Jeb Bush released his welfare reform plan this morning, kicking off a conversation on conservative proposals to reduce poverty and expand opportunity. That conversation will continue tomorrow at the Kemp Forum on Expanding Opportunity, where Bush and six other Republican presidential candidates will participate in a discussion moderated by Speaker Paul Ryan and Senator Tim Scott. It’s an appropriate venue, as the forum’s namesake, former Congressman and Cabinet Secretary, Jack Kemp, was perhaps the original “bleeding-heart conservative” of the post-’60s era.
(Full disclosure: I have informally advised former Governor Jeb Bush’s campaign, but the opinions in this post are mine, and do not necessarily correspond to those of Mr. Bush.)
“Conservative reformers are not talking about gutting the tax credits and transfer payments that are doing some of the work of poverty reduction. However, there is clearly a need to extend the lessons of welfare reform to other antipoverty programs.”
Of course, to the left, “bleeding-heart conservative” is something of an oxymoron. Many find it hard to believe that conservative proposals would, in fact, reduce poverty or expand opportunity. That belief, however, flies in the face of what happened after welfare reform in 1996. With a very real assist from Hillary Clinton’s husband, a Republican Congress discovered a successful antipoverty strategy second only to strong economic growth. The key is to demand and support work and independence.
In 1994, there were 58 families receiving cash welfare for every 100 families headed by a single mother. Thanks to the Earned Income Tax Credit and state welfare experimentation, that number fell to 50 by 1996, when welfare reform passed. After welfare reform, however, the number of families receiving cash assistance plummeted. By 2002, there were only 22 families on welfare for every one hundred single-mother families, and the figure was below 18 in 2007.*
This dramatic fall would have been a limited victory if poverty had risen among single-parent families and their children, but instead it fell. This was a dramatic change from the pre-welfare-reform era, when liberal antipoverty policy focused on simply handing out cash with little responsibility required of beneficiaries.
For instance, the best poverty data, from Columbia University researchers (Figure 3), indicate that 29% of children were poor in 1967 and 29% were still poor in 1993. By 2000, that rate had fallen to 18%, contrary to the warnings of liberals who believed that poor families lacked the capacity to become independent. Liberals attributed the decline to the 1990s economic boom, but poverty stayed low after the 1990s. It rose in the recession of 2001, as in past recessions, but only to 19%. It then fell to a low of 17% before rising back to 19% by 2012. But while the poverty rate during the damaging double-dip recession of the early 1980s increased poverty by 7.5 percentage points, the increase over the Great Recession from 2009 to 2012 was under 2 points.
Why did poverty fall? Work played an important role. According to a new report by scholars convened by AEI and the Brookings Institution, in the 16 years between 1980 and 1996, the share of never-married mothers who worked rose by 10 points, from 40% to 50% (Figure 5). But in the next four years, the work rate rose by 15 points, hitting 65% in 2000. The employment rate fell thereafter but was still 59% in 2013.
To be sure, work supports–the Earned Income Tax Credit first and foremost among them–were vitally important to keeping poverty down. But liberals who claim that poverty stayed down only because of other benefits like the EITC or food stamps are deluding themselves. The official poverty rate for households headed by a single mother does not take SNAP, the EITC, the Additional Child Tax Credit or Medicaid into account. It fell from 1997 to 2000 and has never reached pre-welfare-reform levels (Figure 4).
Similarly, the Columbia poverty estimates indicate that until the Great Recession, child poverty rates before taking taxes and transfers into account were lower than pre-welfare-reform levels (Figure 8). By 2012, they still were a touch lower than their 1993 peak, and using the best cost-of-living adjustment would show a stronger decline. Furthermore, there is some evidence that these safety net programs disincentivized work in the wake of President Obama’s stimulus package in 2009. The pre-tax and -transfer poverty trend would look at least somewhat better in the absence of those work disincentives, because at least some people would have worked who did not.
Widely publicized claims that “extreme poverty” has risen sharply in the wake of welfare reform are not credible. They are contradicted by other evidence on “deep poverty.” And they are weakened by evidence that (1) poverty is significantly overstated by under-reporting of safety-net benefits and (2) this under-reporting is worsening over time.
