Welfare Fraud

Given the fervor emanating from Washington over the recent welfare reform bill, one can be forgiven for believing that we really have “ended welfare as we know it.” From the Left has come a steady chorus denouncing the bill for “punishing the poor” and “throwing millions of children into the streets.” Meanwhile, both President Clinton and the Republicans in Congress take credit for a “revolutionary” overhaul of the welfare system. However, the rhetoric from both sides is a fraud. The unfortunate truth is that this welfare reform will have only a minimal impact on welfare dependency and an even smaller impact on overall welfare spending.

Contrary to popular belief and pundit rhetoric, the current welfare reform is little more than a shell game – the current proposal leaves the majority of the 81 federal welfare programs intact, while the block grants are full of so many loopholes and federal strings that the same Washington politicians and bureaucrats that have been running the failed War on Poverty will continue to wield almost as much power as before. Those who worry that states cannot be trusted to address the needs of their citizens need not worry. The current proposal sufficiently limits the states’ ability to innovate new strategies through numerous federal mandates which guarantee that Washington-style compassion and “smarts” will be retained in virtually every state’s anti-poverty efforts.

The rhetorical campaign proclaiming the agreement as “revolutionary” is misleading for several reasons. First, under the reform, each state will receive a lump sum of federal money to run its own Temporary Assistance for Needy Families (TANF) and work programs. However, a “federal maintenance of effort” provision requires states to maintain their spending at, at least, 75% of the 1994 AFDC level. Citizens will continue to send their money to Washington; Washington will take a cut off the top; and the states will be told how much to spend on welfare and on whom these funds should be spent.

Second, even though lifetime welfare benefits will be limited to five years or less, hardship exemptions may be provided for 20% of families. Because most welfare recipients do not face long-term spells, many recipients who actually reach the five-year limit will probably be exempted from the cut-off. Furthermore, this time-limit provision only applies to fewer than five of the 81 federal welfare programs. The effect of this provision will be virtually null. For example, a person who exceeds the five-year limit and has her cash benefits cut off would still be eligible for a host of federal welfare benefits, including food stamps, Medicaid, public housing, Supplemental Security Income, the Women, Infants, and Children (WIC) health and nutrition program, free school lunches, and so on.

Third, while welfare adults will be required to work within two years or face the loss of benefits, welfare mothers with children under age six will be exempt from this provision if they do not work because they can’t find day care. This provision is particularly startling when you consider that vast federal resources are already dedicated to child care services, much of which is entitlement spending. With over 60% of the current AFDC households containing at least one child under age six, the proposal’s real impact continues to be diminished. Furthermore, when we hear of the “stringent” work requirements, we probably think of our own hectic work schedules and marathon days balancing work and family. Many of us may be surprised to learn, therefore, that for single-parent families the bill’s work requirement involves a 20 hour per week requirement for the first two years, 25 hours per week for the third year, and 30 hours per week thereafter. For two-parent families, the work requirement is 35 hours per week between both parents. Allowable work activities include community service and “work experience.” Since most workfare efforts have been little more than expensive boondoggles, perhaps we should be grateful that the bill’s work requirements are so limited.

While welfare as we know it will not be significantly different for recipients, perhaps it will end welfare spending as we know it. Not likely. The rhetorical campaign vilifying the proposal as cutting social welfare spending is misleading. The proposal actually continues to increase spending – at a slower rate. Here’s how: Absent reform, spending for major programs (including Medicare and Social Security) will increase from $581 billion to $776 billion between 1997 and 2002. Under the reform plan, spending will reach $763 billion in 2002. In fact, the projected 1997 savings under the reform proposal for family support payments will be about $3 billion less than the current 1997 spending projection – that “savings” is less than 1% of the entire federal welfare budget. Meanwhile, spending for other welfare programs such as food stamps, the Earned Income Tax Credit (EITC), and Medicaid will continue to increase. Hardly revolutionary, except maybe in Washington.

You wouldn’t know it from the welfare advocates’ howls of pain that the new law intended to end welfare as we know it is hardly more than a polite fiction. While the politicians vie to take credit for this alleged revolutionary welfare reform proposal, the tragic and compounding failures of the War on Poverty will continue to add misery to the lives of those trapped in the welfare system. The welfare system is unfair to everyone: to taxpayers who must pick up the bill for failed programs; to society, whose mediating institutions of community, church and family are increasingly pushed aside; to future generations who will bear the financial and social burdens of the failed government system; and most of all to the poor themselves, who are trapped in a system that destroys opportunity for themselves and hope for their children. So, until the politicians “end welfare as we know it,” could they at least spare us the self-congratulations?