Synthesis/Regeneration 12   (Winter 1997)

Green and Other Laws

"Welfare Reform:" Clinton Kills Safety Net

by Mark Dunlea, Green Party of New York State

The two main legacies from Bill Clinton's first term as President will be passage of the various international trade agreements and the repeal of the welfare safety net that existed since the Great Depression. Both issues would likely have been defeated under a Republican President.

While the politicians who repealed the federal welfare system frequently repeated the mantra of the need to move participants from welfare to work, there are no jobs created by the recent legislation. The repeal of the welfare system is merely the latest manifestation of the class warfare that the Democrats and Republicans have waged on behalf of their corporate financial backers since Ronald Reagan's election. The principal victims are poor women, children, minorities, and immigrants, but its impact will be concretely felt by many low and moderate income workers.

Welfare reflects the lack of value, especially monetary value, our economic and political system places on "women's work," particularly the rearing of children.

Welfare, like the minimum wage, is primarily a women's issue, and is a major factor in the feminization of poverty. Ninety percent of federal welfare participants are single women and their children. Welfare reflects the lack of value, especially monetary value, our economic and political system places on "women's work," particularly the rearing of children.

The welfare legislation affected many social service programs-Aid to Families with Dependent Children (AFDC), food stamps, school meals, summer meals, Medicaid, SSI, child care, etc. Some of the changes in these programs, such as in food stamps which is 100% federally funded, have already been enacted. For other programs, such as AFDC, the federal government has changed its funding formula, eliminated the federal guarantee of benefits, and given the states greater discretion in how to shape their own welfare systems without ensuring an adequate uniform standard of help for poor households.

The legislation blames poor people for their plight (e.g., they're lazy, abuse drugs, have too many children out of wedlock), rather than addressing the economic conditions that create poverty.

Block Grants to States

The federal legislation, in general, does not mandate what type of safety net a state must provide, though it does specify what type of safety net the federal government will fund. For most federal welfare and nutrition programs, the federal government pays 50% or more of the cost. There are many options that states can select under the federal legislation. States can also decide to provide other services (e.g., benefits beyond the five year lifetime limit) if it is willing to pick up the entire bill.

The impact of various changes will be felt at different times. While the elimination of the entitlement status of AFDC is the most critical, it will be phased in over a 2 to 5 year period at state option. (Entitlement means that if you meet the eligibility criteria, you receive the benefits no matter how many people apply; without entitlement status, benefits can be reduced, rationed or eliminated during times of recession.) Other changes, such as some in the food stamp program, have already occurred-though thankfully food stamps maintain their entitlement status.

The sky will only fall somewhat over the next year; it will fall much further over the next five years. We will see a steady increase in hunger and poverty-but it will occur over time, not all at once.

Many states will actually see a short term increase in federal funding for AFDC (now TANF, Temporary Assistance for Needy Families), since the funding formula is based on average caseload size of 2 to 4 years ago. With many states seeing a sizable decrease in caseloads over the last two years, they will receive more funds than expected. Rather than investing these funds in child care or job creation, many officials will divert the savings to corporate welfare or other budgetary needs. When the next recession hits and federal funding no longer automatically expands to meet the increased need, most states will either slash benefits or eligibility standards or both.

Protest Needed -- But Many Voices Are Silent

Greens should hook up with a state-based anti-poverty organization to find out what options are available to their state and to join in advocacy efforts to build a progressive welfare program reflective of Green values. States have until July to decide how to implement the welfare changes-though many will do so earlier.

Many progressives have been silent in the onslaught against the welfare system that greatly intensified nationwide following the successful use of welfare as a code word for race by David Duke five years ago in his campaign for Governor of Louisiana. While progressives cringed at the attack on the poor, they were slow to rise to the defense of the welfare system due to their feelings that the system was in fact not working-a fact only too well known to poor Americans. Social programs in the United States that are intended to help poor people are by design run poorly-to continue to oppress the poor while opening the programs to charges of waste and mismanagement.

