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Both the Senate and the House have now passed welfare reform bills. A conference
committee will now combine the two versions and send the result to President
Clinton. The smart money is betting that he will sign it: for what political
advisor would dare recommend that anyone run in 1996 as the defender of
the current welfare system against "reform"? The core of the Democratic
Party is declaring "victory" and going home. In Minority Leader
Daschle's words: "We've taken a terrible piece of legislation and made
it a reasonable piece of legislation."
So it's time to begin thinking what this "welfare reform" will
mean for America. The rhetoric of reform focuses on providing states flexibility
so that they, in turn, can provide incentives to move people from welfare
to work. Unfortunately, these bills reduce states' ability to provide needed
incentives. To see this, consider how this country will be different in
ten years if current versions pass.
First, the federal government will be spending less--a lot less--on America's
poor children. Because of inflation and growth of the nation's poor population,
both bills imply that in ten years the federal government will provide each
poor child with about forty percent less than today.
Second, state governments will be spending less--a lot less--on America's
poor children. Currently, the largest cash welfare program, Aid to Families
with Dependent Children, is a partnership between the state and federal
governments. The federal government matches each state's contributions to
help its poorest families. In relatively rich states like New York or California,
one dollar is added to federal welfare spending for each dollar a state
spends. In relatively poor states like Mississippi, five dollars are added
in federal welfare spending for each dollar a state spends.
This federal matching money means that states now pay between twenty and
50 cents for each dollar of welfare spending. The current reform proposals
eliminate this match, increasing the cost a governor sees for helping poor
people by between 100 and 500 percent. The premise of welfare reform is
that incentives matter; for better or worse, they matter for governors as
much as for welfare recipients.
The Senate bill, but not the House, requires that states cut their inflation-adjusted
spending by no more than a third or so over the next five years. That many
governors have opposed even this restriction indicates the magnitude of
the cuts they envision.
Today the poor make up a large chunk of our children--almost one in four.
In twenty years today's poor children will have become a large chunk of
our working population (or prison and welfare populations). Making poor
childrens' lives much harder over the next five years will make them less
productive citizens in 2015--and will make the rest of our lives much harder
in 2015 as well.
A number of programs help poor children stay in school and out of jail,
and, thus, keep them and their families off welfare. For example, the Quantum
Opportunities Program provides an array of after©school, tutoring,
mentoring and summer programs in a number of cities, and has been shown
to reduce dropouts and teen pregnancy. The Center for Employment and Training
in San Jose has a record of giving dropouts a second chance and moving them
into good jobs. Slash-and-burn elimination of funding will require such
programs to shrink, even though both save taxpayers money over the long
run. True reform involves giving states incentives to increase these and
similar high-payoff investments in our nation's children.
"But," you hear advocates of the current welfare reform process
saying, "slash-and-burn welfare reform is hard but necessary; we must
end our dependency-generating welfare system. The end of welfare as we know
it will stop children from having children, will greatly reduce births out
of wedlock, and stop dads from abandoning their families."
Don't bet on it. The major cause of child poverty in America is not the
result of our safety net providing aid to poor children. It is the breakdown
of the two-parent family. If children today were as likely to live in two-parent
families as they were in 1959, only one in eight families with children
would be poor, instead of the almost one in four who are poor today. Since
1959, the increase in single©parent families has undone almost all
of the reduction in poverty that economic growth should have given us.
And the breakdown of the two parent family is due to broader forces than
the existence of a safety net to aid poor children. Unfortunately, for all
segments of society, divorce and single- parent families have become vastly
more common, including segments (such as Republican Congressional leaders
Bob Dole and Newt Gingrich) whose families are unlikely to end up on welfare.
This year's welfare reform debate has seen American politics at its worst.
Everyone agrees we need true welfare reform that gives states flexibility
from federal micromanagement. At the same time, flexibility must be accompanied
by accountability and incentives--not just for welfare recipients, but also
for states--to invest in our children and to move families from dependence
to independence.
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J. Bradford DeLong,
Associate Professor of Economics
Evans Hall, University of California at Berkeley
Berkeley, CA 94720
(510) 643-4027 phone
(510) 642-6615 fax
http://www.j-bradford-delong.net/
