[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
 THE SOCIAL SAFETY NET: IMPACT OF THE RECESSION AND OF THE RECOVERY ACT 

=======================================================================

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

            HEARING HELD IN WASHINGTON, DC, DECEMBER 9, 2009

                               __________

                           Serial No. 111-18

                               __________

           Printed for the use of the Committee on the Budget


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                        COMMITTEE ON THE BUDGET

             JOHN M. SPRATT, Jr., South Carolina, Chairman
ALLYSON Y. SCHWARTZ, Pennsylvania    PAUL RYAN, Wisconsin,
MARCY KAPTUR, Ohio                     Ranking Minority Member
XAVIER BECERRA, California           JEB HENSARLING, Texas
LLOYD DOGGETT, Texas                 SCOTT GARRETT, New Jersey
EARL BLUMENAUER, Oregon              MARIO DIAZ-BALART, Florida
MARION BERRY, Arkansas               MICHAEL K. SIMPSON, Idaho
ALLEN BOYD, Florida                  PATRICK T. McHENRY, North Carolina
JAMES P. McGOVERN, Massachusetts     CONNIE MACK, Florida
NIKI TSONGAS, Massachusetts          JOHN CAMPBELL, California
BOB ETHERIDGE, North Carolina        JIM JORDAN, Ohio
BETTY McCOLLUM, Minnesota            CYNTHIA M. LUMMIS, Wyoming
CHARLIE MELANCON, Louisiana          STEVE AUSTRIA, Ohio
JOHN A. YARMUTH, Kentucky            ROBERT B. ADERHOLT, Alabama
ROBERT E. ANDREWS, New Jersey        DEVIN NUNES, California
ROSA L. DeLAURO, Connecticut,        GREGG HARPER, Mississippi
CHET EDWARDS, Texas                  ROBERT E. LATTA, Ohio
ROBERT C. ``BOBBY'' SCOTT, Virginia
JAMES R. LANGEVIN, Rhode Island
RICK LARSEN, Washington
TIMOTHY H. BISHOP, New York
GWEN MOORE, Wisconsin
GERALD E. CONNOLLY, Virginia
KURT SCHRADER, Oregon

                           Professional Staff

            Thomas S. Kahn, Staff Director and Chief Counsel
                 Austin Smythe, Minority Staff Director













                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, December 9, 2009.................     1

Statement of:
    Hon. John M. Spratt, Jr., Chairman, House Committee on the 
      Budget.....................................................     1
        Prepared statement of....................................     2
    Hon. Gwen Moore, a Representative in Congress from the State 
      of Wisconsin...............................................     3
    Hon. Paul Ryan, ranking minority member, House Committee on 
      the Budget.................................................     4
        Prepared statement of....................................     5
    LaDonna Pavetti, director, welfare reform and income support 
      division, Center on Budget and Policy Priorities...........     6
        Prepared statement of....................................    10
    Sue Berkowitz, director, SC Appleseed Legal Justice Center...    19
        Prepared statement of....................................    22
    Patricia DeLessio, attorney, Legal Action of Wisconsin.......    25
        Prepared statement of....................................    29
    Ron Haskins, co-director, center on children and families, 
      the Brookings Institution; senior consultant, Annie E. 
      Casey Foundation...........................................    32
        Prepared statement of....................................    36


 THE SOCIAL SAFETY NET: IMPACT OF THE RECESSION AND OF THE RECOVERY ACT

                              ----------                              


                      WEDNESDAY, DECEMBER 9, 2009

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:04 a.m. in room 
210, Cannon House Office Building, Hon. John Spratt [chairman 
of the committee] presiding.
    Present: Representatives Spratt, Schwartz, Becerra, 
McGovern, Tsongas, Etheridge, McCollum, Andrews, DeLauro, 
Larsen, Moore, Connolly, Schrader, Ryan, Lummis, Nunes, and 
Latta.
    Chairman Spratt. I call the hearing to order. I want to 
welcome everyone to our hearing this morning on The Social 
Safety Net: Impact of the Recession and of the Recovery Act. 
And let me begin by thanking Congresswoman Gwen Moore for 
suggesting this hearing and for her role in bringing it about 
and putting it together.
    At the beginning of this year, the economy was contracting, 
reeling would be a better word. Jobs were being lost at a rate 
of 741,000 per month in the month of January. With Democratic 
leadership, Congress moved swiftly to enact the American 
Recovery and Reinvestment Act. The Recovery Act has boosted the 
economy by making public investments and by raising the social 
safety net. CBO recently estimated that as many as 1.6 million 
jobs have been created or saved by the Recovery Act through 
September of this year. Last week, the November jobs report 
showed nonfarm job losses slowing to 11,000 per month, from 
741,000 in January.
    There is no question the labor market has improved. This 
improvement is welcome, but it is not nearly enough. The Nation 
still suffers the effects of the worst recession since the 
Great Depression. Looking to my own State of South Carolina, I 
can see the extreme hardship that is being caused by 
unemployment rates that are well above the national average.
    As we consider what additional steps can be taken in 
response to the effects of this economic downturn, it is 
important we have a clear view of the effects of the recession 
on the social safety net, the positive impact that the Recovery 
Act has had on the economy, especially with respect to low-
income individuals.
    To pursue those questions, we have an excellent panel 
today, excellent for their own expertise in their individual 
fields and for the diversity they bring to this issue. I want 
to thank for participating LaDonna Pavetti from the Center on 
Budget and Policy Priorities, Sue Berkowitz from the State of 
South Carolina, South Carolina Appleseed Legal Justice Center, 
Pat Delessio of Legal Action of Wisconsin, and Ron Haskins from 
the Brookings Institution. All four panelists are well versed 
in the social safety net and bring their own various 
perspectives on the economic and social impact of the recession 
and the Recovery Act.
    Before turning to my colleague, Mr. Ryan, for his opening 
statement, let me yield to Congresswoman Moore for an 
amplification of the opening statement I just made. Ms. Moore.
    [The prepared statement of Mr. Spratt follows:]

Prepared Statement of Hon. John M. Spratt, Jr., Chairman, Committee on 
                               the Budget

    When President Obama was sworn into office at the beginning of this 
year, the economy was in deep contraction and jobs were being lost at a 
rate of 741,000 per month. Failed Republican economic policies had 
brought the financial system dangerously close to a complete meltdown 
and had driven the economy into its deepest recession since the 1930s. 
Regrettably, the financial crisis and ensuing recession amplified a 
trend of falling incomes and rising poverty across the United States.
    Under Democratic leadership, the 111th Congress moved swiftly to 
enact the American Recovery and Reinvestment Act, which has jump 
started economic activity by making much-needed public investments and 
by bolstering the social safety net of federal public services. The 
positive impact of the Recovery Act is already being made apparent, and 
more economic activity will be generated as stimulus dollars continue 
to spend out. The Congressional Budget Office recently estimated that 
as many as 1.6 million jobs had been created or saved by the Recovery 
Act through September. Last week, the November jobs report showed 
nonfarm job losses slowing to 11,000 for the month, highlighting the 
improved conditions in the labor market.
    Of course, this improvement is not yet enough. The nation still 
faces brutal, lingering effects of the worst downturn since the Great 
Depression. Job losses are stabilizing, but double digit unemployment 
is unacceptable for a nation as prosperous as ours. Looking to my own 
state of South Carolina, I see the extreme hardship caused by 
unemployment rates that are, sadly, above the national average. Now 
that Recovery Act dollars are flowing into South Carolina, we hope to 
see significant improvements in the coming months, particularly to the 
lives of those individuals most adversely impacted by the recession.
    In addition to creating jobs through infrastructure projects, the 
Recovery Act bolstered the safety net to help low-income families and 
individuals cope with the downturn and to boost consumer spending. The 
Center on Budget and Policy Priorities recently estimated that seven 
programs of the Recovery Act have kept 6.2 million Americans, including 
2 million children, out of poverty in 2009 through new and expanded 
income support programs. The Recovery Act also cushioned the downturn 
in the labor market by providing temporary assistance to unemployed 
Americans while they search for new jobs. Because low-income 
individuals tend to quickly spend the benefits they receive, these 
Recovery Act programs also exhibit a particularly high bang-per-buck, 
helping to generate demand for goods and services throughout the 
economy.
    Even though the Recovery Act has returned the economy to a path of 
growth and is providing much-needed assistance to unemployed and low-
income Americans, the labor market is expected to remain highly 
distressed, and state budgets face increasing shortfalls that threaten 
greater harm to low-income populations. As provisions of the Recovery 
Act begin to expire, Congress may consider extending support to those 
hardest hit by the recession. Given the nation's tenuous fiscal 
situation inherited from the previous Administration, however, we must 
focus on the Recovery Act provisions that have proven most effective. 
This hearing provides the Budget Committee with an opportunity to 
examine the effect of the Recovery Act on the social safety net and to 
explore which programs could be most beneficial if they are extended.
    We are very fortunate to be joined by an excellent panel of 
witnesses, and I want to thank them for their participation in this 
hearing. First, we have with us this morning LaDonna Pavetti from the 
Center on Budget and Policy Priorities. Dr. Pavetti is the Director of 
the Welfare Reform and Income Support Division at the Center. Second, 
we are joined by Sue Berkowitz, representing the South Carolina 
Appleseed Legal Justice Center. An old friend of the Committee, Ms. 
Berkowitz directs a non-profit law office dedicated to advocacy for 
low-income people in South Carolina. Third, we have Pat Delessio of 
Legal Action of Wisconsin. Ms. Delessio is an attorney who provides 
free civil legal services in Milwaukee to low-income people and senior 
citizens. Fourth, from the Brookings Institution, we have Ron Haskins. 
Dr. Haskins is a Senior Fellow and Co-Director of the Center on 
Children and Families. All four panelists are well versed in the social 
safety net and bring with them valuable perspectives on the economic 
and social impact of the Recovery Act.
    We very much appreciate your joining us today. Before turning to 
you for your testimony, let me first turn to Mrs. Gwen Moore, who was 
instrumental in arranging this hearing, for any statement she cares to 
make.

    Ms. Moore. Well, thank you, Chairman Spratt and Ranking 
Member Ryan, and members of the Budget Committee, for 
participating in this important and timely hearing. I also want 
to thank all of our esteemed panelists and witnesses for being 
here today with a very special thanks to Pat Delessio from 
Legal Action of Wisconsin, who braved near blizzard conditions 
and doesn't know whether she will be able to get back. She flew 
out here from Milwaukee to be with us here today.
    In January of this year, when President Obama took office, 
the Nation was at the brink of an economic crisis due to 
massive layoffs, business closings, and involuntary part-time 
employment. Many Americans were forced to foreclose on their 
homes and file for government assistance in order to provide 
for themselves and their families. Between January 2008 and 
June 2009, the economy lost roughly 6 million jobs. In 2008, 
9.8 million people were counted as poor. And 14.6 percent of 
U.S. households were food insecure throughout the entire year, 
the highest recorded rate of food insecurity since the 
measurement began in 1995. Across the country, states were 
experiencing grave budget shortfalls. And to make matters 
worse, the social safety net had all but fallen through as more 
and more Americans saw their food stamps, child care benefits, 
and TANF benefits disappear.
    The reality is that it is impossible to have a work-based 
safety net without work. It is the greatest oxymoron of all; it 
is like jumbo shrimp. In my State of Wisconsin employers cut 
nearly 129,600 jobs since 2008, the steepest year-to-year drop 
in 70 years of data, and TANF caseloads have gone from 9,366 in 
October 2008 to 11,118 in 2009. This is an increase of nearly 
2,000 caseloads in just one year.
    Faced with insurmountable odds and cumulative 3-month job 
losses of 2.1 million in early February, Congress passed the 
American Recovery and Reinvestment Act, ARRA, a bill that 
pumped nearly $800 billion of emergency funds into states and 
localities to stimulate our ailing economy and job market and 
provide funds to low-income communities experiencing dramatic 
shortfalls due to the economic downturn.
    The Recovery Act created a new and temporary Temporary 
Assistance to Needy Families emergency contingency fund. Think 
of that, a temporary-temporary assistance of needy families, 
emergency contingency fund. I mean, you talk about temporizing. 
The fund was made available to states for increased 
expenditures for basic assistance, short-term, nonrecurrent 
benefits and subsidized employment. The Recovery Act included 
$20 billion for the Food Stamp Program, our Nation's most 
important food assistance program, which helps roughly 35 
million Americans feed their families annually. And certainly 
that 35 million represents only a portion of those who are 
eligible and in need. Additional funds were necessary to meet 
the increased need, as well as to fund the 13.6 percent 
increase to maximum food stamp benefits, which went into effect 
in April 2009.
    An analysis done by the CBO and the Council of Economic 
Advisers concluded that the Recovery Act saved or created 
between 600,000 and 1.6 million jobs as of August 2009. And in 
September, the Center on Budget and Policy Priorities released 
an analysis revealing that the Recovery Act prevented more than 
6 million Americans from slipping into poverty. The CBPP also 
concluded that the bill has helped reduce the severity of 
poverty for 33 million more Americans.
    The truth of the matter is that the Recovery Act not only 
worked to soften the blow of the recession on the Nation's poor 
by giving direct assistance to households through increased 
funding for education, health care, child care, child support 
collection, temporary assistance for needy families and 
homelessness assistance, but it also created and preserved 
public and private sector jobs.
    In October, the Department of Labor estimated that the 
number of newly laid off workers seeking unemployment insurance 
fell by 1,000 to a seasonally adjusted 530,000 last week. DOL 
also revealed that the number of people continuing to claim 
benefits meanwhile had dropped sharply by 148,000 to 5.8 
million, which was below analysts' expectations. While I am 
pleased with the drop in unemployment insurance claims, there 
is still work to be done. And we must continue to do all we can 
to continue to make these figures decline and come out of this 
recession.
    As states continue to benefit from funding included in the 
Recovery Act, it is my hope that Congress will continue to work 
to reduce poverty, create jobs, and stabilize our economy. I 
really look forward to this distinguished panel and their 
testimony, and I yield back.
    Chairman Spratt. Thank you, ma'am. Mr. Ryan.
    Mr. Ryan. Thank you, Chairman. I also want to welcome all 
of our witnesses. Pat, I wasn't sure you were going to make it 
here. I know what is going on back home. So nice of you to be 
here. I am sure you came out about a half a day earlier than 
you probably otherwise planned on doing it. And you have seen 
the impact of this recession up close, which brings valuable 
insight on the effectiveness of the various government safety 
net programs.
    I also want to welcome back to the Committee Ron Haskins. 
Ron, as many of you know, was the Staff Director of the Ways 
and Means Subcommittee on Human Resources. He helped craft one 
of the most successful entitlement reforms in the federal 
government's history, the 1996 welfare reform law.
    As is painfully obvious to all, American families have been 
struggling and they continue to struggle in this weakened 
economy. Since the official start of this recession back in 
December of 2007, nearly 6 million jobs have been lost. 
Regrettably, a trillion dollar stimulus added dramatically to 
the Nation's debt, but did little to improve the Nation's dire 
economic situation. Unemployment hovers at around 10 percent 
still and economists are forecasting a sluggish and mostly 
jobless recovery in the year to come. So at this point, even 
many formally middle class families have found themselves 
relying on some degree of public assistance for the first time 
in their lives.
    Clearly it is critical that we here in Congress ensure the 
safety net programs remain available and strong for those who 
truly need and depend on them. But in responding to today's 
recession, we had better remain mindful of the even greater 
economic crisis we will face if we don't get a handle on 
Washington's ongoing explosion of spending and debt.
    We must also reform our largest and least sustainable 
entitlement programs, which are today on a path to grow 
themselves right into extinction. These immense fiscal problems 
threaten to overwhelm the budget and smother any real hope for 
a strong economic recovery in the future. Incredibly, only 
plans likely to go anywhere here in Washington are those that 
will make these programs and problems dramatically worse.
    I will again remind my colleagues that should we fail to 
get Washington's fiscal house in order, the biggest losers will 
be our Nation's most vulnerable, those who depend on the 
continuation of the very federal safety net programs that are 
going broke today. We can and we must reform these programs to 
preserve the safety net, and the sooner we get to work on these 
critical reforms, the better.
    Again, I want to thank you, Chairman Spratt, and I want to 
thank my good friend, Congresswoman Moore, for putting this 
hearing together and the witnesses for their testimony today.
    [The prepared statement of Mr. Ryan follows:]

    Prepared Statement of Hon. Paul Ryan, Ranking Minority Member, 
                        Committee on the Budget

    Thank Chairman Spratt.
    I too would like to welcome all of our witnesses.
    In particular, Pat Delessio from Wisconsin, who has seen the impact 
of this recession up close, and brings valuable insight on the 
effectiveness of the various government safety net programs.
    I would also like to welcome back to this Committee Ron Haskins--
who, as the former staff director for the Ways and Means' subcommittee 
on Human Resources, helped craft one of the most successful entitlement 
reforms in the Federal Government's history--the 1996 Welfare Reform 
law.
    As is painfully obvious to all, American families have been 
struggling--and continue to struggle--in this weakened economy. Since 
the official start of this recession, back in December of 2007, nearly 
7.2 million jobs have been lost.
    Regrettably, the trillion-dollar `stimulus' added dramatically to 
the nation's debt, but did little to improve the nation's dire economic 
situation: unemployment hovers at about 10%, and economists forecast a 
sluggish and mostly jobless recovery in the year to come.
    So at this point, even many formerly-middle class families have 
found themselves relying on some degree of public assistance for the 
first time in their lives.
    Clearly, it is critical that we here in Congress ensure these 
safety nets remain available--and strong--for those who truly need and 
depend on them.
    But in responding to today's recession, we had better remain 
mindful of the even greater economic crisis we will face if we don't 
get a handle on Washington's ongoing explosion of spending and debt. We 
must also reform our largest--and least sustainable entitlement 
programs--which are today on path to grow themselves right into 
extinction.
    These immense fiscal problems threaten to overwhelm the budget, and 
smother any real hope for a strong economy in the future. Incredibly, 
the only plans likely to go anywhere here in Washington are those that 
will make these problems dramatically worse.
    I will again remind my colleagues that--should we fail to get 
Washington's fiscal house in order--the biggest losers will be our 
nation's most vulnerable: those who depend on the continuation of the 
very federal safety net programs that are today going broke.
    We can--and we must--reform these programs to preserve the safety 
net; and the sooner we get to work on these critical reforms, the 
better.
    Again, thank you Chairman Spratt, and I thank our witnesses for 
their testimony today.

    Chairman Spratt. Thank you. Thank you, Mr. Ryan. Before 
going forward, a few housekeeping details. I first ask 
unanimous consent that all members be allowed to submit an 
opening statement for the record at this point. Without 
objection, so ordered.
    Let me say to each of our witnesses that your entire 
statement has been copied and will be made part of the record, 
so you can summarize as you see fit but you are the only panel 
today. There are four of you. We welcome you to give a complete 
account of your testimony and take more than the typical 5 
minutes that are allotted to witnesses. Thank you each of you 
for coming. We look forward to your testimony.
    We will begin with Dr. Pavetti.

 STATEMENTS OF LA DONNA PAVETTI, DIRECTOR, WELFARE REFORM AND 
     INCOME SUPPORT DIVISION, CENTER ON BUDGET AND POLICY 
    PRIORITIES; SUE BERKOWITZ, DIRECTOR AND ATTORNEY, SOUTH 
    CAROLINA APPLESEED LEGAL JUSTICE CENTER; PAT DELESSIO, 
 ATTORNEY, LEGAL ACTION OF WISCONSIN; AND RON HASKINS, SENIOR 
 FELLOW, ECONOMIC STUDIES, AND CO-DIRECTOR, CENTER ON CHILDREN 
            AND FAMILIES, THE BROOKINGS INSTITUTION

