The Libertarian Case Against the 1996 Welfare Law

In the years after former President Bill Clinton signed the 1996 Personal Responsibility and Work Opportunity Act and “ended welfare as we know it,” libertarians have been conspicuously quiet on welfare reform. For two decades, we toed the conservative line on program cuts, stiffer eligibility requirements, and block granting. The promise of smaller government cajoled us into deep spending cuts, too often starting with programs that support America’s most vulnerable.

As a result, we sacrificed the opportunity to define our own agenda—one based on the ideals of personal autonomy and equality under the law, and that stands up for communities marginalized by discriminatory laws and institutions.

In short, libertarians need to rethink their approach to poverty and welfare as they know it.

The current law has unintended consequences

To give credit where it is due, libertarians have begun to take issues of privilege seriously through causes like criminal justice and occupational licensing reform. But at the same time, libertarian and conservative groups have advocated for policies like drug testing benefit recipients and imposing stricter work and asset test requirements. This contradiction is more than a touch ironic—it’s difficult to argue that occupational licensing greatly reduces job availability for low-skill workers while pushing for stricter work requirements for jobs that don’t exist.

Supporters of work requirements would do themselves a favor by studying how they actually work in practice. Rather than being a tool to help families climb out of poverty, they often force recipients to take jobs with little opportunity for advancement to maintain their eligibility for assistance. Under TANF, for example, many parents are barred from counting attendance in a GED program toward their 20 hours of average weekly work. This actively discourages building skills for long-term career advancement, which might explain why conservative scholars who originally supported of the 1996 reform—from Christopher Jencks to Peter Germanis—have had quite public changes of heart.

As a block grant, TANF was conceived to embody the libertarian virtue of federalism by giving states broad discretion in how money is spent. However, its structure was easily gamed and turned into a slush fund for state discretionary spending. This often includes things having little to do with welfare, like marriage counseling and scholarship money for upper middle class families.

Asset tests have also not worked as intended. When the economist Lyman Stone dug into why coal workers in declining regions of Appalachia haven’t moved to find work, he realized Kentucky coal country contained 27 of the 71 counties where cash benefits exceed 40% of individual income. And, as he notes, TANF is not built to support mobility:

“Programs that discourage saving by stringently asset-testing benefits or by prohibiting hoarding (such as TANF or SNAP) trap beneficiaries in place, because migration has steep fixed costs in the form of transportation costs, lease deposits, and income to cover time spent looking for work.”

In other words, streamlining programs and liberalizing asset tests could actually make markets adjust better by reducing residency requirements and letting households save up for big life changes. Isn’t this the “opportunity and upward mobility” that House Speaker Paul Ryan’s poverty task force claims to desire?

Libertarians are typically skilled at identifying the unintended consequences of paternalistic government regulation. However, they have mostly signed off on—or at least not objected to— the House Republican plan to copy TANF’s broken design and paste it onto Medicaid, nutrition, and housing programs.

It’s time for a new approach

The absence of a positive libertarian agenda on poverty and welfare (besides the calls to abolish the welfare state entirely and leave charity to pick up the slack) dates back to the Reagan-era coalition that brought free market liberals and social conservatives under one tent. Conservative-Libertarian “fusionism,” as it became known, has been with us ever since. As a result, a typical proposal from a libertarian economist is to suggest creating a $20,000 tax exemption for high earners to redirect their income tax into charitable nonprofits—in essence, a massive subsidy to religious organizations disguised as a tax break.

Nonetheless, the alliance is due to break down. Libertarians’ aversion to paternalism and love for the rule of law should extend beyond opposition to trifles like soda taxes. It should include opposition to policies like drug testing for welfare recipients and the denial of nutrition assistance to people with criminal records, as well as support for direct cash assistance that allows individual sovereignty over one’s own spending decisions.

More generally, it’s time to abandon the idea that safety net programs inevitably create dependency and damage markets. Whether through a basic income guarantee or a universal child allowance, the best evidence shows that robust safety nets can cut poverty while encouraging the kinds of risk taking and entrepreneurship that lead to innovation, investment in human capital, and growth.

Poverty is not only a matter of material deprivation. It is also an affront to personal autonomy and equal dignity. No matter what your ideology, twenty years after the signing of the 1996 welfare law, the evidence is clear: TANF is no model.



