Freedom to Fail

As any advocate for the poor will tell you, measuring the success of welfare reform depends on how one defines success. If it's simply a matter of cutting the welfare rolls, the Temporary Assistance to Needy Families (TANF) program has been the social policy equivalent of winning the space race. Between 1995 and 2001, the number of welfare recipients nationwide fell more than 50 percent after having grown steadily for decades. If success means anything broader, however, the record is somewhat less spectacular. Poverty is down and employment in single-parent families is up (no shock after an unprecedented economic boom), but not nearly in proportion to the drops in the rolls. And these indicators have all started heading in the opposite direction in the past two years.

The fight over TANF's reauthorization, like the debate over its record, also turns on a semantic pivot: that of flexibility. The Personal Responsibility and Work Opportunity Reconciliation Act that Bill Clinton signed into law in 1996 ended welfare as a federal entitlement program and turned the money over to the states as fixed block grants. The idea was that the states, Louis Brandeis' "laboratories of democracy," would let a thousand innovative policies bloom.

And it came to pass -- sort of. The birth of TANF served as a kind of Homestead Act for welfare reformers. From job-search seminars to drug-rehab programs to workfare to giving private companies such as Lockheed Martin a chance to run TANF employment programs, there's very little that hasn't been tried. Some of it has been heartening and some of it harrowing, but the system as a whole is nothing if not flexible, the sort of loose confederation of social entrepreneurs a Milton Friedman would love.

This year, however, may see the end of welfare reform as we know it. The original TANF funding ran out last year, and, unable to agree on reauthorization, Congress has repeatedly punted, passing a series of continuing resolutions to extend the life of the program by a few months at a time. Now, with Republicans firmly in control and President Bush egging them on, Congress seems set to produce something more long term. In mid-February, the House passed a bill nearly identical to the one it approved last May -- which in turn closely tracked the proposal Bush made the previous February. Sen. Bill Frist (R-Tenn.) has made passage of a Senate bill one of his top priorities as majority leader.

One would think that an administration that has proven reluctant, if not hostile, to the regulation of pollution, workplace safety and magical-realist accounting practices wouldn't want to interfere in the welfare programs of the states. But, as he has made clear, Bush believes the states have abused the leeway that's been given them. In a speech in South Carolina last July, he charged: "States require work of only about 5 percent of the adults on welfare. In other words, the goal is incredibly low." (He doesn't mention that most programs far exceed those targets: The Department of Health and Human Services' most recent report puts the actual percentage of welfare recipients in work or work-related activities at upward of 34 percent.) Despite his misgivings, however, Bush says he still believes in the states. "Congress," he said, "must always remember that when they write law, that we've got to trust the local folks, as well; that one size doesn't fit all when it comes to trying to help people help themselves."

But what about his plan's vaunted flexibility? Apparently it doesn't apply to the matter of work hours. Under Bush's proposal, states would be penalized if they didn't have 70 percent of their welfare recipients working by 2007. Right now the requirement is 50 percent, though the precipitous drops in welfare rolls in the late 1990s exempted most states from it. In addition, Bush's plan would raise the number of work hours required per family. Currently it varies between 35 hours for a two-parent family to 20 hours for a single parent with a child under six. In his estimation, a 40-hour workweek is "the definition of work."

That's not the only defining he does. Programs such as vocational training, bilingual education and drug treatment that states have set up to try to address enduring barriers to employment could only count in a limited way toward the new work requirement. All in all, according to a National Governors Association survey, welfare officials in 35 states believe they will have to make "fundamental changes" to their programs if the Bush plan becomes law. And welfare recipients will suffer as a result. "The National Evaluation of Welfare-to-Work Strategies," the largest study of its kind, found that combining education and job-search programs had the most success in placing welfare recipients in well-paid and stable jobs.

Plus, in a tough labor market there may not be enough jobs to meet the 70 percent bar. As a result, states would be forced to create publicly funded work programs, or workfare. David Ellwood, a professor at Harvard University's Kennedy School of Government and a Clinton welfare adviser (who left the administration deeply disappointed with TANF), says, "Workfare doesn't work; they're make-work jobs. That's how states are going to increase employment in the middle of a recession: make-work jobs." States and localities have largely come to the same conclusions themselves. Those that have tried workfare have dropped it, partly due to the administrative costs and bureaucratic headaches and partly because workfare has proved remarkably ineffective at getting people into real jobs.

And then there's the cost. Bush is freezing the TANF funding levels right where they are, which, with inflation, amounts to a de facto cut. But the Congressional Budget Office predicts that over the next five years, the new work requirements would cost $8 billion to $11 billion more than the current TANF budget, mostly on increased child-care costs and workfare programs. Because the entire yearly block grant is $16.5 billion, that's quite a shortfall.

Which brings us to the alternate definition of flexibility. Tucked away in the administration proposal and the House bill is a provision for "superwaivers" that would allow states to petition the federal government to circumvent federal rules, not only in TANF but in food stamps, public-housing programs, the Workforce Investment Act and elsewhere. A governor who wanted to reroute funding from one of those programs or sought to make deeper cuts than the law allows would simply have to petition the appropriate federal department. Congress wouldn't be able to do a thing about it.

As a result, with pinched budgets and overwhelming work requirements, the states' ability to innovate would be increasingly focused on finding creative ways of reducing welfare recipients' claims. Some might try, for example, merging TANF and the Food Stamp Program, thereby applying TANF time limits and work requirements to food-stamp eligibility. Or a state could apply to raise public-housing rents above the congressionally mandated level. The more dire a state's fiscal situation (and right now, for most of them, it's more dire than at any time in 50 years), the more creative its cost-cutting measures are likely to be. And it's not hard to see this administration, as assiduous as it has been in pressuring states to cut spending in such programs as Medicaid, allowing all sorts of dubious innovations.

What the superwaiver amounts to, as Deborah Weinstein of the Children's Defense Fund puts it, is "a very one-way kind of flexibility: the flexibility to cut." By contrast, the administration has doggedly opposed any suggestion that states get normal, old-fashioned waivers allowing them to keep welfare programs that didn't meet the new work requirements.

According to Shawn Fremstad of the Center on Budget and Policy Priorities, there is "plenty of flexibility already in programs like Food Stamps." The only reason to propose a superwaiver, then, is to open the door to some truly radical measures, the sorts of things that would never get through Congress. As Ellwood sees it, the measure is an administrative flanking maneuver, a means to attack "popular programs that are much harder to reduce or dismantle" through the legislative process.

If so, it couldn't come at a worse time. The great experiment of welfare reform took place in almost absurdly favorable economic conditions. With the boom over and the welfare rolls starting to rise again, TANF is just now being challenged. President Bush says he wants a flexible program, but whether we end up with the flexibility to combat poverty or simply the flexibility to cut funding may determine whether the system bends or breaks.