New Welfare Reform Directive Creates Unlikely Political Issue for Obama

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During the 2008 presidential campaign, pastor Rick Warren asked Senator Barack Obama if he had changed his mind on any substantive issue in the past decade. Obama’s answer: welfare reform. Obama said he initially thought President Clinton’s 1996 welfare-reform bill would have disastrous results. By 2008, he was “absolutely convinced” that the work-centered approach in Clinton’s law must be “the centerpiece of any social policy.”

A July directive from the Department of Health and Human Services (HHS) has sparked questions about whether Obama has changed positions once again, and made welfare reform an unlikely issue in the 2012 election.

The new HHS reform aims to broaden the role of the Temporary Assistance for Needy Families (TANF) program, which provides cash and work assistance to poor families that meet certain requirements, such as undergoing job training or maintaining high secondary school attendance. The new approach gives states the ability to redefine those benchmarks to make it easier for applicants to qualify for funding.

This switch has drawn criticism from Republican leaders. “By gutting the work requirements in President Clinton’s signature welfare-reform law, President Obama is admitting his economic policies have failed,” House Speaker John Boehner said in a July 13 statement.

Mitt Romney also chimed in: “President Obama now wants to strip the established work requirements from welfare. The success of bipartisan welfare reform, passed under President Clinton, has rested on the obligation of work. The president’s action is completely misdirected.” In 2005, Romney joined 28 Republican governors to support a proposal  quite similar to the new one now; President Bush also pushed a related version in 2002.

The Obama Administration says the rule changes were driven by the states, at least five of which had argued TANF was too rigid to help boost employment during troubled times. “We also heard concerns that some TANF rules stifle innovation and focus attention on paperwork, rather than helping parents find jobs,” wrote George Sheldon, an acting assistant secretary at HHS.

Since 1996, Clinton’s belief that recipients should be forced to demonstrate accountability has been the starting point for every welfare debate. Fulfilling a campaign pledge to “end welfare as we know it,” Clinton presided over passage of a bill that scrapped a program guaranteeing federal assistance to the nation’s poorest families and replaced it with TANF’s block-grant system. Welfare caseloads dropped or stayed static until 2007, when the economy began to unravel.

The block-grant welfare system has its detractors, including Peter Edelman, a former deputy secretary of HHS and one of the three officials at the department toresign in protest of Clinton’s 1996 law. Edelman considers the new reform to be “a modest step in the right direction,” but doesn’t think it does enough.   “TANF is broken,” says Edelman, “TANF in the recession turned out to be useless.”  Why? Edelman points to the relative success of food stamps, which have looser eligibility rules that are, for the most part, uniform across the nation.  From 2007 to now, the number of people receiving food stamps have increased from 26.6 million to around 46 million, while TANF recipients increased by 500,000- from 3.9 to 4.4 million people.  Thus America is feeding its poor better than it is able to help them find a job. America is giving a fish, but not teaching them how.

While the federal government provides the broad work requirements, it is really the state that chooses how active it will be in distributing TANF.  Since each state determines how it will distribute the money, it can be tougher for welfare recipients to get benefits in some states.  In 2009, 8% of poor families in Texas received TANF, compared to 80% in California.

A Center on Budget and Policy Priorities study helps explain how this happens: states that have used TANF funds for other purposes during good economic times can’t reclaim that money when the economy takes a dive. TANF benefits are then cut, and work requirements are tightened.  Meanwhile, states have seen their TANF money decline.  Since the totalblock grant is fixed at $16.6 billion per year, inflation has eroded its value by almost 30% since 1996.  While President Obama did set aside an emergency one-year $5 billion fund to replenish TANF in 2009, the states seem to be looking for a longer-term solution.

The White House says it remains committed to a work-centered welfare approach.  “No waivers that water down welfare reform can be approved,” White House spokesman Nick Papas said in an email.  But Obama’s options are limited unless TANF is restructured, since the welfare money will continue to be parceled out as states see fit. The GOP attacks are a pre-emptive strike, since no one knows whether or not states will take advantage of the relaxed requirements. But Republicans think they can use the new HHS directive as a way to revive the narrative that the Democratic Party prefers entitlements, and the GOP accountability.