                 STATEMENT OF LA DONNA PAVETTI

    Ms. Pavetti. Thank you for inviting me. What I would like 
to do today is focus my testimony on three points. The first 
point is what role ARRA has played in keeping millions of 
individuals out of poverty and also in reducing hardship among 
others. The second is that I would really like to talk about 
our SNAP and the TANF program and contrast what has happened in 
those so we understand which parts of the safety net are 
working and which are not. And then what I would like to do is 
talk about the need for continued assistance and how we might 
think about as we move forward what still remains to be done.
    So first talking about the impact of ARRA, the chairman and 
Congresswoman Moore both mentioned a study that the Center did 
on looking at ARRA and its impact on poverty. We looked at 
seven provisions of the Recovery Act that provide income 
directly to individuals or families. And when we did that, we 
found that there are 6.2 million fewer people who are in 
poverty and 33 million who have less poverty than they would 
otherwise have. I think the important part of that is that not 
only did ARRA have the impact of having less poverty, but it 
also provides income to people who are most likely to spend it, 
and what that does is it keeps the economy moving and it keeps 
people employed other than the people who are spending it. So I 
think that is sort of an important part. It is really doing two 
things at the same time.
    I think that the other part of the ARRA I would like to 
talk about is state fiscal relief. ARRA provided $140 billion 
in fiscal relief to states through two mechanisms, through 
enhanced funding for Medicaid and through the Fiscal 
Stabilization Fund, which was targeted primarily to education. 
And state fiscal relief helped to mitigate the recession 
through several different means. First, it helped states to 
maintain critical services. When states received the enhanced 
Medicaid funding, they were able to do two things. One, they 
were able to keep people employed who were in the Medicaid 
program and are health providers, and they also were able to 
keep eligibility at the levels that it would have been without 
state budget cuts. So what we have seen is an increase or 
expected increase in Medicaid--in people receiving Medicaid 
because there was a maintenance of effort to get that enhance 
matched. They couldn't reduce eligibility. So we see more 
people who are actually receiving assistance from that program 
than we would have otherwise.
    The other is that ARRA helps avoid layoffs of public 
employees, and one thing that I think many of us see and are 
concerned about is in education that has been especially true 
of teachers--there are many teachers that would have been laid 
off that are not and are still in our schools. And then the 
other is that it prevents the contraction of private sector 
economic activity again because that activity that supplies 
goods and services continues and it keeps the economy moving.
    And I think that it is important that economist Mark Zandi 
has found that state fiscal relief has a very high multiplier 
effect and for every dollar spent by the federal government it 
results in a 1.41--a $1.41 increase in the gross domestic 
product. The Department of Education found that more than 
255,000 education jobs and nearly 63,000 jobs in other areas 
have been retained.
    I think one of the difficulties with some of what has 
happened in the stabilization is that it is hard to count what 
has been retained rather than what has been added. But I think 
an important point of what ARRA has done is that things are far 
less worse than they would have been had those provisions not 
been in place.
    Now what I would like to do is talk about one last piece of 
ARRA, which is the TANF Emergency Contingency Fund. And as 
Congresswoman Moore again mentioned, there is $5 billion 
available to states and that money is very targeted so that it 
does go directly to families in need. It is a way to help 
states who have increases in their caseload to meet these 
increased payments. It allows states to provide emergency 
assistance to stave off crisis so that they can help families 
to avoid foreclosure or, if they are behind in their rent or 
their utility payments, to avoid them from becoming homeless 
and then to create new subsidized employment programs so that 
states really have been able to use this to maintain a work 
focus in their TANF programs, which otherwise would have been 
difficult.
    One example that I would like to provide is just to give 
you a flavor of how states have used this is to use Oregon. 
Oregon has been hit very hard by the recession. There has been 
a huge increase in the number of people who are unemployed. In 
thier TANF program, they have been serving an additional 6,000 
families a month and they are expecting to draw down almost $75 
million from the TANF emergency fund for 2009 and 2010. And 
without that additional funding, Oregon would have eliminated 
their TANF program for two-parent programs and reduced 
eligibility for employment related day care, and they 
potentially would have had other cuts to be able to account for 
some of the--to be able to meet some of their budget gaps. So 
they have been able to avoid all of those cuts, families are 
continuing to receive assistance, and again Oregon is an 
example where the program that is very work focused was able to 
shift and provide a safety net for families who need it and it 
also did it very quickly.
    Regarding subsidized employment, so far we have more than a 
dozen states that have received approval to create or expand 
their subsidized employment programs, and I think California is 
a good example, being a very large state. They are planning to 
draw down $300 million to create subsidized employment and L.A. 
alone is planning to provide 10,000 jobs to people who would 
otherwise not have them. But there will be programs throughout 
the state. New York State is also spending about $53 million on 
subsidized employment, and that is a combination. What they 
have done is taken some of the ARRA funds and added some of 
their state funds so that they can create funds to do health 
care outreach, they can do green jobs, and they can provide 
subsidized employment for people who otherwise would not be 
employed. So that I think is a good example of the ways in 
which the contingency fund is actually playing out in the 
states.
    Now, what I would like to do is turn and talk a little bit 
about the safety net's overall response to the recession. So we 
had programs in place prior to ARRA that were really intended 
to be a safety net for families. So I think sort of thinking 
long-term, one thing we need to ask ourselves is how well have 
those programs actually been working. And I think there is both 
a good news and bad news story here. On the good news story, 
enrollment in the Food Stamp Program, also known as SNAP now, 
is at an all-time high. Caseloads have increased by 30 percent 
since the beginning of the economic downturn. And they have 
increased in every state. So the program has really responded 
to the increased demand and again they have done so very 
quickly.
    The TANF story is a very different story. The TANF 
caseloads are starting to increase, but what happens is if you 
look at TANF nationally, there has been a very small increase. 
If you look from--we actually looked from March 2008 to March 
2009 in a preliminary analysis, and nationally you see an 
increase of about 5 percent. If you look at that national 
increase it really masks what is going on in the states. And 
there is this extreme variation of what is going on in the 
states. There are some states that have had very, very 
substantial increases in TANF caseloads above 25 percent. So 
again Oregon being one of those, South Carolina is another. 
There are about six states that have had more than 15 percent 
increases. But there are more states that--where the caseload 
has either remained flat or is actually declining, was 
declining at start of the recession, and has continued to 
decline because states that have caseloads declines that are at 
10 percent or greater, and again those have continued.
    So I think we need to sort of ask ourselves why has TANF 
not been responsive given that we know there is greater need. 
And I think there are a lot of reasons, we don't know all the 
details, but I think we can look and sort of draw some 
conclusions based on what we are seeing. One is that states for 
13 years have been focusing on caseload decline, and they have 
really been slow to shift that focus. A measure of success for 
TANF was that the caseloads went down. The work participation 
rates really have discouraged states from serving people who 
can't get jobs quickly. And the easiest way to meet those work 
participation rates is not to serve people who can't be 
employed, and even in this economy states are still concerned 
about how they will meet those rates. And it affects their 
behavior about who they serve and how they actually operate 
their programs.
    Many states have policies and procedures in place that make 
it very, very difficult for people to get on to assistance and 
especially difficult if they can't demonstrate that they can 
work 40 hours a week and meet those work requirements.
    The other is that TANF does have a stigma attached to it 
for many families, and so there are some families who may need 
some assistance who don't pursue it because of the stigma 
attached, because they don't know that they are eligible and 
because of time limits that they may have already reached.
    The other thing that I think is important in looking at 
sort of what is happening in food stamps and TANF, one of the 
things we are seeing in food stamps is an increase in what we 
refer to as zero income households. So they are households that 
have no other income. Those are--many of those families are 
families who historically or prior to reform would have been on 
TANF and are not on TANF. So again we have food stamps 
providing this safety net but food stamps cannot help people to 
pay their rent, it can't help them pay sort of--meet their 
basic needs. So again there is sort of a good side and a bad 
side story to that.
    Finally, what I would like to do is talk about strategies 
for how can we strengthen the safety net and I am going to talk 
about three. There is more in my testimony. And I am going to 
focus on two that are short term and one that is longer term. 
But the short term, first, is to provide additional funding to 
states to really help them with the administrative costs of 
providing foods stamp benefits to individuals. One thing that 
has happened in states is that trying to meet the demand, and 
actually processing those applications, is creating just a huge 
problem administratively for states. And because of budget 
crises, people are being laid off even though there are more 
applications. So one thing we could do to help states meet that 
demand and get benefits in the hands of people more quickly is 
to help them on the administrative side.
    The second is to provide--is to phase down state fiscal 
relief more gradually. When we consider how to provide a safety 
net for people, you shouldn't lose sight of the long-term 
consequences. If you look historically at what has happened in 
recessions, unemployment recovers slowly and poverty recovers 
more slowly. So that if we really believe what has happened 
historically will continue to happen, the need is going to 
continue for an extended period of time and we need to really 
sort of be prepared for thinking about that. So despite 
improvements in the economy and the fiscal relief that states 
have received, the fiscal conditions in states look almost as 
bad in fiscal 2011 and 2012 as they did for 2009 and 2010. And 
the current recovery funds helped them to take part of their 
gap and close that. But it is not going to go away.
    So our recommendation is to really think about how we can 
gradually decrease the amount of money that goes to states but 
not put them in a position where they will have to close those 
gaps quickly and be unable to. We know that states have already 
started to plan their budgets so that it is important to do 
something quickly and we know that without additional fiscal 
relief, many of the services that have been helpful to families 
will be cut. states have already indicated that if the FMAP 
doesn't continue, that they will start to cut back eligibility 
so that they can again meet their budget requirements.
    Finally, on the longer term is really thinking about what 
can we--how can we use TANF reauthorization, which comes up 
next year, to really improve TANF's responsiveness to economic 
downturns and also to improve its performance as a work 
program. I think that we have made--TANF is a very different 
program than when we instituted reform. And I think it requires 
a different discussion about what comes next. And I think 
that--I think we would be remiss if we didn't use the 
opportunity that is coming up to really take a step back and 
say where has it performed well, where is it falling short, and 
how can we make it a safety net that really is for the long 
term and really can deal with the ups and downs of people's 
lives as they happen.
    So in just summary, what I would like to do is just say 
that the stimulus has provided important help to both states 
and to individuals and both of those mechanisms of getting 
money in the hands of poor people who will spend it is an 
important way to help the economy to recover as well as states 
to help them provide important services.
    And second is that we really need to be thinking about this 
as a long-term issue. It is not going to go away in the short 
term. And so we need to really be thinking about what is the 
path--long-term path to recovery so we don't lose ground from 
what we have already accomplished, and I will stop there.
    [The prepared statement of Ms. Pavetti follows:]

  Prepared Statement of LaDonna Pavetti, Director, Welfare Reform and 
    Income Support Division, Center on Budget and Policy Priorities

    Thank you for the opportunity to testify today. My testimony will 
focus on four points:
     Poverty was high at the start of the recession and it is 
likely to remain high for an extended period. Some of the most 
effective measures to boost employment (and reduce poverty) in a weak 
economy have and will continue to be those that provide financial 
relief to people struggling to make ends meet and to states facing 
large budget shortfalls.
     The recovery act passed in February has kept this serious 
recession from being even worse. It has not only moderated the decline 
in GDP and increase in unemployment, but also prevented millions of 
Americans from falling into poverty and has helped some states to forgo 
significant cuts that would have weakened the safety net for very poor 
families with children.
     The Supplemental Nutrition Assistance Program (SNAP), 
formerly food stamps, has responded quickly to rising need in all 
states, but the Temporary Assistance for Needy Families (TANF) cash 
assistance program has lagged behind and has been moderately or 
substantially responsive in only 20 states.
     To help ease hardship and avoid short-circuiting an 
economic recovery, Congress will need to adopt policy solutions that 
are responsive to both immediate needs and the long-term consequences 
of the recession.
 recent and historical data on poverty and incomes underscore challenge
    Recent Census Bureau data show that the nation lost substantial 
ground in 2008 on poverty and incomes. The number of people living in 
poverty jumped by 2.6 million, to 39.8 million people. The poverty rate 
rose to 13.2 percent, the highest since 1997. Real median household 
income declined 3.6 percent, the largest single-year decline on record, 
and reached its lowest point since 1997.
    History suggests that the road to recovery from the current 
economic crisis will be long. Unemployment has been slow to recover 
after recent recessions, and poverty even slower. In the recession of 
the early 1990s, unemployment did not peak until 15 months after the 
recession ended. In the 2001 recession, unemployment did not peak until 
19 months after the recession ended. Poverty often takes even longer to 
start its recovery. After each of the last three recessions, poverty 
continued rising or failed to decline in the first year after 
unemployment began to fall:
     In 2004, the first year the annual unemployment rate 
declined following the 2001 recession, the poverty rate rose to 12.7 
percent, up from 12.5 percent the year before. The number of poor 
persons rose 3.3 percent or 1.2 million.
     In 1993, the first year the annual unemployment rate 
declined following the 1991 recession, the poverty rate reached 15.1 
percent, not statistically different from the prior year's 14.8 
percent. The number of poor persons rose a statistically significant 
3.3 percent.
     In 1983, the first year the annual unemployment rate 
declined following the 1981-82 recession, the poverty rate reached 15.2 
percent, not statistically different from the prior year's 15.0 
percent. The number of poor persons rose a statistically significant 
2.5 percent.
    The pattern suggests that poverty could take years to start 
falling, and even longer to return to its pre-recession levels. These 
figures are particularly grim because they come after the disappointing 
record of the 2001-2007 expansion. Poverty was actually higher--and 
median income for working-age households lower--at the end of that 
expansion than during the 2001 recession. Since the nation began 
collecting these data, such a dismal record during an expansion has 
never occurred before.
    These data include only the early months of the recession. The 
figures for 2009, a year in which the economy has weakened further and 
unemployment has climbed substantially, will almost certainly look 
worse. The figures may worsen again in 2010 if unemployment rises 
somewhat further or even if it plateaus, as a growing numbers of 
individuals who are currently unemployed may exhaust their unemployment 
benefits during 2010 before they find new jobs. However, the expected 
increase in poverty would be substantially greater if not for the 
responsiveness of the social safety net and the additional assistance 
provided by the American Recovery and Re-Investment Act of 2009 (ARRA).
    Recovery Act Keeping Millions of Americans Out of Poverty and 
Helping Forestall Cuts in Critical Human Services
    The recovery act's primary goal was to help the broader economy, 
and evidence suggests it is having a significant positive impact. The 
Congressional Budget Office estimated in November that in the third 
quarter of calendar year 2009, ``an additional 600,000 to 1.6 million 
people were employed in the United States, and real (inflation-
adjusted) gross domestic product (GDP) was 1.2 percent to 3.2 percent 
higher, than would have been the case in the absence of ARRA.''\1\ CBO 
estimated this spring that ``The boost to total employment [because of 
the recovery act] peaks at about 2\1/2\ million jobs in the second half 
of 2010.''\2\ In addition, the recovery act has had the important 
secondary effect of significantly ameliorating the recession's impact 
on poverty.
---------------------------------------------------------------------------
    \1\ ``Estimated Impact of the American Recovery and Reinvestment 
Act on Employment and Economic Output as of September 2009,'' 
Congressional Budget Office, November 2009, p. 1.
    \2\ ``Preliminary Analysis of the President's Budget and an Update 
of CBO's Budget and Economic Outlook,'' Congressional Budget Office, 
March 2009, p. 29.
---------------------------------------------------------------------------
    seven arra provisions keep 6.2 million americans out of poverty
    The Center on Budget and Policy Priorities recently examined seven 
provisions of the recovery act that provide direct assistance to 
individuals--including three tax credits for working families, two 
improvements in unemployment insurance, expanded nutrition assistance, 
and one-time payments to senior citizens, veterans, and people with 
disabilities--and estimated that these provisions will result in 6.2 
million fewer Americans (including 2.4 million children under 18) being 
counted among the nation's poor in 2009.\3\ Because the government's 
official measure of poverty considers only cash income and would 
therefore miss many of the tax-based and non-cash income supplements in 
the recovery act, our analysis used a broader poverty measure 
recommended by the National Academy of Sciences.
---------------------------------------------------------------------------
    \3\ The seven provisions included in the analysis are: (1) new 
Making Work Pay tax credit; (2) expanded Child Tax Credit; (3) expanded 
Earned Income Tax Credit; (4) additional weeks of emergency 
unemployment compensation; (5) a $25 per week supplement for unemployed 
workers receiving unemployment benefits; (6) one-time payment of $250 
to elderly and people with disability; and (7) increased Supplemental 
Nutrition Assistance program benefits. For additional information, see: 
Arloc Sherman, ``Stimulus Keeping 6 Million Americans Out of Poverty in 
2009, Estimates Show,'' Center on Budget and Policy Priorities, 
September 9, 2009, http://www.cbpp.org/cms/index.cfm?fa=view&id=2910.
---------------------------------------------------------------------------
    Two provisions included in our analysis, the new Making Work Pay 
Credit and the increase in SNAP benefit levels, kept the largest number 
of individuals out of poverty. The Making Work Pay Credit, which 
provides a tax credit of $400 for workers earning up to $95,000 ($800 
for a couple earning $190,000) kept 1.6 million individuals, (including 
500,000 children) out of poverty. The 13.6 percent increase in SNAP 
benefit levels kept 1.1 million individuals out of poverty, including 
500,000 children.
    The increase in SNAP benefit levels illustrates the important role 
that provisions aimed at addressing economic hardship can play in 
stimulating the economy. This provision was included in ARRA to provide 
a very fast and effective economic stimulus that could help to push 
against the tide of economic hardship that low-income individuals are 
facing. Te increase went into effect in April 2009. Through September 
25th, according to USDA, it had provided about $4.5 billion in federal 
support to low-income households across the country.
    The added SNAP benefits ripple through the economy. When a family 
uses its SNAP benefits to shop at a local grocery, this helps the 
grocer pay his or her employees and purchase more from his or her 
suppliers. That, in turn, helps the suppliers pay their employees (as 
well as the truckers who deliver their products), and so on. Based on 
analysis from USDA's Economic Research Service, the $4.5 billion 
temporary increase in food stamp benefits has resulted in a total of 
about $8 billion in total economic stimulus.
    The estimates from our analysis represent only a fraction of the 
overall impact of the recovery act on poverty because the seven 
provisions we included account for only about 26 percent of the act's 
total funding. We were unable to model billions of dollars in 
assistance that would further reduce the number of Americans in 
poverty. These include Pell grants and education tax credits, funding 
for state health insurance programs, child care, child support 
enforcement, and assistance to homeless individuals and to TANF 
recipients.
state fiscal relief helps states continue to provide critical services 
                           and avoid layoffs
    ARRA included about $140 billion to provide fiscal relief to 
states. This funding, provided to states through enhanced funding for 
Medicaid and a Fiscal Stabilization Fund targeted primarily to 
education, has helped states substantially. Without it, both state 
budget cuts and state tax increases would be much larger. The best 
estimates suggest that the fiscal relief in ARRA has allowed states to 
close 30 percent to 40 percent of their budget gaps this year. Without 
this aid, states would have been forced to institute even more severe 
actions that would have placed a greater drag on the economy.
    State fiscal relief helps to mitigate the impacts of the recession 
through several different means. It helps states continue to provide 
critical services and it helps them avoid layoffs of public employees. 
It also prevents the contraction of private sector economic activity 
and the loss of private-sector jobs in firms that supply goods and 
services to state governments or that sell their products to state 
employees who would otherwise be laid off, or to people who otherwise 
would have less purchasing power because, in the absence of fiscal 
relief, state programs they rely on would be cut or their taxes would 
be raised.
    The temporary increase in the share of the Medicaid program paid by 
the federal government (known as the Federal medical Assistance 
percentage or ``FMAP'') has provided states with additional funding to 
cover the costs of providing Medicaid for low income families. The 
maintenance of effort requirement associated with the enhanced funding 
has protected Medicaid eligibility criteria--and more people cast into 
the ranks of the uninsured--to cover state budget shortfalls. 
Similarly, a portion of the State Fiscal Stabilization Fund was 
dedicated to helping states and localities maintain K-12 and higher 
education funding. To receive the funding states had to fund K-12 and 
higher education at no less than the fiscal year 2006 level in fiscal 
years 2009, 2010, and 2011.
    The ARRA funding for state fiscal relief has been effective at 
creating and preserving jobs. Economist Mark Zandi has found that a 
temporary increase in state and fiscal relief has a high ``multiplier 
effect,'' meaning that every $1 spent by the federal government results 
in a $1.41 increase in the gross domestic product. The Department of 
Education found that more than 255,000 education jobs and nearly 63,000 
jobs in other areas have been retained or created through the Fiscal 
Stabilization Fund, for a total of 318,000 jobs saved or created 
through September 30 by the Fiscal Stabilization Fund.\4\
---------------------------------------------------------------------------
    \4\ Total education funding through ARRA, including both fiscal 
relief and programmatic funding, was found to have created or saved 
326,593 education jobs. US Department of Education, ``American Recovery 
and Reinvestment Act Report: Summary of Programs and State-by-State 
Data,'' November 2, 2009.
---------------------------------------------------------------------------
    No official reports are available on the jobs impact of the fiscal 
relief funding provided through Medicaid, but there is little question 
that the Medicaid funding has resulted in the retention or creation of 
both public and private-sector jobs for health providers, in large part 
because more people remain insured than would have been the case 
without the funding. The President's Council of Economic Advisers 
looked at the first six months of ARRA Medicaid funding and found a 
strong relationship between that funding and jobs.\5\
---------------------------------------------------------------------------
    \5\ Executive Office of the President, Council of Economic 
Advisers, ``The Economic Impact of the American Recovery and 
Reinvestment Act 2009,'' September 10, 2009.
---------------------------------------------------------------------------
   tanf emergency contingency fund helps states to forestall cuts in 
   benefits and provide cash assistance and subsidized jobs to more 
                                families
    Congress included $5 billion in the recovery act for a TANF 
Emergency Contingency Fund (ECF) to provide states with additional 
resources to help families meet their basic needs. States can qualify 
for these funds if they provide cash assistance to more needy families 
with children, spend more to provide one-time non-recurring benefits to 
help families stave off a crisis, or create subsidized employment 
opportunities for jobless individuals. Over $1 billion in Emergency 
Funds have already been authorized with about two-thirds of this amount 
based on increased spending on TANF basic assistance. States are still 
in the process of submitting requests for these funds--and it is too 
soon for states to apply for funds for the last half of 2010--so we 
don't yet know how much of the $5 billion they will use and what the 
overall impact on poverty will be. However, we do know that this fund 
has made it possible for some states to meet the increased demand for 
assistance, to avoid significant cuts in cash assistance and services 
for very poor families with children and to maintain their commitment 
to providing work opportunities for TANF recipients. Below are examples 
of how three states--Oregon, Florida and Maryland--are planning to use 
these funds. Between March 2008 and March 2009, these state's TANF 
caseloads increased by 27, 14 and 13 percent, respectively.
     Anticipating that it will be able to draw down $74.9 
million from the TANF ECF for 2009 and 2010, Oregon expects to cover 
the costs of providing cash assistance to an average of 6,226 more 
families per month and to forestall cuts that would significantly 
weaken the safety net for poor families. Without this additional 
funding, Oregon would have eliminated its TANF program for unemployed 
two-parent families, reduced eligibility for employment-related day 
care, further reduced transitional payments for newly employed parents, 
and eliminated enhanced grants for families with a disabled household 
head applying for Supplemental Security Income or Social Security 
Disability Insurance.
     Florida expects to draw down at least $76 million to cover 
the costs associated with providing cash assistance to an average of an 
additional 6,406 families each month. The state expects to draw down 
$5.4 million to provide subsidized temporary employment for unemployed 
individuals. For example, a county that lost 1,200 jobs due to a plant 
closing plans to use a portion of the funds to provide subsidized 
employment to 75 individuals who would otherwise be unemployed.
     Maryland expects to qualify for over $30 million in TANF 
Emergency Funds for 2009 and for additional funds for 2010. This 
includes $17.7 million in basic assistance used to provide cash 
benefits to an average of an additional 3,107 families each month, and 
$12.5 million used provide non-recurrent short-term benefits such as 
emergency assistance payments to families who might otherwise lose 
their current housing or be unable to stay employed. Maryland plans to 
use some of these funds to cover the additional staff costs associated 
with processing a greater volume of applications for assistance.
    Additional funding to create or expand subsidized employment 
programs has been authorized for over a dozen states. These programs 
will provide jobs for low-income individuals who would otherwise be 
unemployed. Rigorous evaluations of similar programs have shown they 
are successful at providing short-term employment opportunities when 
parents are unable to find unsubsidized jobs on their own.\6\
---------------------------------------------------------------------------
    \6\ Cindy Redcross, MDRC, ``Using NDNH Data to Evaluate 
Transitional Jobs,'' presentation at the National Association for 
Welfare Research and Statistics annual conference, July 13, 2009.
---------------------------------------------------------------------------
     California is planning to draw down $300 million from the 
TANF ECF to create subsidized employment programs throughout the state. 
San Francisco is planning to use its share of funds to expand its JOBS 
NOW! program to provide subsidized employment to an additional 1,000 
unemployed and underemployed parents by September 2010. Participants 
will undergo a vocational assessment to determine their skills and 
interests, after which they will be assigned to an appropriate job 
based on their employment readiness and the level of personal support 
needed. Los Angeles is implementing the state's largest program with 
plans to provide subsidized employment to 10,000 unemployed 
individuals.
     New York provides another example. The state is currently 
implementing a $39 million effort to provide three different types of 
subsidized employment opportunities to unemployed individuals. The 
state will spend $25 million to create a new Transitional Jobs 
Initiative to provide paid, subsidized work experience--combined with 
educational opportunities related to work--to TANF-eligible individuals 
including disconnected youth and the formerly incarcerated. The state 
will spend $7 million to create a Health Care Job Subsidy Program that 
will hire health care outreach workers to help low-income individuals 
maintain eligibility for public health care programs and to connect 
them to other preventative health care services. Finally, the state 
will spend $7 million to create a new Green Corp Jobs Subsidy program 
that links eligible individuals to job skills training, basic 
education, and career advancement opportunities in entry-level, high-
growth energy efficiency and environmental conservation industries. The 
Health Care and Green Jobs programs each include $2 million of money 
from New York's general fund to provide subsidized employment 
opportunities to single individuals receiving cash assistance from the 
state's general assistance program. New York also increased its wage 
subsidy program by $10 million to make it a $14 million program. The 
state will spend a total of $53 million from ARRA and the general fund 
to create subsidized employment opportunities for unemployed low-income 
individuals.
 arra child care assistance helping working families afford child care
    Congress recognized the vital importance of child care assistance 
in helping low-income families obtain jobs and remain in the workforce 
by including $2 billion for the Child Care and Development Block Grant 
(CCDBG) as a part of the recovery act. CCDBG is the largest federal 
source of funding to states for child care assistance and serves 
children birth through age 13. ARRA child care funds are one-time funds 
to help states recover from the economic crisis by creating new jobs 
and serving more families. Like the TANF Emergency Contingency Funds, 
the CCDBG ARRA funds are available until September 30, 2010.
    As of mid-November, states, territories, and tribes had drawn down 
a total of $244.8 million in child care funds, or 12.3 percent of the 
$2 billion allocation. States are beginning to accelerate their draw 
down rate now that they have an understanding of federal reporting 
requirements, and have approved state plans. States report to the Child 
Care Bureau that they are spending the money in the following ways:
     Reduce waiting list or avoid service cuts (11 states)
     Increase payment rates (11 states)
     Provide assistance during an extended period of job search 
(10 states)
     Lower copayments (4 states)
     Improve child care quality (41 states)
       snap responding quickly and systematically to rising need
    SNAP--formerly known as the Food Stamp Program--has responded 
quickly and effectively to support low-income families and communities 
during the economic crisis (see Figure 1). National enrollment in SNAP 
is at an all-time high. In August 2009, 36.5 million people, or 1 in 8 
Americans, were enrolled in SNAP, including an estimated 17.7 million 
children, or 1 in 4 children in the United States. Nationally, 
caseloads have increased by 7 million people, or 24 percent since last 
August, and by nearly 9 million people (or nearly one-third) since the 
beginning of the economic downturn. Caseloads have increased in every 
state, with 39 states experiencing all-time caseload highs in the last 
12 months.
    SNAP benefits also help protect the economy as a whole by helping 
maintain overall demand for food during slow economic periods. In fact, 
SNAP benefits are one of the fastest, most effective forms of economic 
stimulus because they get money into the economy quickly.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        uneven responsiveness of tanf cash assistance caseloads
    In most states, TANF cash assistance programs have lagged far 
behind SNAP in their responsiveness to the economic crisis and to 
rising poverty. The state variation is significant. Nationally, the 
total number of families with children receiving cash assistance 
remained essentially flat between March 2008 and March 2009; the SNAP 
caseload increased by 19 percent during this same period, reflecting 
large increases in poverty. TANF caseloads either have not been 
responsive at all to the economic downturn or have been only minimally 
responsive in 31 states; caseloads declined in 13 of these states, 
remained essentially flat in eight and increased by one to five 
percentage points in ten. Caseloads responded moderately in another 14 
states, increasing by between 6 and 15 percent. Caseloads increased by 
more than 15 percent in only six states: New Hampshire, New Mexico, 
Oregon, South Carolina, Utah and Washington.
    The lack of responsiveness of the TANF caseload, which is striking 
when compared to the surge both in unemployment and in SNAP caseloads, 
is likely attributable to several factors. For the last 13 years, 
states have been focused on reducing their TANF caseloads for a variety 
of reasons--fiscal, ideological, and as a measure of effective 
performance--and even during the current economic crisis, states have 
been slow to shift away from this emphasis. It is important to note 
that even prior to the economic downturn, TANF was not accessible to 
many families who needed it. In 2005, the TANF cash assistance program 
served only about 40 percent of eligible families compared to 80 
percent of eligible families in 1995. Many states have policies and 
procedures in place that make it difficult both for eligible applicants 
to obtain benefits and for recipients to continue receiving benefits 
even if they continue to be eligible. Some states require applicants to 
participate in work activities for a period of time before they can 
qualify for aid, but some families may be in crisis and have difficulty 
in meeting these requirements until they begin to receive help in 
meeting basic needs. Many states have eased their enrollment processes 
for SNAP and Medicaid but have not extended these improvements to TANF; 
others actively discourage TANF applicants. In some cases, families in 
need may not pursue TANF because of stigma, erroneous information about 
eligibility, time limits or other reasons.
 increasing the responsiveness of the safety net and responding to the 
                long-term consequences of the recession
    Although the recovery act has provided significant help to many 
low-income families, more needs to be done. Serious challenges will 
remain for the next several years, and they demand a continuing 
response. Some of the most effective measures to help the ailing 
economy are those that provide fiscal relief to people struggling to 
make ends meet and to states facing large budget shortfalls. Congress 
should consider the following actions to increase the responsiveness of 
the safety net and to respond to the long-term consequences of the 
recession. I divide my recommendations into two categories, short-term 
actions that should be taken before the end of 2009 and longer-term 
actions that should be taken by the end of the current fiscal year.
                           short-term actions
     Provide additional funding to states to help them handle 
the staffing costs of responding to greatly increased numbers of 
jobless households applying for food stamps. SNAP caseloads are at an 
all-time high and are continuing to rise. States are increasingly 
unable to handle the increased workload associated with enrolling more 
people in the program. Many states, facing budget crises that stem from 
the economic downturn, are cutting staff across large numbers of state 
agencies including food stamp administration. Other states are 
achieving reductions by freezing all new hiring and leaving open 
positions unfilled. (States normally pay 50 percent of the costs of 
administering the SNAP program.) Very large backlogs and bottlenecks 
are showing up in a growing number of areas across the country, with 
long waits for application interviews and delays in application 
processing.
    Additional funding to help states cover administrative costs will 
get help into the hands of people that qualify for it more quickly. It 
will also increase jobs in two ways--both directly by employing more 
state staff, and indirectly by getting food stamps into the hands of 
eligible families more promptly. The current backlogs are reducing the 
effectiveness of the investment Congress made in the ARRA legislation 
in temporarily expanding food stamp benefits. ARRA provided $290.5 
million in administrative funds to states to help them manage rising 
caseloads through 2010. An additional $300 to $500 million over the 
next two years would help states provide SNAP benefits to the growing 
numbers of families affected by the economic downturn. We also 
recommend a maintenance-of-effort provision, perhaps at 97 percent of 
state spending on basic state SNAP administrative costs in fiscal year 
2008, to prevent states from substituting the new funds for existing 
state SNAP administrative funding.
     Provide states with additional resources to provide cash 
assistance payments, emergency assistance and subsidized employment to 
low-income families beyond the September 30, 2010 deadline. The ARRA 
TANF Emergency Fund has provided states with additional resources to 
cover 80 percent of the costs of providing TANF cash assistance 
payments, one-time emergency payments and short-term subsidized jobs to 
more families. The TANF block grant has been frozen for 13 years. When 
the TANF program was established in 1996 as a block grant, a TANF 
Contingency Fund was created as part of the new program and funded so 
that it would be available for states to draw upon in an economic 
downturn. The Contingency Fund lasted for 13 years, but it will be 
depleted this quarter, because more states have drawn down these funds 
recently due to the severity of the downturn.
    As currently structured, neither the regular TANF Contingency Fund 
nor the ARRA TANF Emergency Fund will provide states with the resources 
they need to support low-income families through a long recovery. ARRA 
provided $5 billion for a new, temporary TANF Emergency Fund, and some 
funding remains in it, but that funding expires on September 30, 2010. 
Without an early signal that additional funding will be available, 
states will include cuts to their TANF basic assistance programs in 
their budgets for FY 2011 and they will not expand existing or create 
new subsidized employment programs if they believe such programs will 
need to be dismantled within six to nine months.
    There are two options for addressing this problem. First, the ARRA 
TANF Emergency Fund could be extended for one or two more years, or it 
could be made permanent and replace the TANF Contingency Fund. Second, 
the TANF Contingency Fund could be refunded and restructured to build 
on the ARRA TANF Emergency Fund model which does a better job at 
providing extra resources directly to families.
     Phase down state fiscal relief more gradually. Despite 
improvements in the economy as a whole, state fiscal conditions for 
state fiscal years 2011 and 2012 look as bad as those for 2009 and 
2010. We estimate that state deficits in state fiscal year 2011 will be 
about $180 billion, some $40 billion of which states will be able to 
close with recovery act funds. For state fiscal year 2012, we project 
state budget deficits of $120 billion, with essentially no recovery act 
funding available to reduce the deficits.
    One strategy to address these shortfalls is to provide a reduced 
level of federal stimulus (through some combination of the enhanced 
FMAP provision and the Stabilization Fund) to states for a period of 
time beyond December 31, 2010, when the current recovery act funding 
ends. Congress could, for example, provide additional funding targeted 
to states in serious economic and fiscal distress to close a portion of 
projected state shortfalls in 2010-2011 and 2011-2012. States would 
still need to close the majority of the shortfalls, themselves. In this 
way, federal assistance would phase out gradually rather than ending 
abruptly after December 31, with adverse consequences for both 
vulnerable families and the U.S. economy.
    It would be helpful to send a signal soon about whether additional 
funding will be available, since the new budget cuts and tax increases 
the states will institute to balance their 2011 budgets will take 
effect next summer or even earlier. (State fiscal year 2011 begins on 
July 1, 2010 in most states, and the budget planning process begins 
long before that). Unless states know that additional federal aid is 
coming, they will begin cutting spending and raising taxes by July to 
close the shortfalls in their fiscal 2011 budgets. The large resulting 
state budget cuts and tax increases would counteract a sizeable share 
of the federal stimulus and heighten the risk of a double-dip 
recession. These state actions could result in a loss of 900,000 jobs 
and reduce demand by as much as $260 billion over the next two fiscal 
years, threatening to place a serious drag on the economy and weaken 
the recovery. Florida has announced that when ARRA funding expires, it 
will cut almost 80,000 individuals from its Medicaid programs and other 
states are expected to pursue similar actions in the coming months.
     Prevent the income limits for CHIP, Medicaid, free school 
meals, food stamps, and other programs from being lowered amidst a 
severe economic downturn. Unless Congress passes legislation that keeps 
the poverty eligibility threshold constant next year, the income limits 
for low-income programs that tie their income limits to the poverty 
line (or a multiple of it) are set to drop. A comparable provision is 
in place with respect to the Social Security Cost of Living Adjustment 
(COLA). Were it not in place, Social Security benefits would be lowered 
in 2010 to reflect a negative cost-of-living-adjustment rather than 
staying constant.
    If income limits for poverty programs are not held constant, the 
poverty eligibility threshold for a family of four will fall from 
$22,050 to an estimated $21,850 in January 2010. The poverty threshold 
for a single individual, such as an elderly widow living alone, will 
fall from $10,830 to an estimated $10,690. We estimate this will cause 
40,000 to 45,000 households to be cut off food stamps alone (or not to 
be allowed on the program in the first place). The number of families 
or children losing eligibility for other programs such as Medicaid and 
CHIP, free school lunches, and the like also will run into the tens of 
thousands. This issue can be addressed by freezing the new poverty 
guidelines for program eligibility, which HHS will issue in January, at 
their 2009 level. Cutting struggling families off these programs in a 
weak economy would not represent sound economic policy, since affected 
households will have to cut their purchases. It also would cause 
significant hardship. A simple freeze of the HHS poverty guidelines 
would solve the problem.
     Renew the Emergency Unemployment Compensation program. 
Last year, Congress created the Emergency Unemployment Compensation 
program, which currently provides additional weeks of federally funded 
unemployment benefits to unemployed individuals who have exhausted 
their regular state benefits. (Congress has created a similar program 
in every recent recession.) The recovery act expanded this program and 
extended it through December 2009. This and other unemployment 
insurance provisions in the recovery act have helped millions of 
unemployed workers weather the recession better than they otherwise 
would have. The additional weeks of benefits are also one reason why 
the recovery act has kept the decline in economic activity from being 
even worse in this recession. With unemployment expected to remain very 
high throughout 2010, Congress should extend the EUC program and the 
other UI provisions created by the recovery act for another year. The 
need for an EUC extension is especially great given the record level of 
long-term unemployment, since these are the workers the program 
assists.
     Help unemployed families maintain health insurance 
coverage. Recognizing that some unemployed workers would not have 
sufficient financial resources to continue their health insurance 
coverage through COBRA, Congress included a provision in the recovery 
act that provides for premium reductions and additional election 
opportunities for health benefits under COBRA. This provision allows 
individuals to pay 35 percent of their COBRA premiums, with the 
remaining 65 percent being reimbursed through a refundable, advanceable 
tax credit. This provision is set to end this month, as well. Given 
that unemployment remains high, this provision should be extended for 
another year. States should also be allowed to provide temporary health 
insurance coverage through Medicaid for workers who become unemployed 
during the recession, such as those who are not eligible for COBRA or 
cannot afford the remaining COBRA premiums. The federal government 
would cover the full cost of the coverage through 2010. Such a proposal 
was included in the House-passed version of the recovery act.
                          longer-term actions
     Use TANF Reauthorization as a vehicle to improve TANF's 
responsiveness during economic downturns and improve its performance as 
an employment program for low-income parents. TANF cash assistance 
programs aim to serve two different functions: (1) to provide a safety 
net during times of family crises and when jobs are not available, and 
(2) to help low-income parents find and maintain employment. Under the 
program's current structure, these two functions often are at odds with 
each other, particularly when unemployment is rising and jobs are hard 
to find. In addition, the current performance standards discourage 
states from providing assistance to families most in need. When TANF is 
reauthorized next year, Congress should identify improved performance 
measures that encourage states both to provide a safety net for very 
poor families when they need it and to help them improve their long-
term employment outcomes. It should also encourage state innovation and 
provide states with additional funding to improve the employment 
prospects of the families least likely to succeed in the paid labor 
market on their own. Adequate child care funding should also be 
provided to increase parents' chances of achieving long-term success in 
the paid labor market.
     Make tax credits expansions included in ARRA permanent. 
ARRA expanded eligibility for the Earned Income Tax Credit (EITC), the 
low-income component of the Child Tax Credit (CTC) and the American 
Opportunity Tax Credit. The ARRA expansions made very low-income 
working families with nearly 3 million children eligible for the CTC 
for the first time, and families with 10 million additional children 
eligible for a larger CTC. The ARRA expansions also provide larger EITC 
payments to low-income families with three or more children and married 
families. ARRA also made it possible for low income families who do not 
earn enough to owe income taxes to qualify for up to $1,000 per year 
through the American Opportunity Tax Credit to help defray college 
tuition costs. These changes will expire at the end of 2010, if 
Congress does not pass a law implementing the presidents' proposal to 
make them permanent. We estimate that the EITC and CTC expansions have 
lifted more than 900,000 people, including 600,000 children out of 
poverty. If these changes are not made permanent, these individuals 
will fall back into poverty.
     Pass the Hunger Free Schools Act (H.R. 4148 and S. 1343). 
The number of children in poverty and struggling against hunger is 
increasing. The federal child nutrition programs have an important role 
to play in making sure that low-income children have access to 
nutritious food. The Hunger Free Schools Act would help ensure that 
poor children receive the free school meals for which they are eligible 
and that they are enrolled with much less paperwork. The bill would 
allow schools in very poor neighborhoods to provide free meals to all 
their students. Instead of spending time and resources sorting through 
applications from very poor children, these schools could focus on 
serving healthy meals to all students. Nationwide, an estimated 6,000 
schools (under the Senate version of the bill) to 12,000 schools (under 
the House version), serving roughly 3 to 6 million children, could 
qualify for this new option. Also, to help poor children receive free 
meals no matter where they attend school, the bill would require 
schools to use data already collected and scrubbed by Medicaid to 
enroll children for free meals automatically if their income is below 
133 of the poverty line. An estimated 3 million children would benefit 
(some of these children would benefit from the simplification of 
automatic enrollment, others would be enrolled for free meals for the 
first time). These proposals should be priorities for the 
reauthorization of the child nutrition programs because they would 
improve access to free meals and are well-targeted to the poorest 
children and to schools that serve very poor areas.

