The Big Idea: No Strings Attached

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Talk to an advocate for the poor for long enough these days, and you’ll likely hear an unexpected admission. “It’s strange to say it,” they will begin, “but states now almost seem like our friends.”

After years of fearing a “race to the bottom” if states were given more leeway over how to spend federal welfare funds, the reality is that local governments have proven more responsive and less onerous than many had feared. With the White House focusing its energies on being a kinder, gentler Jerry Falwell (would you like some pro-marriage counseling with your faith-based services?), state agencies seem benign by comparison: willing to experiment with progressive reforms while opposing new federal work requirements.

Any sympathy for increasing state control, however, ends with the latest attempt at detaching federal strings from social service funds: the “superwaiver.” First proposed by the Bush administration last February as an amendment to the House bill reauthorizing federal welfare programs, the superwaiver would grant sweeping authority to the White House to exempt states from federal rules governing almost all of the basic federal benefit programs assisting low-income people: Food stamps, Medicaid, child care, public housing, adult education and of course welfare. Currently most of these programs remain entitlements, with states that receive these federal dollars obligated to provide services to anyone eligible under federal law. With superwaivers, all bets would be off.

If the proposed legislation passes, governors would be able to spend money designated for these benefit programs according to their own design. They could ignore federal eligibility requirements, or impose new ones. States could create time limits for benefits that currently have none, or tie them to participation in mandatory programs. And under some circumstances, money designated for one program could be used to fund another. With many states now suffering crushing deficits, the prospect of replacing their own spending with federal dollars may prove too tempting to pass up. “The superwaiver would really allow states and the executive branch to completely rework the fundamental nature of programs–and to do it in closed-door negotiations,” says Shawn Fremstad, a senior policy analyst at the Center on Budget and Policy Priorities.

The superwaiver, or State Flex as the GOP belatedly attempted to rename it, passed the House in May with minor modifications. Under the legislation, states and federal agencies would only be obligated to follow labor law, civil rights protections and environmental standards (thus dashing the hopes of the Heritage Foundation, which has long advocated “state flexibility” to evade minimum-wage laws). While it’s yet to be introduced in the Senate, that’s still too close for comfort for many Beltway observers. Critics are labeling the law a thinly veiled attempt to effectively eliminate entitlements of all kinds.

Its proponents like to paint superwaivers as a means of encouraging innovation, by allowing states to coordinate policies across different programs. But opponents of waivers point out that most programs are already flexible enough to allow plenty of wiggle room: When HHS Secretary Tommy Thompson suggested the benefits of a superwaiver would include the ability to put food stamps and cash grants on the same electronic benefits card, he failed to note that several states already do this under current law.

The fear is that the sweeping new powers could affect not just details like EBT cards, but what till now have been the untouchable core of entitlement programs: funding levels and eligibility rules. “The food stamp program is the one remaining basic safety net program,” says Fremstad. Under a superwaiver, he says, “states could cut food stamp benefits by as much as they wanted, for as many low-income families as they wanted. Right now federal law is pretty restrictive for adults without children, but states could say, ‘We’re not going to cover them at all. Too much hassle.'”

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Though waivers were first authorized by Congress in 1962, they didn’t surface in a big way until the 1980s. With AFDC entrenched as a federal entitlement to all eligible, the Reagan administration concocted a workaround: hand out state-by-state “waivers” allowing state governments to evade federal law under the guise of experimentation.

The years that followed were the heyday of welfare as behavior modification: Learnfare, Bridefare, and other ‘fares attempted to tie benefits to marriage, school attendance, or whatever else lawmakers felt like promoting via cash bribes. Waivers also introduced the “family cap” that limited benefits regardless of household size, and governors took their first steps toward the time limits and work requirements that would later be the centerpiece of federal welfare reform.

From 1992 to 1996, all but six states asked for waivers from federal welfare regulations, and none more than Wisconsin under Governor Tommy Thompson. With the 1996 welfare law, which gave wide discretion to states to shape their own programs, waivers gave way to a law that accomplished the same thing. But many governors continued to push for legislation that would allow them even more leeway. Their moment came with Thompson’s ascension to HHS secretary last year.

The superwaiver would reach further than Thompson’s agency. Public housing authorities, for instance, freed from federal minimums on how many units must go to low-income people, might be tempted to ditch problematic poor tenants for handpicked higher-income ones on a far larger scale than they can now. Time limits on public housing, briefly tried in Delaware and a few other jurisdictions, are another possibility.

But as Barbara Sard of CBPP points out, in practice sloughing off federal requirements can end up being deeply impractical. Housing authorities have been slow to take advantage of waivers under the 1998 Moving to Work demonstration project, which allow the imposition of time limits on subsidized housing. “One of the things they are learning is that time limits are much easier to say than to do in any kind of fair manner,” she explains. They’re forced to confront reality: These renters can’t afford their housing without aid, nor will their landlords be pleased when good tenants get arbitrarily evicted.

A stronger concern is that states will raid entitlement funds to balance their budgets. Food stamps may prove a particularly tempting target. Under the proposed law, money designated for that program could be used to support any initiative that would benefit eligible families, even if it had nothing to do with nutrition. “Especially with the budget crisis mode that you see in states with the economic downturn, there’d be a real temptation to divert food stamp funds to plug a budget gap,” says Fremstad.

Mark Greenberg of the Center for Law and Social Policy sees troubling precedent in the ways states have already taken advantage of flexibility in welfare spending. “States would find something that was an allowable use of [welfare cash] but for which the state was currently spending state dollars, use the federal funds to pay for it, and free up the state dollars for other purposes,” he notes. “So it looked like the federal money was going to a low-income benefit or service, but the practical reality was that it was being used to fund tax cuts or state spending unrelated to low-income assistance.”

Whether the welfare law is renewed this year or next, the Bush administration is likely to make a big push for superwaivers in 2003. D.C. observers point out that waivers could make inroads in the Senate even if Democrats hold onto their majority this fall, because several conservative Democrats there are former governors themselves.

The irony is that even proponents of stronger government support for the poor see positives in some degree of state flexibility–when coupled with federal standards. “On the state level, they’ve come to a more realistic view of welfare, and a more real impression of the human beings that we’re talking about,” notes Maureen Lane of the Welfare Rights Initiative, pointing to such programs like Maine’s Parents-As-Scholars, which served as a model for education and training options added to the Senate Finance Committee’s welfare bill this year.

Still, it’s likely to be a whole other story when budgets are on the line. If superwaivers come to pass, warns Fremstad, “the food stamp program could turn into a cash cow for states.” If so, it’s going to be the poor who end up getting milked. ?

Neil deMause is editor of Here magazine and writes frequently for Extra! and In These Times.