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A Project of The Annenberg Public Policy Center

Does Obama’s Plan ‘Gut Welfare Reform’?

A Mitt Romney TV ad claims the Obama administration has adopted “a plan to gut welfare reform by dropping work requirements.” The plan does neither of those things.

  • Work requirements are not simply being “dropped.” States may now change the requirements — revising, adding or eliminating them — as part of a federally approved state-specific plan to increase job placement.
  • And it won’t “gut” the 1996 law to ease the requirement. Benefits still won’t be paid beyond an allotted time, whether the recipient is working or not.

Romney’s ad also distorts the facts when it says that under President Obama’s plan “you wouldn’t have to work and wouldn’t have to train for a job.” The law never required all welfare recipients to work. Only 29 percent of those receiving cash assistance met the work requirement by the time President Obama took office.

Under the new policy, states can now seek a federal waiver from work-participation rules that, among other things, require welfare recipients to engage in one of 12 specific “work activities,” such as job training. But, in exchange, states must develop a plan that would provide a “more efficient or effective means to promote employment,” which may or may not include some or all of the same work activities. States also must submit an “evaluation plan” that includes “performance measures” that must be met — or the waiver could be revoked.

Ron Haskins, a former Republican House committee aide who was instrumental in the 1996 overhaul of the welfare program, told us the Obama administration should not have unilaterally changed the work-requirement rules. But Haskins said the Romney claim that Obama’s plan will “gut welfare reform” is “very misleading.”

“I do not think it ends welfare reform or strongly undermines welfare reform,” said Haskins, co-director of the Brookings Institution’s Center on Children and Families. “Each state has to say what they will do and how that reform … will either increase employment or lead to better employment” of recipients.

The Obama policy responds to state officials who say they can improve job placement and retention if freed from the time-consuming process of documenting and verifying that recipients are engaged in those work activities.

“In times of reduced funding, waivers may be the best method to allow states to find effective and efficient approaches to assist the unemployed to find and keep work,” the Utah Department of Workforce Services wrote to federal welfare officials last year.

Republicans criticized the new policy shortly after it was implemented on July 12. That prompted Utah Gov. Gary Herbert, a Republican who supports Romney, to issue a July 17 press release “defending Utah’s waiver request for state flexibility to achieve work-related outcomes for Temporary Assistance to Needy Families (TANF) recipients.”

Welfare to Work

The Romney campaign began airing its new TV ad on Aug. 7. Called “Right Choice,” the ad praises the bipartisan cooperation of President Bill Clinton and a Republican-controlled Congress to overhaul welfare. It then turns partisan and attacks President Obama.

Romney TV Ad, “Right Choice”: President Obama quietly announced a plan to gut welfare reform by dropping work requirements. Under Obama’s plan, you wouldn’t have to work and wouldn’t have to train for a job. They just send you your welfare check. And welfare-to-work goes back to being plain old welfare. Mitt Romney will restore the work requirement because it works.

It’s simply not true that the administration’s policy will allow states to “just send you your welfare check.” Under the policy, states must meet a whole new set of federal requirements in order to obtain and keep a waiver. Plus, states have an incentive to get people off welfare and into jobs, since that would free TANF funds for other services for low-income families.

“I think — and now remember I’m a Republican — that the ad is very misleading,” Haskins said.

We’ll go into more detail about the new policy later, but first let’s review how we got here — beginning with “The Personal Responsibility and Work Opportunity Reconciliation Act of 1996” that created the Temporary Assistance for Needy Families (TANF) program.

The welfare overhaul was designed to help move unemployed Americans from welfare to work. The federal government strengthened work requirements on families receiving cash assistance, and for the first time imposed lifetime limits (generally up to five years). After two years on TANF, the parent in the household must be engaged in “work activities.”

The law also generally requires states to document that 50 percent of all families receiving cash assistance are participating in such work activities. But work-participation rates peaked at 38 percent in 1999 and started to decline — prompting Congress to attempt to strengthen the rules when it reauthorized TANF as part of the Deficit Reduction Act of 2005.

Still, the work-participation rates remained low. The most recent data available show the rate was 29.4 percent in fiscal year 2009. Many states rely on options in the current law that allow them to be in compliance with requirements even though their rates are below 50 percent.

The new work-participation rules did have one impact on states: They were time-consuming to comply with and counterproductive to helping people find jobs, as documented by the nonpartisan Government Accountability Office in a 2010 report. GAO’s welfare experts were among those questioning the value of the work-participation rates as a measure of success.

“The emphasis on work participation rates as a measure of program performance has helped change the culture of state welfare programs to focus on moving families into employment, but weaknesses in the measure undercut its effectiveness,” Kay E. Brown, the GAO’s director of Education, Workforce and Income Security Issues, testified before a Senate committee on June 5. “Are the work participation rates providing the right incentives to states to engage parents, including those difficult to serve, and help them achieve self-sufficiency?”

Providing Flexibility … or Gutting Welfare?

It was against this backdrop that the Obama administration acted.

On Feb. 28, 2011, the president broadly directed his administration to work with state, local and tribal officials to find ways to provide more flexibility in complying with federal regulations. As a result, the Administration for Children and Families within the Department of Health and Human Services solicited recommendations from state officials on how to improve its programs.