    Chairman Spratt. Thank you very much. Sue Berkowitz.

                   STATEMENT OF SUE BERKOWITZ

    Ms. Berkowitz. Thank you, Mr. Chairman and members of the 
committee. I appreciate the opportunity to speak to you today 
on the Recovery Act and how it is impacting the State of South 
Carolina, specifically to be talking about the unemployment 
insurance program.
    I am Sue Berkowitz with the South Carolina Appleseed Legal 
Justice Center and we provide advocacy on behalf of the low-
income community, specifically working on safety net programs, 
including SNAP, welfare, Medicaid, and also recently we have 
had the opportunity to work on unemployment insurance. I worked 
with the legislature recently as it attempted to undo a huge 
mistake that it made by failing to change certain state laws to 
us to take advantage of the generous programming that Congress 
had provided to the states for extended benefits. And, Mr. 
Chairman, I want to thank you and your staff for all you did to 
help us in recognizing the grave error that the State of South 
Carolina made and the fact that--which I found absolutely 
remarkable--that they came in for a special session to fix this 
to allow extended benefits for thousands of South Carolinians 
who otherwise would have lost their unemployment insurance 
benefits, which is something that just could not happen in our 
state, especially during these hard economic times.
    South Carolina is, like every other state in the Nation, 
experiencing incredible problems due to the recession. But I 
think our state, with an unemployment rate that is right now 
hovering at about 12.1 percent, is facing just slightly harder 
conditions than many other states. We have been double digit 
for most of the year and it is now predicted that starting next 
year we will probably be at around 13 percent unemployment. I 
cannot tell you what this does to families who are already in 
distress but also to middle class families who are now finding 
themselves faced with joblessness. During the past year, our 
need for our safety net programs has dramatically increased in 
the state.
    Unfortunately, at the same time, our state is facing a huge 
fiscal crisis. While the $1 billion that we have had to cut 
from our state budget probably seems like a small amount of 
money relatively speaking to Congress, when you think about a 
state that its budget was only 7 billion, it is almost one-
sixth of our budget that has been cut and I cannot tell you 
what it has done to dramatically hurt so many of our safety net 
programs.
    State agencies have seen cuts, like our Department of 
Social Services, of up to 25 percent of their state dollars. 
And this is going to ultimately impact the number of families 
that are being served.
    As Ms. Pavetti said, in South Carolina, unlike some other 
states, we have seen a dramatic increase in our TANF program. 
We have seen an 11,000 recipient increase since last year at 
this time. And that is after this program had been relatively 
flat in its growth for the past number of years. I think what 
is even more telling is that in the SNAP program, formally food 
stamps, we have had a participation rate increase of 100,000 
individuals in the last year. Our unemployment rate has 
increased 4 percentage points over the last year and 
unfortunately our Medicaid rolls have remained relatively flat 
while I don't think it is a lack of need and we are now looking 
into seeing what our agency and our current administration is 
doing to suppress rolls. We think that, while our number of 
uninsured are increasing, in fact this program should be seeing 
huge increases as well.
    What this shows is that the safety net programs are the 
lifeline to assist families in need. And that can't be even 
more so than during these times of recession. And that all 
these benefit programs provide critical help to our state's 
poorest and most vulnerable citizens and that these dramatic 
program increases show that the needs of our state, the needs 
of our citizens are being--have dramatically increased and that 
the funding that has been provided to the states has never been 
more needed.
    Of course, one of the most important provisions that was 
passed in ARRA are the UI provisions which have helped 
thousands of individuals in our state and over a million people 
in our country. In February, ARRA funded a comprehensive set of 
protections to help unemployed workers throughout the year, and 
I should say that a similar approach will be necessary in 2010 
as long-term unemployment continues at record levels. With ARRA 
we have expanded the Emergency Unemployment Compensation 
program, which was just extended in November to provide four 
tiers of benefits to workers who run out of the basic 26 weeks 
of assistance. And this can range from 34 to 53 weeks, 
depending on the level of unemployment in the state. And 
needless to say, in South Carolina, with our high unemployment, 
we are taking advantage of the maximum amount, full federal 
funding of the extended benefit program, which means another 13 
to 20 weeks of benefits, that normally would be paid 50 percent 
by the states now is paid 100 percent by the federal 
government. An increase of $25 per week to both state and 
federally funded UI benefits and nearly 9 million workers are 
now collecting either the state or federally funded benefits 
that are now qualifying for this additional benefit each week.
    ARRA also included the COBRA subsidy, 65 percent COBRA 
subsidy, which was to last for 9 months. This means that for 
individuals who are finding themselves unemployed and would 
otherwise find themselves uninsured are able to afford to keep 
their health care insurance. And this benefit has not only an 
economic benefit to the individuals. It has been a huge 
economic benefit to our state. South Carolina has really seen a 
huge increase--a huge benefit as a state from this money, 
unfortunately because of our high unemployment rate. $126 
million has been made available to families because of that $25 
a week benefit.
    And also from the EUC benefit are 327 million additional 
dollars. Our state unemployed numbers are growing not just in 
amount but in length of time they are staying unemployed. The 
extended benefit programs are particularly helpful to states 
with substantially higher unemployment rates but also longer 
durations of unemployment. Our recovery is slow and many 
unemployed workers are still unable to find assistance, and I 
should say that the calls that we received after the extension 
of the emergency benefit program to our office were tremendous. 
We received calls from individuals who had worked their entire 
lives but found themselves laid off. And one story that really 
resonated for me was from a woman from Charleston who called to 
thank us, to thank our office because she had read that we had 
been involved in working with the legislature to tell me she 
had done everything she had done to try to find a job but was 
still unemployed and it was partly because of her age. It was 
hard for her to find employment and she really felt that it was 
going to continue to be difficult in the environment that she 
was facing and that without this extended benefit, she and many 
other people who are in the same position would have found 
themselves without any way to support themselves and would be 
falling off a financial cliff.
    I should also say that the COBRA subsidy is critical. While 
we haven't had--had the uptake in the COBRA subsidy that we 
would like to see, we have seen double the number of people 
taking advantage of it in keeping their health insurance, and 
just the numbers show why that is important. While the average 
monthly benefit in South Carolina is about $1,060, the average 
COBRA benefit is about $1,090. The math shows that if you are 
on unemployment, you cannot keep your health insurance. This 
subsidy has allowed many people to keep their health insurance 
while facing unemployment, and I have also talked with 
individuals, including an interesting young man who never 
thought he would find himself in a position of being 
unemployed. He didn't know about the COBRA benefit initially 
but when he realized that it was available, has been able to 
keep his health insurance, not have to worry about the stresses 
of looking for a job while also being uninsured.
    And we receive many calls from individuals from around the 
state who are facing the problems of recession. We know that 
this $25 a week, while it may seem minimal, makes a huge 
difference to individuals. For many people in our country, 
about 800,000 people according to the numbers from the Center 
on Budget and Policy Priorities, we know it has kept them out 
of poverty.
    We also know that people on unemployment insurance are less 
likely to face food insecurity. The National Employment Law 
Project did a survey recently--well, last year--of unemployed 
individuals and many of them, the majority of them have stated 
that without unemployment benefits they would probably be faced 
with skipping meals, something that we know is not an option 
for any of them.
    So what I ask from you today is to consider the extension 
of the unemployment provisions of ARRA. While what has been 
done for the states has been remarkable and incredibly helpful, 
we are not out of the woods yet and our workers still depend on 
both the EUC, the money that is needed by the state for the EUC 
benefits, the extended benefits, the full federally funded 
extended benefits, as well as for those who are facing 
uninsurance insecurity because they will not have the COBRA 
benefit, and that needs to be done sooner rather than later.
    Our state is probably already sending out the notices to 
those who are in the extended benefit program and, as we know, 
states are working with antiquated computer systems and are 
under great stress now trying to keep up with all of the 
benefit programs and keeping up with the extensions. And in 
order to solve the problem of gaps for service for the 
individuals, we need Congress to act on this as soon as 
possible.
    I cannot thank you enough for what you have done for the 
states and the fiscal relief that you have provided to our 
state during this very difficult time, but more importantly to 
the individuals that we serve. The thousands of people who have 
been served by all of these programs are being able to keep 
their body and soul together because of the SNAP program, 
because of TANF, and because of UI. And as we field the calls 
from people who are facing losing their homes, keeping the 
lights on, trying to make sure that they can feed their 
families, we can direct them to these programs and we want to 
be able to continue to direct them to these programs but also 
recognize that our state that is also struggling and needs the 
fiscal relief.
    I thank you once again for the opportunity to speak to you 
about these important programs.
    [The prepared statement of Ms. Berkowitz follows:]

             Prepared Statement of Sue Berkowitz, Director,
                   SC Appleseed Legal Justice Center

