Donald J. Devine

Welfare reform fantasyland
June 5, 2002

Who did not cheer when the House of Representatives renewed the 1996 welfare reforms last week? Everyone knew the number of families on welfare had decreased from 3 million to 2 million families, without throwing more people into poverty.

Conservatives crowed about forcing President Bill Clinton to sign their bill that had now proved so successful. Even Liberals admitted the old Aid of Families with Dependent Children (AFDC, now TANF) reform had been a success, while they awaited Senate consideration to increase other welfare spending.
Yet, “welfare reform” is an excellent example of Washington bureaucratic happy talk. Robert Rector, while the proud father of welfare reform, refuses to hide the real facts. His recent Heritage Foundation study noted: “As a nation, we spend 10 times as much on welfare today, after adjusting for inflation, as was spent when the War on Poverty began. We spend twice as much as when Ronald Reagan was first elected president.” What, welfare spending has increased 200 percent since the mean old days of President Reagan and New Gingrich? How has this little fact escaped the public debate?

Sure, it is great that a million fewer families are on one public assistance program. Finally, the federal government has stopped subsidizing families to keep fathers out of the household. It only took a half-century and millions of broken families but the government finally got it. But there are 70 other federal welfare programs. Welfare is best understood in four categories: Federal medical welfare assistance totals $115 billion, state-local medical welfare assistance is $85 billion, other federal welfare assistance equals $160 billion, and other state-local welfare assistance tops $30 billion, while private charity adds $65 billion (excluding religious and educational contributions). AFCD/TANF is a mere pittance of total welfare spending at $11 billion. In other words, “welfare reform” dealt with only a minuscule part of the problem. In fact, the total number receiving at least one welfare benefit has increased from 82 million in 1980 to 103 million today, up 10 million even from pre-reform days.

The dirtiest secret is that Mr. Clinton actually won the welfare reform battle. People remember that he vetoed the Republican welfare bill twice before being “forced” to sign the bill. What conservatives forget is that the first two versions of the bill reformed medical assistance too, where the big bucks are in welfare. Presidential candidate Bob Dole opposed its removal at the time but the de-revolutionized Republicans in the House caved to the president and his party, taking the issue off the table for the 1996 election.
Liberals keep their victory very quiet so they can still play the guilt card for a gullible media and turn out their welfare troops who consider themselves robbed.

Can anything be done to solve the real problem? President Reagan had the solution with his “big swap” proposal – for the federal government to assume the medical assistance part of welfare and swap the rest of welfare back to the states. The federal government already determines health policy in the U.S. through its effective 100 percent tax credit for employer-offered health insurance, plus Medicare for seniors and half of Medicaid for the poor. The only politically viable solution is to transfer the national program – plus all state health ones – into a single tax credit for every individual in America. Once all the programs are consolidated in one location at the national level, such a solution to take bureaucrats out of health policy completely becomes possible.

That would leave the rest of welfare where it belongs, at the local and private levels, where Mr. Reagan and most traditional conservatives say it belongs. Mr. Rector opposes this because the states do not want it and pressure can be put on the federal bureaucracy easier than that states. However, if the states could be rid of their biggest expense and headache, Medicaid, they might be ready for a deal. Besides, they had no voice when the Feds took the responsibility from them. Why be delicate now?

As far as trusting the federal bureaucracy more, that just will not sell. Rather than the state, welfare should be run at the local or private level, anyway. As the spending figures show, the private sector already has a major role. Jason Turner, also at Heritage, documents that the big successes in Wisconsin and New York City welfare caseload reductions worked because the lowest levels of government in both places – at the neighborhood level in the cities – made them work.

At least the country deserves a serious debate. It may be in the politicians’ interest to keep the facts about welfare under wraps but this is too big an issue to keep the public wholly in the dark.

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Donald Devine, former director Of the U.S. Office of Personnel Management, is a columnist and a Washington-based policy consultant and a Vice Chairman for the American Conservative Union