANF. You also stated that the wages of former
TANF recipients were typically $7 to $8 an hour, well above the
current minimum wage of $5.15.
You further went on to testify that child poverty overall
and poverty among single-mother families fell during the
19nineties and overall child poverty remains lower today than
in the mid nineties.
In 1993, some 22--I am still quoting from you--22.5 percent
of the children were poor, but by 2004, poverty was 7.5
percent, a 22-percent decline during the period which included
a recession.
Those are your words, not mine, but I compliment you for
making that observation then which emphasizes other than what
you have testified to today.
Also, I think that there is a misimpression out there that
we have slashed welfare benefits. In 1995, the typical family
was receiving $7,000. Today, that is up to $16,000. One of the
big differences is that we are investing in people, investing
in their future; we are not just subsidizing them. We are
teaching them to fish, not just handing them fish and requiring
they do not have a fishing poll. We have now $4 billion of
unspent TANF funds that are in the States awaiting to be spent.
The problem is--and I am troubled by the accusations of
this being a partisan hearing. The minority party was entitled
to invite anyone they wanted to testify on this panel, and they
picked two very fine witnesses, Bishop Riley and Ms. Parrott.
Then we get criticized for not inviting Mrs. Clinton. She
certainly would have been welcome, and I think actually I would
love to have seen President Clinton here.
I think I have tried to make it clear all the way through
this hearing that this was a bipartisan effort as it ended up.
It started as a partisan effort; there was no question about
it. The Republicans pushed it, and in Committee, we were
blocked by the Democrats.
That wasn't the final outcome. When you are talking about
the success of a program that many of the Members of this
Committee eventually voted for and supported and have talked
about, that that is a partisan issue? We went through this
debate yesterday on the floor, and I thought it was absolutely
ridiculous because the bill that was on the floor yesterday
said nothing about the Republican party, said nothing about the
Democrat party, didn't trash President Clinton. As a matter of
fact, I was very generous to him in my statement. I managed the
time, and I was also very generous to him today in this
hearing. Where in the world people get so defensive, I really
don't know. I think it is indicative of the atmosphere that is
up here on the Hill today, and I think it is something that we
need to change because we are talking about people that
Republicans and Democrats care about and care about deeply. We
viewed welfare reform as a rescue mission, nothing more,
nothing less. We did accomplish that.
Mr. Becerra referred to this as ``mission accomplished.''
Yes, we accomplished the first part of that, but the terrorists
are still out there, just as in Iraq. What we need to do is to
work together and pull together to tie these strings up. This
hearing wasn't captioned I don't believe as a celebration; it
simply was a meeting to review the outcomes of the 1996 welfare
reforms 10 years later.
It is something we should do on this Committee more often.
We should go back and review just about everything this
Committee does, whether it be tax policy or whatever it is, and
we should meet and see what can bring us together rather than
split us.
When we finally find something that both parties want to
take credit for, for gosh sakes, what are we fighting about? We
may have different views as to where we should go from here,
but welfare reform has been a success, and it has been a great
rescue program that has given people credit, given people
control over their lives that they didn't have.
So, I think we need to do a better job in communicating
with each other.
Dr. Haskins, I would like to give you the last word. You
are very much responsible for why we are today.
Dr. HASKINS. Well, thank you for that. I would say the most
important thing to say is that this--you can call it
celebration or whatever--it is a very important function in
Committees to provide oversight, and I think most Committees do
far too little of it, and this law above all others is the most
important welfare reform, most important social policy of our
lifetime. So, the Committee has an obligation to look back over
it.
Then I would conclude by saying that there is no
legislation that has been as successful as welfare reform. It
has done everything that its authors intended it to do. It was
passed on a greater bipartisan basis than the Medicaid and
Medicare legislation in 1965. So, I think celebration is
appropriate, notwithstanding the fact that there is still a lot
left to do.
Mr. SHAW. Thank you, Dr. Haskins. Thank you all for being
here today. Your testimony was very helpful.
We are adjourned.
[Whereupon, at 2:03 p.m., the Committee was adjourned.]