Even many advocacy groups were timid in their response, partially out of a desire to continue to support the Democratic Party and Bill Clinton no matter what their positions. Many anti-poverty groups endorsed but stayed away from last summer's Children's March on Washington because of the refusal of the Children's Defense Fund to make the protection of the welfare safety net a focus of the demonstration.

It is ironic but informative that the first President who openly campaigned as an advocate for children ended up signing the most anti-child piece of legislation in American history, condemning more than a million children to a life of poverty. With an "official" childhood poverty rate of more than 20%, the US already has twice the rate of childhood poverty of any other industrial country.

Full Employment -- Without Job Creation

Groups such as the Hunger Action Network of New York State, Up and Out of Poverty, and National Welfare Rights Union pushed for a welfare reform based on job creation, increasing the minimum wage and Earned Income Tax Credit, job training and education, and universal access to child care and health care. The US and South Africa are the only two industrial democracies without a universal child and health care program; many expect that South Africa will now beat the US in implementing such programs.

By repealing the entitlement to welfare, the Democrats and Republicans in essence called for a full employment economy, yet enacted no job creation program.

By repealing the entitlement to welfare, the Democrats and Republicans in essence called for a full employment economy (i.e., everyone must have a job to survive), yet enacted no job creation program. In addition, the Federal Reserve -- which undemocratically manages the U.S. economy through its control of interest rates and the money supply -- remains strongly opposed to full employment. The Federal Reserve believes that inflation remains the greatest threat to the American economy. They believe that inflation is caused by high levels of employment, since when more people work, consumer demand increases, forcing prices up. Thus the Federal Reserve works to keep the economy at a 5.5 to 6% level of "official unemployment" ---though the real rate of unemployment is much higher.

The Economic Policy Institute estimates that wages for low-income workers (wages at or below the 30th percentile) will drop by 15% due to welfare repeal. If you increase the number of workers who are desperately seeking jobs but don't increase the number of jobs, the law of supply and demand means that wages for existing jobs will decline.

The repeal of the welfare safety net and the resulting decline in wages continue an economic trend that began in the mid-1970s. The economic growth following America's victory in World War II allowed both corporate profits and workers' wages to increase for the quarter century following the end of the war. Beginning about 1973, real wages for most Americans began to decline. Corporate profits last year were the highest in 25 years-yet wages for 80% of Americans either remained the same or fell.

Welfare For Everyone -- Except the Poor

Almost all Americans receive some form of welfare. For instance, allowing home owners to deduct their interest payments on mortgages is a huge welfare program, exceeding the entire budget for the federal Housing and Urban Development agency. It may promote a desirable policy of home ownership, but the vast majority of the benefits go to taxpayers with incomes above $75,000. It also raises the cost of housing for everyone else by about 20%. Social security is primarily a welfare system, not a pension plan. Companies like McDonald's, M & M, and Gallo wines receive tax subsidies to advertise their products abroad. Agribusiness is a major recipient of welfare subsidies. The list of corporate welfare subsidies-starting with the military budget-is endless. Not surprisingly, welfare for the poor is one of the few programs where the beneficiaries are too poor to make sizable campaign contributions, leaving them politically vulnerable.

Attacks on the welfare system are often based on false stereotypes. One of the most common is the size of welfare families. They are almost exactly the same size as the average non-welfare family-3.2 individuals. One of the most outrageous proposals has been to eliminate benefits for children born to a parent who is receiving welfare (i.e., Family Cap)-even though the birth rate for individuals once they enter the welfare system is far, far lower than for individuals not receiving welfare. Individuals raised on welfare are no more likely to themselves become welfare participants than other children.

AFDC has been one of the least abused welfare programs. The federal government estimates the rate of fraud within AFDC at about 2 to 3%. Fraud with the IRS tax code and unemployment programs is estimated at 25%.

