The NewStandard ceased publishing on April 27, 2007.

Debate Over Renewing Welfare Reform Reveals Cracks in the System

Part One of Two

by Michelle Chen

Proposed budget changes, new tax rules and inadequate welfare funding threaten to push the social safety net further out of reach for many of the poorest Americans while effectively raising taxes for documented immigrants.

Apr. 30, 2005 – A single mother struggling to stay above the poverty line and an immigrant household that cannot afford healthcare have more in common than hardship: the government might soon be strengthening the barriers both non-citizens and parents face in obtaining federal entitlements. Nine years after the Clinton administration’s unprecedented overhaul of the social benefits system, Congress is revisiting the plan to end "welfare as we know it," and advocacy groups are voicing the concerns of those they view as victims, not beneficiaries, of welfare reform.

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Efforts by both the House of Representatives and the Senate to renew the welfare law follow failures in previous years to pass a reauthorization bill. So far, social justice organizations have focused their attention on the Senate Finance Committee’s recent markup, which they see as more generous than the House bill.

Advocates for low-income households are pushing Congress to enhance childcare services for mothers entering the workforce, repeal the current law’s restrictions on non-citizens’ access to federal benefits like healthcare and income assistance, and scrap a proposed tax rule change that could restrict immigrant families’ eligibility for the Earned Income Tax Credit.

At the same time, some legislators have sought to freeze funds and to make the current law even tougher. Childcare is the only program slated for a major funding increase in either chamber of Congress, and both the House and Senate are seeking to increase the number of hours welfare recipients must work per week.

There is scant concrete evidence that the 1996 law has directly helped alleviate poverty. While more people have become eligible for government assistance, fewer have received it.

Advocates recognize that they are up against an inhospitable political and budgetary climate. "It’s an extraordinarily difficult time right now to be proposing things that some people [see as] expansions of benefits," said Jonathan Blazer, an attorney with the National Immigration Law Center, a legal advocacy organization for low-income immigrants and their families.

Welfare Recipients Threatened Under System Shortfalls

In 1996, the Personal Responsibility and Work Opportunity Reconciliation Act eliminated the Aid to Families with Dependent Children program, which had provided direct cash assistance to needy households for 60 years. In its place emerged Temporary Assistance to Needy Families (TANF), a complex regime of work requirements, social programs and cash assistance, federally funded and administered by the states. The broadly defined goals of the new system included aggressively pushing program participants into the workforce and promoting "the formation and maintenance of two-parent families."

According to a recent report from the Urban Institute, a public policy think tank, by the year 2000, about 2 million welfare cases had vanished -- a drop of 50 percent, with more departures from the program than new enrollments. While the government has touted the decline as an indicator of success, advocacy groups warn that the figures mask underlying flaws in a system that is failing the impoverished.

Research has shown that mothers who benefit from subsidized childcare tend to be more economically stable and better able to find and hold a job.

There is scant concrete evidence that the 1996 law has directly helped alleviate poverty. While more people have become eligible for government assistance, fewer have received it.

The Urban Institute reported that the proportion of families eligible for TANF assistance who actually accessed these benefits declined from 85 percent to about half in the later half of the 1990s. The Center on Budget and Policy Priorities (CBPP), a federal policy research group, reported that between 1998 and 2003, the number of poor people nationwide rose by 1.5 million. However, TANF cash assistance recipients actually dropped by 845,000 between 2000 and 2003. As TANF payments fell, the number of children living in destitution – below half the poverty income level – swelled by nearly one million.

In that same time period, according to the US Department of Health and Human Services, unemployment among single mothers rose, suggesting that some single-mother households were "graduating" from welfare rolls into unemployment, not economic security. Researchers have found that people have often not left welfare voluntarily, but rather because their cases were terminated when they failed to fulfill "welfare-to-work" requirements and related obligations.

Neither the House nor the Senate proposes to increase overall funding for the $16.5 billion TANF block grant. But Sharon Parrott, director of the CBPP’s welfare reform research program, warned that due to inflation, "the real value of the block grant is declining each year," and that without a significant funding infusion, already overstretched state programs will continue to suffer.

The dwindling pool of federal resources is inadequate to serve all equally, and that “success,” as defined by the TANF system, is measured in bureaucratic rather than human terms.

The paradox of a shrinking welfare system and a simultaneous growth in economic hardship, in Parrott’s view, has been overlooked by both the Clinton and Bush administrations. "There hasn’t been a whole lot of interest in figuring out what’s happening to families who are getting no assistance but are very poor, and what the implications of that are," she told The NewStandard.