Also relevant to these poverty trend estimates is the fact that conservative reformers are not talking about gutting the tax credits and transfer payments that are doing some of the work of poverty reduction. However, there is clearly a need to extend the lessons of welfare reform to other antipoverty programs. For example, as the Bush backgrounder notes, food stamps (the “Supplemental Nutrition Assistance Program,” or SNAP) have proliferated dramatically–far beyond what poverty and income trends would predict. In 2000, there were 17 million Americans receiving food stamps, but today 45 million do. That’s an increase of 164%. Of nearly 30 million. When the unemployment rate is 5%.
“In 2000, there were 17 million Americans receiving food stamps, but today 45 million do. That’s an increase of 164%. Of nearly 30 million. When the unemployment rate is 5%.”
That takes us back to Jeb Bush’s proposal, which would combine cash welfare (“Temporary Assistance for Needy Families,” or TANF), SNAP, and the federal rental assistance programs (“public housing” and “Section 8″) into “Right to Rise” grants and send them to the states. These programs currently make up about $130 billion dollars in federal spending, or a third of the non-health-care antipoverty budget.
States would be granted wide leeway to redesign the way they provide assistance. They will have to meet benchmarks for success related to work, poverty, marriage, and out-of-wedlock births. The proposal includes work requirements and time limits for beneficiaries. It features proposals to promote marriage as well.
Liberals have already begun to demagogue the plan, as some did with Speaker Ryan’s “opportunity grant” proposal last year. But the scare tactics will have to ignore several thoughtful features of the Bush plan (which are generally also in the Ryan plan):
- Most importantly, the plan is modeled on the 1996 welfare reforms, which, as I hope is clear, reduced poverty. There are also signs that the very limited experimentation with work requirements in public housing are paying off. A new evaluation of a Charlotte, NC demonstration, which began imposing work requirements in five of its fifteen public housing developments at the start of 2014, finds that it raised employment rates and did not increase eviction rates.
- States are barred from spending less on the poor than they currently do, and they cannot use Right to Rise grants for things unrelated to poverty reduction.
- To quote from the backgrounder: “To ensure a robust safety net for those who have severe employment barriers and challenges, such as especially low skill levels, states will be permitted to exempt a minority of beneficiaries from these requirements.” This, too, follows the successful 1996 approach.
- Another quote: “The reform will provide additional funding in the event of an economic downturn.”
- Consistent with recent research on the importance of residential mobility, the plan would encourage states to coordinate so that red tape is not a barrier to families moving to opportunity.
Nor does the Bush welfare reform package constitute the entirety of his antipoverty program. Bush has famously been focused on achieving economic growth rates of 4%, and nothing lifts the poor and middle class like strong growth. His proposal would also strike a sensible balance by expanding the EITC to childless workers and young adults not in school, while also prioritizing the reduction of the too-high rate of improper payments to EITC claimants. The plan encourages states to experiment with parenting programs, and Bush “will focus special attention on improving skills, labor force participation and parental involvement of young men so that they can be more reliable and effective fathers.” But it also will demand more responsibility from nonresident fathers by toughening up child support enforcement. And there may be more to come.
Hopefully the release of the Bush proposal and the Kemp Forum will kick off a national conversation in 2016 about antipoverty policy. Conservatives have the better argument (4 links there), and this is an issue that, it is increasingly clear, is important to voters. Most importantly, though, our federal policies are failing too many poor families, and it’s incumbent that we find a way to do better by them.
* For estimates through 2002, see Scott Winship and Christopher Jencks (2004). “How Did the Social Policy Changes of the 1990s Affect Material Hardship among Single Mothers? Evidence from the CPS Food Security Supplement.” John F. Kennedy School of Government Faculty Research Working Paper RWP04-027. https://research.hks.harvard.edu/publications/getFile.aspx?Id=127. For estimates after 2002, see https://www.acf.hhs.gov/programs/ofa/programs
/tanf/data-reports and https://www.census.gov/hhes/families/data/families.html, Table FM-2.
This piece originally appeared in Forbes
This piece originally appeared in Forbes