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tv   Heritage Foundation Hosts a Discussion on Welfare Reform  CSPAN  August 20, 2016 5:00pm-6:20pm EDT

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>> welcome to the heritage foundation. i would like to remind our internet viewers you are welcome to send questions and comments at any time. you can e-mail the speaker. check our cell phones and other mobile devices. they have been silenced as a courtesy to our presenters. we are pleased to go host this program with our friends at the american enterprise institute and thank them for their special participation in this 20 year anniversary discussion. hosting our guests is jennifer marshall, vice president for the institute for families, community an opportunity. she is a fellow. heritage. she oversees our research on a variety of issues to determine
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the strength and character of american society. she edits our annual index of culture and opportunity, copies of which are available in the foyer for you that tracks key economic trends and indicators of economic opportunity and if they are on the right track. join me in welcoming my colleague. [applause] jennifer: thank you, john, and thanks to you who could be here with us today in mid-august. next monday, august 22, march the 20th anniversary of welfare reform. on that day back in 1996, president bill clinton signed the fiscal responsibility and work opportunity act based on a policy proposed by the republican congress in a 1994 contract with america.
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welfare reform has been widely hailed as one of the most significant domestic policy successes in the last half-century. participation in the temporary assistance to needy families program dropped by more than half. poverty rates among single mothers felt a historic lows. for decades before the reform welfare dependence grew without significant reduction of party rates. contrary to what president lyndon johnson at hoped for when he enacted the original war on poverty programs back in 1965. welfare reform in 1996 was an important milestone in the ongoing effort to help more americans overcome poverty and dependence on government welfare. recently some have asserted welfare reform actually increased the number of people in the most dire straits. others catherine eden and luke schaeffer's a after reform more than one million families are surviving a lesson two dollars
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per person per day in america. today our panelists will evaluate those assertions and explain like getting the facts right and learning the right lessons from the 1996 welfare reform are essential to building on its success for the good of more people. understanding the nature of poverty in america is essential to effectively help those in need, particularly those in the most extreme need. our panel today includes three leading experts on the subject. robert rector is the senior research fellow here at the heritage nation. a leading national expert on welfare in poverty and he played a major role in the 1996 reforms.
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his work focuses on a range related issues including how the erosion of marriage has contributed to party. dr. bruce meyer's mccormick foundation are better at the university of chicago school of public policy studies. he holds a phd in economics from m.i.t. and his research focuses on poverty and inequality, tax policy and government safety net programs such as unemployment insurance, food stamps and medicaid. he evaluates the accuracy of various government surveys relevant to our questions here today. we are particularly grateful dr. meyer was willing to rearrange his vacation plans to make a detour and be with us today. robert is the fellow in party
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studies at the american enterprise institute. before joining, he was the commissioner of new york city's human resources administration. the largest local services organization in the united states. he administered 12 public assistance programs. he was the new york state commissioner of social services and helped to make the state a model for welfare reform implementation. when you join me in welcoming robert rector. [applause] mr. rector: ok. 20 years ago that sweet bill clinton, president bill clinton signed the welfare reform act that changed the program and notably imposed requirements on some of the recipients for the first time in the history of the welfare state. the time the act was signed the left basically said it would cause an immediate and drastic increase in party in the united states. they predicted 1/5 of all families with children would have substantial drops in income. some 2.5 million people would quickly be thrown into poverty. senator daniel patrick moynihan infamously predicted this act would leave children sleeping in the streets, scavenging and
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garbage bins, and being picked up frozen in the morning. those doomsday prophecies were quickly put to rest when the act very soon produced record drops both in black child poverty and party months ago mothers. and that sort of clamor has remained quite silent for many years now. close to two decades. recently in the last two or three years, essentially the moynihan claims have been resurrected. there is a new group, particularly two dollars a day by catherine eden and mark luke schaeffer planning that while poverty may have gone down, there is a group of the very bottom that is in very dire conditions with 3.5 million children living on less than two dollars a day. that is the third world global poverty level. 4% of families in any given month or down in these dire conditions. bloomberg goes as far as to say
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they are millions of american families whose incomes are lower than disabled beggars and ethiopia. we will examine the truth of that assertion during this panel. let's start by getting the slide -- there we go. this is the case load in blue. the line on the left, the second line is welfare reform in 1996. at the height of that program we had roughly one in seven children in the united states and rolled in it. welfare reform comes along and by imposing work requirements onto the caseload, they caseload quickly drops by 60%.
