June 26, 2002 | WebMemo on Welfare and Welfare Spending

The Baucus "WORK" Act of 2002: Declaring War on Welfare Reform

Quick Hit: Although it does not restore entitlement status to TANF funding, the Baucus "WORK" bill overturns nearly every other element of the 1996 welfare reform. It also significantly expands the size and scope of the welfare state; the new spending contained in the bill is around $10 billion over five years.

The bill effectively eliminates the five time limit on receipt of TANF benefits. It ends the current goal and incentives for states to reduce welfare dependence and creates new financial incentives for states to expand welfare caseloads. Few if any welfare recipients would be required to work or prepare for work under this bill; such work requirements as do exist are lax and nearly meaningless. The bill effectively prohibits Wisconsin-style workfare programs.

The bill does nothing to reduce the anti-marriage penalties in the welfare system; the so-called marriage promotion grant program is designed so that it has little or nothing to do with marriage. Rather than encouraging marriage, the bill has several provisions expressly designed to encourage and reward out-of-wedlock childbearing and single parenthood. In addition, Senator Baucus apparently intends to introduce an amendment to eliminate the federal abstinence program and replace it with a safe sex program during the markup hearing.

Time Limits

Ending the five-year time limit on receipt of TANF aid.
Under the current law, federal funds cannot be used to provide cash assistance for more than five years. However, day-care and transportation aid can be provided indefinitely. The WORK bill effectively ends the five-year time limit on aid by permitting states to give TANF "supplemental housing benefits" to recipients indefinitely. Since there is little or no difference between giving cash aid and giving cash that is dedicated to paying rent, this provision effectively ends the federal time limits.

Work and Work Preparation Requirements

Hollow "universal engagement."
The bill places a strong emphasis on "universal engagement," the idea that all recipients should be engaged in activities leading to self-sufficiency. To promote "universal engagement," the bill requires that all recipients must complete an individual responsibility plan (IRP) within two months of enrollment. An IRP is not a new idea; in the past, legislators have realized that an IRP alone is meaningless. The IRP is nothing but a piece of paper in the recipient's case folder. For universal engagement to be a reality, the welfare agency must continuously engage the recipient in constructive activities after the IRP has been signed. (This is the purpose of work participation standards.) The Baucus bill does not require or even suggest this. Universal engagement is a hollow slogan and nothing more.

Prohibiting workfare or community service work.
Community service work (requiring recipients to perform service in exchange for benefits) is a critical element of welfare reform. Community service work or work experience was the core principle in Wisconsin's highly successful efforts to reduce dependence and promote employment. The WORK bill seeks to make it difficult or impossible for states to operate community service or workfare programs. Such programs would be subject to the Davis-Bacon and Service Contract Acts. Welfare agencies would be required to pay unemployment insurance and Social Security taxes for recipients in workfare programs. A welfare recipient performing work in a nonprofit organization or government agency could not perform any activities that had previously been performed by a regular employee, even if the employee had left voluntarily and the organization had expanded its workforce in other areas. These provisions constitute a de facto prohibition on state operation of community service or work experience programs.

Work or activity participation standards: as full of holes as Swiss cheese.
The White House has sought to increase the share of TANF recipients engaged in work-related activities. In the past, increases in work requirements have led to drops in dependence and increases in employment.

Increasing the number of recipients engaged in work and other constructive activity would seem to be essential to the idea of "universal engagement" promoted in the Baucus bill. Thus, the WORK bill claims to increase the work participation levels. In reality, it does not do so.

On the surface, the bill requires 50 percent of TANF recipients to participate in education, work, or other activities by 2005; the nominal participation level rises to 70 percent in 2007. However, the bill contains such generous exemptions and credits against the work participation rates that in reality no recipients would be required to do anything.

Acknowledging the problem of excessive credits and exemptions, the bill creates a second "floor" participation rate. The "floor" participation rate is ostensibly 30 percent in 2005 and 50 percent in 2007. However, the bill excludes mothers with young children from the count; this reduces the real floor to 24 percent in 2005 and 42 percent in 2007. The bill then allows states to reduce the participation rate by the number of applicants who are diverted from entering the TANF rolls; the impact of this last provision is unclear, but it probably reduces the effective participation rate to zero.

In addition, the bill exempts a state from the work participation floor if it meets any two of the following conditions: rising unemployment, rising TANF caseload, or rising food stamp caseload. HHS estimates that 18 states would thus be exempted from the "floor" in 2005 and 15 in 2007.

The bottom line: The so-called work floor is made of Swiss cheese. Under the Baucus bill, the number of TANF recipients who will be required to participate in any activity, even five years in the future, will probably not be higher than the number currently participating under the now-obsolete provisions of the 1996 Act. Since the WORK bill does not strengthen the work requirements in any meaningful way, and in many respects weakens them, it would be better simply to extend the current TANF law for one or two years than to enact the bogus provisions of the Baucus bill.