Everything You Wanted to Know About the 1996 Welfare Law but Were Afraid to Ask

Table of Contents

What’s TANF?
What’s a Block Grant?
Isn’t State and Local Control More Effective?
Does It at Least Help People Prepare for Work?
Why Does All This Matter?
So Where Do We Go From Here?

What’s TANF?

In 1996, Congress replaced the New Deal-era Aid to Families with Dependent Children (AFDC) with a new program called Temporary Assistance for Needy Families (TANF), under the guise of “ending welfare as we know it.”

The new law built on decades of anti-welfare sentiment, which Ronald Reagan popularized in 1976 with the racially-loaded myth of the “welfare queen.” In the two decades that followed, progressives and conservatives alike put forward reform proposals aimed at boosting work and reducing welfare receipt. Progressive proposals included expanded childcare assistance, paid leave, and tax credits for working families. Conservatives, on the other hand, tended to favor punitive work requirements—without any of the corresponding investments to address barriers to employment.

In 1996, after vetoing two Republican proposals that drastically cut the program’s funding, President Bill Clinton signed the Personal Responsibility and Work Opportunity Act into law. The new legislation converted AFDC into a flat-funded block grant—TANF—and sent it to the states to administer.

The law’s stated purpose was to move families from “welfare to work.” By that measure, supporters initially heralded TANF as a success during the strong, full-employment economy of the late 1990s. But too often, the narrative stops there, ignoring significant failings in the program that surfaced after the economy slowed down.

What is a block grant?

A block grant is essentially a pot of money that the federal government gives to state governments to administer a program subject to federal guidelines.

One of the key limitations of block grants is that they can lose value over time. The TANF block grant, for example, has been flat-funded at $16.5 billion since the law was first implemented 20 years ago. In other words, despite the rising cost of living, TANF’s funding hasn’t increased at all. As a result, it has lost more than one-third of its value since 1996, leaving fewer low-income families able to access the help they need. Fewer than one in four families with children living below the federal poverty line are helped by TANF today—down from more than two-thirds in 1996.

Another major limitation is that block grants are unable to respond to economic downturns. During the Great Recession, the number of families helped by TANF barely budged—the number of unemployed workers spiked by nearly 90%, but families able to access TANF only ticked up by 16%. TANF’s failure to respond to rising economic hardship not only hurts struggling families; it takes away a critical tool to lessen the impact of recessions.

Isn’t state and local control more effective?

Not in TANF’s case. There’s very little accountability with regard to how states must spend this money, so many states treat the program like a slush fund by diverting the funds to a range of other purposes—including closing budget gaps.

As a result, just 1 out of every 4 TANF dollars goes to income assistance for poor families with kids—policymakers, the public, and the media lack even the most basic information on where the rest of the funds go. By comparison, over 95% of Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) dollars go to helping struggling families purchase food.

Does it at least help people prepare for work?

Not well. Preparing people for work was one of the stated goals of the 1996 welfare law, but only 8% of TANF’s funding goes to employment preparation services. What’s worse, states aren’t actually required to track whether TANF recipients get jobs—employment isn’t even an outcome that gets measured (nor is poverty reduction, for that matter).

Conservatives claim the law gives states flexibility, but states face stiff constraints when it comes to helping participants prepare for and find work. For example, states aren’t allowed to provide “job search and job readiness assistance” for more than four consecutive weeks and six weeks in the entire year—no matter how hard someone is looking for work. In addition, vocational training only counts towards required work activity for 12 months. It’s no wonder that governors from both parties have requested greater flexibility in designing work programs for TANF.

Why does all this matter?

Great question. TANF’s shortcomings don’t just matter to the millions of poor families with kids who aren’t getting the help they need through the program. A full 70% of Americans will need to turn to the safety net at some point—whether it’s TANF, nutrition assistance, Supplemental Security Income, or Unemployment Insurance. Without these programs, our nation’s poverty rate would be nearly twice as high as it is today.

But despite TANF’s dismal record, many congressional Republicans want to model effective antipoverty tools, including nutrition assistance and housing aid, after TANF—by converting them to block grants.

In total, Speaker Ryan has called for ending 11 antipoverty programs—including housing assistance, food assistance, and child care—and combining them into a single block grant. Just like TANF, the funding would be fixed—making it woefully unresponsive to recessions or changes in the unemployment rate.

So where do we go from here?