[Submissions for the record follow:]
Statement of Russell Sykes, Office of Temporary and Disability
Assistance, Albany, New York
The Success of Welfare Reform in New York State
Chairman Thomas and distinguished members of the Committee on Ways
and Means, thank you for the opportunity to provide testimony on the
unprecedented success that New York State has achieved under welfare
reform.
Under Governor Pataki's leadership, New York State has actively
applied the principles of personal responsibility through
implementation of a ``require work--reward work'' philosophy, even
before it became a federal mandate through the 1996 Personal
Responsibility and Work Opportunities Reconciliation Act. This
philosophy is put into practice through the following primary elements
of welfare reform in New York State:
First, we put the primary focus on work, rather than dependency and
entitlement to benefits. Cash assistance is intended to be temporary
and each adult is expected to participate in work activities and other
services to support quick entry into the workforce.
Second, in order to ensure that work is rewarded, and that those
who go to work are better off than they were on welfare, we strongly
emphasize supports for those who leave welfare for work. These supports
include a generous earned income tax credit to supplement low wages and
significant investments in child care, transportation and health care
coverage.
Last, New York has aggressively improved our performance in
collecting child support from non-custodial parents. Far too many
children in New York have had to depend on the earnings of just one
parent, which is too often not sufficient to meet even basic needs.
Economic and other types of support for these children from non-
custodial parents--mostly fathers--are key to their well-being.
New York's ``require work-reward work'' philosophy has been
validated by remarkable results and continues to be the underpinning
for the major success of current welfare-to-work efforts along with
numerous policy changes and the reinvestment of TANF block grant funds
to spur ongoing caseload declines, help more low-income female heads of
household to enter and retain employment and reduce both overall and
child poverty.
I would like to take this opportunity to provide a brief summary of
some of the achievements that New York State has accomplished under
welfare reform.
New York's `work first' approach has resulted in a historic reduction
in welfare dependence.
When the Pataki Administration came into office in January 1995,
1,643,832 individuals in New York State received welfare cash
assistance. This translated into roughly one in twelve individuals
statewide who were receiving some form of welfare . . . and in NYC, it
was one in seven.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Today, the number of individuals receiving case assistance has
fallen by over one million to 577,246individuals, a reduction of 64.9
percent. We can proudly state that only 1 in 32 people statewide
receive welfare benefits, and in NYC only 1 in 20. People are moving
away from a dependence on government and towards self reliance and
productivity. I am please to report that the number of individuals
dependent on welfare continues to decline.
Require Work, Reward Work: New York consistently emphasizes the
importance of work.
Prior to welfare reform, work was neither expected nor rewarded in
the old system. Few families on welfare had earned income.
Today, those who can work must do so as soon as practicable. Those
who do not immediately secure employment are required to participate in
work preparation activities that incorporate work experience with other
program supports. Lastly, those who are temporarily unable to work are
expected to participate in rehabilitative services to restore the
ability to work.
Under the old welfare system, less than 10 % of families on welfare
in New York State had a parent or other adult engaged in work
activities, including education, work experience or job search. Today,
more than 45% of families receiving welfare are engaged in work
activities, including employment.
In New York State, almost 20% of adult individuals in families
receiving temporary assistance have been determined unable to
participate in work requirements due to a medical or mental health
condition. However, as I mentioned earlier, these individuals are not
ignored. We expect those who can benefit from rehabilitation or
treatment to participate in such treatment to improve their ability to
participate in work activities and to become employed.
New York has also achieved a significant increase in the labor
force participation and employment rates of single mothers,
particularly single mothers with a strong likelihood of receiving
welfare. As welfare use declined, work rates for women with children
rose dramatically.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The work rate of single mothers in New York State, a group with
high welfare rates, increased from a three year moving average of 54
percent in 1994, to 73 percent in 2004, a 35 percent increase in the
employment rate of single mothers.
For never married single mothers--a group with a very high
likelihood of receiving welfare and a low likelihood of working in
1994--work rates increased from 41 percent in 1994 to 71.5 percent in
2005, an increase of 74 percent in their employment rates.
