We Should Give the Poor a Greater Stake in Prosperity


We Should Give the Poor a Greater Stake in Prosperity

Aug 23, 2010 3 min read

Commentary By

Chuck Donovan

Former Senior Research Fellow

Robert Rector

Senior Research Fellow, Center for Health and Welfare Policy

To hear Washington politicians tell it, welfare reform is something they’ve already checked off their “to-do” list. Been there done that back in the ’90s, veteran members of Congress boast.

So why would lawmakers even think about accepting the Obama administration’s plans to spend $10.3 trillion on six dozen means-tested welfare programs over the next decade? Next year alone, welfare spending (cash, food, housing and medical care for the poor) is set to exceed $950 billion. For every $10 President Bush spent on welfare in 2008, President Obama expects to spend about $13. Far from encouraging self-reliance, the welfare state’s unrestrained growth spurt will force millions more into dependency on government.

And, unless Congress acts, it will drive the nation into bankruptcy.

Instead, lawmakers should focus on proven reforms, including incentives for able-bodied adults to get jobs, for poor Americans with children to marry, and for states to contain costs and trim welfare rolls. While we’re at it, why not give the poor a greater stake in realizing the American dream? We can do that by treating some welfare benefits as loans to be repaid, at least in part.

This approach also would rescue the able-bodied poor from a clear moral hazard. Right now, they’re passive beneficiaries as government compels their fellow citizens, the taxpayers, to make outright grants with minimal expectations attached. A gift is good, but a reciprocal obligation would restore dignity and build character. After all, most of us are more likely to act responsibly when our own money is on the line.

These were among the principles Congress applied 14 years ago in voting to reform a significant portion of the fast-growing welfare system.

President Clinton signed the reforms into law in 1996, promising they would “end welfare as we know it.” Congress replaced a failing program, Aid to Families with Dependent Children, with a new model called Temporary Assistance for Needy Families. Under TANF, the federal government no longer sent blank checks for program managers to pass along. Instead, the law expected bureaucrats to control costs. And, in exchange for cash benefits, it required healthy adults to devote 20 to 30 hours a week to working or preparing for a job.

Within 12 years, we saw dramatic results: 2.8 million Americans, well over half the national caseload, moved off the welfare rolls and into jobs. Many were single mothers.

But a funny thing happened on the way to ending welfare as we know it.

Adjusting for inflation, total welfare spending has nearly doubled since 1996. In a major shortcoming, Congress reformed only one of the 70 means-tested welfare programs. And in the past two years, even the gains under TANF came to a screeching halt. President Obama’s economic “stimulus” package quietly created a $5 billion “emergency” fund. Bureaucrats used it to reward states where welfare rolls are growing again. Not even one in five of these “emergency” dollars goes directly to employment strategies.

Congress should insist that program managers enforce TANF’s work requirements, and vote to extend them to other welfare programs such as food stamps and housing assistance.

Yes, the recession continues to leave too many Americans hurting and jobless. Once it ends, though, lawmakers should peel back total welfare spending to previous levels and cap future increases at the inflation rate. That alone would save $1.4 trillion.

Promoting healthy marriage should be a centerpiece of welfare policy, as Congress envisioned. Because the child of a single mother is seven times more likely to live in poverty than the child of married parents, it’s a national tragedy that four of every 10 babies are born to unmarried mothers. For blacks, the rate is seven in 10 — a compelling reason for the Congressional Black Caucus to back real welfare reform.

Congress ought to address this crisis by reducing and eventually eliminating the “marriage penalty” that perversely strips benefits from Mom and Dad for being married and living together. One way could be to increase the Earned Income Tax Credit for married couples. Congress also should direct welfare agencies to share the facts on marriage’s benefits to residents of low-income neighborhoods. Here, especially, out-of-wedlock childbearing — and thus poverty and a host of social ills — climbs ever higher.

With annual welfare spending closing in on $1 trillion — over four times the 1979 level, adjusting for inflation — it’s time to reboot our anti-poverty programs to control costs and promote self-reliance. Work requirements and loans rather than giveaways are a solid start. If we as a nation also act to reverse the collapse of marriage, it would be a wise investment in building strong working families and helping their children and communities prosper.

Robert Rector and Charles A. Donovan are senior research fellows at the Heritage Foundation.

First appeared in The Providence Journal