Single Mothers Make Do with Less

The concept driving welfare reform is that the government can push welfare recipients into sustainable jobs, but advocates say that the current system actually holds people back from economic advancement, especially single mothers with low incomes.

The House and Senate reauthorization bills would raise the basic 30-hour work requirements from by several hours per week, though the Senate version offers more flexibility in alternative work-related activities, such as job training. Advocates are skeptical that raising work requirements without enhancing complimentary assistance programs could really increase economic self-sufficiency.

Congress has acknowledged that in 2003, only 31 percent of welfare recipients met the 30-hour requirement. Moreover, the Urban Institute reported that among those wiped off the welfare rolls, employment has declined slightly in recent years; that many former welfare recipients are relegated to low-wage jobs without benefits; and that of those who had left welfare in 2000, one in four were back on it two years later. Critics see these figures as evidence that an unresponsive federal assistance system has left many locked out of financial independence.

Advocates point to childcare as a crucial and neglected component of the welfare-to-work transition. Research has shown that mothers who benefit from subsidized childcare tend to be more economically stable and better able to find and hold a job, but detractors of welfare reform contend that access to these services is rapidly declining.

According to government data, more than 2 million children currently rely on subsidized childcare. Yet federal funding has stagnated in recent years, pressuring states to reduce program capacity or to narrow eligibility criteria. The Center for Law and Social Policy (CLASP), an advocacy organization serving low-income communities, reports that under the fiscal squeeze, three-fifths of states have lowered the income level that qualifies a family for subsidized childcare, and as of 2004, about half of states were placing parents on waiting lists or simply no longer accepting new applicants.

In CLASP’s analysis of the proposed Senate legislation, the group argued that the proposed $6 billion increase in childcare subsidies, distributed over the next five years, would barely cover the costs of inflation and elevated demand resulting from the proposed additional work requirements. Still, the Senate bill is seen as more moderate than House version, which allocates only $1 billion for enhanced childcare services, and better than the President’s budget proposal, which offered no increase at all. According to White House 2006 budget projections, maintaining the current level of funding would lead to the elimination of subsidized childcare services for 200,000 children between 2005 and 2009.

Mark Greenberg, director of policy at CLASP, believes childcare must be expanded to be accessible to all low-income families, not just those receiving welfare, so that parents who have entered the workforce can maintain the support they need to remain employed.

Under the current system, predicts Greenberg, stricter work requirements combined with financial pressure for states to reduce caseloads will severely impact those most in need of government help. "The families that will have the greatest difficulty meeting those new requirements," he said, "are the families that face the most serious employment barriers… [such as] health problems, mental health problems, disability issues."

For Immigrants and Children, Not Enough to Go Around

One of the red flags in the childcare funding debate is the Senate’s plan to fund childcare in part with the savings from a proposed change in tax credit eligibility rules that would target non-citizens. The controversial rule change would potentially bar access to the Earned Income Tax Credit (EITC), a major federal income supplement, for hundreds of thousands of immigrants without a standard "work-authorized" Social Security Number.

Critics argue that the provision would unfairly restrict the eligibility of working immigrant families that should in fact be entitled to the credit, because bureaucratic obstacles have resulted in many members of immigrant-headed households lacking the appropriate social security number.

Though narrowing the eligibility for the tax credit would yield an estimated $3 billion in savings over ten years, proponents of increased childcare funding have criticized the action as creating an unjust tension between two severely under-funded social needs. Noting that the EITC is virtually the only federal benefit available to many immigrants, advocates have expressed outrage at the Senate committee’s move to alleviate the needs of poor children by sacrificing the resources of poor immigrant families.

Led by the National Immigration Law Center, a coalition of groups advocating on welfare reform issues sent a letter last month to the Senate committee, stating that "to pit one group against another" through the provision would be "a disservice to all of these families." The letter also called attention to the linguistic and cultural barriers in TANF services, pointing out the irony of imposing "a tax increase on hard-working immigrant families in order to fund childcare programs that historically have underserved their children."

In the view of welfare reform’s critics, the various uncertainties facing low-income communities -- immigrant and citizen alike -- reveal that the dwindling pool of federal resources is inadequate to serve all equally, and that "success," as defined by the TANF system, is measured in bureaucratic rather than human terms.

"Caseload decline has been so stressed that it’s been achieved," reflected CBPP director Sharon Parrott. "But part of the achievement has been at the expense of very poor families that really struggle to make ends meet and now get no income assistance through TANF."

Part two of this series, "Immigrants Advocates Hope to Open Door to Federal Assistance," will takes a deeper look at the uphill battle faced by documented immigrants trying to navigate an increasingly hostile social welfare system.

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The NewStandard ceased publishing on April 27, 2007.

Michelle Chen is a staff journalist.

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