Work has truly become the cultural expectation for those on welfare
as the receipt of assistance has transformed from a permanent,
dependency-based entitlement to a temporary benefit provided to those
on the road to self--sufficiency.
Once employed, New York continued to support working families
New York's ``require work, reward work'' philosophy also provides
significant ongoing income support to working families, most notably
through the federal and state Earned Income Tax Credit (EITC) and child
care subsidies to help ensure those who work are able to meet basic
needs and are indeed better off than those on welfare.
Families have been able to make the transition to work as a result
of our emphasis on work supports and strategies that decrease the need
for welfare benefits. Those who are receiving assistance and enter the
workforce receive a generous earned income disregard which enables the
family to retain almost 50% of earnings before the welfare grant is
reduced. This enhancement strongly encourages parents to work and helps
families become economically independent as they work their way off
welfare. The fact that over 20% of those still receiving cash
assistance have earnings is evidence that work supports encourage
individuals to enter the workforce.
In addition to the earned income disregard, low-income families
that work are also eligible for a range of work supports that they may
receive without the trappings of welfare. These supports include the:
EITC: New York's Earned Income Tax credits claimed rose
from $78M in Tax Year 1994 to $681.4 M in Tax Year 2003. In the same
period the number of claimants rose from 950,000 to 1,348,000. The
maximum state benefit for a family with 2 or more children increased
from $190 in 1994 to $1,320 in 2005. This is in addition to the maximum
federal benefit for these same families of $4,400. This maximum
combined EITC turns a $6.75/hour job into a $9.68/hr. job in New York
Child Care: Last year NY spent $867 million on child care
subsidies for NY families.
Food Stamps: Federal food stamp benefits are an important
tool to supplement the income of working families and New York has
promoted the availability of such benefits. Since 2001, the number of
food stamp recipients who do not receive cash assistance has increased
by more than 365,000 or 77%.
TANF funds are also appropriated each year to support
State administered welfare-to-work (WTW) initiatives that support a
range of services that help individuals obtain or maintain employment.
Over 300 contracts are in place which provide a variety of WTW
programs, activities and services that combine work or work experience
with services including adult basic education and training, offer
employer wage subsidies, or provide auto loans and car repairs for
employed individuals These contracts provide an important resource for
local districts seeking to engage public assistance families in
activities that we lead to employment and independence, while counting
for federal participation rate purposes. Further, as part of their plan
for self-sufficiency, former public assistance recipients who have
gained employment can avail themselves of numerous services under these
contracts during this transition period to promote job retention and
advancement. And, many programs are available to low-income families
not receiving welfare so they may upgrade basic skills.
Reduction in Child Poverty
In addition to significant reductions in the number of individuals
receiving cash assistance and increases in engagement, the large-scale
substitution of work for welfare by single mothers has had another
large and significant effect: major reductions in poverty for children
in New York State.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The official poverty rate for children in female-headed families
declined from 57.7 percent in 1994 to 43.9 percent in 2004, a decline
of 14 percentage points or 24% lower than the rate in 1994.
For all children, the official poverty rate declined from 26.2
percent in 1994 to 20.5 percent in 2004, a decline of 6 percentage
points or 22% lower than the rate in 1994.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Increase in Child Support Collections
While many individuals are aware of the major changes in welfare
use and labor force participation that have occurred as a result of
reform, few are aware of the major improvements that have occurred in
New York's ability to collect child support.
Child support collections, which help keep families out of poverty
and off of welfare, have risen steadily since 1995. Last year, a record
$1.5 billion in child support was collected, with more than a half-
billion dollars going to 226,000 families formerly on public
assistance. There has also been a notable increase of more than $1,100
in average yearly collections per case.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Additionally, the trends in support order establishment and
paternity establishment show substantial improvements. Support order
establishments have increased from 56 percent in 1995 to 78 percent in
2005.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Paternity establishments in New York have increased dramatically,
from 45 percent in 1995 to 77 percent in 2005.