To begin with, the federal government should require states to spend a certain share of TANF funds on the law’s core purposes—income assistance, child care, and work programs. Requiring states to spend even half of TANF funds on these priorities would ensure that more families get the help they need. We should also hold states accountable for meaningful outcomes such as actually helping TANF recipients get jobs, and reducing poverty.

In addition, Congress should stop rewarding states for ending aid to families in need. Right now, states receive a so-called “caseload reduction credit” for reducing the number of people they help—regardless of whether they have jobs when they leave the program. In effect, instead of giving states incentives to provide needed assistance, we’re doing the opposite.

We also need to increase benefits so that families can meet their basic needs. In no state are benefits equal to even half the austere federal poverty level (the maximum benefit was about $10,000 per year for a family of three in 2015).

Strengthening TANF is critical to ensure that our nation’s safety net provides adequate protection against life’s unpredictability. But it is just one part of a broader antipoverty agenda.

Building an economy that works for everyone—not just the wealthy few—will require creating good jobs and ensuring a living wage; adopting work-family policies that ensure parents are not forced to choose between work and caregiving; putting childcare and high-quality education within reach for all families; and removing barriers to opportunity so that all families have the opportunity to succeed.



Rep. Doggett: ‘It’s Time to Fix the Broken Welfare System’

Twenty years ago today, legislation promising to “end welfare as we know it” became law.  I voted for that bill, which created a program called Temporary Assistance for Needy Families (TANF).  I believed that it would help more people move from welfare to good-paying, long-term jobs that would support families and reduce poverty.

Unfortunately, the program has failed to deliver on its promise, and it has left some families in even worse condition.

Since TANF was signed into law in 1996, the number of children living in extreme poverty—defined as no more than $2 per person per day—has doubled, from 1.4 million to 2.8 million children. That’s evidence of a failed approach, not a successful model we should apply to other federal programs, as many Republicans would now like to do.

Our country is capable of developing a system that will create brighter futures for poor families with children; ensuring a robust safety net for families when they can’t work; and preparing impoverished parents to succeed in today’s labor market.

To achieve these goals, here’s what we need to do:

First, we must hold states accountable for properly spending the funding they get from Washington. A key premise underpinning TANF was that if states were given more flexibility they would do a better job providing families with a strong safety net when they can’t work and they need help to obtain a good job.  But two decades of evidence has shown that when states get a pot of money accompanied by few federal standards, they will act in their elected leaders’ self-interest, not in the interest of poor children and their families.

The TANF block grant has thus become welfare for states.

The TANF block grant has thus become welfare for states. Most of them use the money once provided directly to poor families to instead plug state budget holes—some of which were created when these same states enacted tax cuts that mostly benefit the wealthy. In 2015, states spent only about half of their TANF funds on the program’s core purposes—work preparation, child care, and direct assistance. My own state of Texas, which so often neglects disadvantaged children, spent less than 14 cents of every TANF dollar towards these ends. Nationwide, states are spending only about 1 cent of every TANF dollar on education and training for recipients to find long-term and good-paying employment.

That’s not what Congress envisioned, and we need to ensure meaningful accountability.

Second, we need to eliminate provisions that restrict access to the education and training that low-income parents need to succeed. TANF recipients—mostly single parents raising their children—should not be denied the opportunity to pursue education and training that will prepare them for better jobs.  And yet, in many states a parent receiving TANF assistance would not be able to attend a community college or university to obtain the skills they need for a family-supporting career. Instead they might be forced into a for-profit job-training program in a low-wage industry, or a work assignment with no promise of upward mobility.

Preparing disadvantaged individuals for jobs that are in demand offers significant long-term payoffs. For example, Project Quest in San Antonio has enabled many individuals to escape poverty by training for in-demand jobs that pay a living wage, in sectors such as health care and bioscience, information technology and security, and aerospace. We need to ensure that struggling individuals have access to those kinds of high-quality opportunities.

By 2014, TANF reached just 23 of 100 poor families.

Third, we need to hold states accountable for providing a safety net for families who either can’t work or can’t find work. The 1996 welfare law contained a number of incentives for states not to serve families who need cash assistance—and states have responded by serving fewer and fewer. In 1996, for every 100 families with children living in poverty, 68 received cash assistance. By 2014, TANF reached just 23 of 100 poor families. Texas is one of a dozen states that provide income assistance to less than one in ten poor families with children.

