Welfare Fraud

December 3, 1996 • Commentary
By Naomi Lopez Bauman and Michael D. Tanner

The president says that he has “ended welfare as we know it.” Congressional leaders brag that they have forced an end to the failed 30‐​year experiment of the welfare state. Think again. The welfare reform bill that President Clinton signed into law may be one of the biggest examples of welfare fraud yet perpetrated on the American people.

Even as the president was signing the bill, his administration was rushing through last‐​minute waivers to exempt many welfare recipients from the bill’s provisions. States have long been able to seek permission from the federal government to opt out of certain provisions of the welfare system. Under the new law, a state will generally be able to continue operating under the waivers even if the state’s welfare program conflicts with the bill’s provisions. Moreover, even without those waivers, the bill is so riddled with loopholes and exemptions that most of its provisions are little more than paper promises.

Keeping in mind that the president is promising unspecified proposals to “fix” the harshest provisions of the law, let’s look at the rhetoric and reality behind this legislation.

Time limits. The bill is supposed to establish a five‐​year lifetime limit for welfare benefits. One could be forgiven, therefore, for believing that after five years welfare recipientswould be off the public dole. Well, not in the District of Columbia, to cite just one example. Almost simultaneously with signing the bill, President Clinton granted the district a waiver exempting it from the five‐​year limit. The district’s waiver lasts 10 years, so district welfare recipients will not be subject to the time limit cutoff until 2006. In addition to Washington, D.C., several states have waivers that would allow recipients to exceed five‐​year time limit. Moreover, many state waivers guarantee a job after five years or provide for the continuation of benefits if no job is found.

Even without the waivers, few welfare recipients will actually be affected by the time limits. Most welfare recipients use the program for far less than five years and would never fall under the five‐​year limit. What about the small proportion of hard‐​core welfare recipients who do remain in the program for more than five years? This is the group that the time limit targeted. Yet, once again, exemptions limit the bill’s effectiveness.

For example, the time‐​limit provision does not apply to about 17 percent of the current welfare caseload: minor children, but not their parents, who are receiving assistance. A substantial portion of this group is U.S.-citizen children born to alien parents. In addition, states are allowed to exempt up to an additional 20 percent of recipients from the five‐​year limit for hardship reasons.

Furthermore, the time‐​limit provision applies to only four of the nearly 80 federal welfare programs. A person who exceeds the five‐​year limit and has her cash benefits cut off would still be eligible for a host of federal welfare benefits, including food stamps, Medicaid, public housing, Supplemental Security Income, the Women, Infants, and Children (WIC) health and nutrition program, free school lunches, and so on.

Work not welfare. Since most workfare efforts have been little more than expensive boondoggles, perhaps we should be grateful that the bill’s work requirements are so limited. When we hear of the “stringent” work requirements, we probably think of our own hectic work schedules and marathon days balancing work and family. Many of us may be surprised to learn, therefore, that for single‐​parent families the bill’s work requirement involves a 20 hour per week requirement for the first two years, 25 hours per week for the third year, and 30 hours per week thereafter. For two‐​parent families, the work requirement is 35 hours per week between both parents. Allowable work activities include community service and “work experience.”

Those “stringent” work requirements become even less so when exemptions from work and state waiver provisions are examined.

For example, welfare mothers with children under age six will not have to work if they cannot find day care. About 60 percent of current single‐​parent Aid to Families with Dependent Children (AFDC) households have at least one child under age six, so the size of this loophole is readily apparent. Moreover, at least 30 states have been granted waivers exempting recipients from the full impact of the bill’s work requirements. In many cases states have defined work to include job search activities, job training and, in at least one case, drug rehabilitation.

State control. One of the rhetorical centerpieces of the welfare bill is the idea that it turns welfare over to the states, allowing them to run their programs as they see fit. However, in reality, the federal government will retain an enormous degree of control over state actions. For example, a “federal maintenance of effort” provision requires states to maintain their spending at no less than 75 percent of the 1994 AFDC level. So citizens will continue to send their money to Washington, Washington will take a cut off the top, and the states will be told how much to spend on welfare and on whom those funds should be spent.

Cutting welfare spending. From the howls of outrage on the left, one might think that this bill at least reduces welfare spending significantly. Unfortunately, exactly the opposite is true. This bill actually continues to increase welfare spending by more than $70 billion over the next seven years.

This welfare reform is probably better than no welfare reform. The big question is, what comes next? Will President Clinton continue to undermine the bill through the waiver process? What proposals will he make to “fix” the bill? Will Congress settle for self‐​congratulation at having tackled welfare reform, or will it be willing to take additional steps next year?

Until they are able to answer those questions, will politicians at least spare us the rhetoric about “ending welfare as we know it?”

About the Authors
Naomi Lopez Bauman