He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is a graduate of Harvard College and Harvard Law School. He is author of The Obamacare Disaster, from the Heartland Institute, and President Obama's Tax Piracy, and his latest book: America's Ticking Bankruptcy Bomb: How the Looming Debt Crisis Threatens the American Dream-and How We Can Turn the Tide Before It's Too Late.
Latest posts by Peter Ferrara (see all)
- Just As With Reagan, Getting Tax Reform Right Today Is Key To Booming Economy - April 17, 2017
- Closing The Deal With Conservatives On Obamacare - March 24, 2017
- Senator Warren’s ‘Trust The IRS’ Bill - March 21, 2017
[First posted at The American Spectator]
You can tell where the Obama campaign is worried that Romney is drawing blood, because it’s made up a fairy tale totally disconnected from reality to address that concern. We’ve seen it already in the Obama reaction to Romney’s tax plan, in which the GOP nominee has proposed across the board 20% cuts in income tax rates, similar to Reagan’s 1981 25% across the board cut in income tax rates.
Obama’s fabrication in response is that Romney’s tax cut for everyone plan, which includes several other tax cuts for the middle class, is a tax increase on the middle class, to finance tax cuts for millionaires and billionaires.
What a dastardly fiend the Republicans have nominated! To think Romney would propose a tax cut for everyone that is actually (somehow) a tax increase on the middle class, to finance tax cuts for millionaires like himself. Too bad Carter never thought to counter Reagan’s Kemp-Roth proposal with the argument that it was actually a tax increase on the middle class.
Now you can see the same thing in regard to President Obama’s announced waivers from the work requirements in the enormously successful 1996 welfare reforms. Bill Clinton recounted the Obama administration’s fabrications about those waivers in his speech at the Democratic National Convention last week. Here’s the complete truth about how brazenly dishonest Obama and the Democrats are being on this issue.
The Astounding 1996 Welfare Reform Success Story
The 1996 welfare reforms involved sending the federal funds for the old, New Deal, Aid to Families with Dependent Children (AFDC) program back to the states in block grants. In the process, the entitlement status of AFDC was actually repealed, to give the states maximum discretion in redesigning the program, subject only to the work requirements in the federal reform legislation.
Federal financing for AFDC was previously based on a matching formula, with the federal government sending more to each state for AFDC the more the state spent on the welfare program. The federal government was effectively paying the states to spend more on AFDC welfare. As a result, when Reagan as governor first proposed welfare reforms that would reduce welfare spending in California, the liberals and their media screamed that Reagan was going to lose federal funds for the state if state welfare spending declined.
Reagan’s top welfare policy advisor in California was Robert Carleson, who later served him in that role in the Reagan White House. I worked directly for Carleson in Reagan’s White House Office of Policy Development.
The key to the success of the 1996 welfare reforms was that the federal financing for AFDC was changed so that it no longer matched state spending, increasing as state spending increased. Instead the federal financing for the program was provided to the states under the reforms in fixed finite block grants that were the same amount no matter how much the state spent. Consequently, if the state spent more on its new redesigned AFDC program, the state had to pay for 100% of those increased costs. But if the state spent less, by getting those formerly dependent on the program out to work, or married to someone who worked, the state could keep the savings. To drive home the point of the reform, the program was renamed Temporary Assistance for Needy Families (TANF).
This policy arose directly out of the thinking of Reagan and his top welfare policy aide Robert Carleson going all the way back to their experience with welfare reform in California in the early 1970s. This is explained in detail in a new study I have co-authored with National Tax Limitation Committee (NTLC) President Lew Uhler, “Restoring Fiscal Order: Block Grant Federal Welfare Entitlements to the States,” published by the National Tax Limitation Committee Foundation.
I recently recounted here the astounding success of those 1996 reforms. Two thirds of those dependent on the program left it entirely for work, or marriage to someone who works. As a result, federal spending on the program declined by 50% from where it would have been otherwise on prior trends. At the same time, incomes for those formerly dependent on the program have been documented to increase by 25%, and poverty among them plummeted.
In the NTLC report, we propose extending those same 1996 reforms to all federal means-tested welfare programs. We have identified close to 200 of those, including all the big ones such as Medicaid, food stamps, federal housing programs, etc. Send them all back to the states with fixed, finite block grants, restoring the original federalism. That would be perfectly suited to Tea Party activists.
The best estimate of the cost of those federal means tested welfare programs over the next 10 years is over $10 trillion. Based on the experience with the 1996 reforms, such extended reform would potentially reduce federal spending over a same period by $5 trillion. If the states follow our advice in the NTLC study as to what policies they should follow with those block grants, we think the savings would be much greater, while all involuntary poverty would be completely eliminated.
Obama’s Waivers and Obama’s Lies
As I recently recounted, despite the astounding success of the 1996 reforms, on July 12 of this year the Dept. of Health and Human Services published a “regulatory guidance” that announced that the Department would favorably entertain requests from states for waivers from the work requirements on the TANF block grants. Romney gamely pounced, running ads denouncing this retreat from required work in return for welfare.
The Obama administration tried to respond that the waivers would be granted only for states that increased required work by 20%. Clinton elaborated on this point in his address at the Democrat National Convention last week, saying:
When some Republican governors asked to try new ways to put people on welfare back to work, the Obama Administration said they would only do it if they had a credible plan to increase employment by 20%. You hear that? More work. So the claim that President Obama weakened welfare reform’s work requirement is just not true.
That is a complete fabrication of reality. Here is why.
The states don’t need a waiver to increase work under the TANF block grants. Under the 1996 federal reform law, Governors and states are already perfectly free to increase required work in the program any time they want. The whole point of the 1996 welfare reforms was to empower the states with the authority and discretion to completely reform their AFDC programs from the ground up. That is why the entitlement status of AFDC was repealed under the 1996 welfare reform legislation! The states could not be fully free to reform AFDC if dependents had the legal right in federal law to specific entitlement benefits.
Indeed, several states already have pursued and required work under the 1996 reforms more aggressively and reduced their welfare rolls for AFDC/TANF far more than the two-thirds national average: Wyoming (97%), Idaho (90%), Florida (89%), Louisiana (89%), Illinois (89%), Georgia (89%), North Carolina (87%), Oklahoma (85%), Wisconsin (84%), Texas (84%), Mississippi (84%). By 2006, the percent of the population receiving TANF cash welfare was down to 0.1% in Wyoming, 0.2% in Idaho, 0.5% in Florida, 0.6% in Georgia, Louisiana, North Carolina, and Oklahoma, and 0.7% in Arkansas, Colorado, Illinois, Nevada, Texas, and Wisconsin.
The only thing that could conceptually be “waived” is the work required under the law’s work requirements. But as I discussed in my previous column on this issue, the 1996 welfare law intentionally and legally provides no authority for the Executive Branch to waive the work requirements.
Consequently, Obama’s announcement of such waivers is a violation of his constitutional duty to take care that the laws be faithfully executed, and of his oath of office to uphold the Constitution. Those violations are grounds for impeachment, actually.