Moreover, the value of TANF funding has fallen by more than one-third since 1996 because it was never adjusted for inflation. We must therefore provide more, and change the incentives so that states are encouraged to assist more families—those who are able to transition to work, and those who need assistance because they are unable to work.

TANF was enacted 20 years ago on a bipartisan basis.  It’s past time for us to revisit the law and improve it on a bipartisan basis as well.  Unfortunately, congressional Republicans continue to reject any genuine change, content to talk about reform but offering only kinder talk with less help. Indeed, Speaker Ryan would double-down on this broken system to make other types of assistance—such as housing and nutrition—even harder for struggling families to obtain.

We need to heed the lessons of the past two decades and create a new approach—one that will truly put good jobs within reach, while strengthening the safety net to keep families from falling into poverty when they are experiencing hard times.



Why North Carolinians Can’t Drink Their Well Water

Last week, controversy erupted in North Carolina when the state’s epidemiologist resigned via an open letter, saying that the state’s Department of Health and Human Services (DHHS) is willingly misleading the public.

It’s the latest installment in an ongoing battle over coal ash contamination in residents’ well water. Earlier this summer, a state toxicologist’s deposition accused the governor’s staff of pressuring him to sign on to letters saying well water near coal ash sites was safe to drink. In response, the governor’s office accused him of lying under oath.

How did we get here?

For the past 50 years the question of how to regulate coal ash, a byproduct of coal-fired power plants, has been left to the states.  In North Carolina, that meant utility companies were allowed to store hundreds of millions of tons of ash full of toxic metals in unlined pits, without any barriers to prevent them from leaking into the groundwater that feeds nearby rivers and wells.

In the spring of 2015, residents who live near coal ash pits across the state began receiving letters from DHHS telling them their well water was contaminated—primarily with vanadium and hexavalent chromium (the carcinogen made famous by Erin Brockovich)—and that they shouldn’t drink it.

In all, 369 households were told their well water was unsafe to drink.

State governments have allowed ash to be warehoused in communities with little political influence

For two generations, our state governments have allowed ash to be warehoused in communities with little political influence—that is, low-income communities and communities of color. These community members do not have the resources to get a meeting with their governor. But Duke Energy, the state’s major power company, does.

On June 1, 2015 the governor and his staff, including his top environmental official, met privately with Duke Energy leadership—despite the fact that the state is in litigation with the company over coal ash contamination.  A spokeswoman for Duke Energy described the meeting as a “routine update and conversation,” but this direct line between Duke Energy and the governor remains stronger than the voices of ordinary residents who need stronger environmental protections.

In May, North Carolina’s Department of Environmental Quality completed a public comment and hearing process on ash clean up at 14 sites across the state.  Of the 7,819 comments filed, 98% were in favor of a removal process called excavation, which would move the ash to lined landfills that prevent contaminants from mixing with groundwater. The process is expensive, but effective: In South Carolina, where all ash is being excavated, early groundwater testing results show that arsenic levels beneath the old pits have declined by 60% to 90%.

In mid-June, the North Carolina state legislature passed a bill requiring coal ash sites to be excavated, and safe water be permanently provided to residents.  Governor Pat McCrory vetoed it. Instead, he signed a compromise bill that would allow Duke Energy to “cap in place” at some sites—that is, bury their ash without a protective liner to prevent groundwater contamination—instead of excavating, provided the utility ran water to residents and completed some dam repairs.  The new legislation was met with objections from neighbors around coal ash pits.

The disparate impact on minority and low-income communities has caught the attention of the U.S. Commission on Civil Rights, which has been holding hearings in North Carolina and across the country to examine the impact of coal ash.  Eventually, this effort could lead to recommendations to the EPA that would protect coal ash neighbors from lax state enforcement against powerful utilities.  But in the meantime, residents have few options.

Compared to Duke Energy, we are all poor.  This is a Fortune 250 utility company worth nearly $50 billion.  Its territory stretches from Florida to Ohio, and regulators in many of these states are currently deciding how to handle coal ash.

We know Duke Energy will be heard. The question is whether or not residents will be heard, too.


First Person

The House Next Door

When my father, aunt, and uncle decided to pool their money to buy my grandmother a house closer to one of her children, they didn’t need to look far. The house next door to mine had just gone up for sale.

I had played with the children who lived next door for years, so my father asked me what the inside of the house was like. “I don’t think you want to buy that house,” I told him. He was confused—the house was in perfect condition on the outside, a cute little colonial-style two-story. Yes, it was built in 1921, but it had an immaculately kept lawn and a big tree with a swing in the backyard.

