The states are given a rather Machiavellian out. The law in effect assumes that any reduction in the rolls reflects people who have gone to work. So states have a de facto incentive to get people off the rolls in any way they can, not necessarily by getting them into work activities.
The states can shift a big chunk of their own money out of the program if they want to. There is no matching requirement for the states, only a maintenance-of-effort requirement that each state keep spending at least 80 percent of what it was previously contributing. This will allow as much as $40 billion nationally to be withheld from paying benefits over the next six years, on top of the $55 billion cut by the bill itself. Moreover, the 80 percent requirement is a static number, so the funding base will immediately start being eroded by inflation.
Besides being able to transfer some of their own money out, the states are allowed to transfer up to 30 percent of their federal block grants to spending on child care or other social services. Among other things, this will encourage them to adopt time limits shorter than five years, because this would save federal money that could then be devoted to child care and other help that families need in order to be able to go to work. Hobson's choice will flourish.
The contingency fund to cushion against the impact of recessions or local economic crises is wholly inadequate—$2 billion over five years. Welfare costs rose by $6 billion in three years during the recession of the early nineties.
The federal AFDC law required the states to make decisions on applications within forty-five days and to pay, retroactively if necessary, from the thirtieth day after the application was put in. There is no such requirement in the new law. All we know from the new law is that the state has to tell the Secretary of Health and Human Services what its “objective criteria” will be for “the delivery of benefits,” and how it will accord “fair and equitable treatment” to recipients, including how it will give “adversely affected” recipients an opportunity to be heard. This is weak, to say the least.
Fifty Welfare Policies
Given this framework, what can we predict will happen? No state will want to be a magnet for people from other states by virtue of a relatively generous benefit structure. This is common sense, unfortunately. As states seek to ensure that they are not more generous than their neighbors, they will try to make their benefit structures less, not more, attractive. If states delegate decisions about benefit levels to their counties, the race to the bottom will develop within states as well.
I do not wish to imply that all states, or even most states, are going to take the opportunity to engage in punitive policy behavior. There will be a political dynamic in the process whereby each state implements the law. Advocates can organize and express themselves to good effect, and legislatures can frustrate or soften governors’ intentions. There is another important ameliorating factor: many welfare administrators are concerned about the dangers that lie in the new law and will seek to implement it as constructively as they can, working to avoid some of the more radical negative possibilities.