Politics & Policy

Welfare Reform Part Ii

No, the job is not nearly done.

If Congress is looking for ways to save tax dollars and help balance the budget, how about revisiting the welfare budget? There is as much as $45 billion in savings there if you just root out the blatant fraud. How much is $45 billion? It’s about the size of the entire federal budget during the 1930s.

Yes, the welfare reform bill of 1996 was one of the stunning conservative success stories of the past generation. And yes, we have cut the welfare caseloads in most states by half, while requiring work for most of the beneficiaries of traditional cash-assistance welfare programs. And, yes again, liberals from Ted Kennedy to the Children’s Defense Fund, folks who claimed that welfare reform would mean “blood on the hands” of Republican lawmakers, were dead wrong in their every dire prediction. (There is even encouraging evidence that the incidence of out-of-wedlock teenage births — America’s number-one social pathology — has started to decline as teenage girls have gotten the message that having a child is no longer a passport to getting a government check.)

But no, the job of welfare reform is not nearly done. Congressman Ernest Istook of Oklahoma has made it his personal mission in life to fix the still-gaping holes in welfare reform that discourage work, marriage, and economic self-sufficiency, and encourage dependency and cheating. Istook recently compiled some disheartening statistics about welfare spending at the federal level. It’s way up when you consider the whole panoply of means-tested programs.

Many members of Congress forget that welfare is not just one federal program — it’s more than thirty separate handouts, ranging from food stamps, to Medicaid, to child care subsidies, to home heating assistance, to cash income supplements. A few years ago, a Cato Institute study calculated the “value” of the whole package of welfare benefits versus the value of working. It found that workers in some states would have to find jobs that paid more than $30,000 a year just to break even.

The chart below shows how welfare payments have skyrocketed since 2000. Part of this is the result of the recession, but part is a result of cracks in the welfare laws that have been exploited by welfare cheats. For example, as Istook points out, although we require work for traditional cash welfare assistance, there is no work requirement for Medicaid or food stamps in most states. These are two of the programs with the fastest increase in case loads.

At the same time, recent reports by the Office of Management and Budget and the General Accounting Office document widespread fraud in welfare payments that is now costing taxpayers $45 billion a year — or over $400 for every American household. The OMB recently found that the Medicare program made $21.7 billion in improper payments in 2004. A series of GAO studies found that food stamps are often fraudulently issued to people who are deceased or in prison. The GAO estimates that more than 10 percent of food stamps are improperly issued or illegally trafficked. Where are the watchdogs?

For traditional cash-assistance programs, the 1996 welfare reform bill accomplished three important goals: it required work for benefits, it turned these programs over to the states, and it put five-year time limits on financial aid. Welfare Reform Part II requires Congress to institute precisely these same common-sense measures for all welfare programs if we are going to permanently sever the cycle of poverty and protect against taxpayer rip-offs of the system. Beware, however, that the Left is striving for just the opposite: to reverse the gains from the original welfare reforms and rebuild the corrupt industry of dependency they erected in the 1960s and ’70s.

Welfare Reform Part II, if properly implemented, will save money and for those in need restore the dignity of a purposeful life. It will also be consistent with the original intention of aid to the poor, which was to be a temporary safety net for those out of work and out of luck.

Back in 1935 the founder of the modern welfare state warned: “Continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit.” The speaker was Franklin Roosevelt. What a tragedy that seven decades later Uncle Sam is still undermining the human spirit with this destructive narcotic.

Stephen Moore is president of the Free Enterprise Fund and a senior fellow at the Cato Institute.


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