Devastatingly bad welfare policy in the stimulus bill

WARNING: The following is a policy post. It's not very funny and certainly not clever.

This is not a good idea. Here's the premise. In 1996, Congress replaced the old welfare program AFDC with TANF. TANF required that 50 percent of a state's welfare caseload be engaged in some kind of a work activity. As an incentive for states to reduce their caseload as well as understanding that after large caseload reductions states might be left with a whole lot of people who had "barriers to employment," Congress created the caseload reduction credit which reduced a state's required participation rate by the percent drop in a state's caseload since 1994 (I think. I should double check this.) So, basically, if you had a 50 percent reduction in your caseload since 1994, your state had a required participation rate of 0%. In 2006, Congress recalibrated this base year to 2005, so a lot of states had their caseload reduction credits wiped away (although in the last couple of years, states have seen really drastic declines....of course some states like Indiana were planning on a recalibration of the base year and were keeping a bunch of people on the caseload with payments of about 1o dollars a month so that when the base year was recalibrated, they just kicked those people off the caseload and generated a nice new fat caseload reduction credit). Anywho, what a number of states did is shove a bunch of their non-working caseload into state programs. So, these nonworkers did not count against the state's participation rate and also, by leaving TANF, generated a caseload reduction credit.

I've left a lot of the details out. So, the stimulus bill says that for the next two years, anyone who is placed on the state's caseload will not be subject to participation requirements, the federal government will pay 80 percent of the costs for new welfare recipients, AND the new welfare additions will not count against a state's caseload reduction credit. So, if you had a 20 percent caseload reduction credit between 2005 and 2007, and you bring enough people onto your caseload in the next 6 months that, normally would wipe out said caseload reduction credit...well, you still get to keep your credit. Oh, and those people you bring on don't have to be engaged in a work activity. And the government will pay the state more than they ever did in the matching days of AFDC. Basically, the states can start putting all those people they had shoved into separate state programs back onto TANF. All this is only for two years, but, as with everything, once something's enacted, it's tough to roll it back.

Now some of you are saying, "Wait! First of all, TANF block grants haven't been increased since 1996, so they are worth much less now. We should give more money to TANF! And second, during a recession, don't we need to allow our safety net to expand to account for all the people that need assistance?" I think those are two very valid points. But, remember that TANF caseloads have declined something like 70 percent since 1996. That's an incredible decline and it bascially means that despite inflation, states should have much more to spend on each welfare recipient than they did over ten years ago. So, unless caseloads increase at an unprecedented rate (like, adding 1.5 million people a year), states should have enough from their annual TANF block grant to pay for more people coming on the caseload. The problem is that because states have such low caseloads, they have been using their TANF money for all sorts of other services such as state and local Earned Income Tax Credits and more child care, many of which go to people who would not qualify for the regular TANF program. It's basically the same problem that all states are having across the board--they created too many programs in the good years and didn't anticipate a downturn.

Of course, I have a bigger problem with states not requiring participation. I could see maybe an attempt to remove the restrictions on the percent of the TANF caseload that can be engaged in education or training activities (which counts as a work activity). But making it so that any new welfare recipient is exempt from any work activity seems to completely undermine the whole purpose of TANF.

I think my biggest concern would be for those families who used up a good number of their lifetime limit of 5 years of TANF. I could see this downturn being potentially devastating for them if they weren't allowed to come back on TANF. Perhaps an exception could have been made there. But, I think that this has the potential of undoing way too much of welfare reform without anyone being aware of it.