A Look Back at Welfare Reform
Though from opposite sides of aisle, lecturers agree on overall outcomes

Winter, 2008, Volume 30, Number 1

	From left: Fay Lomax Cook, Ron Haskins, and David Ellwood answer questions from the audience about welfare reform.

David Ellwood and Ron Haskins worked on opposite sides of the aisle on welfare reform legislation during the often inimical negotiations that culminated in President Bill Clinton’s signing of the 1996 welfare reform bill. For its 2007 Distinguished Public Policy Lecture, the Institute for Policy Research invited these two pre-eminent social policy scholars to share their thoughts on “Ten Years After Welfare Reform: Who Was Right, What Have We Learned, and Where Do We Need to Go Next?”

Despite being in opposing camps, both agreed on the hard numbers of drastic reductions in welfare caseloads and poverty, with Ellwood noting that “the Right was more right than wrong” and Haskins squelching any expectations for a “pugnacious fight.” Yet the two did differ, most notably on what welfare reform should look like in the future.

A View from the Democratic Side
Calling welfare reform “an extraordinary moment,” Ellwood explained how welfare had reached the bottom of the barrel of public support by the mid-1990s.

“What was striking was everyone hated welfare,” he said. “And the people who hated it the worst were those who were on it, who talked about the isolation, stigma, and the frustration associated with the system left them in.” He pointed to the system’s “terrible incentives” that kept people on the rolls and the “check-writing culture” of welfare offices where the ideal client was “someone who had never worked.”

David Ellwood

Called to Washington because Clinton had read his 1998 book, Poor Support, Ellwood became a key player on Clinton’s welfare reform team, rewriting the Earned Income Tax Credit in a mere three weeks and then moving to the more difficult task of crafting the Democratic proposal for reform.

In crafting the Democrat’s legislative proposal, Ellwood said he and his colleagues defined three core elements: making work pay, enforcing child support payments as a way of making both parents responsible for raising their children, and making welfare “a hand up and not a handout.”

While Republicans and Democrats generally agreed upon and passed the make-work-pay and child support aspects, he said, they differed greatly on how to transition families to—and support them in—the world of work. Clinton originally wanted to provide job training coupled with time limits and subsidized jobs for those having difficulty finding work. Republicans wanted a five-year lifetime time limit on individuals’ welfare benefits and block grants for the states. In the end, the Republican vision passed.

In looking back at the lessons learned, Ellwood singled out three in particular: Incentives matter. Putting more money in people’s pockets through tax credits and subsidies and allowing people to keep benefits such as Medicaid proved to be powerful incentives for welfare recipients to work. The economy matters. The “miracle economy” created a favorable environment for low-wage workers to find jobs, and states did their share by spending their block grants on services to aid low-wage workers. Finally, messages and expectations matter. Setting high expectations for recipients to work was “more effective than any plan … devised to change the culture of welfare offices,” he said.

However, more welfare or welfare reform is “a dead end,” according to Ellwood. Real upward mobility is very hard to create, he said, noting that welfare recipients have not gotten a step onto a ladder to a better life, but a step onto a platform. Just giving a person a dollar so that he or she can get above the federally mandated poverty level is not going to radically change anyone’s life, he noted.

Instead of implementing more welfare rules and restrictions, Ellwood suggested focusing on industry-specific training, creating more supports for putting men and childless adults to work, and increasing the number of two-parent households, where studies show that everyone does better.  “Strengthening families is often talked about as being a right-wing idea, but it is clearly vital to what we do.”

“Overall, I think things worked out better than many of us had expected, but we still have basically the same problem that we had to start out with,” Ellwood concluded. “How do we really make an end to poverty as we know it—and not just welfare as we know it?”

A View from the Republican Side
Ron Haskins, who was a senior Republican staff member on the House Ways and Means Committee at the time, started by underscoring the bitterness of the debate. He read a passage from his book Work Over Welfare describing how Congressman John Lewis (D-Ga.) equated the Republicans with Nazis for their “mean-spirited” bill that “took food out of the mouths of children.”

“Very few debates in the House have this intensity,” he said, pointing to a shortage of facts and an abundance of emotion.

Ron Haskins

Looking back, Haskins noted that “the radical Republican agenda” consisted of wanting to increase work and marriage to have the greatest impact on poverty. “And this was what welfare reform did,” he said.

Haskins listed the five fundamental changes to welfare: ending cash entitlements, creating block grants, instituting five-year time limits, implementing strong work requirements, and applying sanctions.

“It is very rare that any program in Washington changes to this degree,” Haskins added.

Some of these changes, such as the five-year time limit, were highly controversial, despite the bill’s bipartisan support. As an example, he explained, much of the bill dealt with child support, with many of those pages coming directly off word processors at Health and Human Services where David Ellwood and his colleagues were in charge at the time.

Other controversial elements included taking away welfare from newly arriving noncitizens and changing the rules for Supplemental Security Income (SSI). One of the SSI rule changes ended the cash benefits of 200,000 drug addicts and alcoholics from the rolls. “People should not be able to get a welfare check because they can prove that they’re an alcoholic or a drug addict,” Haskins said.

Welfare reform’s triumph, he pointed out, was the “explosion of work by never-married mothers,” which rose from 45 percent in 1995 to more than 60 percent between 2000 and 2005, representing a 30-percent increase in earnings. This also led to a substantial decline in child poverty, especially for black children. Overall rates of child poverty fell from 46 percent in 1993 to 30 percent in 2001. He said poverty fell because “moms got their money the old-fashioned way—they earned it.”

Poverty rates went down, Haskins continued, because “we radically changed the system of making work pay.” He then showed how the new laws actually raised the amount spent on supporting low-income working families to $52 billion—, about 10 times more than the $5.6 billion that would have been spent under the old rules for several work-support programs.

This increase in funding represents a second revolution that took place at the same time as the welfare reform revolution, Haskins pointed out. It was a quieter, bipartisan revolution in bolstering work-support reforms such as the Earned Income Tax Credit.

Looking forward, Haskins still sees major problems that encompass motivating unemployed males to work, improving the life chances of poorly educated immigrant children, increasing marriages to reduce poverty and improve child outcomes, and doing more to promote job retention and training. Even when you get to “$18,000 or $20,000, that is not even approaching middle-class income,” he said. “So we need to impart more skills.”

“Fighting poverty in an advanced, capitalist economy rests on two foundations,” Haskins ended. “The first is income redistribution by governments, with most benefits or at least many of them, contingent on work. And the second is responsible and disciplined behavior by individuals, including teenagers and children. To effectively fight poverty, we need more of both.”