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Introduction Of The Next Step In Reforming Welfare Act

Sen. Benjamin L. Cardin

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Mr. Speaker, our work in helping people move from welfare to employment, and from poverty to a better way of life, is far from done. We must continue the progress States have made in promoting employment among welfare recipients, while also increasing our focus on job advancement and poverty reduction. To achieve these goals, I am introducing the Next Step in Reforming Welfare Act to reauthorize and improve the Temporary Assistance for Needy Families (TANF) program and to enhance several related programs. I am proud to be joined by my Democratic colleagues on the Ways and Means Subcommittee on Human Resources, Representatives Stark, Levin, McDermott and Doggett, in sponsoring this important legislation.

As we approach the reauthorization of TANF, it is important to acknowledge the progress our Nation has made over the last six or seven years in reducing poverty and other critical social problems. For example, the percentage of children living in poverty in the United States has dropped to its lowest level since 1979. Unfortunately, even with that improvement, one out of every six children still lives in poverty.

Three developments are primarily responsible for these positive changes in the poverty rate. First, until recently, we have seen nearly unprecedented economic growth. Second, the work supports put in place by Congress, particularly the 1993 increase in the Earned Income Tax Credit, are now paying important dividends. And third, welfare reform has encouraged more low-income mothers to enter the workforce.

As impressive as these poverty reductions have been over the last few years, they pale in comparison to the decline in the welfare rolls over the same time period. This raises some troubling issues, not the least of which is the fact that many families are not leaving poverty when they leave welfare for work. Additionally, some families at the very bottom of the income scale may have lost ground over the last 5 years because of a reduction in various forms of public assistance.

This should raise a basic question for every Member of this body: is caseload reduction a goal unto itself, or is it a means to an end? I believe it must be the latter. In other words, we want people to leave welfare so they can lift their families out of poverty. To achieve that objective, we must continue the expectation that welfare recipients move toward employment. But at the same time, we must do more to help them escape poverty and move up the economic ladder. Both of these goals will undoubted be made more difficult by a slowing economy that is now shedding more jobs than it is creating. In fact, the current recession raises the stakes on our efforts since many recent welfare leavers may lose ground in their fight to escape poverty and current welfare recipients may find it even harder to leave the rolls for work unless we make some necessary improvements to TANF.

At its core, the Next Step in Reforming Welfare Act is driven by a philosophy that we should help people escape poverty through hard work. The TANF program is not, nor should it be, our only weapon to achieve this goal, but it must be an important part of our arsenal. Here are the eight steps our legislation would pursue to improve TANF and several other important poverty-related programs.

First, the legislation would maintain our financial commitment to the TANF program by increasing the current annual $16.5 billion allocation by an inflation adjustment in coming years. Such an increase is necessary to stop the continual erosion in the real value of the States' TANF grants (which will be worth 22 percent less in FY 2007 compared to FY 1997 unless adjustments are made). Of course, some may suggest we should cut funding because of declines in TANF's cash caseload. However, three facts are in conflict with such a suggestion: (1) there are still many unmet needs that demand significant resources; (2) an increasing amount of TANF funds are spent on work supports, rather than on direct cash assistance; and (3) the current recession will present new challenges to our welfare system. In addition to prospectively increasing the TANF grant for inflation, the bill would improve and extend the current supplemental grants for States with low Federal funding per poor child, the annual work-based performance bonuses and the contingency fund, which would be redesigned to provide real assistance to State TANF programs during economic downturns.

Second, the bill would include poverty reduction as an explicit goal in the welfare reform law, and States should be given financial bonuses if they reduce child poverty. Broadening the goals of TANF and providing financial bonuses would encourage States to consider developing new approaches and providing additional assistance to help struggling families. Furthermore, under the bill, a conciliation process would be required before a TANF recipient's benefit can be sanctioned, funding for the Social Services Block Grant would be restored to $2.8 billion a year, and the current caseload reduction credit would be replaced with an employment credit, which would reward States for moving people from welfare to work, rather than for people simply exiting welfare.

Third, the current requirement that TANF recipients be working or enrolled in related employment activities would be continued. However, additional incentives and rewards for work would be established, including not counting TANF payments to recipients' with earnings towards the five-year time limit (such payments would be considered wage subsidies). The legislation also would make a dramatic new investment in the Child Care and Development Block Grant (an additional $11.25 billion over 5 years) to ensure that both welfare leavers and the working poor have access to quality and affordable day care.

Fourth, State TANF plans would have to include goals for improving earnings for TANF recipients and leavers, and new demonstration projects ($150 million per year) would be established to increase wages for low-wage workers and to improve employment outcomes for welfare recipients with multiple barriers. Additionally, to promote the skills needed for employment advancement, the legislation would eliminate the current cap on the number of TANF recipients who can be enrolled in vocational education and still count towards the participation requirement.

Fifth, the bill would take a series of step to encourage family formation and responsible parenting. For example, the measure would create a new fund ($100 million a year) to promote the best practices on promoting the formation of two-parent families, reducing teenage pregnancy, and helping low-income, non-custodial parents support their children. Furthermore, the legislation would encourage States to pass through more child support to families, rather than retaining those collections to recoup past welfare costs.

Sixth, the legislation would revise the harsh immigrant provisions in the 1996 law by restoring TANF and Supplemental Security Income (SSI) eligibility to non-citizens who are legally residing in the country (with a requirement that their sponsor's income be deemed available to them for a certain period of time). Seventh, the bill would maintain State accountability under TANF by extending the current maintenance-of-effort requirement (plus an inflation increase), and by requiring States to generally use Federal funds to supplement, rather than replace, State funding in various low-income programs.

Eight and finally, the measure would call for increased information about State TANF programs and about the status of welfare leavers.

Mr. Speaker, I believe we can pursue these eight goals while maintaining the State general discretion to tailor their own TANF policies. Furthermore, I am hopeful these suggestions can attract bipartisan support on the basis that promoting work and reducing poverty are goals that hopefully draw near universal approval. I look forward to working with the Administration and with all of my colleagues on a TANF reauthorization bill designed to reward work, reduce poverty, and increase self-sufficiency.