House Republican leaders have a clever fiscal idea. They are eyeing $6 billion of previously approved federal antipoverty money that governors have not yet spent to fund other government programs.
It would be one thing if this idea were part of a general belt-tightening necessitated by deficits. But the scheme comes against a background of ever-increasing budget surpluses.
To add insult to injury, the Republicans would use about $800 billion of the surplus for tax cuts, mostly for the affluent. So this is a perfect case of Robin Hood in reverse.
This bizarre idea reflects the interaction of two events -- the 1996 welfare reform legislation and the 1997 Balanced Budget Act. The welfare law replaced the old Aid to Families with Dependent Children program with a new federal block grant known as Temporary Assistance to Needy Families (TANF).
TANF, unlike its predecessor, required states to impose time limits on public assistance. It emphasized a shift from welfare to work, with the policy goal of leaving people who worked economically better off. The details were left to the states, in the name of federalism.
Today there is $6 billion of unspent state TANF money, in part because the economy is doing better than expected, in part because people have left the rolls faster than anticipated, but mainly because governors are prudently reserving some money for the inevitable economic downturn. Even with time limits on benefits, in a recession millions of people will lose their jobs and pour onto the welfare rolls as new claimants.
The reason House Republicans are coveting $6 billion set aside for the truly needy is not just a warped sense of priorities or a propensity for going back on promises. The move is a response to the "cap" mechanism of the 1997 Balanced Budget Act.
Back in 1997, before economic growth picked up, both parties assumed that getting the budget balanced would require Draconian cuts in public spending. So they devised mandatory ceilings ("caps") on outlays to steadily cut back public spending over a 10-year period. Only about one-fourth of the projected surplus reflects higher-than-expected economic growth. Three-quarters reflects the spending constraints of the caps.
The caps are so tight that even fiscally conservative Republican chairmen of appropriations committees are having trouble funding minimal government programs consistent with the discipline of the caps. So they are resorting to budget gimmicks.
One such gimmick is to designate ordinary spending as emergency spending. But there are not enough credible emergencies.
Another gimmick is simply to rob Peter to pay Paul. If the governors have not yet spent $6 billion of previously approved funds for the very poor, the money is fair game for other federal uses.
Not surprisingly, the governors -- even conservative Republican ones -- have gone ballistic. Let a recession come and the money will hardly be enough.
The governors are doing the conservative thing -- being fiscally prudent -- and their conservative brethren in Washington want to punish them for it. Indeed, in this budget game, the shrewd governor is the one who shovelled the federal money out the door as fast as it came in.
If anything, the TANF money is too meager and should be supplemented rather than raided. Welfare benefits prior to TANF were already declining.
According to a study by Wendell Primus of the Center on Budget and Policy Priorities, 6 million women and children welfare recipients with incomes at or below 75 percent of the poverty level lost an average of $660 a year between 1995 and 1997 -- before welfare reform. TANF offers only very limited child care support and leaves many of those in low-wage work economically worse off than they were on the welfare rolls.
University of Wisconsin economist and antipoverty researcher Robert Haveman, reviewing the major studies that tracked people coming off the welfare rolls, told a recent Washington research gathering that between half and two-thirds of ex-welfare recipients are economically worse off. New York Times welfare reporter Jason deParle, writing a book on welfare reform, is finding that many of the poster children celebrated as welfare-to-work success stories can't hold jobs because of family problems.
Maybe you can't solve problems by throwing money at them, but you can certainly make people's lives more miserable by taking money away. At a time of fiscal plenty, we need to revisit both the budget caps and the nation's priorities. Both are far too stingy for an era of general prosperity.
Robert Kuttner is co-editor of the American Prospect.