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they said that would affect result in a disaster. let's look at that, at what the consequences were. before that if you have a handout, we need to review briefly three concepts about poverty we will be talking about today. the first is normal, the official poverty which for a family of three is around $19,000 in income expenditure, $17.44 per person per day. and having an income half of the official poverty level, which comes to around $9,000 per year and around $8.75 per day. finally we have the concept that is been recently introduced into the debate of extreme poverty, which is roughly 1/10 of the official party level. it is less than $2000 per year and about two dollars per person per day. they claim before us is that 4% of all families with children in
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any given month have incomes that are down at this extreme poverty level, which would be considered poor by a global un standard. we can look at a simple official poverty based on income over the last 20 years. the columns on the left in the red is pre-welfare party. those are families -- let me back up. 90% of the caseload in the population are single parents. if you want to judge the impact, look at the impact on the poverty rate of single parents.
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that appears on the left of the chart. we see over the last 20 years it is based on income that the official poverty as a client before welfare by about 3% for this group, after welfare by about 4.5%. the right-hand column is interesting because these are households without children, based on the normal current population survey. over the last 20 years in households without children, a group unaffected by welfare reform, official party has gone up both before welfare and after welfare. exactly the opposite of the normal narrative which is somehow welfare make things worse. welfare seems to have made single parents better off than the rest of the population. now, ede and schaeffern take a survey called the survey participation. they look at that and find in that survey they can find a
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population that appears to have less than two dollars per day per person in income. that same survey also provides a lot of other data. the next thing i did was to take the exact population that allegedly lived in extreme poverty on less than two dollars per person and look at what the same survey tells us about how those families actually live. what we find is when we look at the population that they defined as living in extreme poverty, we see in the survey 86% of the households in extreme poverty have air-conditioning and their houses or apartments, two thirds own a computer, 90% have a cell phone, and about 88% have a dvd player or digital media recorder or some similar device. we go to the next chart and we
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see in the same survey, if you ask these families who are allegedly subsisting on less than two dollars per day, at any time during the previous four months where you -- did you often not have enough food to eat? 1% of the population in extreme poverty says they often did not have enough food to eat. despite the fact they allegedly have two dollars per day in income, only 1% of them were evicted from their houses or apartments during the previous year. if we look closer at food consumption, this is the survey. that tiny orange sliver. 1% said they often didn't have enough food to eat in the previous four months. 8% said they sometimes didn't have enough food to eat. over 90% said they always had
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enough food to eat during the previous months. purple says we would've liked to have better food, but they certainly had enough food eat. what is this? how can they have income less than two dollars a day but they all have air-conditioning and computers and dvd players and enough food to eat? the answer to that is the government survey measures income badly. they have done this all along. they particularly measure badly at either tail of the income distribution. when you are talking about a group that allegedly in extreme poverty, they are way down in the tail of the distribution. the simple fact is when the surveys asked income and the family is getting welfare or is off the books earnings, they don't tell you about it. on the other hand, you could ask them how did you spend money?
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they tell you something very different. they will tell you in every government survey for decades when you look at poor people, they report spending at least two dollars and $.40 for every dollar of income they apparently have. why should the expenditure data be better than the income data? the expenditure data is very detailed. how much did you spend on tunafish? it is very detailed. they spent several hours making these expenditures. when you look at the families in extreme poverty what you find is they are in fact spending $25 for every dollar of income they have. what we did was go to another survey called the consumer expenditure survey.
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we look at every record of every family with children for the last 30 years. based on their quarterly reported expenditures. 270,000 observations. on the basis of those 270,000 observations we found 60 that reported spending less than two dollars per day. 60 out of 270,000. although the are trying to tell us one in 25 families tries to live on two dollars a day, based on their exported miniatures, the number looks like that. one family out of every 4400 are spending less than two dollars a day. most of those families reside in public housing where they did not have to pay rent. why is there this huge disparity? the part of the reason schaeffer and eat and get large numbers they have is when they say 3.5 million children, they basically
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don't count any welfare as income at that point. food stamps are not counted. tax credit is not counted. once they count income, it falls down to about 1.2 million children who have less than two dollars a day. the problem is they are using this data which is fairly normal. when you look at the data, what you see is like most government surveys welfare benefits are grossly underreported. on a typical month the survey is missing over 20 million benefits per month that we know are paid out by administrator record but are not being picked up as benefits received. what they are doing is using a survey which is missing 20 million welfare benefits every
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month and concluding there are roughly 1.2 million children who don't have any welfare that month. it makes absolutely no sense at all. you can't possibly use a survey that has gross reporting gaps to try to make these very tiny calculations about people, the number of people that don't have welfare. it is as if he took what they reported, not conditions in the real world, but simply gross underreporting gaps in the survey. it is like someone who is a pair of glasses with cracks in it. they look out on the world and they confuse the cracks in their lenses with reality. they look up and say this guy is full of figures and it looks like it's about the fall. it is not out there in the sky. it is right there in the survey instrument. another way of characterizing this is if you use the instrument for the services, it