But the inside of the house looked nothing like the outside. The owners had started renovating the house years before, but stopped midway through when money got tight. There were no walls in the kitchen and dining room, and no flooring. Old nob-and-tube wiring hung, exposed, from the studs. One planned bathroom had barely been started, it was just exposed pipes in the wall. The basement had a dirt floor that got muddy when it rained, and the washing machine was propped on plywood in the corner.

An exposed stud in the kitchen was a sad testimony to the history of the house. The heights of the family’s three children were marked there, starting when the children were two. By the time the family moved, they were in their twenties—proof that the house had been unfinished for decades.  My family thought I was lying until they saw for themselves.

“I can’t believe they lived like that,” my dad said, “all those years.”

The basement had a dirt floor that got muddy when it rained.

The house next door is a symptom of and a metaphor for the larger phenomenon of suburban poverty. Americans have ready-made stereotypes for poverty in urban and rural areas, of crime-filled streets and crumbling housing projects or broken-down farmhouses and beat-up pick-up trucks. But suburban poverty, thanks to its stereotype-defying nature, is often more difficult to understand.

My family bought that house, and the more than two acres of land it sat on, for $20,000. The sale notice in the local paper caused a scandal in my suburban community—housing prices in the region are low, but not that low. Neighbors were unwilling to believe that $20,000 was all that house, with its pleasing exterior, was worth.

As my family worked to renovate the house, we realized that we had much more in common with the family next door than we thought. My father, a cabinet maker, had always gotten along well with the machinist patriarch of the house next door. They bonded over a shared identity as working class men, relating to each other’s long shifts and six-day work weeks. But my dad hadn’t realized how much they struggled. They had seemed so much more prosperous from across the property line.

We were also a working class family that struggled to make ends meet, fighting to finance a slew of large and small expenses—from car insurance to braces to broken household appliances. We did not always juggle these costs well. I went without health insurance for months when the premium swelled and my dad struggled to find a plan he could afford. My parents are divorced and because my mom lived in poverty, we received food stamps and free school lunches. My father, meanwhile, has struggled to scrape together $15,000 in retirement savings despite working full time his entire life.

Was it possible that each of our families had spent years thinking, wrongly, that their neighbors were doing better financially?

The neighbors likely didn’t know any of this. To them, the equation was clear: the interior of our home was finished, so we must be better off than them. Was it possible that each of our families had spent years thinking, wrongly, that their neighbors were doing better financially?

Across the country, the phenomenon of suburban poverty is growing. In my hometown of Youngstown, Ohio, some 13.9% of suburban residents lived in poverty in 2011. Between 2000 and 2011, the number of suburban people in poverty in the U.S. grew 64%. These trends have been mirrored in rising student participation in the Free and Reduced Price Lunch Program—often used as a measure of families living in poverty–in suburban school districts nationwide. In 2011, 40% of students in suburban districts were eligible for this program.

The suburban poor face a unique set of challenges, because suburbs simply do not have sufficient infrastructure for handling poverty. Those struggling to get by in suburban communities can have a difficult time accessing public transportation to travel to work, reliable childcare for unpredictable work schedules, or even a soup kitchen.

Even as the numbers of suburban poor climb, awareness of their existence is minimal. The suburbs still conjure images straight from a 1950s sitcom, complete with soccer moms, family dinners around a table, and perfectly manicured lawns. And while these things still exist in the suburbs, it is shockingly easy to ignore the rising tide of poverty there.

The suburban poor themselves may help to exacerbate to these stereotypes by hiding behind them. Looking presentable and fitting in are made easier by hand-me-downs and thrift stores that sell nice clothes for cheap. Poor suburban children may be able to attend highly-rated suburban schools alongside the children of affluent families, their classmates and teachers none the wiser. And once proud middle-class citizens, now unable to pay for rent or food, may struggle with guilt or shame and opt not to share their stories or even seek out help.

The family next door succeeded in blending in, but they were not alone in their financial struggles—not in our neighborhood and certainly not in our larger suburban region. I don’t know if they realized that. Life in the suburbs can be isolating, especially when there is pressure to hide your circumstances from friends and acquaintances. If everyone who is experiencing poverty hides it, then all of those people end up thinking they are alone.

My family would have thought the same, if not for the house next door.