One of the responses ACF received was from Kristen Cox, executive director of the Utah Department of Workforce Services. “Utah is especially interested in the development of a waiver authority in the TANF grant,” the Aug. 1, 2011, letter said.

The Utah letter said the federal work-participation rules focused too much on process and not enough on outcome. “The lack of focus on outcomes makes the program less about the need to help parents find and retain work and more about the need to assure that parents are active in prescribed [work] activities,” the letter said.

Utah expressly said it would not use a federal waiver to avoid work requirements. “The expectation to participate fully in specific [work] activities leading to employment is not the issue,” the letter stated. Instead, Utah was seeking the flexibility to overcome the “narrow definitions of what counts [toward work participation] and the burdensome documentation and verification process.”

The Obama administration cited the Utah letter when it announced its new policy on July 12. The policy provides exactly the kind of flexibility Utah was seeking.

Under the new policy, states may receive a waiver if they submit plans for a “demonstration project” (not to exceed five years) that provides a “more efficient or effective means to promote employment.” States also must submit an “evaluation plan” that includes a “set of performance measures that states will track to monitor ongoing performance and outcomes.” States also must set up “interim performance targets” and, if states fail to meet those, they will be “required to develop improvement plans.”

“Repeated failure to meet performance benchmarks may lead to the termination of the waiver demonstration pilot,” the rules state.

Is Obama “dropping work requirements,” as Romney’s ad claims? No. He is allowing states to change the work requirements, but he is not dropping them. The changes could be made to a variety of federal requirements, including “definitions of work activities and engagement, specified limitations, verification procedures, and the calculation of participation rates.”

A lot will depend on what a state proposes and how it is implemented. There is nothing inherent in the waivers that guts work requirements.

In explaining the new policy, George Sheldon, the acting assistant secretary for the Administration for Children and Families, wrote: “Waivers that weaken or undercut welfare reform will not be approved.” Health and Human Services Secretary Kathleen Sebelius wrote a July 18 letter to Republican Sen. Orrin Hatch of Utah saying the department’s “goal is to accelerate job placement,” requiring states to commit to a plan that will “move at least 20% more people from welfare to work compared to the state’s past performance.”

It’s understandable that some Republicans simply may not trust Sebelius and Sheldon. There is a lot of mistrust between the Democrats and Republicans on the issue of welfare — and the way the administration implemented the new policy has not helped.

Ron Haskins was the Republican staff director of the Subcommittee on Human Resources for the House Ways and Means Committee from 1995 to 2000. Now at the Brookings Institution, Haskins’ biography states that he was “instrumental in the 1996 overhaul of national welfare policy.”

Haskins said Republicans at the time drafted the welfare law so that the executive branch could not waive work-participation rules. Obama’s unilateral action has understandably angered some Republicans who believe the administration lacks the authority to issue waivers, he said.

However, Haskins also said that the new waiver policy does not “gut welfare reform.” He cites two reasons: The federal government will continue to hold states accountable for moving people off welfare and into jobs, and the states have a tremendous financial incentive to use the new waiver authority to improve employment outcomes.

“The idea that the states will use this to bring people back on the welfare rolls … doesn’t make sense to me,” Haskins said. “The states are all about work. All they talk about is work. They agree with welfare reform and they want to figure out how to get everybody they can into the labor force — because it is to their advantage.”

Over the past 15 years, the federal government and states have spent $406 billion on the Temporary Assistance for Needy Families program, and about 40 percent of that came from the states, according to the GAO.

Haskins notes that historically the “Republicans are the ones who talk about giving the states more flexibility. Romney himself talks about giving the states more flexibility.”

“Now all of a sudden the states shouldn’t get the flexibility because they are going to mess it up?” he says. “It doesn’t make sense.”

It makes no sense, either, to Utah Gov. Gary Herbert, a Republican who was caught in the partisan crossfire when the Obama administration singled out his state for recommending that the federal government provide waivers. Herbert sent a July 16 letter to Sebelius to “clarify Utah’s position.”

The governor reiterated that the state was not seeking to avoid work requirements and explained why the state remains interested in obtaining a waiver. “Some of these participation requirements are difficult and costly to verify, while other participation requirements do not lead to meaningful employment outcomes and are overly prescriptive,” he wrote.

However, like Haskins, the Utah governor questioned whether the administration has the authority to issue waivers. Hatch, the state’s senior senator, has asked the GAO to determine if the administration’s policy “qualifies as a regulation that is subject to review — and potential disapproval — under the Congressional Review Act.” The waiver issue is also likely to be addressed as part of the congressional reauthorization of TANF.  (The current authorization of TANF expires Sept. 30.)

“HHS appears to be granting waivers that will provide the flexibility we seek,” Herbert wrote. But, he added, “Our support of the HHS change is contingent on HHS having statutory authority to grant waivers — whether that authority is in the statute as currently written or whether it is granted as part of a TANF reauthorization.”

Either way, the Republican governor is on record as welcoming a rule that his party’s candidate for president says will “gut welfare reform.”

— Eugene Kiely, with Rina Moss