    I want to thank Chairman Spratt and members of the House Budget 
Committee for the opportunity to speak with you today about the impact 
the recession and Recovery Act is having on social safety net programs; 
specifically unemployment insurance. I am Sue Berkowitz, director of 
the South Carolina Appleseed Legal Justice Center. SC Appleseed is a 
non-profit law office dedicated to advocacy for low-income people in 
South Carolina. Through my work with SC Appleseed I have been a key 
participant in formulating state welfare, Medicaid and SNAP (food 
stamp) policy for the citizens who use these services in our state.
    I recently had the opportunity to work with the South Carolina 
legislature as it enacted changes to our state UI laws to fully realize 
the benefits of the American Recovery and Reinvestment Act of 2009 
(ARRA). This change enabled thousands of unemployed individuals in 
South Carolina who were facing the expiration of their extended 
unemployment benefits to access these emergency benefits. I want to 
thank Chairman Spratt for your leadership to secure this needed benefit 
in the federal appropriation, but more importantly your office's rapid 
response that enabled us to correct the mistake made by our state when 
it failed to make needed changes to access these funds. Through your 
efforts we were able to save lifeline unemployment insurance benefits 
to those individuals facing the exhaustion of their UI. I am plesased 
to tell you that we have received numerous calls from grateful 
beneficiaries who were facing the exhaustion of their benefits. Without 
your involvement in this effort many unemployed South Carolinians would 
be facing a huge crisis today.
    South Carolina like every state is experiencing problems due to the 
recession and these problems are having a huge impact on our lower 
income residents. Since this economic downturn South Carolina has 
consistently ranked as experiencing one of the highest unemployment 
rates in the nation. The lastest unemployment figures demonstrates that 
over 12% of our population is unemployed, well above the national 
average, putting us at number four in the country. An economic summit 
was held at the University of South Carolina last week with a number of 
our state's leading economists predicting that our unemployment number 
could be over 13% by next year.
    During the past year as our numbers of unemployed has grown the 
need for our safety net programs has become even more important. While 
the demand for these services increase South Carolina is facing a huge 
fiscal crisis, cutting 1 billion dollars from our budget. While this 
may seem like a small number in many states, it represents over one 
sixth of our state budget. Safety net programs, TANF, SNAP/Food Stamps, 
TEFAP, Medicaid and unemployment insurance are often the only resource 
that will help individuals and families in poverty or near poverty 
maintain their ability to meet their basic needs. During this economic 
downturn we are seeing a growing number of South Carolinians turn to 
these programs with a dramatic increase in the participation of all of 
these benefits. Within the past twelve months the state Family 
Independence Program (TANF) roles have increased by more than11,000 
recipients. This progam had remained relatively flat over the years, 
indicating that the need by families has enlarged due to this recent 
recession. Even more telling SNAP (food stamp) participation has grown 
by 150,000 over this same time. All of this is happening while our 
state is cutting staff and absorbing more work with less resources. At 
the same time our unemployment rate has risen 4%. Just the last week 
1,500 new claims were reported due to new layoffs in manufacturing. 
Unfortunately, the Medicaid roles have remained relatively flat, 
despite the number of eligible children and families who are in need of 
this very important benefit. I am concerned this is due to our current 
state administration's efforts to suppress enrollment as a way to 
control the budget. Safety net programs are the lifeline that assist 
families meet their basic needs. They need to be strong during all 
economies, but are even more necessary during times of recession. All 
of these benefit programs provide critical help for our state's poorest 
and most vulnerable citizens. What all of these dramatic 
programaticeincreases demonstrate is that these safety net programs are 
working to catch those families and individuals before they fall 
between the cracks. Congress' response through ARRA has been crucial to 
make sure that all those in need can be served, especially during this 
difficult time.
    South Carolina Appleseed routinely repsonds to requests from 
individuals and families who are struggling to keep body and soul 
together due to limited resources. Because South Carolina has 
consistently ranked high in poverty and unemployment, SC Appleseed has 
always worked to provide our callers with information that will direct 
them to needed benefits. During this recession we have seen a dramatic 
rise in calls and emails from individuals who are facing financial ruin 
due to unemployment. Many of these families have never been faced with 
such a dramatic loss in income. Our program is working to save homes, 
keep lights on and ensure that there is food on the table for those 
finding themselves without employment. The foreclosure rate in South 
Carolina is high and SC Appleseed is working with the South Carolina 
Foreclosure Task Force to help save homes. We are training attorneys to 
represent consumers and working to achieve loan modifications. Free 
health clinics and community healthcare centers are overwhelmed with 
requests due to our huge number of uninsured. South Carolina's food 
banks and food pantry's are reporting a remarkable increase in 
participation, with many of the customers coming for help identifying 
themselves as former donors. One in four children in our state lives in 
a family receiving food stamps. The recession has hit our vulnerable 
citizens hard as well as creating additional families who are now in 
need of help. Our safety net programs help to ensure families maintain 
during these difficult times, and we must work to help all eligible 
families take advantage of the programs.
    An essential program helping these distressed families is the 
unemployment insurance provisions of ARRA. The success of this 
provision of ARRA has impacted thousands of South Carolininans and over 
one million unemployed workers in the United States. Unfortunately it 
sets to expire at the end of this month. This would be catestrophic to 
these individuals who are struggling to meet their basic needs. My 
office has received a number of calls from unemployed workers around 
the state who were facing the discontiuation of benefits prior to the 
recent change in our state law allowing the extension. These callers 
expressed gratitude for our small part in helping with the passage of 
the extension language, but they also expressed concerned as to what 
they will do if an additional funding extension is not granted.
    ARRA, enacted in February, funded a comprehensive set of 
protections to help unemployed workers throughout the year. A similar 
approach will be necessary in 2010 as long-term unemployment continues 
at record levels. Features of the 2009 ARRA included:
     The Emergency Unemployment Compensation (EUC) program, 
which was expanded in November to provide four tiers of benefits for 
workers who run out of their basic 26 weeks of state assistance 
(ranging from 34 weeks to a full 53 weeks of benefits for workers in 
states with unemployment rates over 8.5%).
     Full federal funding of the Extended Benefits (EB) 
program, which provides another 13 to 20 weeks of benefits that are 
normally paid for 50% by states.
     An increase of $25 per week in both state and federally 
funded UI benefits. Nearly nine million workers are now collecting 
either state or federally funded benefits that qualify for the $25 
weekly supplement.
     The 65% COBRA subsidy, which lasts nine months. Employer 
surveys show that the number of workers participating in the COBRA 
program has doubled since the subsidy took effect, although 
participation remains below 20% of all those eligible.
     The suspension of the federal income tax on an 
individual's the first $2,400 of unemployment benefits.
    ARRA funds have been a huge economic benefit to our state. For 
example, the additional $25.00 a week UI benefit increase has meant 
that an additional $126,314,637 has been made available to families 
dependent on UI benefits. In addition, unemployed South Carolina 
workers have received $327,865,566 from the EUC program. Our state's 
unemployed are not only growing in numbers, but in the length of time, 
they are staying unemployed. The extended benefit programs of ARRA are 
particularly helpful to those states with substantially higher 
unemployment rates. South Carolina's recovery is slow and many 
unemployed workers are still unable to find work making these UI 
extensions their only hope for survival. Without ARRA's unemployment 
provisions, our state would not have been able to maintain these 
additional weeks of UI benefits and many families would be falling off 
the financial cliff. As a high unemployment state, this program 
benefits both the individual families collecting UI and our economy as 
a whole.
    While we have not had a huge utilization uptake of the COBRA 
provision, for those in South Carolina who do make use of this benefit, 
it has had an enormous impact. The average monthly COBRA premium in our 
state is $1,090.00. With the average monthly UI benefit in South 
Carolina being $1,061.00 it is virtually impossible for an unemployed 
worker to maintain his or her insurance through COBRA without this 
subsidy. The average COBRA premium in South Carolina is 102% of the 
monthly benefit. I have had the opportunity to talk and counsel with 
individuals in our state who have benefited from this program and have 
attested to me they would currently be among South Carolina's uninsured 
without this assistance.
    The calls to SC Appleseed from distressed families have 
dramatically increased during the recession. We hear from those who are 
facing the dilemma of unemployment; unsure how to maintain their 
current bills, feed their family and save their home. Many of these 
households earned middle-class wages, and had never been forced to rely 
on any benefit or safety net program. A layoff in today's economy will 
often result in extreme economic hardship, including sending household 
incomes well below the poverty level. Unemployment benefits play a 
major role in preventing this catastrophic decline. According to a 
Congressional Budget Office study measuring the income effects of 
unemployment benefits on jobless workers collecting benefits in 2001 
(the last recession) and 2002, only 7 percent of unemployment 
recipients had family incomes below the official poverty level before 
losing their jobs. After job loss, nearly one-quarter (23 percent) of 
the families of long-term jobless workers collecting benefits fell into 
poverty as measured by the official poverty guidelines. However, 
without UI benefits, the poverty rate would have more than doubled, 
with one-half of the families ending up in poverty. The Center on 
Budget and Policy Priorities has provided estimates that the ARRA's 
unemployment insurance extension and $25 increase in weekly benefits 
checks have kept 800,000 people out of poverty. The importance of 
unemployment benefits for families of jobless workers is also reflected 
by food consumption of the unemployed. On this most basic indicator of 
family subsistence during tough times, there is no doubt that 
unemployment benefits help families avoid serious hardship. In 2008, 
The National Employment Law Project (NELP) conducted a national survey 
of the unemployed found that unemployed workers who did not receive UI 
benefits were twice as likely as those with benefits to be forced to 
skip meals in order to get by financially. Without UI, many families in 
our state would plunge into economic ruin; with UI, they are able to 
maintain a modest existence.
    Between January and March of next year, the number of people in the 
United States without federal jobless benefits is expected to swell to 
nearly three million workers if the ARRA is not reauthorized. These 
figures take into account the impact of the ARRA's December deadline on 
the extensions of unemployment benefits. The critical benefits provided 
to jobless workers by the ARRA are set to expire at the end of the 
year, which means that even with the latest 14 to 20 week extension 
enacted in November, 30,000 workers a day will be left without any 
jobless benefits in January. They do not include the number of workers 
who will no longer qualify for the ARRA's COBRA subsidy program when it 
expires in December. Any delay reauthorizing the ARRA will have 
devastating consequences not just for workers and the struggling 
communities hardest hit by the recession. By early December, state 
agencies that administer unemployment benefits will be forced to notify 
workers that the program will be shut down by the end of year, as 
required by federal law. If Congress does not reauthorize the programs 
as soon as possible, this ARRA deadline will create total chaos for the 
state agencies and workers facing an uncertain future.
    While these benefits assist the individual households that are 
faced with being unemployed, unemployment insurance is an enhancement 
to our state's economy. The federal funding appropriated to South 
Carolina helps families maintain housing, utilities, food and other 
necessities. These funds circulate directly in our economy having a 
multiplier effect by to helping to support businesses and workers and 
stimulating the economy. These dollars spent inside South Carolina 
lessen the ripple effect that long-term high unemployment brings to our 
local economy.
    I would urge that the ARRA's provisions for unemployed workers be 
extended another year, through to the end of 2010. Specifically, these 
include the current EUC program (providing 20-33 weeks of benefits), 
the $25 weekly increase in benefits, the suspension of federal income 
tax on the first $2400 of benefits collected in the year, and the 65% 
COBRA subsidy. With the unemployment rate continuing to rise and job 
losses mounting, the situation for workers will continue to deteriorate 
even as the recovery takes hold on other fronts. Under these 
circumstances, it is essential that we provide those who are more 
recently unemployed with no less support than those who lost their jobs 
earlier in the recession.
    In addition, I would urge Congress to simplify the two federal 
extension programs now on the books, the Emergency Unemployment 
Compensation and the Extended Benefits programs, that now impose major 
burdens on the states. Instead of operating these two programs side by 
side, Congress should temporarily fold EB into the EUC program, not 
unlike the program that was in place in 1990s. With a merger of these 
programs, state and local governments would no longer have to pay 
dollar for dollar all the costs of the EB program for laid-off 
government employees, an existing requirement that today imposes a 
steep and onerous burden on state and local finances when they can 
least afford it. In addition, state UI agencies will no longer have to 
spend precious time and resources implementing the onerous tracking 
requirements that govern EB claims.
    Millions of Americans and their families are facing personal crisis 
and depending on our leaders to continue to provide the help they need 
during this time of economic crisis. While helping these individuals we 
are ensuring that our local economies continue to recover and begin to 
prosper. While there is a fiscal price tag that goes with this help, 
our country cannot afford not to extend the unemployment provisions of 
ARRA. Without the safety net programs that are now in place, many 
families would be in even greater distress unable to meet their basic 
needs. I thank you for seeing the need to make sure these programs were 
funded in ARRA as I do not know how they could cope without this help.
    These difficult times are not over, and Congress needs to ensure 
these programs continue to be available to help those who are 
struggling due to unemployment and the recession. On behalf of SC 
Appleseed and the low-income community we represent, we are asking 
Congress to enact the needed extension of unemployment benefits for 
workers, to remove the unnecessary burdens on states and workers that 
the extended benefits program is causing. These continuations will help 
our unemployed and assist our state economy as it begins its recovery.

    Chairman Spratt. Thank you, Sue, very much. And now Ms. 
Delessio.

                   STATEMENT OF PAT DELESSIO

    Ms. Delessio. Good morning, Chairman Spratt, Congresswoman 
Moore, and members of the committee. Thank you for the 
opportunity to speak here today.
    I have to admit that when I was first contacted by 
Congresswoman Moore's office I was a bit hesitant. I was 
certainly honored by it. I said don't you really want someone 
who knows a little bit more about economics or funding streams 
or statistics, and they convinced me that they didn't. And so I 
am here today to talk for the men and women who come into our 
office at Legal Action.
    We are the legal services office, a federally funded legal 
services office serving southeastern Wisconsin, and daily we 
see women and men in desperate straits. They are not a uniform 
group of people. They are single parents, the chronically 
underemployed and unemployed. But they are also--and these 
numbers are increasing--two-parent families, people who have 
recently lost their jobs and increasingly calling from outside 
the City of Milwaukee from our suburbs and our surrounding 
counties. They are as varied as the people of Wisconsin, white, 
black, Hispanic, Hmong, Russian, and increasingly, Somali 
refugees. And they are from many different places and different 
backgrounds. But they are all seeking one thing, and that is 
the ability to live in dignity, to pay for their rent, to 
provide for their children and to live without the uncertainty 
and fear that poverty brings.
    I would like to give you some examples, as I did in my 
written testimony, of some of the people we see. One is a 
single father recently who contacted us, who in the best of 
times struggles to care and make a home for himself and his 
cognitively disabled son, whose unemployment is about to run 
out, and who has been unable to find a job.
    Another is a two-parent family living in one of our 
wealthiest counties, Waukesha, to the west of Milwaukee, who 
both have lost their jobs and are living on unemployment, are 
trying to meet their mortgage payment, and for the first time 
in their lives are receiving food stamp benefits.
    Another is a single mother also living in the suburbs, 
carrying for a disabled son, as well having recently lost her 
job after losing her husband suddenly, and is suddenly facing 
being plunged into poverty and facing a life of uncertainty.
    Another is a client that I have known for quite some years. 
She is a 40-year-old mother employed at a local hotel who has 
worked on and off most of her life and who has seen her hours 
at the hotel because of the economy gradually cut until she 
could no longer afford to pay her rent and she has exhausted 
her TANF time limits.
    Another is a young mother who--we see a lot of young 
mothers--who spent most of her life going from one foster home 
to another, who lacks a high school diploma and who has been 
unable to receive the education or training she needs to move 
into long-term employment.
    The final example I would like to give is an 84-year-old 
mother who contacts me every time her son, who is on medical 
assistance, needs help. He is bedridden, an adult who she has 
cared for most of her life. And she calls us because she is 
unable to get any response from her county agency. And I think 
she is a good example of what we have seen as the counties in 
Wisconsin, we have a county-state system. The counties 
administer our safety net programs. As they have become 
increasingly burdened with ever increasing caseloads, it is 
difficult to reach them. And what we have noticed is that we 
are increasingly receiving calls from the disabled because of 
course their means of access to county workers are much more 
limited. Many of them cannot leave their home, so they are 
dependent on reaching workers by phone, which has become in 
many areas impossible.
    These people represent the numbers that we see, people who 
are struggling to pay their rent, who are skipping meals so 
their children can eat, who can't buy their prescription 
medicine because they don't have health insurance or because 
their medical assistance benefits have not been processed 
timely, and who don't have a job anymore to get up to go to in 
the morning.
    And just as we have seen the spread of poverty increase 
throughout the state, we are also seeing that the depth of 
poverty is much worse. In recent years, and increasingly so, we 
have been seeing families without any income at all. It is just 
hard to imagine that you have no income stream. And they live 
in that way for months. These are people living doubled up, 
tripled up; all our shelters are full on any given day. They 
move from one family member to another trying not to wear out 
their welcome.
    Behind these people of course there are the numbers and 
poverty in Wisconsin. We have been one of the fortunate states 
until recently. It was long stable at about 8.8 percent of our 
population. It has now grown to 12.6 percent. In Milwaukee 
County, long mired in financial distress, 17.3 percent of our 
people live in poverty, with some areas of the city reaching a 
staggering 40 percent. In a large swath of Northwestern 
Wisconsin, a largely rural area, poverty has also been 
historically high and now exceeds 14 percent.
    And for Wisconsin's children, like children elsewhere, the 
poverty rate has grown and it is 1 out of 7 children. In 
Milwaukee County, it is 1 out of 4. And the severity of people 
living in extreme poverty for children, that has also grown in 
Wisconsin from about 3 percent to 7 percent.
    The response to the increase can be seen like in other 
states in the increase in our SNAP program or foods stamps. The 
Institute for Research of Poverty in Madison, Wisconsin, out of 
the university, indicates that from March 2007 to March 2009, 
our SNAP participation increased 37 percent. And this increase 
was not uniform. Milwaukee County has long accounted for about 
half of our food stamps population. It is now one-third. So 
even though the increase in Milwaukee County was about 33 
percent, in other counties the increase was even higher, 
exceeding 40 and in some cases 50 percent. And now in 
Wisconsin, about 10 percent of our 5.6 million people rely on 
foods stamp to feed themselves and their children.
    And nearly 1 in 5 of Wisconsinites receive health care 
through our medical assistance program. I am proud to say that 
we have a very comprehensive medical assistance program 
reaching out to all children in the state who are not covered 
by private insurance.
    In contrast to our SNAP program, as you have heard for 
other states, Wisconsin is similar in that our TANF program has 
not responded to the recession, or responded only modestly at 
best. Like every other state after the institution of TANF, our 
Wisconsin Works, or the W-2 program as we call it, caseloads 
dropped dramatically. They rose briefly to about 10 to 12,000 
in the early part of 2000, between 2000 and 2004. But by 
December of 2006, the number on cash--and we also measure 
people who receive noncash benefits. I am going to give you the 
people receiving cash benefits--was about 6,349. That number 
has increased to only about 8,628 as of October of 2009. And 
this is far below the increase that we saw in early 2000 when 
the recession was much milder.
    When you compare this to our foods stamp population, out of 
the 269,000 families receiving foods stamps, about half of 
those or slightly more than half are families with children. In 
a study by the Department of Children and Families in November 
of 2008, they identified 12,608 families receiving foods stamps 
who have zero income, no income at all. These are families with 
children. Sixty-four percent of these zero families, as they 
term them, live outside the City of Milwaukee. And that doesn't 
even measure the number of families living below 115 percent of 
poverty, which is our TANF eligibility limit. It doesn't 
measure people who move in and out of poverty. It just measures 
on that particular day when they identified families those who 
had no income. And thinking long term, the low participation 
rate is only one of the program failures of our TANF program. 
Even in the best of economic times, our TANF program, W-2, has 
really failed to show any measurable improvement in the well-
being of our participants and children. Yes, it has decreased 
caseloads greatly in Wisconsin. But it has been done it at the 
cost and expense of increasing poverty within Milwaukee and the 
rest of Wisconsin.
    It is our experience based on our extensive representation 
of families--and this includes reviewing their records 
maintained by the TANF office--that many of them exhaust their 
precious time on W-2 without any increase in their skills or 
ability to obtain and maintain employment. After leaving W-2, 
many of the families we see remain mired in the same cycle of 
moving from one low-wage job to another without any opportunity 
for anything better. And our experience, which is extensive, is 
supported by studies done by the Legislative Audit Bureau as 
well as the Chapin Hall Center at the University of Chicago. 
The Legislative Audit Bureau found that 41 percent of the W-2 
participants who obtained jobs, obtained temporary agency jobs. 
So these are temporary staffing jobs which women can really 
obtain on their own. They don't really need the W-2 agency to 
find those jobs for them. And in fact in most cases, they did 
obtain them on their own. And these are the same types of jobs 
that women receiving AFDC in the past always were able to 
obtain. The other percentage, large percentage, 29 percent, 
were employed in retail services and fast food. Again, these 
are traditionally the types of jobs women are able to find on 
their own which don't offer future and often don't offer a 
guaranteed 40 hours of work a week.
    The Chapin Hall study, which followed W-2 applicants, a 
group in Milwaukee County only, from 1998 through 2003, showed 
only an increase of about 4 to $500 in their earned income from 
1999 to 2003. They also found that a quarter of the study 
group--and these were people who had applied for TANF. Some of 
them had gone on for periods of time. Some of them had never 
received W-2, but they were diverted into jobs. A quarter of 
the study group had no income, employment or W-2 payments when 
they were looked at in 2003. But in addition, nearly 1 out of 4 
of the study group noted that they had been subject to a 
material hardship in the prior year, defined as a lack of money 
to pay rent, bills or utility bills, becoming homeless or 
having to double up with friends and relatives.
    At the same time as our TANF caseloads plummeted, childhood 
poverty in Wisconsin has increased. As I noted before, extreme 
poverty defined as families living with incomes less than 50 
percent of the poverty level rose from 3 to 7 percent.
    Now, as the previous speakers have indicated, like other 
states, Wisconsin would be in even worse shape if we had not 
received funding through the Recovery Act. In Wisconsin, foods 
stamp benefit spending has grown from 37 million in August 2008 
to 70 million in September of 2009, bringing much needed 
revenue into our state and of course helping the families that 
receive those benefits to provide nutritious food for them and 
their children. The increase in our state's medical 
reimbursement rate, which runs from 60 to roughly 70 percent 
and state officials have indicated that brought $1.2 billion in 
enhanced federal match in Wisconsin, has also provided 
additional revenue and has allowed us to avoid any cutbacks in 
our medical assistance program which now extends to all 
children in the state without access to other coverage. And 
even though state Department health and services was able to 
provide $4.2 million in Recovery Act funds to our county 
agencies who as I said administer income maintenance programs, 
these counties, they have had furloughs, they have had 
cutbacks, are struggling desperately to meet the ever 
increasing demands on our services. And again, we are receiving 
many more contacts in our office from people who cannot receive 
services from their counties and these are counties outside of 
Milwaukee as well as Milwaukee because of the cutbacks and the 
demand on workers' times.
    So it is really imperative that the funding of the Recovery 
Act be extended in order to prevent further cutbacks in 
benefits and further delays in services. We also must address 
the plight of TANF eligible families and the unemployed. And I 
wanted to talk a little bit about the area of Milwaukee and 
southeastern Wisconsin----
    Chairman Spratt. Ms. Delessio, could I ask you to sort of--
taper it to an end. I am not trying to rush you to finish. But 
if you could bring it to a conclusion, we will come back to you 
with some questions.
    Ms. Delessio. In fact I am almost done. I wanted to talk to 
you about the jobless rate in Milwaukee. Because after this is 
all over, Milwaukee is still going to be in the state that they 
are currently. A recently released report from the Center for 
Economic Development at the University of Wisconsin said that 
at least since 2000, the unemployment rate for black males in 
the City of Milwaukee has ranged from 46 percent to 51 percent. 
That is half of our population of black men. So long-term and 
short-term, what we need is, I think the biggest thing and I 
listed a number of things that I won't repeat in my testimony, 
but I think the most important thing is to look at TANF and to 
see how we can redesign the program or create a parallel 
program to address the needs of the unemployed and families 
especially during the times of economic crisis.
    In closing, I would just like to relay what a client said 
to me recently when she said all I really want is a job that 
guarantees me 40 hours a week so I can keep a roof over my 
family's head and feed my children. And I hope that when you 
consider extending funding and when you look at reauthorization 
of TANF, that you think of her and what she desires. Thank you 
very much.
    [The prepared statement of Ms. Delessio follows:]

           Prepared Statement of Patricia DeLessio, Attorney,
                       Legal Action of Wisconsin

