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.
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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.