If you pay attention to the fiscal philosophy of many of today’s conservatives, you will quickly discover that they love block grants.
What’s a block grant? It’s a fixed amount of money sent from the federal government to the states to administer a program. Sounds innocuous, I know. But consider programs such as food stamps (now called SNAP) and Medicaid that aren’t administered as block grants (though states pay a portion of Medicaid costs). The funds from the federal government are, importantly, flexible (not fixed) in these cases. They ebb and flow to meet the needs of people eligible for the programs as, for example, they ramp up in recessions and down in expansions.
But under a block grant, the feds send a fixed amount to the states, which use it to administer their own programs as they see fit. They typically have to meet some federal standards, but beyond that, they are pretty much free to do what they want.
Congressional conservatives thus sell block grants as “devolving power back to the states…” and giving “…states the freedom to tailor their individual programs to address the diverse needs of their communities.”
Would it were so. In the real world, block grants work as a stealth tactic to cut spending, often on programs for families in need, as shown in a new paper from my colleagues at the Center on Budget and Policy Priorities. Their analysis finds that block grants for housing, health care and social service programs are down 26 percent in real terms since 2000. Factoring in population growth (as you should because more people means more needs to be met) or overall economic growth leads to even larger declines.
For example, Temporary Assistance for Needy Families (TANF), which provides various forms of assistance, including cash, to poor families with children, was turned over to states as a block grant worth about $16 billion as part of the 1996 welfare reform bill. Two decades later, it still clocks in at around that amount, meaning it hasn’t been adjusted for inflation or population growth. In real terms, its funding is down about 40 percent, and the result has been a sharp decline in the extent to which TANF is reaching poor families.
The other big problem, as noted above, is that block-granted programs lose their counter-cyclical function. In a new paper by Ben Spielberg and I about getting ready for the next recession, we point out that SNAP was much more responsive than TANF during the last downturn. Given that there’s another recession out there somewhere, disabling SNAP or Medicaid by turning them into block grants would be a great way to ensure that a lot more economically vulnerable people get hurt.
Some conservatives insist that a block grant could be tweaked to respond counter-cyclically, say by providing an option for Congress, at their discretion, to bump up the block grant in real time when a recession hits.
Gimme a break. We’re supposed to believe that the tea party caucus and like-minded conservatives are going to put aside their hostility to spending more on poverty programs and quickly respond to declining economic conditions by increasing block grants? As Bob Greenstein points out, only three Republicans in the entire Congress voted for the stimulus in the throes of the Great Recession in 2009.
Simply put, there’s no need to break programs that work well and then try to kludge together a fix for what you just broke.
So think of block-and-cut as nothing more than bait-and-switch. Since they haven’t been able to whack low-income programs directly, the block-grant ploy is now conservative orthodoxy, handed down from Paul Ryan to Trump, Cruz, and the rest of the lot. But from the perspective of millions of economically vulnerable families, it is, in the eloquent words of columnist Michael Hiltzik, a “poisoned chalice” from which we must not drink.