    Mr. Chairman, Members of the Committee, thank you for the 
opportunity to testify on the effect of the recession and the Recovery 
Act on safety net programs and families in Wisconsin.
    Legal Action of Wisconsin is the legal services office serving 39 
of Wisconsin's 72 counties. In our Milwaukee office, where I have 
practiced for over 20 years, the majority of the individuals and 
families seeking our assistance have traditionally been single parents, 
the disabled, and the elderly residing within the city of Milwaukee. 
Some are employed, many more are not.
    Since the recession we have noted a gradual change in those seeking 
our help. Our contacts are increasingly from persons who were recently 
employed, two parent families in which both parents have lost jobs, 
individuals who have exhausted their unemployment benefits, and 
individuals living in the city's suburbs and surrounding counties. In 
addition, we have noted that many more of our clients live in extreme 
poverty, without any income stream at all. Many are homeless, living in 
shelters, doubled or tripled-up with relatives or friends, moving from 
place to place, or on the streets, and they have lived that way for 
months. Others live without any heat and/or electricity in their homes. 
Among them are:
     the single father caring for a cognitively disabled son 
whose unemployment benefits are about to run out and who has been 
unable to find a job,
     the two parent family residing in one of Wisconsin's 
wealthiest counties who have both lost their jobs and are desperately 
trying to pay their mortgage and survive on unemployment benefits and 
food stamps,
     the single mother living in the suburbs caring for a son 
with cerebral palsy who recently lost her job and whose husband died 
suddenly leaving them without health insurance,
     the 40 year old mother who was employed at a local hotel 
who has seen her hours gradually cut until she can no longer pay her 
rent and who has exhausted her TANF time limits,
     the 21 year old mother of two who spent most of her 
childhood moving from one foster home to another, who lacks a high 
school diploma, and who has been unable to receive any help with 
education or training to move beyond the of cycle low-wage temporary 
employment she is caught in, and
     the 84 year old mother caring for her disabled adult son 
who lost his medical coverage and his home health care services because 
his mother was unable to reach a county worker to complete a medical 
review due to the increased caseload and demands on workers' time.
    The recession, as both our experience and recent numbers tell us, 
has both widened and deepened the reach of poverty in Wisconsin.
    For many years the official poverty level in Wisconsin, with a 
population of 5.6 million people, was relatively stable at 
approximately 8.8 percent. In April 2009 the University of Wisconsin's 
Institute for Research on Poverty, using data from the 2007 census, 
found that the poverty rate had increased to nearly 11 percent. 
Recently released numbers from the University of Wisconsin indicate 
that the rate has climbed further, reaching 12.6 percent of the state's 
population.
    The increase in poverty is reflected in a doubling of Wisconsin's 
unemployment rate to 9.4 percent between March 2007 and March 2009 and 
a sharp increase in the use of food stamps or SNAP benefits. The 
Institute for Research on Poverty's report found a 37 percent increase 
in food stamp use for the above period. Statistics released by the 
state's
    Department of Health Services show that as of September 2009, 10 
percent of Wisconsin's population now depends on food stamps to 
survive. In addition, nearly one of out of every five residents 
receives health care through our state's Medical Assistance program.
    Poverty in Wisconsin, as in most states, is not evenly distributed. 
In Milwaukee County the poverty rate, based on 2007 census figures as 
reported by the Institute for Research on Poverty, is 17.3 percent, 
with some areas of the city of Milwaukee reaching a staggering 40 
percent. For rural residents in a ten county area of northwestern 
Wisconsin the rate exceeds 14 percent. And children in Wisconsin, like 
children in the rest of the nation, fare worse. One out of every seven 
children, or 14 percent, live in families below the poverty level. In 
Milwaukee County the number climbs to 25 percent. In addition, more 
than half the children in Milwaukee County reside in families with 
income below 200 percent of poverty.
    The increase in the use of SNAP benefits reflects these regional 
differences and also highlights the spread of poverty throughout the 
state. Historically Milwaukee County represented approximately half of 
the state's food stamp caseload. While use in Milwaukee County remains 
high with 20 percent of its residents relying on benefits, the recent 
33 percentage increase in Milwaukee is less than the increase in other 
counties. In a number of counties SNAP participation has increased more 
than 40 percent and, in some areas, more than 50 percent. Milwaukee 
County now represents one-third of the state's growing caseload.
    While the state's SNAP usage has grown dramatically our TANF 
program, known as Wisconsin Works or W-2, has failed to respond to the 
current recession. Since the end of AFDC the number of families 
receiving cash assistance has dropped dramatically. In August 1998 that 
number was 10, 383. From 2000 through 2004, as a result of the 
recession at that time, the caseload grew by approximately 2000-3000 
cases. After the state reinforced up-front job search and other 
requirements that number dropped to 6, 349 by December 2006. As of 
October 2009 the number has increased only modestly to 8,628 families, 
below the increases of the early 2000s. 1
---------------------------------------------------------------------------
    \1\ The above numbers are taken from regularly issued reports by 
Wisconsin's Department of Health Services and the Department of 
Children and Families, 1999 and 2005 audits of the W-2 program by the 
state's Legislative Audit Bureau and a series of 2006 reports issued by 
the Wisconsin Council on Children and Families entitled collectively as 
TANF turns 10.
---------------------------------------------------------------------------
    In contrast to our W-2 population, as of September 2009 there were 
269, 383 households receiving food stamps in Wisconsin, slightly more 
than half of these households included minor children. In a report 
entitled the `take-up' study the state Department of Children and 
Families found that in November 2008, before the recession worsened, 
there were 12, 608 families receiving food stamps with zero income, all 
of them potentially eligible for W-2. 2 It is noteworthy 
that 64 percent of these zero income families resided in counties other 
than Milwaukee.
---------------------------------------------------------------------------
    \2\ This number of families identified as `zero income' is the 
number on a particular day and does not capture those families cycling 
in and out of employment or those who earn less than 115 percent of 
poverty, the eligibility limit for W-2.
---------------------------------------------------------------------------
    The low participation numbers are only part of the program's 
failures. Even in the best of economic times, the W-2 program has 
failed to demonstrate any measurable improvement in the well-being of 
its participants and their children. It has been our experience, based 
on representation of W-2 families, that many exhaust precious months on 
W-2 without any increase in their skills or ability to both obtain and 
maintain full-time employment. After leaving W-2 many parents remain 
mired in the same cycle of low-wage employment they were in before 
without any opportunity for long-term employment.
    A 2005 study by the state's Legislative Audit Bureau found that 
41.8 percent of W-2 participants who obtained jobs were employed by 
temporary staffing agencies and 29 percent were employed in retail 
services, fast food and other eating establishments. Historically these 
are the same jobs women receiving AFDC in the past secured on their 
own. In a series of 2006 reports issued by the University of Chicago's 
Chapin Hall's Center for Children, it was found that W-2 applicants in 
Milwaukee County who later obtained employment experienced only a 
slight increase in median income from $7,139 in 1998 to $7,425 in 2003. 
The Chapin Hall study, which followed a group of Milwaukee families 
from their W-2 application in 1999 through the end of 2003, also found 
that a quarter of the study group had no income, employment or W-2 
payments when earnings were examined in late 2003. In addition, nearly 
one out of four study group participants reported at least one material 
hardship in the prior year, defined as the lack of money to pay rent or 
essential bills, becoming homeless or having to double-up, and/or 
losing utility services.
    It should also be noted that at the same time that our TANF 
caseloads plummeted childhood poverty in Wisconsin increased. According 
to an August 2006 report released by the Wisconsin Council on Children 
and Families, the percentage of children in poverty rose from 12 to 14 
percent between 2000 and 2004 and the number of children living in 
extreme poverty rose from 3 to 7 percent. Extreme poverty is defined as 
families with incomes less than 50 percent of the poverty level. These 
numbers are consistent with what we have seen over the last ten years.
    The downward spiral Wisconsin and other states have experienced as 
a result of the current recession would be significantly worse if not 
for the Recovery Act. In Wisconsin, food stamp benefit spending has 
grown from 37 million in August 2008 to 70 million in September 2009 
bringing much needed revenue into our state. The increase in the 
state's Medicaid reimbursement rate from 60% to roughly 70% (1.2 
billion in enhanced federal match) has also provided additional revenue 
and allowed Wisconsin to maintain its comprehensive health care program 
that extends to all children in the state without access to other 
coverage. While the State Department of Health Service has been able to 
provide 4.2 million in Recovery Act funds to county income maintenance 
agencies, these agencies are struggling to meet the ever increasing 
demands for services and families throughout the state are experiencing 
delays in receiving needed assistance. It is imperative that the 
funding of the Recovery Act be extended in order to prevent cut backs 
in benefits and further delays in service.
    Specific efforts must also be made to address the plight of TANF 
eligible families and the unemployed. A recent study released by the 
Employment and Training Institute at the University of Wisconsin-
Milwaukee reported that for the seven counties of southeastern 
Wisconsin, including Milwaukee, job openings were down by 16,100 from 
May 2006. The report finds that the job gap in the region is 13 jobs 
seekers for every full time job opening. In the inner city of Milwaukee 
the job gap is 25 to 1. In addition, the Employment and Training 
Institute reports that `the labor market has nearly dried up for 
unskilled workers lacking a high school diploma and occupation specific 
experience.' 3 The report authors found that in May 2009 
there were only an estimated 500 job openings for unskilled workers 
compared to 6548 in May 2006.
---------------------------------------------------------------------------
    \3\ This data is taken from the Employment and Training Institute's 
survey of job openings in the seven counties of southeastern Wisconsin 
conducted during the week of May 29, 2009.
---------------------------------------------------------------------------
    Compounding the above numbers is the long term jobless rate for 
African-American men living in the city of Milwaukee. Research 
conducted by the Center for Economic Development at the University of 
Wisconsin--Milwaukee found that since at least 2000 the number of 
unemployed black men residing in the city has ranged from 46.8 percent 
of the population to 51.1 percent. These numbers underscore the fact 
that cities such as Milwaukee which have lost their traditional 
manufacturing base were already in dire straits long before the current 
recession.
    Recently a client said to me `all I want is a job that guarantees 
me 40 hours a week so I can keep a roof over my family's head and feed 
my children.' To help this mother and the millions of other workers and 
parents like her immediate and long-term solutions must be considered, 
including:
     extension of federally funded unemployment benefits beyond 
December 2009 to assist workers who have or will exhaust their 
benefits,
     continuation of funds to states for administration of 
safety net programs,
     creation of subsidized or transitional employment,
     expansion of youth employment programs with incentives 
that encourage states to make such programs available to young 
custodial and non-custodial TANF eligible parents,
     extension of the time limit for claiming TANF emergency 
contingency funds and incentives to states such as Wisconsin that have 
not yet submitted a request for funds,
     incentives that encourage states to provide assistance to 
TANF eligible families, especially during periods of economic 
recession, and to develop integrated employment, training and work 
programs that will lead to long-term employment, and
     maintenance of funding for homeless prevention programs 
and increased funding for subsidized housing.

    Chairman Spratt. Thank you very much.
    Dr. Haskins.

                    STATEMENT OF RON HASKINS

    Mr. Haskins. Mr. Chairman, members of the committee, thanks 
for inviting me. I consider it a great honor to be asked to 
testify before this committee. I am going to focus on only one 
issue, and that is the role of work in American social policy 
and more specifically the impact of the welfare reforms of 1996 
and the Temporary Assistance for Needy Families program, called 
TANF, on work and American social policy.
    A little background: for at least 2 or 3 decades before we 
passed the welfare reform law of 1996, Congress had enacted a 
number of provisions in the old Aid to Families With Dependent 
Children program, which was the forerunner of TANF, and a major 
cash assistance program for welfare to try to encourage work. 
They were all a failure. And there are various theories about 
why this might be the case, but one of those theories was put 
in for us in 1996 and that was that we need to have strong work 
requirements, they need to be backed up by sanctions, including 
losing benefits if people did not meet the work requirements, 
as well as sanctions on states. This is a little known fact 
about welfare reform. The states were also sanctioned--the 
federal government withheld money if they didn't meet their 
work requirements. And I want you to know that the states 
played a very big role--a bigger role. I was on staff here for 
15 years. And states played more of a role in drafting this 
legislation than any other legislation I know about. So the 
states were culprits, if you want to think of it that way.
    Let me first show what happened as a result of welfare 
reform, especially in the 1990s. If you look at a second chart 
here--I guess this thing isn't going to work on that screen--
but the second chart shows that the welfare rolls fell 
dramatically. Nothing even close to this had ever happened 
before. The welfare rolls virtually never fell. They just kept 
going up on AFDC. There were a few years that they declined a 
little bit; the most ever was 2 percent. And they fell by half 
and then eventually reached 60 percent. So it was 
unprecedented.
    Secondly--no, no. Go back to the other chart. Look at the 
top chart. This is a crucial point. This is the income of all 
female headed families--they are the most likely to be on 
welfare--in the bottom 40 percent of the distribution. So 
roughly speaking, all female headed families, earning under 
$20,000, many of which were eligible for welfare and here is 
what happened to their income. The red line graph is their 
earnings, plus the earned income tax credit. And as you can 
see, that went up very substantially. It has decayed a little 
bit starting with the recession of 1980 and it is still going 
down a little bit. And the blue graph is their income from 
welfare, a collection of welfare programs, not just cash 
welfare, but a collection of welfare programs.
    So you can see welfare is going down, earnings plus earned 
income tax credit is going up, and families at the maximum were 
25 percent better off in income. Now, this would not apply to 
every state, but these are national data from the Census 
Bureau. So welfare definitely increased earnings which in turn 
increased income.
    And then if you look at the last chart down there, it shows 
what happened to poverty. And as you can see, poverty declined 
throughout this period up until 2000. It declined for both kids 
and female headed families. That is a crucial group to analyze 
welfare reform. And it also declined substantially for all 
kinds of children, but especially black children. Both poverty 
among black children and poverty among children in female 
headed families reached the lowest level ever. And even now 
after 2008, when we have had the recession of 2001 plus the 
recession of 2000--that began in December of 2007, poverty is 
still lower than it was before welfare reform. And as the top 
chart shows, work played a huge part in that. So I think it is 
safe to say--and maybe some of you will want to argue about 
this a little bit--that welfare reform was quite a success.
    There are some weak points. I mentioned some of those in my 
testimony. There is a lot of work that we could do. There is a 
group at the bottom that is worse off. There is no question 
about that. We haven't paid enough attention to them. Donna 
Pavetti is probably the country's leading expert on states that 
have tried to address this problem of the mothers that are 
really down and out. And also a problem that we already knew 
about that has turned out to be true is Horatio Alger does not 
apply to moms who leave welfare. They leave it in the old days 
$8.50 an hour and you come back 2 years later and they are 
making $9.00, you come back 2 years later and they are making 
$9.25. There is not a nice progression. We should be able to do 
something about that, but so far after spending billions of 
dollars we haven't figured out how to do it.
    So there are some problems. I am not whitewashing welfare 
reform. But generally, it has been a success and it established 
a principle that everybody has to face. And that is as long as 
people are only on welfare they will never escape poverty. If 
we have a welfare system that does not encourage work, we will 
have a substantial number of people who will never escape 
poverty. We do not give enough in foods stamp and cash benefits 
for people to escape poverty.
    So now we come to another challenge, which is the 
recession. The recession of 2000 and 2001 was not very deep. It 
didn't have that much of an impact on unemployment. It had a 
lot more impact on males than it did females. So the poverty 
went up a little bit, but child poverty still stayed quite low 
and the percentage of women who were working, and especially 
low-income women, stayed quite high, much higher than before 
welfare reform. But now it is much more serious. Many more 
people are losing their jobs. We don't know the full impact of 
it yet because we don't have good data for 2009. And I think 
that is going to change substantially some of the things I have 
shown you there.
    So I think the first thing that we should say, both sides 
of the aisle, is this is a problem, this is a problem and we 
need to figure out what we should do about it.
    So the essence now of TANF, like many other social 
programs, is that they are both friendly to work--and TANF is, 
I would even say, demanding, and programs like the EITC and 
food stamps are friendly to work. And, taken together, I call 
this the work support system.
    You have strong work requirements, but you also have 
programs that help people when they go into the economy because 
they cannot earn enough, many of them. They earn $12,000 to 
$14,000 a year. That is not enough to support a family. So we 
have the earned income tax credit, we have food stamps, we have 
Medicaid.
    Congress, in its wisdom, substantially modified all those 
programs, starting in the mid-1980s, and they are much 
friendlier to work now. So it is not unusual for someone 
earning $12,000 or $13,000 to have a package of benefits that 
is $25,000 to $30,000, but they have to work to do it. So we 
want to emphasize work, we want to retain the emphasis on work 
and the work support system.
    But, secondly, it has to also be a safety net. I think we 
are in agreement on that, and we should be frank about this. 
And the evidence now, if you look at the next chart, is that it 
is not a very good safety net.
    You can see the substantial increase in unemployment. And 
unemployment insurance, if you look at the graphs for 
unemployment insurance, look at a graph for food stamps--this 
is a point that previous witnesses have made--they did exactly 
what a safety net program should do. If things decay and 
unemployment goes up, then benefits should go up, more people 
should qualify for benefits.
    Look at the bottom line. That is TANF. There is hardly any 
response through 2008. There is apparently a lot more 
responsiveness now. I have given evidence of that in my 
testimony. But I think it is still weak. We need to know a lot 
more about how this has responded. But, on the first blush, it 
is a big problem.
    So why is it that TANF has such a different pattern than 
these other programs? LaDonna has already given some very good 
reasons. I do think the fact that states--it became almost a 
badge of honor that--I often heard governors talk about this, 
you know, ``My caseload is down 15 percent.'' ``Well, mine is 
down 20 percent.'' It got to be almost a number-one 
qualification of having a good TANF program was reducing the 
rolls. And that is important, but a lot of other factors are 
important, as I have shown you here.
    And so the states were so much in the habit of reducing the 
rolls that they did not respond very quickly. So that is a big 
issue. We need to figure out why this happened.
    Now, LaDonna also has given away my main point, which is: I 
think that this committee and the Ways and Means Committee and 
the Education Committees in both houses and the Finance 
Committee in the Senate should focus on this. Next year, we are 
supposed to reauthorize welfare reform. It provides a perfect 
occasion to look specifically at many of the problems I have 
mentioned but especially this problem, because TANF appears not 
to function as a safety net.
    And I want to draw one thing to your attention that is 
extremely important. And that is, there was a recent editorial 
in the Post that some of you may have seen that charged that 
the people who wrote the 1996 welfare reform bill were cavalier 
or disregarded low-income families and so forth. It was signed 
by a Democratic President. Half the Democrats in the House and 
the Senate voted for the bill. It was a bigger bipartisan vote 
on that legislation than on Medicare and Medicaid in 1965. So 
we are all in this together, so to speak.
    It is a false charge that people weren't worried about 
that. There are four provisions in the bill that were intended 
to make it a safety net and to respond when people were 
unemployed. The most important one was called the contingency 
fund that had $2 billion in it. It was never used through 2000. 
It was hardly used in the recession of 2001. Now it is about to 
run out of money, according to the CBO, because states are 
really using that money. There were other provisions in there, 
as well.
    So that is the place to begin. Why did it take so long for 
those to work? And now, in addition, we put a new provision in, 
which you did in ARRA, which was $5 billion for, in effect, an 
emergency contingency fund, and states are using that money as 
well. So that is where to begin. Why aren't those programs 
working better? Why did it take the states so long to take 
advantage of them?
    I think this is a big challenge. And I want to--my last 
comment is, I want to call to your attention--and, please, if 
you don't believe this, ask me questions--as long as people are 
only on welfare, they and their children will never escape 
poverty for working-aged families. They cannot escape poverty, 
by definition, unless they cheat and don't report their income.
    So we have to have a system that helps people get jobs. And 
they are going to be low-income jobs. Most of them are going to 
be low-income jobs. They are going to be flipping hamburgers, 
to use the old phrase. And we need a government system that 
supports them while they work. And we have constructed that. So 
the work part of this is really working; now we need to figure 
out why it doesn't work better during recessions.
    Thank you.
    [The prepared statement of Ron Haskins follows:]

Prepared Statement of Ron Haskins, Co-Director, Center on Children and 
Families, the Brookings Institution; Senior Consultant, Annie E. Casey 
                               Foundation

    My goal in this testimony is to clarify one of the most important 
issues in American social policy. This issue, which has been evolving 
since passage of the Social Security Act in 1935, has been brought to 
the forefront by the recession that now plagues us. The issue is who 
should be expected to work and how far should social policy go in 
demanding work.
    The elderly, the disabled, and children are the easiest to deal 
with. Hardly anyone expects members of these large demographic groups 
to work, although even here there are important issues of definition. 
The definition of the elderly for the purposes of Social Security is 
being gradually increased from 65 to 67 as a result of recommendations 
by the Greenspan Commission in 1983.\1\ Some policy analysts have 
recommended that the age of eligibility should be increased still 
further. There is little or no pressure from the public or major 
organized groups to change the definition of age for purposes of 
program eligibility, but it is a good bet that when Congress finally 
decides to seriously address the nation's cancerous budget deficit, the 
definition of elderly will get close scrutiny.
    The definition of disability is one of the great conundrums of 
American social policy. There is a large class of people who have 
medically established physical disabilities about which there is little 
or no disagreement, although some people with extensive physical 
disabilities who could easily qualify for disability payments choose to 
work. The definition of emotional and behavioral disabilities is more 
tortured. I recall that during the debate over welfare reform in 1995, 
a senior analyst at the Congressional Research Service testified that, 
due to the interaction of unclear statutes and regulations plus 
confused interpretations of the statutes by the Supreme Count,\2\ the 
definition of childhood disability in the Supplemental Security Income 
(SSI) program was essentially behaving in an age inappropriate way. 
Clay Shaw, the subcommittee chairman, immediately remarked that under 
that definition half the members of Congress were qualified for SSI.
    The welfare reform law of 1996 significantly tightened the 
definition of disability in the SSI program. Before 1996, anyone found 
to be addicted to drugs or alcohol was entitled to a guaranteed cash 
benefit and health care coverage. The welfare reform law simply 
eliminated alcoholics and drug addicts from both the SSI program and 
the Social Security Disability Insurance program by dropping them from 
the definition of disability.\3\ There may have been negative impacts 
on addicts who would have been eligible for SSI under the old 
definitions but are no longer eligible, but if there are no one has 
demonstrated them in a good study.
    These definitional problems with age and disability are relatively 
modest compared with the lively debate conducted over the years about 
the eligibility of able-bodied adults--especially mothers--for welfare 
benefits. Before the 1996 reforms, mothers who met a test of low 
resources and low income were entitled to cash welfare from the Aid to 
Families with Dependent Children (AFDC) program and their entire family 
was covered by Medicaid and the Supplemental Nutrition Assistance 
Program (SNAP; formerly food stamps). From time to time Congress passed 
provisions that encouraged able-bodied mothers to work or prepare for 
work.\4\ But these provisions were weak and ineffective. In a typical 
year before welfare reform passed, data from the Department of Health 
and Human Services showed that less than 10 percent of AFDC recipients 
participated in a work program or a program in which they searched for 
work. Few of these participated full-time. By contrast, nearly 35 
percent of the caseload was enrolled in educational activities, 
although the evidence that these educational experiences led to work 
was minimal.\5\
    Perhaps the most important single issue in the 1996 welfare reform 
debate was that Republicans wanted to have tougher work requirements 
but Democrats were reluctant to put impoverished mothers at risk by 
penalizing them if they didn't work. The Family Support Act of 1988 had 
strengthened work provisions somewhat, but still, as the data just 
cited demonstrates, the overwhelming majority of adults on AFDC did not 
work or prepare for work.
    That changed with the election of President Bill Clinton in 1992 
and the Republican takeover of Congress in the 1994 elections. Clinton 
campaigned on limiting time on welfare and emphasizing work 
requirements. Although he did not deliver on this promise in his first 
two years in office, upon achieving a majority in the 1995-1996 session 
of Congress, Republicans immediately introduced a bill that backed up 
work requirements with sanctions and time limits and provided states 
with a block grant featuring fixed funding that gave them a strong 
incentive to help adults leave welfare. The Republican bill strictly 
limited the amount of education that could count as work on the 
philosophy that only work led to more work. After a bitter 
Congressional fight that lasted until July 1996, a bill that had tough 
work requirements backed by sanctions and time limits passed on a 
bipartisan basis and President Clinton signed the bill in August 
1996.\6\

