If the recently enacted $787 billikon economic “stimulus” package is intended to save or create jobs, why does it encourage states to move people from work back to welfare? Yes, you read that correctly. With virtually no debate on the issue, Congress approved the new law with provisions that effectively reverse the historic welfare reform law of 1996. That reform, crafted by a Republican Congress and signed by Democratic President Bill Clinton, moved millions of people from welfare to work, while dramatically cutting poverty among single mothers and children.
That’s the assessment of the Heritage Foundation’s Robert Rector, the main think-tank architect of the 1996 reform. As Rector and others have noted, a key element of that reform was to eliminate federal incentives for states to pad their welfare rolls to garner more federal money. Instead, the 1996 reform rewrote federal payment formulas to reward states for helping people find jobs (or get job training or other education). It worked beautifully: Welfare caseloads dropped in a decade from 12.6 million to less than five million, saving taxpayers billions of dollars even as the truly needy actually received greater benefits.
The stimulus bill completely reverses the incentives by giving states more federal funds as they increase their welfare rolls. Even worse, it actually gives states greater incentives than they had prior to 1996 to put people on welfare. As Rector explained in an essay last week with Heritage colleague Katherine Bradley, the stimulus provides that “the federal government will pay 80 percent of cost for each new family that a state enrolls in welfare.” No wonder blogger Mickey Kaus called it “a liberal conspiracy to expand the welfare rolls” in a post on Slate.com.
Rector and Bradley estimate that the stimulus bill adds $264 billion on top of current spending for means-tested, welfare-related programs, including “cash, food, housing and medical care.” They continued: “If these welfare expansions are made permanent – as history indicates they will – the welfare cost of the stimulus will rise another $523 billion over 10 years.” One would think that such major changes in an important, successful, and popular reform would merit extensive public debate. Instead, they were buried in a much larger bill promoted by its sponsors for entirely different purposes. Thus, stealthily, was welfare deformed.