Food Stamps Take Biggest Hit

Almost half of the $55 billion in projected savings over the next six years comes in the food stamp program. Food stamp benefits for many Americans have already been cut, beginning October 1, 1996. Some important improvements that were won after years of struggle have been canceled. One major loss was the elimination of the provision that would have allowed households for the first time to deduct their actual housing costs in calculating their income for food stamp purposes. Many low income individuals spend 70% or more of their income on housing-and yet only 50% can be counted for food stamp purposes.

It is hard to describe workfare as anything other than creating a supply of forced labor.

Unemployed adults between the ages of 18 and 50 will be limited to 3 months of food stamps in a 3 year period-unless their state applies for a waiver based on a lack of jobs.

Immigrants are the single largest group under attack. With some exceptions, immigrants are generally eliminated from receiving help from the federal government, though the state has the option to restore eligibility in many cases. California and New York are the states most affected.

Workfare Means Forced Labor

Workfare is a major focus of the federal welfare changes. When the politicians talk about moving people from welfare to work, they usually mean workfare, not a job.

It is hard to describe workfare as anything other than creating a supply of forced labor in order to reduce welfare payments and undercut wages and working conditions for other Americans. States that do not quickly move mothers into workfare (i.e., 25% of the caseload in one year) will be subject to major financial penalties. However, merely eliminating people from the "welfare rolls" for whatever reason counts towards the quota of moving welfare participants into "work." Families will lose benefits if they don't participate in workfare for 20 hours a week or more, though child care is not require to be provided if the child is six or older.

Many welfare participants support workfare as an opportunity to give something back to the community-though that support will rapidly decline as the nature of workfare becomes more apparent. Workfare is not a job. It does not entitle you to social security or unemployment. You cannot work more hours to increase your benefits-though the state can make your work for less than the minimum wage. You do not have the rights of a worker. Workfare participants can be put in hazardous situations without adequate training. The smallest violation of work rules (being late because a child is sick) can result in your termination from welfare.

Municipal unions in New York have belatedly woken up to the threat posed by workfare as they have watched much of the city's parks department be replaced by workfare-at a much lower rate of pay. The Mayor then moved on the transit system, forcing the unions to agree to eliminate 500 jobs. The hospitals are next.

The new welfare legislation now allows the private sector to take workfare participants-forced labor at McDonald's, manual labor, and other parts of the low wage corporate economy. Clinton will also push for a major expansion of wage subsidy programs (i.e., corporate welfare) for businesses, giving them the participant's welfare check. Unfortunately, the job usually disappears once the wage subsidy ends.

Lockheed and IBM at the Corporate Welfare Trough

The federal legislation also significantly expands the privatization of the welfare system, including allowing for-profit companies for the first time to determine who receives benefits. Sandy Felder, Public Service Coordinator for the Service Employees International Union, describes these changes "as one of the biggest corporate grabs in history." Billionaire Presidential candidate Ross Perot built much of his fortune on the welfare system, designing computer systems for welfare programs such as Medicaid. EDS, the company that Perot founded and then sold to IBM, has pioneered the introduction of fingerprinting into the welfare system. With the door now thrown wide open, major companies such as Lockheed (who made billions selling weapons) and Andersen Consulting are moving to compete with EDS for computer and other management contracts.

. . .any program just for the poor is invariably designed and administered poorly.

Advocates for low-income Americans worry that profits will increase if companies reduce caseloads, so there will be an incentive to deny or terminate individuals from assistance. "Its the same problem we are seeing with Health Maintenance Organizations. While the companies contend they can save money through increased efficiency, they can also do it by reducing services, which is much easier," stated Henry Freedman, Executive Director of the Center on Social Welfare Policy and Law.

Fight Back

It is unlikely that the federal safety net will ever be restored. But the repeal is a threat to all workers. Much of the fight in the short term will be in the state houses. Greens and other progressives need to join together to support an economic reform agenda that includes jobs for all, universal health care and child care, education, and an adequate safety net for those unable to work. We need a welfare program that benefits all Americans-because any program just for the poor is invariably designed and administered poorly.

Mark Dunlea is Executive Director of the Hunger Action Network of New York State, 278 Clinton Ave, Albany NY 12210.

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