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    This seminal legislation marked a fundamental change in American 
social policy.\7\ The AFDC program, with its entitlement to cash 
welfare, was repealed and replaced by the Temporary Assistance for 
Needy Families (TANF) program. The new program emphasized work over 
welfare and was followed by unprecedented reduction in the welfare 
caseload and major increases in work by poor mothers (see Figure 1). Up 
to 70 percent of mothers leaving welfare found employment.\8\ By 2000 
the percentage of single mothers who were employed reached nearly 75 
percent, an increase of over 20 percent since 1995 and the highest 
level ever.\9\ Throughout this period, child poverty fell rapidly even 
as cash welfare payments fell, and both poverty among black children 
and poverty in female-headed families reached their lowest level ever 
(Figure 1). Even at the recession of 2001, employment among single 
mothers stayed well above its 1995 level and the poverty rate for 
children in female-headed families remained about 20 percent lower than 
before welfare reform. A reasonable conclusion from these numbers is 
that as many as 2 million or more of the mothers who had been on 
welfare were capable of productive work.\10\ Thus, the AFDC definitions 
of who should qualify for welfare on more or less permanent basis and 
who should be required to work had been flawed The 1996 reforms 
significantly changed the definition of who was expected to work and 
the willingness of the nation's social policy to penalize those 
expected to work if they didn't.
    It is important to point out that most of the jobs taken by mothers 
leaving or avoiding welfare paid low wages, around $8 per hour in 
2000.\11\ Many of the mothers were nonetheless better off than they had 
been on welfare because Congress and a series of Presidents had 
expanded programs that provided cash and in-kind assistance to low-
income working families. Specifically, the Earned Income Tax Credit 
(EITC) and other tax programs, day care, SNAP, and Medicaid were all 
expanded or modified to make it easier for low-income working families 
to receive the benefits. The dramatic welfare-to-work revolution met 
the quiet and drawn-out revolution of expanded work support programs to 
produce a total family income for working mothers that was higher than 
welfare even for mothers who had low-wage jobs.
    The story so far is a solid success for the nation's social 
policy.\12\ But the current deep recession is raising a serious 
challenge to the optimistic picture I have painted. Now the employment 
of females heading families has declined almost to its pre-welfare 
level. The 1996 reforms were successful when the economy was strong, 
and even during a mild recession like that of 2001. But that recession 
was nothing more than a modest thunder storm; the current recession is 
a hurricane. The question arises: how does the TANF program perform in 
a hurricane?
    Figure 2 shows the unemployment rate, and enrollments in the TANF, 
SNAP, and Unemployment Compensation programs between November 2007, a 
month before the recession began, and either December 2008, August 
2009, or October 2009 depending on the program and the availability of 
data. Assume that means-tested programs should automatically (without 
legislative action) increase during a recession; assume further that 
the unemployment rate is a useful measure of the severity of a 
recession. It follows that the graphs in Figure 2 for enrollment in 
TANF, SNAP, and Unemployment Compensation should follow the graph for 
the unemployment rate. Unemployment benefits and SNAP roughly conform 
to the pattern of unemployment, that is, as unemployment rises, 
enrollment in both programs rises as well. But TANF does not.\13\
    More recently, a story published in June in the Wall Street 
Journal, based on a survey of 30 states that account for 88 percent of 
the U.S. population, found that the TANF rolls in 23 or the 30 states 
increased between March 2008 and March 2009.\14\ The rolls in two 
states increased by more than 20 percent during this period. These 
findings, if confirmed by official data, suggest that the TANF program 
in many states may now be responding appropriately, albeit on a delayed 
basis, to the recession.
    Should TANF, the nation's major cash benefit program for needy 
children, provide benefits to more people during a recession? Put this 
way, I think most Americans and most members of Congress would say yes. 
But we don't need to rely on guesswork. There is direct evidence on 
this question in the case of members of Congress. Anticipating that 
single mothers leaving or avoiding welfare would have trouble finding 
work during recessions, the authors of the 1996 reforms put three 
important provisions to fight recessions in the legislation.\15\ The 
first allowed states to save federal dollars frothe TANF block grant 
without limit for a rainy day (see Section 403(e) of the Social 
Security Act). As the welfare rolls declined after 1996, many states 
were able to save money because they were paying much lower cash 
welfare benefits. All of this saved money could be used to pay TANF 
benefits during a recession. The second provision allowed ``needy'' 
states that were experiencing high unemployment to, logically enough, 
count more job search as work. The third and most important provision, 
called the Contingency Fund, created a pot of $2 billion to be given to 
states that had high unemployment or substantial increases in SNAP 
enrollment during an economic downturn (see Section 403(b) of the 
Social Security Act). These three provisions demonstrate unequivocally 
that congressional Republicans and Democrats realized that recessions 
could be a problem for work-based strategies of helping the poor, that 
people on welfare would have trouble finding jobs during a recession, 
and that states would therefore need more flexibility and additional 
funds to pay benefits to a rising caseload. Over the first decade of 
welfare reform, this issue of giving states additional money to handle 
a rising caseload was moot. During the booming economy of the last half 
of the 1990s, only one state qualified for money from the Contingency 
Fund. Even during the rise of unemployment in the mild recession of 
2001, only a few states qualified for Contingency Funds jobs. But now 
that a serious recession has arrived, many more parents have lost their 
jobs and as many as 18 states are now or have been qualified for 
contingency funds since the recession began. So many states have 
qualified that the Congressional Budget Office projects that the 
Contingency Fund will run out of money early in 2010.\16\ Anticipating 
this evaporation of money from the Contingency Fund, in February of 
this year Congress put a provision for giving states up to $5 billion 
of additional money to pay for expand welfare rolls in the American 
Recovery and Reinvestment Act (ARRA). This action, consistent on its 
face with the intent of 1996 law to give struggling states additional 
Republicans charging that Democrats were trying to undermine the work 
requirements of the 1996 law.\17\

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    Leaving aside the political fight over the new emergency fund, and 
keeping in mind the fact that since 1996 it has been federal policy to 
give states more flexibility in meeting work requirements and more 
money when their caseload increases during recessions, we should now 
raise the question of why, as shown in Figure 1, states seem to have 
been slow to increase TANF enrollment during the current recession. 
National caseload data on TANF enrollment show that the caseload 
increased by only 3 percent between December 2007 when the recession 
began and December 2008 (Figure 2). Further, caseload declines 
continued in 20 states, including drops of over 10 percent in five 
states.\18\ Why, in other words, is the TANF graph in Figure 2 so 
different from the graphs for unemployment compensation and SNAP?
    There is no doubt that states are giving TANF benefits to a much 
smaller fraction of eligible families that ever before. In 1995 before 
welfare reform, fewer than 900,000 of the families qualified for 
welfare benefits did not receive them; by 2005 this figure had 
increased to well over 3 million and it seems likely that the figure is 
higher still today. There are several possible explanations for why 
eligible parents are not being enrolled in the TANF program. These 
include increased stigma of being on welfare that makes families more 
hesitant to sign up; the alternative many mothers have of living with 
partners, friends, or relatives who have income; and living for a 
period on savings or borrowed money. But some of these families with 
children are facing difficult financial challenges, especially when 
there are more than three times as many of them as there were before 
welfare reform.
    Another possible explanation of the sluggish increase in TANF 
enrollment is that states, now in the worst financial shape they have 
been in for decades, have taken various actions to prevent parents who 
cannot find a job from coming on welfare. Foremost among these actions 
could be requirements--such as a 30-day job search before qualifying 
for welfare--that states impose on adults applying for welfare. Many 
states also conduct a protracted application process that could feature 
administrative hassle for applicants, causing some to give up before 
the application process is completed. Another administrative technique 
to trim the caseload is strict enforcement of rules that can lead to 
families losing their welfare benefit because of minor infractions. A 
recent survey of states conducted by the Urban Institute indicates that 
42 states have programs that aim to ``discourage enrollment'' as the 
Urban Institute puts it.\19\ On the other hand, many states operate 
diversion programs that try to help adults intending to join the 
welfare rolls find jobs instead. Depending on how states help these 
parents find jobs, the diversion approach can make great sense for some 
families, especially those who would like to avoid welfare if they can.
    Another possible explanation for the delay in TANF caseload 
increases is that administrative problems are causing state TANF 
programs to take longer to respond to rising unemployment. As we have 
seen, last year, with unemployment rising rapidly, the national TANF 
caseload continued to decline in 20 states and rose only 3 percent 
nationally. The trend toward increasing caseloads is continuing this 
year, and many more states are experiencing caseload increases. When we 
have complete data on TANF caseloads for 2009, it could well be found 
that caseload increases are greater in percentage terms than in 2008 
and that many of the 20 states with declining caseloads in 2008 are now 
experiencing caseload increases. Thus, state TANF programs may be 
responding to the recession by bringing more families onto the rolls, 
but with a time lag. Further, some states may be responding more 
quickly than others. Because TANF is a state administered program, it 
is to be expected that evaluations of state performance in responding 
to the recession will show large variability across states.
                               conclusion
    Congress and the administration should carefully investigate the 
response of the TANF program to the recession that began in December 
2007. Next year's reauthorization of the 1996 welfare reform law 
provides the perfect opportunity to learn a lot more about the response 
of TANF to the recession and on the basis of this knowledge to 
determine whether additional reforms are required.
    In conducting its investigation, Congress and the administration 
should define its goal as understanding how to maintain the strong work 
requirements in the TANF bill while providing temporary cash assistance 
to destitute families that cannot find work. The impact of the 1996 
welfare reform law on employment and earnings by poor single mothers 
shows that most of these mothers are capable of finding jobs and 
improving their total family income during normal economic times. It 
would be a serious mistake if the nation's response to the current 
recession were to dismantle the 1996 reforms and return to an AFDC-like 
program that provided cash welfare with few or no strings. That major 
policy shift would solve the problem of admitting more destitute 
mothers to welfare during a recession, but it would return us to the 
days when millions of able-bodied mothers accumulated on the rolls and 
became victims of welfare dependency.
    Moreover, the combination of strong work requirements in the TANF 
program and the system of supplemental benefits provided to low-income 
workers--especially the EITC, SNAP, child care, and Medicaid--is the 
most effective poverty fighting strategy the nation has developed since 
the War on Poverty began in the 1960s. That strategy enabled us to 
achieve the lowest poverty level among female-headed families and among 
black children ever recorded within four years after passage of the 
1996 welfare reform law. Most--but not all \20\--of those concerned 
about the well-being of low-income families, regardless of their 
political views, now realize that families cannot escape welfare unless 
they work.\21\ A return to the pre-1996 policies that caused welfare 
dependency is a return to a policy of guaranteed poverty.
    However, even the below-poverty benefits of TANF and SNAP are 
better than no public support when parents cannot find work. The 
nation's welfare system should be premised on strong work requirements, 
but it should also adapt when unemployment rises and allow workers who 
can't find jobs and who are not qualified for Unemployment Compensation 
to receive cash welfare. The 1996 reformers recognized this principle 
and included provisions in the law intended to make sure states had 
greater flexibility and enough money to pay for expanded welfare rolls 
during recessions. Similarly, the current Congress recognized the 
problem and drafted a new provision, included in the ARRA that would 
provide states with additional funds to ensure they could pay for 
expanded welfare rolls.
    Despite these provisions, it appears now that many states may have 
been too slow to take destitute families back on the rolls. We lack 
sufficient information to determine exactly why states may have been 
slow. So let's use next year's welfare reform reauthorization to find 
out. Permanent policies made during a recession are likely to 
constitute an overreaction to dire circumstances. My own view is that 
the TANF structure of strong work requirements with provisions for 
flexibility and additional funds during recessions is sound but that 
its provisions on helping states have enough money on hand to increase 
their rolls when parents experienced high levels of unemployment may 
not have worked as planned. Our goal now should be to find out why and 
to determine what changes in federal and state policy would allow 
states to respond more quickly and completely during the next 
recession--but without any permanent loosening of the work 
requirements.
                                endnotes
    \1\ National Commission on Social Security Reform, Report of the 
National Commission on Social Security Reform (Washington, DC: Social 
Security Administration, January 1983).
    \2\ Sullivan v. Zebley, 493 U.S. 521 (1990).
    \3\ Similarly, the definition of childhood disability was tightened 
so that approximately 100,000 children were dropped from the SSI roles 
and many hundreds of thousands of children have since been denied SSI 
coverage under the new definition. Taken together, the two changes in 
the definition of disability are now and will continue to save 
taxpayers billons of dollars each year.
    \4\ House Committee on Ways and Means, 1990 Green Book (Government 
Printing Office, 1990), pp. 337-545; House Committee on Ways and Means, 
1994 Green Book (Government Printing Office, 1990), pp. 337-359.
    \5\ House Committee on Ways and Means, 1996 Green Book (Government 
Printing Office, 1996), pp. 423-424
    \6\ The combined House and Senate vote was 406 to 122. See Ron 
Haskins, Work Over Welfare: The Inside Story of the 1996 Welfare Reform 
(Washington, DC: Brookings Institution Press, 2006), p. 331.
    \7\ The bill also greatly reduced welfare benefits for noncitizens 
which removed a disincentive to work; ended the SSI benefits of drug 
addicts and alcoholics which removed a disincentive to work; and 
simplified and increased funding for child care, which provided an 
incentive to work.
    \8\ Gregory Acs and Pamela J. Loprest, TANF Caseload Composition 
and Leavers Synthesis Report (Washington, DC: Urban Institute, March 
28, 2007).
    \9\ James Ziliak has shown that the employment rates of never-
married mothers, the group most likely to be on welfare, increased even 
more rapidly than the employment rates of all single mothers; see James 
P. Ziliak, editor, Welfare Reform and Its Long-Term Consequences for 
America's Poor (Cambridge: Cambridge University Press, 2009), pp. 4-5.
    \10\ Ron Haskins, Work Over Welfare: The Inside Story of the 1996 
Welfare Reform (Washington, DC: Brookings Institution Press, 2006), 
Chapter 15; Rebecca M. Blank, ``What We Know, What We Don't Know, and 
What We Need to Know about Welfare Reform,'' in Welfare Reform and Its 
Long-Term Consequences for America's Poor, edited by James P. Ziliak 
(Cambridge: Cambridge University Press, 2009); Jeffrey Grogger and Lynn 
A. Karoly, Welfare Reform: Effects of a Decade of Change (Cambridge: 
Harvard, 2005), Chapters 5-7.
    \11\ Gregory Acs and Pamela J. Loprest, TANF Caseload Composition 
and Leavers Synthesis Report (Washington, DC: Urban Institute, March 
28, 2007).
    \12\ I have argued elsewhere that two important problems with 
welfare reform were that some mothers who lost their cash welfare did 
not work steadily. As a consequence, many of them were worse off 
financially than they had been before welfare reform. Another serious 
issue is that most of the mothers leaving welfare failed to move up the 
job ladder to jobs with higher wages and employee benefits. There 
remain serious issues that should be examined thoroughly if Congress 
takes up reauthorization of welfare reform as scheduled in 2010. See 
Ron Haskins, Work Over Welfare: The Inside Story of the 1996 Welfare 
Reform (Washington, DC: Brookings Institution Press, 2006), Chapter 15; 
Rebecca A. Blank, ``Improving the Safety Net for Single Mothers Who 
Face Serious Barriers to Work,'' The Future of Children 17, no. 2 (Fall 
2007): 183-197.
    \13\ These data are consistent with a front page story in the New 
York Times on February 2 that drew attention to the claim that TANF was 
underperforming during the recession; see Jason DeParle, ``Welfare Aid 
Isn't Growing as Economy Drops Off,'' New York Times, February 2, 2009, 
p. A1.
    \14\ Sara Murray, ``Numbers on Welfare See Sharp Increase,'' Wall 
Street Journal, June 22, 2009.
    \15\ A fourth provision, the ability to borrow money at interest 
from the federal government, was little used.
    \16\ Personal conversation with Jonathan Morancy of the 
Congressional Budget Office on December 7, 2009. See also http://
www.acf.hhs.gov/programs/ofa/tanf/apprTANFemerfund.html.
    \17\ Sara Murray, ``Numbers on Welfare See Sharp Increase,'' Wall 
Street Journal, June 22, 2009, A1.
    \18\ Urban Institute, ``Highlights of State TANF Programs in 
2008,'' Washington, DC: Author, 2009.
    \19\ Ibid.
    \20\ Peter Edelman and Barbara Ehrenreich, ``Why Welfare Reform 
Fails the Recession Test,'' Washington Post, December 6, 2009.
    \21\ The combined maximum cash benefit from TANF plus the cash 
value of SNAP benefit provides families with income equal to about half 
the poverty level in the median state. See House Committee on Ways and 
Means, 2008 Green Book (Government Printing Office, 2008), pp. 7-51 to 
7-52.