Increased Federal Requirements under TANF Reauthorization
The evidence I have presented today is encouraging. The work-
focused welfare system of today is clearly a major improvement over the
system of the past, which focused mainly on maintaining eligibility for
aid. In the history of major government attempts to fight poverty, the
welfare reforms initiated in 1995 clearly stand out as one of
government's true successes.
The success of these reforms has benefited hundreds of thousands of
children and families in our state.
New York has made great strides in assisting families to become
self-sufficient through employment and achieving federal work
participation rates and we have no quarrel with the philosophy of
recently enacted TANF reauthorization or published interim final TANF
regulations that urge us to dig deeper into our remaining caseload to
extend the similar benefits of work and work supports. However, we are
concerned with certain aspects of the interim final TANF regulations
that unnecessarily limit the very flexibility that states have utilized
to vastly reduce caseloads over the past ten years and move more female
heads of households into the labor market than ever before. The failure
to account for the necessary interaction among some of the core work
activities for instance could pose problems (e.g. the fact that
incidental job search outside of the 4-6 week limits is and should be
an embedded activity in work experience and community service). In some
instances HHS has also too narrowly defined their regulatory authority
under the DRA and therefore not looked at areas such as penalty
provisions and relief. We are concerned that by not addressing
necessary changes in this and several other areas the overall TANF
regulations may become incongruent with current realities.
We agree that more can and should be done to improve our ability to
help families transition from welfare to work, both because it makes
them better off economically and will help the state meet increased
federal participation rates. We are committed to achieving these
federal requirements and are engaged currently in an ongoing dialogue
with DHHS in order to clarify the intent of several areas of the
interim regulations. I would encourage you to ensure that the
requirements imposed by the interim final TANF regulations support
States' efforts to help needy families and maintain the success that
welfare reform has had to date. We are optimistic that we will meet the
All Families Work Rate and will share our comments to HHS on the
interim final TANF regulations with you when they are finalized.
I also respectfully request that Congress reconsider the benefit of
a separate two-parent participation rate, especially a ninety percent
participation rate which is almost certainly unattainable without a
significant caseload reduction credit. We should support marriage with
the same vigor we have supported work and not impose more stringent
program requirements on two-parent families.
As a nation, each state, each locality and millions of families
have benefited from the changes prompted by the welfare reform efforts
of the past ten years. The results have led to unprecedented cultural
changes regarding how temporary welfare benefits are delivered and the
expectations we have of those who receive such benefits. While there is
always room for further improvement, the outcomes to date under TANF
are undeniably a success. I urge Congress to ensure continued program
and funding flexibility to support the ability of states to continue
and expand upon of these historic successes.
Thank you for this opportunity to highlight for the record some of
the success that New York State under Governor Pataki's leadership has
achieved under the initial stage of welfare reform.
United States Conference of Catholic Bishops
August 2, 2006
Representative Bill Thomas, Chairman
Ways and Means Committee
United States House of Representatives
Washington, DC 20515
Dear Chairman Thomas:
On behalf of the United States Conference of Catholic Bishops, I am
pleased to submit these comments to be part of the record of the Ways
and Means Committee's hearing on welfare reform and the Temporary
Assistance for Needy Families (TANF) program. I would like to thank you
and your committee for continuing to examine this very important topic.
The welfare policies Congress helps to shape are an important part of
our nation's effort to serve the common good by addressing the needs of
the most vulnerable families among us.
Our nation, the most prosperous on earth, as a whole is blessed to
enjoy material plenty--but too many among us still experience want in
the midst of plenty. Too often, overcoming poverty has been neglected
in the national dialogue. Our nation must focus on tackling the
persistent problem of poverty, and that is the spirit which should
animate our welfare policy.
As the U.S. bishops wrote in their statement, A Place at the Table,
to truly address poverty in our nation we must recognize and build on
the essential roles and responsibilities of four institutions. Debates
about how to address poverty in the United States too often focus on
just one of these four foundations, but all are essential:
Families and individuals must work for and respect their
own dignity, rights and responsibilities and those of others.
Community organizations and faith-based institutions help
families by helping them make good choices, assisting with material
needs and working to overcome discrimination and injustice.
