So why does Thompson worry over what Congress is about to do? His Republican colleagues, it seems, have heard only part of what Thompson’s been saying. “I tell everyone, ‘You’re not going to save as much money as you think you are’,” Thompson told NEWSWEEK. “People in Congress overlook that fact.” And when he presses the point? “They ignore me.”
As the U.S. Senate begins a historic debate over how to fix welfare, Wisconsin has some lessons to offer. There will be emotional arguments over conservative proposals to deny welfare to teenage mothers. But in the end, Senate Majority Leader Dole is likely to pass a welfare bill that lets states make such decisions. The Dole plan would give lump-sum checks to the states with few, if any, of today’s rigid federal rules on how the poor should be treated. It stands to reason that if states had more flexibility, they could replicate the Wisconsin results. But a closer look at what happened there shows that the GOP approach may not help-and, ironically, may make it harder for states to devise homegrown reforms.
While congressional Republicans plan to freeze welfare spending right away, Thompson says states have to spend money to save money. He increased funds for training, job placement and child care five-fold to help move people off welfare, Wisconsin spends about $1,400 a year–in addition to welfare benefits-helping each parent prepare for work. That’s what Mississippi pays a family of three in benefits alone. But after a few years of heavy investments, Thompson got a payback. The state now saves $2 in benefits for every $1 it spends making them employable.
Congressional plans could also make it harder for governors to remove one of the biggest obstacles to getting people to work-fear of losing health insurance. In the past, families that left Aid to Families with Dependent Children also lost Medicaid, the government-subsidized health-care program. Wisconsin solved that problem by allowing them to retain the medical care for a year after they’ve left welfare. But Congress is cutting federal payments for Medicaid, so it’s hard to see how states will afford to follow the Wisconsin model.
There is one diabolical solution to the problem of too many people and not enough block-grant money: make benefits so skimpy that welfare recipients will choose to relocate to a state where they’ll find a better deal. For years conservatives have argued that welfare mothers moved from state to state to get more generous benefits, much as other people moved for better jobs; liberals claimed that was insulting and racist. The conservatives were right. In a recent survey of newly arrived Wisconsin welfare recipients, 20 percent admitted that they’d moved in part because they’d get a bigger check. Wisconsin pays $518 for a family of three while neighboring Illinois pays $377. Outside the welfare office in Kenosha, Wis., it’s never hard to find a car with Illinois plates and a Chicago Bears decal on the rear window. Nationally, Harvard political scientist Paul Peterson estimates, states with high benefits end up with bigger caseloads-by about 10 percent-because of their generosity.
But if Republicans were right about welfare migration, they have not come to terms with the implications. If welfare mothers migrate to high-benefit states, legislatures will want to make sure they’re not the most generous ones around. The result is what’s called the “race to the bottom.”
Bob Dole has dismissed this possibility and its implication that states would be so callous to the poor. “I wonder which states he [Clinton] thinks would participate in such a race,” Dole said before a gathering of governors last week. But the race to the bottom has already begun. Gov. John Rowland of Connecticut recently won passage of some of the toughest welfare rules around. Beneficiaries must leave the rolls after 21 months. And he has little patience for recipients who refuse to work: “If they don’t like it, they could leave the state.”
Politics being politics, Clinton won’t embrace Thompson’s approach–even though the Wisconsin experience provides evidence in support of the Democratic plan. Clinton argues that the Feds need to set basic standards-including a Thompson-like requirement that beneficiaries work.
And, politics being politics, Thompson favors the GOP block-grant program, even with its flaws. His hope is that getting rid of federal rules would let states save so much money that they’d have enough left over for the costly reforms he advocates. Last week he unveiled an even more ambitious welfare plan – wryly called “W-2” – that would require recipients to work but also expand health and day-care help. Republicans argue that such inventiveness would sprout in all states if Washington got out of the way. That would be true if every state were as committed as Wisconsin to getting it right.
How much is enough to help families in need? Depending on the state, payments can vary by hundreds of dollars a month.
AVERAGE MONTHLY AFDC PAYMENTS FOR A FAMILY OF THREE California $607 New York 577 Vermont 638 Washington 546 Wisconsin 518 Low Benefits Arkansas $204 Indiana 288 Mississippi 120 Tennessee 185 Texas 188
SOURCE: ADMINISTRATION FOR CHILDREN AND FAMILY