    Chairman Spratt. Let me ask two questions and then turn it 
to Gwen Moore, and then we will go to others.
    First question: Pete Edelman's article in the Post this 
weekend, is this the gist of what he was pointing to, that TANF 
had been changed significantly, but other programs which, in 
the past--cash assistance which had been available, were no 
longer available because they were left on the cutting-room 
floor in welfare reform?
    Mr. Haskins. It just isn't true. We have shown the data. 
Food stamps have been very responsive. We are spending more on 
food stamps, and there are more people on food stamps than ever 
before. I did not put Medicaid on there, but the same thing is 
true of Medicaid. They are at historic highs.
    So the safety net, those other programs have responded very 
appropriately. LaDonna is from the Center on Budget and Policy 
Priorities. Their credentials as a conservative organization 
are in lousy order, and they have constantly said that those 
programs responded very well because they were constructed that 
way. We thought TANF would respond well, too, but it hasn't for 
some reason.
    So I just think that Peter is mistaken.
    Chairman Spratt. Would you call that this single biggest 
deficiency in the safety net?
    Mr. Haskins. Yes. I think the TANF program--it looks like 
it is a deficiency in the safety net, yes.
    Chairman Spratt. And what would you do in short to fix it, 
make it more----
    Mr. Haskins. I don't think we know enough to have a good 
answer. The obvious, the most straightforward answer was to 
give them more money, which we did in the contingency fund and 
now you have done in ARRA. And maybe the ARRA provision is the 
one that really convinces the states to try this.
    But I think there--and here is another big point--these are 
state programs. The federal government has very little control 
over the particular characteristics of the state programs. And 
it was the states that made these decisions. And what you will 
find, if you look into this, is some states were quite good. If 
you look at Florida, which is surprising, a very conservative 
state, they responded early and quickly, probably more than 
almost any other state. Now more states are responding.
    And you need to bring the states in and ask them, why did 
it take you so long? How come you weren't responsive early? As 
the unemployment rate went up in your state, how come there 
wasn't a TANF response?
    I think we need to dig into that, as I have said. I think 
it is a problem, but I think it is solvable. The key is to 
solve it without destroying the mandatory work provisions in 
TANF.
    Chairman Spratt. Ms. Moore?
    Ms. Moore. Well, thank you, Mr. Chair.
    And I very much enjoyed this entire panel.
    I guess, just having listened to the four of you, the 
conclusion that I have come to, looking at these charts and 
graphs--and correct me if I am wrong--is that basically we have 
a kind of a safety net for people who are unemployed, who have 
been working and they go on unemployment insurance, but we 
don't have a safety net for people who basically don't have a 
job and depend on TANF.
    I guess, with respect to why the states didn't roll out 
assistance earlier, I guess I want to yield to Pat Delessio 
from our state to describe--she was at the scene of the crime 
in Wisconsin when we ended welfare, the first state to do 
that--and describe her struggle with ``job ready'' and lack of 
educational opportunity. And perhaps that will address some of 
the points that you raised, Dr. Haskins, as to why people can't 
get out of poverty.
    Pat, will you describe----
    Ms. Delessio. Well, I can tell you, in talking with state 
officials, why they feel like the caseloads haven't increased. 
And it is, in part, due to our system, our county/state system, 
where our counties or private agencies run W-2, operate the W-2 
program. And what state officials have told me is that, even 
though they have told the counties to let more people on--and 
that is exactly what they said, let more people get on W-2--
they have been reluctant to, because the money up front isn't 
there. Especially counties and county boards are afraid to 
expend funds that they don't know if they are going to be able 
to support these families for as many months as they need to.
    And in Wisconsin, I think we have been famous for reducing 
our caseload. And we did it basically by changing the rules, by 
saying that people who were job-ready, you know, who were able 
to work even though they didn't have a job, couldn't receive W-
2.
    Ms. Moore. Well, thank you for that brief review.
    And I guess my next question would be to Doctor--I can't 
read your name because I don't have my glasses on--to Dr. 
Pavetti. You know, I don't understand--there seems to be a 
difference in whether or not poverty was reduced. There is a 
claim that among women who worked--that there was a reduction 
in poverty among children. But I really question those metrics 
since I know, in the case of Wisconsin, we really didn't track 
people who were just thrown off the rolls and what happened to 
them.
    And so, when you look at your chart, Dr. Haskins, and see 
that, even though SNAP programs have increased, UC has 
increased, there are zero-income families that are using SNAP, 
the fact that TANF didn't increase, it would indicate to me 
that we don't have a true metric of how many children are truly 
living in poverty and women who are living in poverty.
    So could you respond to that for me, please?
    Ms. Pavetti. Well, part of the problem in trying to sort 
this out has to do with looking at averages, because what 
happened is that there were winners and losers when we did 
welfare reform. So there are people who did go to work and who 
were moved out of poverty. And then there were a group of 
families who really have very low-incomes who are far worse 
off.
    So, I am sorry I don't have it here, but I can provide it, 
where we have charts where we look, over time, at what has 
happened. And you can see that there are parts of the safety 
net that really have increased in the number of people that 
they have moved out of poverty. And you see a huge gap in what 
has happened in TANF.
    So what we are seeing is a story where there is a group of 
people who have not as great needs, who have been able to make 
that transition, who are doing better. So you see them moving 
out of poverty. And then you see this group at the bottom whose 
incomes have just plummeted and are doing far worse.
    So it is a story that is more important to look at deep 
poverty and what is happening there. So I think that is----
    Ms. Moore. And averages are not a good thing. They are damn 
statistics.
    Dr. Haskins, let me let you weigh in on this. Because you 
have claimed--and I just haven't seen where we have reduced the 
poverty, just like, you know, people who don't work aren't out 
of poverty on AFDC. I don't see that they have gotten out of 
poverty by the TANF program either.
    Mr. Haskins. The Congress pays billions of dollars to have 
one of the best statistical systems in the world. There is no 
question about problems with our definition of poverty, but 
poverty definitely declined, no matter how you measure it. 
Throughout the second half of the 1990s, it declined 
dramatically, more than it has since the 1960s. And you can 
quibble if you want to, but, you know, those are the numbers. 
And I think everybody agreed that that actually happened.
    Ms. Moore. Well, I don't agree, but my time has expired. 
Thank you.
    Chairman Spratt. Mrs. Lummis?
    Mrs. Lummis. Thank you, Mr. Chairman.
    And thank you, members of this panel. It is a great 
discussion, considering the importance during this time, these 
recessionary times.
    Mr. Haskins, first for you, CBO's analysis of the 
President's budget forecasts a debt spiral, with debt levels 
not seen since World War II and a tripling of net interest 
payments on the debt over 10 years.
    Are you concerned about the impact of a debt spiral and its 
potential consequences for economic growth on the health of our 
safety net programs? We know we need safety net programs, but 
is the overall health of our economy putting our safety net 
programs at risk?
    Mr. Haskins. Yes. And, in fact, let me tell you an 
interesting thing that has occurred over the past 6 or 7 years. 
A number of quite liberal foundations that focus on children 
and children's programs have funded organizations like 
Brookings, like the Center on Budget and Policy Priorities and 
other organizations that, roughly speaking, are both liberal 
and conservative, specifically to do everything they can think 
of to, A, call to the public's attention how serious our debt 
crisis is and, B, work with Congress, if possible, to try to 
encourage people, especially people on budget committees, that 
we have to do something and we have to do it now.
    And the reason they are doing that is that they are afraid 
that we are going to reach budget Armageddon, in which we very 
substantially cut programs and increase taxes. And the programs 
that they are worried will be vulnerable are the children's 
programs. And so, they would like to see us reduce the deficit 
in an orderly way.
    Yes, a deficit is a big problem, and it is a threat to the 
safety net.
    Mrs. Lummis. Thank you.
    Sue Berkowitz, you were quoted in The Wall Street Journal 
as saying, ``The cash assistance funding in South Carolina is 
crowding out money to help people find jobs.'' Does that ring a 
bell?
    Ms. Berkowitz. No, not at all.
    Mrs. Lummis. Well, let me go on and ask the question. So 
maybe that is an inaccurate statement.
    Ms. Berkowitz. I am not sure where that came from.
    Mrs. Lummis. Okay. According to the GAO, there are more 
than 40 federal programs that send funding to the states for 
job training, including the Workforce Investment Act programs 
that are supposed to be available to all job seekers.
    Do you know, is your state coordinating with these programs 
effectively, the TANF program with the job training programs?
    Ms. Berkowitz. I think there has been some disconnect in 
our state, and I wouldn't want to use South Carolina right now 
as an example of what is going on, on a state level, between 
the state agencies. There have been some concerns with our 
Employment Security Commission and what they have been doing to 
assist people in job searches and with job trainings. I will 
tell you that our TANF agency has been attempting to do what 
they can to help individuals identify better paying jobs and to 
increase their income.
    I would also want to respond to something that Dr. Haskins 
said when he was talking about whether or not the TANF program, 
while people are working, whether it has actually taken them 
out of poverty. And I would say that, in looking at what has 
happened with the state agencies and the pressures that have 
been put on them with the threat of sanction if people are not 
put to work, is what we are doing is we are finding people jobs 
that are not paying living wages, that they are not able to 
actually support their families through work.
    The majority of the people that I have counseled with over 
the years want to work. They don't want to be dependent on the 
TANF program. The bigger problem for them is whether or not, 
with work and with the other social safety net programs they 
may be able to access, whether that is going to allow them to 
be able to afford to work but, more importantly, as to whether 
or not they are going to be making money to take them out of 
poverty.
    In South Carolina, while our TANF rolls had gone down 
tremendously prior to this current recession, it really was not 
taking children and families out of poverty. So I think that we 
need to be doing a better job. We need to be more responsive in 
helping that particular population with accessing better paying 
jobs.
    Ms. Pavetti. Can I just, sort of, add something to that? I 
think one thing that is important is that the same 
disincentives in TANF that serve people who need more than just 
job search to get a job exist in the WIA system, and even to a 
greater degree. So, often what you hear when you talk to WIA 
people is that they are not set up to be able to provide the 
employment services that they feel that TANF recipients need. 
They just don't--they have so many issues going on in their 
lives, and they need a different kind of support that WIA 
struggles to provide, as well.
    And, again, both in TANF and in WIA, a huge part of the 
issue is the way we have set up performance standards that 
really reward states for serving people who are most able to 
get jobs on their own. And until we change those incentives 
about how we measure our performance, we are not going to be 
able to provide the work supports that people need to be able 
to get into the labor market.
    So I think that is, sort of, where some of the disconnect 
comes, is neither program is set up to deal with the reality of 
what people's lives are and what their needs are to actually 
make that transition.
    Mrs. Lummis. I would like to give Dr. Haskins an 
opportunity to respond to that little round.
    And while you are doing that, could you perhaps address 
some of the duplication that may occur within safety net 
programs? And is there a way to consolidate them and to make 
them more efficient and perhaps more flexible so they could 
respond to the kinds of needs in a recessionary time that may 
be different from needs in a robust economy?
    Mr. Haskins. Let's talk first about the numbers of people 
who are just on welfare and people who are working at low-wage 
jobs.
    If you are just on welfare, roughly speaking, the cash 
value of food stamps and the welfare in a typical state is 
about $10,000. The poverty line for a family of three is around 
$20,000. So you are halfway to poverty. If you have a job for 
$12,000, you get $4,500 if you have two children from the 
earned income tax credit and around $3,000 or $4,000 in food 
stamps. So you are almost at the poverty level with a job of 
just $12,000. If it is minimum wage, that is about a half-time 
job.
    So it should be clear to everybody that work, even at a 
low-wage job--and granted, the low-wage job does not take you 
out of poverty, but that is where government comes in. We have 
built this fabulous system. Congress made, I would say, at 
least 30 reforms over a period of 15 years to expand these 
programs and make them friendly to low-income workers. And now 
we are saying that, you know, it doesn't work. It does work. It 
is a very good system.
    Yeah, there is a lot of duplication. There was duplication 
in 1996, as well. We ended, I think, something like seven 
programs, which I was involved in at a staff level, and you 
never had a great experience until you have tried to end any 
program that the federal program has established. And we ended, 
I think, six or seven of them and created block grants.
    Now, block grants have their problems. I think LaDonna 
Pavetti is about ready to explode down there. But I think the 
TANF block grant, if we had had an inflation adjustment, it 
would have been a great success.
    We also created a block grant out of daycare. This is an 
exact response to your question. We ended several daycare 
programs, some of them entitlements, put all the money in a 
block grant, increased the amount of money, gave it to the 
states and said, ``You figure it out. You are responsible for 
regulations.'' We made them spend some money on quality, 
because quality is a big issue, but basically we gave them free 
reign.
    And I think almost everybody agrees that has worked well. 
We still have a problem with quality, but we serve a lot of 
people in daycare. There is not enough money in there to serve 
everybody, but you could solve that by putting more money in 
there. In fact, I think we should put more money in the block 
grant.
    So, yes, there is a way to promote efficiency.
    Mrs. Lummis. Thank you. My time is up.
    Ms. Moore. Will the gentlelady yield?
    Mrs. Lummis. I will yield.
    Ms. Moore. Thank you. I want to thank the gentlelady, and I 
will not be long.
    I guess I just wanted to ask Dr. Haskins and the other 
panelists, don't you think that, by allowing a couple of 
things, that perhaps time limits is a barrier to really helping 
people get out of poverty and also limiting the type of 
education and training that we can provide for people in order 
to lift them out of poverty and to really help those people 
develop the skill sets that are important for our economy--
there seemed to be a lot of focus in the 1996 reform to limit 
the amount of education and training. And we have, sort of, 
shot ourselves in the foot, in my opinion, by doing that.
    And thank you.
    Ms. Pavetti. It is not just--limiting education and 
training is a part of it. But I think the limit is far greater 
than that, and it goes to the issue of the coordination.
    What we have done in TANF is we have created a very narrow 
definition of what the appropriate path to work is, and it is a 
definition that doesn't really respond to the range of needs of 
people on TANF.
    So even states that are trying to coordinate with 
vocational rehabilitation, for their recipients who have 
disabilities, what they find is a conflict because the narrow 
definition of TANF means that they cannot meet the requirements 
by going to voc rehab.
    So I think what we need to do is to acknowledge that there 
are many different paths, and the best path to work for one 
person is not for the other. And for some, the only way they 
are going to move out of poverty and even need less of the 
supports that we provide, if they are working, is through 
education and training.
    And states that really, sort of, do all of these gyrations 
are trying to make those opportunities available. So I think 
what we need to do is to think about a broader range of 
activities that really will lead people to work. And it will 
address a lot of issues, including the education conundrum.
    Mr. Haskins. Time limits, I think, were essential for 
sending a message that--the name of the program is Temporary 
Assistance for Needy Families. It is not temporary unless there 
is some limit on time.
    There is an exception, though. A state can have 20 percent 
of its caseload above the time limit. So there is flexibility 
even in the time limit. Very few states ever reached that. Very 
few people have reach the 5-year time limit because they are 
gone by then because the program did send this very clear 
message.
    Education and training; the logic is wonderful. Wouldn't we 
all love all of our kids and all of our young adults to go to 
college or at least get a 2-year degree or learn to be a 
plumber or something? There was a time when we spent $27 
billion a year on these programs. We now spend something like 
$7 billion or $8 billion, because evaluation showed almost 
consistently that they produce very modest impacts.
    I think what you have in your mind is that we have a lot of 
people on welfare who are dying to have education. That is not 
true. There are some. And the states have a 30 percent 
exemption. They can have 30 percent of their caseload in 
educational activities. So there is flexibility now for them to 
have people in education, and a few states are close to the 30 
percent limit.
    But TANF is a program for people to learn to work and get 
into the labor force. And that is what the program should 
primarily do, while leaving some room for education. But it is 
very difficult to show that the education has an impact on the 
people's subsequent wages or even their ability to complete a 
2-year degree.
    Ms. Delessio. If I could just add something, I think, in 
terms of education and training, it really is a range. And from 
what we see from our W-2 program is that most people don't 
really increase their skills in any sense while on W-2. And, 
you know, short of a college education, people could be given 
very specific, through our technical college training programs, 
6 months to a year that will lead to jobs that actually exist 
in the market. And we have not even attempted to do that.
    So I think, you know, we really do need to rethink how we 
provide incentives to states within those time limits. You 
know, the time limits are for the participants, but they should 
also be for states to help people move into work that is going 
to last.
    And we talk about minimum wage jobs. I think what we see is 
that, yeah, people get these minimum wage jobs, but they really 
don't last. It may be in theory that if you get this job and 
you work 40 hours a week, you are going to have this income on 
an annual basis. But what we see is that their hours are cut 
gradually or the jobs disappear altogether, and they move from 
one minimum wage job to another with periods of unemployment in 
between. And that is the reality. So it doesn't really lead to 
a job that is going to last you and move you further along the 
economic scale.
    Mrs. Lummis. Will the gentlelady yield back?
    Ms. Moore. This is your time.
    Mrs. Lummis. Okay, Mr. Chairman. I yield back my time.
    Chairman Spratt. Mr. McGovern?
    Mr. McGovern. Thank you very much.
    I appreciate all of you being here. I want to thank Gwen 
Moore for organizing this hearing, and I appreciate your 
testimony.
    For the record, I should say that I, too, believe that we 
need to get our budget deficits under control, but I don't want 
to do it by balancing the budget on the backs of the poorest of 
the poor in this country. So I hope that we can find other ways 
to do this without further exacerbating the problem of all 
these people in poverty.
    As a United States congressman, I am ashamed to state that 
hunger is getting worse in this country. And you have all 
testified that the demand for food stamps and emergency food is 
increasing. Over 36 million people, one in eight Americans, are 
on the SNAP program. And, nationally, caseloads have risen by 7 
million people, or 24 percent, since last year. Caseloads are 
up 28 percent in my home State of Massachusetts.
    And I think the increase speaks to the extraordinary need 
in Massachusetts as well as the hard work by the state to be 
able to deliver benefits to eligible people. The increased 
demand for food stamps is happening at a time when state 
budgets are in crisis. States across the country are cutting 
their human service agency staff at the very time that they 
need more staff to be able to manage the flood of new 
applications.
    In parts of Texas, new applicants for food stamps must wait 
60 to 90 days to get an appointment. This is the case despite 
the fact that the federal law mandates that benefits be 
processed within 30 days. And while Texas is the most extreme 
case, delays are common all across the country, even in my home 
state.
    So Congress has provided $300 million in additional 
administrative funds as part of the Recovery Act, thanks to 
Congresswoman Rosa DeLauro. But there was no maintenance of 
effort tied to the funds or a requirement that states continue 
to spend what they were funding and not just use federal money 
to facilitate cuts. So, in some states, the funding provided 
much-needed relief. In other states, the funds delayed staffing 
cuts, and, in other cases, the money was supplanted.
    So I have a couple of questions.
    Dr. Pavetti, in your testimony, you pointed out that SNAP 
is responding quickly and effectively to help low-income 
families during the economic crisis. But you and others have 
described how, in many states, TANF caseloads have remained 
virtually flat or declined.
    And we have all talked about the need for further 
investigation and hearings down the road, and maybe we need to 
adjust the TANF program. But the reality is, people right now 
need help, and people are not getting these benefits. There are 
people who are unable to pay their rents or electric bills or 
buy clothes for their kids.
    So I get that we need to look to the future. I guess my 
question is, what can we do right now in the short term to 
increase the responsiveness of TANF during this terrible 
economic crisis?
    And my other question is to Ms. Delessio. I know the number 
of people on the food stamp program has been rising 
dramatically. And I mentioned the caseloads in Massachusetts 
are up 28 percent, and in some states they are up 40 percent. 
But it is my understanding that the food stamp participation 
has gone up by 37 percent, or 123,000 people, I think, in your 
state.
    I know that states are struggling to manage the increased 
applications for food stamps, and new applicants can't get 
through to file applications or they must wait a long time to 
get their benefits. At the same time, many states are cutting 
their caseworker staff as a result of budget cuts.
    Is that the case in your state? And are these delays 
increasing the demand for the reliance upon food bank 
assistance? And would some additional assistance with 
administrative funds for staffing or overtime help some of 
these states manage its backlog?
    Again, my question really is--we have a problem right now. 
So, within the existing rules and regulations, with all that 
exists right now, how do we immediately respond? I got the 
request to look forward, but the problem is now. People who 
don't have food right now are hurting right now.
    Ms. Pavetti. One is I think that we need to look at what 
message states are hearing about meeting the work participation 
rates. Because as long as states believe that they have to meet 
the work participation rates, they are going to continue to 
make it difficult for people to get on to the rolls who cannot 
meet those rates. States face very serious budget constraints, 
and the thought that they could have a penalty imposed and lose 
more money is a constraint.
    So I think we need to think about how do we, sort of, have 
states realize that this is a different time and to think about 
that differently. I don't think you have to eliminate a focus 
on work to do that. But I think that is an important piece.
    The other is, I think we need to look at whether or not the 
maintenance of the 20 percent funding requirement in ARRA is 
constraining states from being able to access those funds. 
States just don't have the money to come up with the match. So 
we have been working with foundations who have been willing to 
try and, sort of, figure out whether they can help states to 
leverage their funds. So I think that is another thing, is 
looking about in the very short term whether there is a way to 
do that.
    The other thing I think that we could do is to use the 
increase in SNAP to really try and encourage--states can 
identify the families who are in dire straits, and whether you 
can do something to really encourage families to take advantage 
of those.
    The other thing is the same thing on the unemployment 
insurance. What has happened is that there are--work is a part 
of most people's lives on TANF. It is no longer an issue that 
people are not working or haven't worked. But only half of the 
people who have worked and who may be eligible are applying for 
unemployment insurance. So we may need to be doing some 
outreach to get more people to take advantage of those 
benefits.
    And then the other thing is, I do think the additional 
relief to states to help them to meet the demand more on an 
administrative level with some of the maintenance of efforts 
that were left out, I think, is an important step that will 
help. You know, states just don't want to think about more 
people. They are so stretched with having to do that, so I 
think we need to make it feasible for them to do that.
    Ms. Delessio. I just want to echo a little bit, in the 
State of Wisconsin, we were going to try to draw down the 
emergency funds. And they have indicated that they need more 
time to come up with the money to match. So that has been a 
real problem, and they have indicated that they would like to 
use that money, and we fully support this, for transitional 
jobs.
    In terms of the--Wisconsin is a little bit complicated 
because of our state/county system. So some counties are 
furloughing workers, others are not, although I think many more 
are. And some counties are experiencing worse delays in 
processing, but we are beginning to see it everywhere 
throughout the state.
    The food banks: Recently I heard there was a 20 percent 
increase over this time last year; that just measures the last 
year. And I would think there is probably more demand for food. 
But, again, I think the states are going to have--they are 
already struggling to keep up with processing applications. And 
I can't emphasize enough how much this has hurt the elderly and 
disabled, again, because their means of access to counties are 
just much fewer. They don't have the ability to walk down.
    So I think it is very significant. And if states don't 
receive additional funding, at least in Wisconsin, that we can 
pass through our counties, we are going to see increases.
    Ms. Pavetti. One other quick point is that the TANF 
regulations only allow people to look for jobs and have it 
count for 4 to 6 weeks; in an economy like this, the 
expectation that somebody with low skills, low levels of 
education can find a job after looking for work 4 to 6 weeks is 
completely unrealistic.
    Mr. Haskins. There is a provision in law that allows more--
called a ``needy state'' provision that allows them to go above 
the 4 to 6 weeks. So something like that is already in law. 
Maybe it isn't generous enough.
    Ms. Pavetti. It isn't generous enough, Ron. It is 12 weeks. 
We are talking about extending unemployment for very long 
periods of time. So there is something, but it still isn't 
enough.
    Mr. Haskins. I just want to point out to the committee that 
the people who wrote the 1996 legislation thought of that and 
put flexibility in there. Maybe it is not enough. That is the 
kind of thing we ought to find out.
    I want to draw two considerations to your attention, 
thinking about giving states yet more to meet the need in their 
states. First of all, we have a deficit right now of a trillion 
dollars. The Budget Committee is responsible over the long run 
for figuring out how to pay that back. If you don't, then our 
kids are going to pay it back. So if we want to spend more 
money, where does it come from?
    The second thing is----
    Mr. McGovern. Let me just say, I appreciate that a lot. But 
the reality is, for many, many years, we have been balancing 
the budget on the backs of the poor in this country. I mean, 
one suggestion is maybe we stop fighting so many wars that we 
don't pay for, as a way to control the deficit.
    But, I mean, the notion that we are not going to help 
people who are desperately in need because we have a budget 
crisis, I think, is unacceptable. We have to respond. I mean, 
people don't have enough to eat. People are hungry in this 
country. We should be ashamed of that.
    And so I get the deficit stuff. And this is a committee 
where we are very much concerned with that. But the reality is 
that there are people who are hungry in the United States of 
America, and we have to respond to it regardless of the 
deficit.
    Mr. Haskins. Could I make a second point?
    Mr. McGovern. Sure.
    Mr. Haskins. Just review what this committee and what the 
Congress has already done. The food stamp program was 
responding appropriately, and you even increased the food stamp 
program. People get more money from food stamps. The 
unemployment insurance program was responding appropriately. We 
are now spending something like $7 billion a month on food 
stamps, and we have dramatically expanded food stamps, or you 
have, and now the maximum benefit is 53 weeks.
    We entice the states to give more TANF dollars. We 
dramatically expanded the reimbursement rate for Medicaid. The 
Congress--I don't know what else could you could do. You could 
do more of the same, I guess. LaDonna's suggestion about the 10 
percent match in emergency fund I think is a good idea.
    But the Congress has already done a lot. So those two 
considerations would give some people pause about how much more 
the Congress should do.
    Mr. McGovern. Well, I will just conclude by saying I think 
what the Congress needs to do is to make sure that there is a 
safety net and that the safety net works. And I think what we 
are hearing today is that, notwithstanding good intentions, 
there are some holes in the safety net that we need to deal 
with. And these are real people, not statistics, not 
abstractions.
    But I appreciate all your testimony. Thank you.
    Chairman Spratt. Ms. Tsongas?
    Ms. Tsongas. Thank you, Mr. Chairman. And thank you, 
Congresswoman Moore, for hosting this and calling this hearing 
together.
    And I have appreciated very much your testimony. The 
stories are obviously very, very compelling.
    And I have one of my own. We have heard the statistics, and 
I don't need to repeat them. But, this November, I held a 
roundtable event with social service agencies in a community 
that is experiencing 18-plus percent unemployment in my 
district, just to hear how they are dealing with the downturn 
and how I could help as we look at legislative solutions.
    Even with the incredible resources going toward the SNAP 
program as a result of the Recovery Act, too many in my 
district are still going hungry, just simply to reiterate what 
Congressman McGovern has said. I was overwhelmed by the number 
of agencies and nonprofits that reported hunger as the number 
one problem facing their clients.
    As one example of many, at the Lazarus House in Lawrence, 
they distribute eight tons of food each week, up from three and 
a half tons this time last year. And even that is too much, and 
it is still not enough. So, clearly, in spite of our best 
efforts, hunger is a tremendous problem in this country.
    But I have a slightly different question that goes to a 
more structural issue looking forward, and that has to do with 
asset limitations in our programs, our safety net programs.
    Through categorical eligibility and some asset exemptions, 
we have addressed some but not all of the asset limits in the 
food assistance programs, but not in a very uniform way. Among 
federal antipoverty programs, more broadly, assets are treated 
very differently, creating a lowest-common-denominator effect 
for low-income families who may depend on more than one federal 
program to survive the downturn.
    These low asset limits require low-income families to spend 
down any modest savings, including retirement savings, they may 