The private sector--the marketplace and institutions of
business, labor and commerce--contributes to the common good through
production and the creation of jobs, and should do so in a way that
reflects our society's values and priorities. A key measure of the
marketplace is whether it provides work at adequate wages, especially
for those on the margins of economic life.
Finally, government has an essential role and
responsibility in serving the common good, providing a safety net for
the vulnerable, helping to overcome injustice and addressing problems
beyond the capacity of individual or community efforts
The bishops approach TANF in the context of the Church's experience
living with, serving, and including among its members the poor and
vulnerable. We meet the poor in our parishes where we worship together
and work together for the betterment of our communities. The Catholic
Church is the largest non-governmental provider of human services to
poor families, through our soup kitchens, shelters and Catholic
Charities agencies. Our community has lived with the realities of
welfare reform, encouraging and helping people to make the transition
from welfare to work. But we also live with those who are left behind,
who turn to our parishes, eat in our soup kitchens, sleep in our
shelters and ask for our help.
Our advocacy on behalf of poor families, including welfare reform,
reflects both our experience in serving the poor and Catholic social
doctrine. The Catholic community has consistently worked for welfare
reform policies which protect human life and dignity; strengthen family
life; encourage and reward work; preserve a safety net for the
vulnerable; build public/private partnerships to overcome poverty; and
invest in human dignity.
Experts reviewing the impact of welfare reform over the past ten
years can produce numbers backing up both the claims that reform was a
wonderful success or a failure. Welfare caseloads have decreased
dramatically, and both poverty rates and single mother employment rates
have improved over ten years. On the other hand, not all those who
leave welfare have gone on to find jobs. Child poverty has increased
since 2000, and the number of children in deep poverty--below 50% of
poverty--has also gone up. Single mother employment rates have also
gone down recently. And while welfare reform is surely part of the
reason for some of the success, the strong economy of the 1990s also
played a part.
Statistics can be useful, but we must always look behind them and
keep in mind the real families, real individuals, and real children
whose lives have been and will be deeply affected by welfare policy.
Policy makers face an ongoing opportunity and challenge: to tackle the
persistent problem of poverty and the tragedy of so many families
living without hope in our nation. The goals of national welfare policy
should be to reduce poverty in this, the most prosperous of nations,
and to improve the lives of our children.
The recent changes in TANF did include some positive steps forward.
The U.S. bishops have supported funding for programs to support healthy
marriages and strong families; research and technical assistance
focusing on family formation and healthy marriage activities; and
effective fatherhood programs, which was passed into law. The TANF
changes also included some additional funding for child care, and did
not increase the weekly work hours required of recipients.
However, there is room for more improvements in TANF. The
additional child care funding will not be enough to meet the need.
Changes in work rules could put additional burdens on both states and
families, especially two-parent families. The U.S. bishops will
continue to work to end the five-year waiting period imposed before
legal immigrants can be eligible to receive TANF.
What is needed now is a broad commitment, by all our society's
institutions, to combat poverty. TANF is an important part of that
commitment; so is making the refundable child tax credit available to
more low-income working families, making sure all families eligible for
the Earned Income Tax Credit receive it, and maintaining a strong food
stamps program. We also need to find ways to create jobs that support a
family; to increase affordable housing; and to ensure that everyone has
access to health care. Families and individuals, government and the
private sector, faith-based organizations and community groups, must
strive in their own realms and work together towards the goal of ending
poverty in our nation. We urge Congress to take the lead and forge a
bipartisan dialogue that looks at both new and familiar ideas for
fighting poverty.
Our faith teaches that the moral measure of our society is how we
treat the least among us (Mt. 25). Our national policies, including
welfare policies, should be judged on the basis of their effectiveness
in alleviating the poverty of our sisters and brothers and in helping
their families to live in dignity. We look forward to working with
Congress to achieve these goals.
Sincerely,
Most Reverend Nicholas DiMarzio, Ph.D., D.D.
Bishop of Brooklyn
Chairman, Domestic Policy Committee