Hours of required activity.
In contrast to the President's proposal, the Baucus bill does not increase the hours of activity required of TANF recipients. It is very similar to current law. Mothers with children under age six are to participate in work-related activities for 20 hours per week. Mothers of older children are to participate in activities for 30 hours per week, of which 24 are to be "work-related." (For mothers of older children, current law provides for 30 hours, of which 20 are to be work-related.) The definition of work-related is very porous; moreover, the required participation rates are so low that these provisions are largely meaningless.

Incentives to increase food stamp enrollments.
The bill creates strong financial rewards for states to increase food stamp dependence. Under the act, states can recruit to increase enrollment in food stamps. (Ninety percent of food stamps costs will be borne by the federal government.) If a state is successful in increasing food stamp caseloads by 10 percent, it will be rewarded by up to a 15 percent increase in federal TANF funds.

Marriage and Out-of-Wedlock Child-Bearing

Marriage promotion grants have nothing to do with marriage.
The 1996 welfare reform had four principal goals, two of which were to reduce out-of-wedlock childbearing and to increase two-parent married families. The expectation was that states would use TANF funds to develop programs to promote healthy marriage. Yet, despite over $100 billion in federal TANF funds over the past six years, only about $20 million as been spent on pro-marriage programs. States have held that they were unable to promote marriage because they lacked model programs to follow. Because of the lack of activity on the critical marriage issue, the Administration decided to allocate $300 million, or roughly 2 percent of future federal TANF funds, to a pilot program to reduce child poverty and increase child well being by increasing healthy marriages.

The Baucus bill does allocate $200 million per year to a "marriage promotion grant" program. Unfortunately, the program is about marriage in name only. Indeed, most of the activities fundable under the Baucus marriage program have nothing to do with marriage. For example, the bill states the "marriage" funds may be used for "broad-based income support strategies that provide increased assistance to low-income working parents, such as housing, transportation, transitional benefits, etc., independent of family structure." In other words, the marriage grant program is specifically designed to support the vast array of conventional welfare services rather than marriage.

The Baucus bill prohibits reductions in the anti-marriage penalties in the welfare system.
Existing means-tested welfare programs such as TANF, food stamps, public housing, Medicaid, and the EITC profoundly discriminate against marriage. If a single mother marries an employed father, the father's earnings will make the mother ineligible for most welfare aid. The existing welfare system creates strong financial incentives for low-income mothers and fathers to remain separate and not marry.

One of the objectives of the President's marriage program was to encourage small-scale experimentation in reducing the anti-marriage incentives of welfare and to assess the impact of these experiments in promoting healthy marriages. The Baucus bill's so-called marriage promotion program specifically prohibits any reduction in welfare's anti-marriage penalties. All benefits must be provided "independent of family structure." This makes it impossible to reduce the anti-marriage incentives by allowing a mother to retain some portion of benefits upon marrying an employed man.

Non-citizens who give birth out of wedlock will get TANF benefits.
Most non-citizen residents who come to the United States have sponsors; the sponsor pledges that if the non-citizen falls into financial difficulty, the sponsor will support the individual rather than having the welfare system do so. However, the obligation for the sponsor to support the immigrant was found to be completely unenforceable. The 1996 welfare law put teeth into the sponsor's obligation by assuring that non-citizens could not receive TANF aid. The Baucus bill overturns that, allowing all lawful non-citizens to get TANF and effectively relieving sponsors of any financial obligation. Nearly all the beneficiaries of this provision will be non-citizens who have come to the U.S. and had children out of wedlock.

At-home care provision: a new program to reward illegitimacy.
The bill creates an experimental program with $150 million in funding over five years to pay non-married mothers to provide infant care to their own children under age two. This is exactly like the old AFDC system, except that it will be more generous. The meaning of this provision is clear; it is explicitly designed to encourage and reward women for having children out of wedlock.

Increasing welfare payments for single mothers.
Under current law, a single mother's welfare benefits are, in general, reduced when she receives child support from the father. The Baucus bill makes it much easier for mothers on welfare to "double dip," receiving both child support and their full TANF check. By significantly raising the incomes of mothers on welfare, this provision makes it less likely that they will leave welfare and obtain employment. Also note that if the mother decides to marry the child's father rather than merely collecting child support, she will, in most cases, lose her TANF aid. The effect of this provision, like many others in the Baucus bill, is to increase the financial incentives for a mother and father to remain separate and not marry. The cost of this provision is around $1 billion over five years.

Robert Rector   is a Senior Fellow at The Heritage Foundation

About the Author

Robert Rector
DeVos Center for Religion and Civil Society