have before they receive assistance. In my view, this is a 
penny-wise but pound-foolish strategy that ultimately costs the 
federal government more by forcing families, perhaps facing 
temporary needs, to permanently lose the assets that would help 
them once again escape from poverty once the economy improves.
    And to deal with that in a narrow context, I will be 
introducing a bill in January to address asset limits in SSI 
and peg them to inflation to begin to raise the lowest-common-
denominator bar.
    My question, though, to all of you is, will families 
entering poverty as a result of the downturn be able to return 
to their former status once the economy recovers? Or are we 
seeing a new generation entering chronic poverty?
    The recovery is having a large impact on low- and middle-
income families, but many are still struggling. What impact 
would higher asset limits have had on helping some families on 
the cusp of long-term poverty avoid it?
    Ms. Pavetti. I think, again, this is probably an issue 
where there are different parts of the spectrum. So the 
families that have been successful at moving into the labor 
market have had success at increasing their incomes. I think 
that building up the assets is what they would all like to do 
and would help them. I think for people at the bottom, it 
wouldn't. It wouldn't help them as much.
    But I think that the simplification across programs is just 
a smart way to do business for government. It will save time 
and resources that can be used in other ways.
    As far as, though, sort of, what are the long terms, I 
think we need to acknowledge that the unemployment rate is 
going to be high for some period of time. And I know that Ron, 
sort of, worries that, you know, we are going to move away from 
this focus on work. But I think if we think more about long-
term opportunity, it is a perfect time for people on TANF or on 
other programs to take advantage of education. And we need to 
make that a more viable opportunity for them.
    So I think that, yes, I have been concerned with the long-
term, but I also think there are things we can do to fix some 
of the constraints that would allow people to use some of this 
time to just create a better future for themselves, and we 
should do that.
    Ms. Tsongas. Would anybody else like to respond?
    Ms. Delessio. I would just like to note that, in Wisconsin, 
we have no asset limit for our medical assistance program for 
families called BadgerCare. We have also eliminated it in our 
food stamp program and our child care program, which, in terms 
of administrative ease, has been great.
    We do have an asset limit for TANF, but it does allow 
families, middle-class families, now to utilize food stamps 
without having to worry about spending down assets.
    Ms. Tsongas. Thank you.
    Ms. Berkowitz. And I would say, in South Carolina, we have 
different asset tests for different programs. We have an asset 
test for the TANF program, and we have a separate one for the 
low-income families.
    I think that there has been a real problem with families 
being able to engage in one-stop shopping, for lack of a better 
word. What we are seeing are people applying in one state 
agency and the other state agency not wanting to take the 
information from the first state agency because of the 
differences. That causes a lot of administrative costs. It 
causes suppression in going from one program to the other. And 
I think that it would be wonderful to see one asset test for 
all of the different programs and recognizing that, for some 
things, we need to eliminate certain assets completely.
    Ms. Tsongas. Thank you. My time is up. Thank you.
    Chairman Spratt. Mr. Andrews?
    Mr. Andrews. Thank you, Mr. Chairman.
    I would like to thank the panelists and my friend, 
Congresswoman Moore, for making this possible today.
    I certainly subscribe to the idea that, if we do not deal 
with the exploding budget deficit and the resulting debt, that 
the programs most likely to be hurt and the people most likely 
to be hurt are the ones we are talking about this morning: food 
stamps, TANF, housing assistance, and whatnot.
    I wanted to come back, Dr. Haskins, to your invocation of a 
budget Armageddon--because I think you are right; we are facing 
one--and ask you in the context of this morning's discussion 
about some of the choices that we have.
    Do you agree that entitlement spending is one of the 
driving forces behind that budget Armageddon?
    Mr. Haskins. Yes.
    Mr. Andrews. Do you agree that Medicaid and Medicare are 
two of the most important entitlements in that context?
    Mr. Haskins. Yes.
    Mr. Andrews. One of the choices the Congress has is whether 
to scale back Medicare and Medicaid outlays by about $500 
billion over the next 10 years in the health reform bill. No 
one on the minority side voted for that.
    Are you aware of any of their ideas to reduce Medicare or 
Medicaid outlays?
    Mr. Haskins. In the past, the Congress----
    Mr. Andrews. How about now?
    Mr. Haskins. You know, I am not a staffer. I don't know 
exactly what their proposals are. I am not responsible for 
them. As you well know, Republicans would be quite pleased to 
cut a number of programs, including some----
    Mr. Andrews. Well, of course, that is contrary to their 
behavior, though, because when they were in the majority, they 
did affect entitlement spending in Medicare. They increased it 
by $800 billion without paying for it in the Medicare Part D.
    So if you want to talk about the--one of the genesis points 
of this entitlement is that the former majority added $800 
billion and did not offset it with revenues. And it opposed the 
present proposals to reduce outlays by about $500 billion over 
10 years. As a matter of fact, the standard bearer of the party 
in the Senate, presidential standard bearer, attempted to strip 
all those savings out of the Senate bill last week on a floor 
amendment and failed, which I found to be uncharacteristically 
unwise.
    What about revenue options? The tax cuts that the erstwhile 
majority enacted in 2001 and 2003 are expiring in the next 18 
months. If we let them all expire, we would add $2 trillion of 
federal receipts. If we only permitted those affecting the top 
5 percent to expire, we would add about $800 billion to the 
federal receipts.
    What should we do, in your opinion?
    Mr. Haskins. I have written, since I was no longer a staff 
member in Congress, that the solution to the deficit was half 
tax increases and half cuts in spending programs. So I 
certainly would have taxes on the table.
    Mr. Andrews. Good for you.
    Mr. Haskins. But I would do it in the context where I would 
not increase taxes unless Democrats were willing to cut 
spending programs. I would put them together into one package, 
like we did back in 1993.
    Mr. Andrews. Which almost all of us voted to do in the 
health reform bill and no one on the other side did, in 
Medicare and Medicaid.
    Let's talk about another source of the Armageddon. Ms. 
Delessio, you talk about a person in Wisconsin who is a single 
mother living with her son, caring for a son with cerebral 
palsy, recently lost her job and whose husband died suddenly, 
leaving them without health insurance.
    People below 200 percent of the poverty level typically 
spend 30 percent of their income on health care. If the bill 
that was before the House, the health reform bill, were passed, 
the woman that you are talking about would probably pay about 3 
percent of her income for health care, if that, because she may 
be Medicaid-eligible, but if that. She would pay about 3 
percent and have a robust health insurance policy for herself.
    No one on the other side voted for that bill. Do you think 
that their judgment was right or wrong?
    Ms. Delessio. Obviously, I believe people should have 
health insurance and everybody should have access to health 
insurance. In fact, we were able to get this family on our 
BadgerCare program after they came to us. You know, when she 
returns to work, whether that will continue, I don't know. But, 
I mean, I think that what we are seeing is, even among working 
people, increasing numbers losing their employer-sponsored 
health insurance.
    Mr. Andrews. And finally, Dr. Haskins, one of the ideas in 
the House health reform bill is to make single adults and all 
those ineligible for Medicaid who make less than 150 percent of 
poverty level eligible for Medicaid. Do you think that would be 
a good work inducement for people who might otherwise choose 
not to work?
    Mr. Haskins. I don't.
    Mr. Andrews. What would be a better one?
    Mr. Haskins. The current system that we have allows 
especially mothers leaving welfare to get at least a year of 
Medicaid coverage, and I would even give them more.
    Mr. Andrews. But how about a working person who makes 145 
percent of Medicaid who doesn't get insurance from their 
employer? What should we do for them?
    Mr. Haskins. Some subsidy might be appropriate, but I would 
not automatically make them qualified for Medicaid because, you 
know, it is almost impossible to pay for it. If do you it in 
the context of a huge bill where you are raising revenues and 
they are real, then that makes more sense. But there should 
be----
    Mr. Andrews. As we are here. Because the CBO scored our 
bill as reducing the deficit by over $100 billion over 10 
years.
    I yield back.
    Mrs. Lummis. Will the gentleman yield, before he yields 
back, to me briefly?
    Mr. Andrews. If the chairman permits.
    Mrs. Lummis. I have bills that would address your concerns 
that I would be happy to share with you after the holiday 
season.
    As a member of the Republican Party who was not here during 
the years that you described and that wants to take a new 
approach rather than the approach of the current majority 
party, which is to double the deficit in 5 years and triple it 
in 10, my response is to forget about what the Republicans did 
when they were in the majority and what you have done since you 
were in the majority and----
    Mr. Andrews. If the gentlelady will yield----
    Mrs. Lummis [continuing]. We would be happy to work with 
you to solve problems, instead of point fingers.
    Mr. Andrews. Well, since it is my time, I would ask the 
gentlelady a question. Does she favor permitting the tax cuts 
to be repealed or to keep them permanent?
    Mrs. Lummis. I favor reducing spending, which is something 
that neither Republicans nor Democrats have taken seriously.
    Mr. Andrews. Do you favor permitting the tax cuts to expire 
our not?
    Mrs. Lummis. I do not. I favor cutting spending. I favor 
cutting spending.
    Mr. Andrews. Thank you.
    Chairman Spratt. Ms. DeLauro?
    Ms. DeLauro. Thank you, Mr. Chairman.
    I want to say thank you to my colleague, Ms. Moore, for 
asking for this hearing.
    I suppose one further comment on the deficit, in recent 
activity, at least in the House of Representatives, was--and, 
Mr. Haskins, I would be interested in your view and in my 
colleague's--well, my colleague is leaving the hearing room. 
But what is your attitude with regard to the estate tax bill 
that was just passed by the House of Representatives?
    Mr. Haskins. I don't know the particulars of the bill. I 
don't have any opinion on that.
    Ms. DeLauro. On estate taxes in general, do you have any 
thoughts?
    Mr. Haskins. No.
    Ms. DeLauro. Well, just to make a point to people who 
concern themselves with the deficit, that was $234 billion not 
offset. And don't take my word for it; you are all 
statisticians, economists, et cetera. The beneficiaries of the 
estate tax are the richest 1 percent of the people in this 
Nation. So let's not talk about deficits out of both sides of 
our mouths. Let's talk about a current crisis that we have.
    I will just give you an example from my State of 
Connecticut. There is a 24 percent increase in the use of food 
stamps this year. It has risen by 55,000 people. We went from 
231,000 to 286,000 people. The unemployment rate in the State 
of Connecticut went from 4.9 percent to 9.8 percent in less 
than 18 months.
    Now, the numbers have consequences because the numbers 
reflect people's lives. No job, no wages, no health care, no 
ability to take care of what people view as their 
responsibility: taking care of their families.
    And one of the things that has always been very interesting 
to me is listening to people who would say that, if we extend 
unemployment benefits and if we provide training and if we 
provide food stamps, that, in fact, people will stop looking 
for a job. That is the way that individuals are regarded. That 
is how they are demeaned, when fundamental to most human beings 
and their self-description is about their job and what they do 
and what contribution they make to society and their 
wherewithal so that they can take care of the economic security 
of their families.
    And if we want to live in a world of numbers and statistics 
and refuse to look at the plight of the people behind those 
numbers and statistics, then we are going down the wrong road, 
whomever serves here, Democrats or Republicans. This Nation is 
in a crisis. Do office hours every week. Look in people's eyes, 
with the fear that they have that they can't make it and there 
isn't anybody out there to support them.
    We all do pretty well in this institution, and all the 
panel members as well. We take good care of ourselves. But they 
don't have anywhere to turn. And, frankly, when they have 
turned here in the last several years, there has been a deaf 
ear. Well, I hope to God that our ears are open in this 
administration and that we are going to do something about 
this.
    And, Mr. Chairman, if you would give me a second to ask a 
couple questions, I would do it. I didn't intend to make a 
speech, but I will be damned--excuse me--if we don't call the 
shots for what they are right now and what is happening in this 
country.
    Let me ask about refundable tax credits. And I don't know 
if it has been discussed because I wasn't here for the whole 
hearing. The child tax credit, in particular. It is available 
to families with earnings of at least $3,000. If they earn 
less, they are too poor to claim the credit.
    And I guess what I will do--to Mr. Haskins and Dr. Pavetti, 
do you believe that, if we were to make the benefit, the child 
tax credit, partly available to families starting with their 
first dollar of earnings, that we could help to make a 
difference in terms of their economic security?
    Ms. Pavetti. Yes. And I think that, again, it addresses, 
sort of, what I talked about of having, sort of, people at the 
top and the bottom. Again, so many families who end up on TANF 
or who end up on food stamps are workers who have lost their 
job for whatever reason, and we need to be able to figure out 
how do we support all families who work.
    So I think it is a reality that not everybody can work all 
the time. They lose their jobs for lots of different reasons. 
And so I think really trying to figure out ways to provide more 
support is a good idea. And I think the child tax credit, 
making that available to more families, is one way to do that.
    Ms. DeLauro. Thank you. Mr. Haskins?
    Mr. Haskins. I would not.
    I support the child tax credit. I always wanted to make it 
refundable. Again, when I was no longer in Congress, I wrote 
articles and books recommending that we make it refundable. And 
the refundability that I favored was roughly the one that you 
have put in the ARRA, where you count income above I think it 
is $7,000.
    Ms. DeLauro. No, it is $3,000. We moved it from $8,500 to 
$3,000.
    Mr. Haskins. Yeah, one of the earlier ones was $6,000 or 
$7,000. So I would support that.
    I would want to look at it in the context--we already have 
negative taxes for the whole bottom 40 percent of distribution, 
if you just consider income taxes. So we are already using the 
tax code to give a lot of money back to low-income families. We 
are doing a terrific job, and I have always supported that. But 
why we would give them more in the context of the kind of 
deficit we have now?
    Ms. DeLauro. Well, if you take a look--because if you go 
down from 3,000 to zero, you are really going to deal with the 
underemployed, in terms of people's hours, which have moved 
from a certain number to less.
    But, quite frankly, in terms of the unemployed, you have 
lost your job, you have lost your health care, you have lost 
your child tax credit, because it is not refundable. So should 
we move in that direction?
    Mr. Haskins. It is refundable, but you have to have an 
income to get it.
    Ms. DeLauro. So what happens to those families that have 
lost it? So is there anything that you would suggest that we 
try to do with regard to a tax issue?
    Mr. Haskins. Yes. I think you have already done a great 
job. You have expanded unemployment insurance in almost every 
way conceivable, including consideration for COBRA health 
coverage, increasing the benefit for every American and making 
it go as long as 53 months. I mean, the Congress has already 
done a lot.
    Ms. DeLauro. No, not the Congress----
    Ms. Moore. Will the gentlelady yield?
    Ms. DeLauro. In a second, I will.
    Not the Congress. Not the Congress. I am going back to what 
my colleague said here. Not one single vote from the minority, 
not one. And that is a story to be told to people whose 
livelihoods these folks purport to represent. Not one single 
person who believes in that effort.
    I would be happy to yield if I have the time to yield. I 
don't have any time to yield.
    Ms. Moore. Thank you for yielding, gentlelady.
    I just want to ask Dr. Haskins, because he has referred to 
the success of the unemployment insurance and the expansion on 
several occasions, to the extent we are talking about TANF, you 
know, that is typically a program, like AFDC, that is available 
to women, single women and children, and unemployment insurance 
is typically available to men. We have seen a lot of men lose 
construction jobs and those kinds of jobs that were covered by 
unemployment insurance. And women are very heavily employed as 
hotel workers, restaurants, and not covered by unemployment 
insurance.
    Do you see any difficulty or have any recommendations for 
us with respect to the disparity in the safety net for those 
people--for men who are covered by unemployment insurance and 
women who, despite their work efforts, are not covered by 
unemployment insurance? Is that a difficulty for you?
    Mr. Haskins. First of all, there is nothing in the law, 
itself, that discriminates between men and women. And yet there 
are all kinds of complicated historical reasons and so forth 
that women happen to be in industries that, on average, they 
don't accumulate the amount of time they need and especially 
the consistency.
    And the reason that they leave their jobs, I would say the 
number-one--LaDonna may have more information on this than I 
do. But several years ago, the number one reason that people 
did not qualify for unemployment insurance was not that they 
didn't earn enough money in enough quarters, but they 
voluntarily left their job. So you may want to look at that or 
the Ways and Means Committee, which has jurisdiction, may want 
to look at that. But that has always been a criterion----
    Ms. Moore. I am just talking about pink-collar jobs where 
women can't get unemployment.
    Mr. Haskins. Well, I am telling you the reason they often 
are not covered is not that they are in pink-collar jobs. They 
make plenty of money to meet the quarter requirement and the 
dollar requirement. They often have voluntary separation from 
their jobs.
    Chairman Spratt. Let's go to Mr. Connolly, who has been 
waiting a long time.
    Ms. DeLauro. Yes. Thank you.
    Thank you, Mr. Connolly.
    Mr. Connolly. I thank the chairman and thank the panel.
    One of the concerns I have, as somebody who spent 14 years 
in local government, is that when we talk about the safety net, 
we, of course, understandably, have been talking a lot about 
federal programs. But I am worried about the fraying of the 
safety net at the state and local level.
    If you look at what is happening, state after state, to 
their respective budgets, their ability to handle growing rolls 
of folks who need to seek help with the safety net, whether it 
be TANF or food stamps or Medicaid or state- or locally run 
free clinics or wellness centers, whatever it may be, 
affordable housing, emergency housing, all of those things are 
at risk, given the most recent estimate that, come January, you 
may be looking at somewhere north of $400 billion in 
accumulated budget gaps that, by either constitution or by 
statute, must be closed. That has a direct effect on the safety 
net.
    And I wonder whether the panel might want to comment about 
that parallel reality that is equally bleak and very troubling, 
in terms of peoples's lives that will be affected if states and 
localities have to cut back significantly to meet those budget 
gaps?
    Ms. Berkowitz. I think that the point you have raised is 
important. It is part of why the center has been advocating for 
one of the policies that we think is most important in the 
short term, is to extend fiscal relief to states. Because the 
states do have a huge role, and they do have to balance their 
budgets. And if they do not have additional resources to help 
them during these difficult economic times, what we have been 
talking about today is going to get much worse for many people.
    So we think that, you know, again, we are not talking 
about, sort of, a long term. We are talking about phasing down 
more slowly, so that states continue to get the extended FMAP 
and they continue to get the fiscal stabilization fund, they 
get extra help to help with the food stamps, we make the TANF--
so there are, I think, a lot of things that we really think can 
be done in the short term that will really help things from 
getting as bad as they could.
    Mr. Connolly. If I may, at risk of piling on, the original 
House bill, the Recovery and Reinvestment Act, had more money 
both for infrastructure to create jobs and for relief of states 
and localities for precisely the reason you laid out, both of 
which were pulled out by the three members of the minority 
party in the other body who were willing to negotiate but the 
price of their support was that we substituted AMT tax relief 
for the middle class for those two provisions. And, without 
arguing the merits of that, that is why the bill had even less 
than originally contemplated for those purposes.
    Mr. Haskins. It had $144 billion in relief for states and 
localities, though. So it was still pretty generous, don't you 
think?
    Mr. Connolly. I do. But, as somebody who comes from a 
locality, I can tell you, it didn't begin to address the 
problem, Dr. Haskins. And now we are going to be revisiting the 
problem, come January of next year, because the situation has 
deteriorated. We plugged some holes, but we didn't plug as many 
as we wanted to, actually, in the original legislation.
    Ms. DeLauro. Will the gentleman yield for a second?
    Mr. Connolly. Of course.
    Ms. DeLauro. $80 billion I believe it was roughly, $70 
billion or $80 billion for the AMT, which, by all accounts and 
by every economist who wrote about this, had not one shred of a 
stimulative effect. And that was done as opposed to trying to 
do something about stimulating the economy.
    Mr. Connolly. It was done at the price of political support 
in the other body. Because, as Ms. DeLauro pointed out, not a 
single member of that minority party here in this body was even 
willing to talk about the legislation.
    I am sorry. I interrupted you.
    Ms. Pavetti. Well, no, just quickly, I think that on the 
state fiscal relief, besides the, sort of, needing to have it, 
I think the other issue is it needs to happen quickly. Because 
states are doing their budgets now, and if they don't know that 
there is additional funding coming, then they are going to be 
proposing both tax increases and cuts in their budget. And so, 
that is just critical.
    I mean, we estimate that if there is not additional 
stimulus, that you could have a loss of about 900,000 jobs. 
Because, again, states, if they don't get the money, they have 
to close their budget gaps, and they will cut. And they will 
have to do that, and they will do it quickly.
    Mr. Connolly. Dr. Haskins, one final question. My time is 
running out. I was very heartened to hear you say that, in your 
paper, since you have gone to Brookings, leaving here, you call 
for a combination of spending cuts and tax increases, obviously 
a sentiment not shared by our ranking member, Mrs. Lummis.
    I wonder, just having worked up here, is it your impression 
that members of the minority party would, in fact, ever be 
ready to support that proposition--that is to say, be willing 
under any circumstances to, in fact, vote for revenue increases 
that involve new taxes?
    Mr. Haskins. No, I am not a fortune teller. I am a scholar. 
I study the past. I don't know what they will do.
    But we will not get a budget deal to really have a serious 
impact on the budget unless taxes are increased or we reform 
taxes, which results in a net increase in taxes. Taxes have to 
be part of it, there is no question.
    Mr. Connolly. But I assume--my final point--I assume, given 
the fact that you are an intellectual and you are dealing with 
the subject straightforwardly, I assume you would agree that 
those who take a pledge, a priori, that no matter what, no 
matter what, I will never, ever, ever vote for any kind of tax 
increase or anything that smells, looks, walks, or quacks like 
a tax increase, frankly, precludes an honest discussion about 
that issue if I have already sold my soul and my vote in 
advance.
    Mr. Haskins. Look, I am a Republican. I was a loyal staffer 
up here on the Hill for many years. I don't want to say things 
that are going to put the Republican Party in a difficult 
situation. But I can tell you, personally, I would never sign a 
pledge like that.
    Mr. Connolly. Thank you.
    Thank you, Mr. Chairman.
    Chairman Spratt. Thank you, Mr. Connolly.
    Ms. DeLauro, did you have another question you wanted to 
ask.
    Ms. DeLauro. I did, Mr. Chairman. And it had to do with--
isn't Mark Zandi the economist who says that, for every dollar 
spent on food stamps, there is $1.74 in GDP growth and, for 
every dollar spent on unemployment benefits, there is a $1.61 
in economic growth. ``By contrast''--and this is Zandi--``you 
put out a dollar for various business tax breaks, you only get 
25 cents or less.''
    Just in terms of the explanation here, why the benefits 
affect economic growth, does continuing or expanding the 
benefits belong in job-creation legislation?
    Ms. Pavetti. It does. And the reason why it does is that 
there is a multiplier effect. Basically what happens is that, 
particularly in food stamps, TANF, unemployment insurance, 
those benefits are very well-targeted. They are targeted to 
people who are going to spend what they get. They don't have 
the extra resources not to spend them.
    So basically what happens, in using food stamps as an 
example, is that when somebody goes to the store to buy food, 
basically what you have done is you create this chain where the 
store needs to hire people to be able to serve you; the 
suppliers stay in business because they need to supply the food 
that you are going to buy--I mean, the distributors; and then 
the suppliers who actually are producing the food. So there is 
a whole chain of people who benefit from that money that is 
going to food stamp recipients or from people who are going to 
spend it in the economy.
    On the other hand, while there is some benefit from tax 
increases, they are just not well-targeted. Some of it is a 
replacement for things that would have happened anyway. And 
there is no guarantee that it ends up actually being spent in 
the same way that money is very well-targeted.
    So it is this multiplier effect of what happens when you 
target benefits, and there are jobs that are maintained 
especially as a result of that.
    Ms. DeLauro. Any comment, Ms. Berkowitz?
    Ms. Berkowitz. Well, I would just add that the money that 
has been invested in South Carolina through food stamps, 
through unemployment is money that, as Dr. Pavetti said, it is 
money that allows businesses to exist, hire new employees, and 
stays in our economy. I can say that, without the additional 
infusion of federal dollars in our state while we are facing 
incredibly hard times, we would see a much higher unemployment 
rate and more people in need.
    Ms. DeLauro. So, in fact, your communities, your states 
can't really succeed or you will fail without these increases 
in these benefits or seeing these benefits concluded at the end 
of 2010?
    Ms. Berkowitz. Oh, absolutely. I think that right now as 
our state is formulating its budget and we are looking at--and 
everybody keeps talking about the cliff when the federal 
dollars end--everybody is trying to figure out how are they 
going to project budgeting for the next year. And while we are 
already looking at additional budget cuts because of the weak 
economy, there is no question that there is going to be a 
ripple effect if there are not additional dollars that are 
appropriated and sent through fiscal relief to the states. And 
there is no question that that will more than likely have a 
disparate impact on safety net programs and the lower-income 
community.
    Ms. Delessio. I would totally agree with that. I think the 
same thing will happen in Wisconsin. And I think for areas that 
were already distressed, like Milwaukee, it will be 
devastating.
    Ms. DeLauro. Dr. Haskins, on the----
    Mr. Haskins. No comment.
    Ms. DeLauro. No comment? Okay. That is fine.
    I also wanted to add that the FMAP program, quite frankly, 
which ends on the 31st, what essentially will happen if nothing 
is done there and the states do not have any notification that 
we will be doing anything, come August what we will see is 
massive layoffs in education. Because states will have to make 
a determination of whether to deal with health care and laying 
people off or where to do go to deal with the cuts there. So we 
will see that there will be a massive, again, layoff of 
teachers, et cetera. So that is why, in my view, relief to the 
states is critically important.
    I will make a final comment, and I didn't get involved in 
the--we had moved on. I think one of the issues with regard to 
women--and we were talking about employment and unemployment. 
The fact of the matter is, with regard to women and what they 
do get to in their retirement years with regards to Social 
Security, yes, women have had in the past responsibilities as 
caregivers for children or for elderly parents. And, yes, it is 
a voluntary separation if there isn't anybody home to take care 
of your kid. On the other hand, what we don't do is to make 
sure that women who are in the same exact jobs as men, as we 
are in this body, we get paid the same amount of money, not the 
case for women, whether they are bus drivers, waitresses, 
engineers, news anchors, college professors, get paid 75 or 77 
cents on the dollar. That has an enormous impact on what 
happens to them as they are making their way through their 
lives and the loss of income, but the incredible effect it has 
on their retirement, as well, which is why one of the highest 
cohorts of people in poverty today are women over the age of 75 
or beyond, because we live longer.
    So, Mr. Chairman, you have been very, very indulgent with 
us.
    And thank you again, Gwen.
    Thank you.
    Chairman Spratt. Ms. Moore?
    Ms. Moore. Thank you, Mr. Chair. I just want to thank you 
again for enabling us to have this hearing.
    And I do want to say to each and every one of the panelists 
that you have been very clearly prepared and given us great 
information.
    I just wanted to say that one of the things that I have, 
sort of, noticed from all of your testimony, including Dr. 
Haskins's testimony--I think he was very, very candid in his 
written and verbal testimony here--that the way we administer 
TANF is very haphazard as a safety net versus how we administer 
other safety net programs like the unemployment compensation 
program.
    If you are eligible for unemployment compensation, if you 
have worked, if you make a certain--the child tax credit--if 
you make a certain amount of money, you are treated very 
differently than if you are just drop-dead poor and have no 
skills.
    So, with respect to the reauthorization of TANF, I do 
think--and, Dr. Haskins, you pointed out very clearly in your 
testimony--that there is a lag time, which I think could be 
very deadly for some people. When I consider the possible 
blizzard that is going on in my area right now, I think about 
someone requiring you to do a 30-day work search before you can 
access any benefits. Or the administrative barriers that are 
put in front of you because the state, as Ms. Berkowitz has 
indicated, is terrified of the sanctions that they may receive. 
Or the stigma of receiving TANF funds versus rushing down to 
get your unemployment; and even being able to apply for 
unemployment online, quite frankly, making it very convenient 
for you. And there is a disparity in men and women who qualify 
for unemployment compensation.
    And so, it occurs to me that, while we may not abandon the 
work-based program, as many of you have already indicated, it 
is going to be a long time before we have full employment--that 
is, only 5 percent unemployment nationwide. So we better look 
at reauthorizing TANF with the recognition that we need to 
reduce some of the strictures for people getting aid when they 
need it.
    Thank you so very much for your appearance, and thank you 
so very much for being prepared and for indulging us.
    Chairman Spratt. Let me echo what Ms. Moore just said. You 
have, each one of you, added something to our understanding of 
this problem, and you have brought your own authoritative 
views. And we appreciate the time you have put into it and what 
you have left behind. We definitely have benefited from this 
hearing, and we appreciate, once again, your appreciation.
    Before closing, let me ask unanimous consent that any 
Member who wishes and did not have the opportunity to submit 
questions may have 7 days to submit questions for the record.
    The hearing is now adjourned.
    [Whereupon, at 12:18 p.m., the committee was adjourned.]

                                  
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