WORKING OUT WELFARE

For the third time since President Clinton took office, the House of Representatives last week passed a bill that aims to make good on his 1992 promise to “end welfare as we know it.” And this time, with the Senate poised to pass a similar bill, it will be hard for Clinton to veto the measure as he has done twice before. The President faces a problem largely of his own making: last Tuesday, in a broadcast address to Governors, he announced that he was prepared unilaterally to impose a two-year limit on welfare recipients. The promise sounded a lot tougher than it probably was. Administration aides hastened to add that while recalcitrant adults might lose Aid to Families with Dependent Children (AFDC) benefits after two years, their children would probably keep theirs. Current law already has similar (if laxly enforced) work requirements, and many states, operating under waivers granted by the Administration, have even stiffer ones.

Still, the speech goaded Republicans in Congress to produce a new welfare bill of their own, since it could hardly help their election prospects–or Dole’s–to let the President out-tough them on this issue. Congress has already made some important concessions to his earlier objections. The Medicaid block grants that Clinton called a “poison pill” have been removed, and many softeners sought by the Governors have been added: child-nutrition programs, extra aid for recession-hit states, money for child care, foster care and adoption, and medical benefits for working families.

So although Administration officials remain troubled by such tough features as a projected $60 billion cut in total federal spending for welfare and food stamps over the next six years and limits on aid to noncitizens, Clinton will be in a box if the bill in its present form hits his desk before the August recess. If he vetoes it–which is likely, according to senior adviser George Stephanopoulos–the G.O.P. can argue that he “talks right and negotiates left.” If he signs it, he will face the wrath of party liberals at the convention.

But would this bill, in fact, end welfare as we know it? The truth is, nobody knows, because nothing close to reform on this scale has ever been attempted. The current draft gives official sanction to a national laboratory experiment, under way in many states, that tests the degree to which shifting incentives and sanctions can change people’s behavior with respect to marriage, childbearing and work. States would receive a block grant for all welfare expenditures, set, in general, at this year’s level, with added money promised only in the event of recession or unusual population growth. Federal money would no longer be paid to most recipients who stay on welfare longer than five years or to those who fail to meet work requirements within two years of coming on the rolls. Six years from now, states that fail to place half their welfare families in some sort of work activity would lose federal funds. States also will be free to stop payments to teenage mothers who aren’t in school or living with an adult, and unless their legislatures voted otherwise, they would have to eliminate extra payments for children born to mothers already on welfare.

Those sound like big changes, but there are plenty of outs. For example, the law exempts 20% of a state’s caseload from the five-year limit. In fact, while the proportion of long-term recipients on the rolls has increased in recent years, of all the families that move on and off welfare over time, relatively few stay on continuously for five years. States would also be free to use their own money to fill in any gaps left by federal law. Moreover, as many jurisdictions have already discovered, almost any effort to crack down is immediately rewarded by a 5%-to-15% drop in caseloads, so the block grants will go further. It’s worth remembering too that for as long as food stamps have been a capped program, Congress has never failed to provide a “supplemental appropriation” when the nation’s Governors came knocking.

States that really do want to move their poorer citizens to a life of greater self-sufficiency would have new flexibility to try out different approaches, but they would still face a daunting task. The more realistic among them, like Wisconsin, have recognized that to make a work requirement stick, a state will have to be ready to create jobs in the public sector–a potentially massive and expensive undertaking, especially for understaffed and often reluctant local-welfare bureaucracies.

Many forces affect growth in welfare rolls, among them demographic shifts, cultural mores, immigration and economic conditions. But the terms of welfare also matter. When welfare rights were an important cause in the late ’60s, the caseload soared (see graph). When states stiffened their rules in the mid-’70s, caseloads flattened out, despite the baby-boom generation reaching its childbearing years and some very nasty recessions.

Then in the late ’80s–when public interest in welfare waned–substantial new benefits were added, mostly in Medicaid, but also in food stamps and payments for “behaviorally disturbed” children, though basic AFDC payments declined. There were few well-publicized crackdowns, and caseloads rose more than 30% between 1988 and 1994. In the past two years, as reform rhetoric has heated up, the AFDC caseload has headed down.

None of the states’ experiments has been big enough or gone on long enough to claim direct credit for this reduction. The steady economic growth of recent years certainly has something to do with the improvement. But if the decline continues, welfare reform–rightly or wrongly–will get credit, notes welfare expert Douglas Besharov. That, in turn, will sustain the constituency for reforms.

Should the economy falter, however, states may be less willing to shoulder the added burdens of welfare reform, since the benefits, in terms of more stable, self-sufficient families would be slower in coming and harder to detect than the hardship cases that draw media attention. In the end, neither Governors nor Congress is likely to tolerate more malnourished or neglected children. In an economic downturn, the tough talk of summers past will be forgotten, government will appropriate whatever is needed and welfare as we know it will be back in business.

This will happen unless the President–and the public–faces up to the real truths of welfare reform: that changing the nature of the system requires large investments in changing both the opportunities and the incentives that millions of Americans face; that such changes will inevitably produce some harsh consequences; and that welfare, however reformed, cannot solve all the problems of the nation’s underclass any more than welfare, unreformed, is to blame for all of them.