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is like trying to use a fork lift for brain surgery. it is radically cannot do this with the survey. when you go to the consumer expenditure survey, which is much better about picking up the actual resources of the families have, it shows you a very different picture. very briefly i will go to that. this is consumer expenditure survey data going back to the late 1980's. the redline's welfare reform. the green line is the official party rate based on expenditures for single-parent families. the group affected by welfare reform. what you see is quite contrary to conventional wisdom. the official poverty rate, about $17 per person per day, drops dramatically after welfare
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reform and continues downward until the great recession which is the gray bar on the left. where it starts to go up again. that is largely due to the weak economy and not welfare reform. interestingly the blue and red lines at the bottom, the red line is very families with children, a group largely unaffected. their rate is largely unchanged during this period and the blue line is households without children. there rate is largely the same. this does not seem to be a general economic factor. it does not seem to be anything in the consumer expenditure survey. it seems in the group affected by welfare reform you have a substantial downward trend in poverty. the final chart, deep poverty. we can't measure extreme party because it is 60 out of 270,000 observations. it is effectively zero and you cannot have trends in zero. you can look at this list of the conditions which is families that don't have two dollars a day but they have about $8.50 per person per day. about half the party level. the red line is welfare reform. the green line is single parents
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with children. what you see is a steady and substantial decline in deep poverty fo single parents with childrenr that starts with welfare reform and the overall deep poverty rate is substantially lower and continues downward until the great recession where it kind of levels off and grows up slightly. a very substantial decline. that can be compared to the red and blue lines that are two groups unaffected by the welfare reform, the deep poverty rate for those groups has essentially remained unchanged in the same period. this is exactly the opposite story you are getting from the left at the present time, which is that somehow after welfare reform or extreme party went up in particular for the group affected by welfare reform, single parents.
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when you look at the consumption is exactly the opposite. to summarize, when you look at the survey data that is being used to proclaim children live with less than two dollars per day, the actual living conditions in those families in no way resembles anything that would be considered extreme deprivation. they look like fairly ordinary poor families. when you look at consumption, you see these families are spending over $20 for every dollar of income. when you look at 30 years of consumption data, you can virtually find no families whatsoever that spend less than two dollars per day. when you look at the trend lines, what you see is in the group that is supposedly victimized by welfare reform, both regular party and deep poverty have been going down relative to the rest of the population. the key idea of welfare reform was that welfare should not be a one-way handout.
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able-bodied adults who receive benefits from the government should work were prepared to work as a condition for receiving aid. over 90% of the american public agrees with that assessment. when it was put into effect 20 years ago it not only reduced dependency but also produced poverty. the problem is we reformed only one program out of 80. it is time to take the same principles and apply the more broadly. jennifer: thank you, robert. >> you are going to hear i'm going to echo many of the themes
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that robert has emphasized. i will have a little bit of a different take in terms of what were the policy changes. i need to get my presentation up. ok. great. so we are here to talk about the 1996 welfare law and extreme poverty. i want to begin by putting the 1996 law and perspective. it was part of a long list of policy changes i have put on
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this slide roughly in chronological order. one will have a distorted view if you look at just the single program because the safety net is constructed from a large set of programs. those that were previously on one program now are often on different programs. now, as a result of these changes, changes in the ei gc, medicaid expansions, food stamps replaced by staff, general assistance expanding. as a result of these changes we are spending more than ever. here we go. we are spending more than ever on those at the bottom. this slide indicates
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expenditures in 1996 and 2011. those were the years that are emphasized and be eden and schafer work. they say welfare is dead. by that they mean there isn't much being spent on welfare. well, if you take a look at these numbers, you see that we used to have a bunch of $20 billion programs. now snap is three times that big. ssi has doubled. unemployment insurance at the time they were looking is more than four times as big as it was in the earlier years. i didn't put down numbers for the child tax credit, or
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medicaid, child tax credit one from zero to $30 billion. medicaid went from about $150 billion to $300 billion. the death of welfare is greatly exaggerated. when the popular press and even my academic colleagues look at poverty they can to look at income. to measure income we rely on the current population survey or cps, or the survey of program participation. the cps is the source of our official party numbers. the other is the source of the data used by eden and schafer. these surveys are so flawed through poverty measurement should be abandoned and less linked to a ministry of data.
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you heard a version of that from robert rector and i will emphasize that as well. using a slightly different analogy than he did, income surveys are measuring costs riddled with holes. the holes are the benefits and other transfers that are not reported in the survey. claims claims shortly, but lete into some good news. the consumer expenditure survey provides actual living standards. it indicates what people are actually spending on things like food and housing, and it reflects cash transfers from others and savings. in work that i have done with jim sullivan, we find strong evidence that low consumption is
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more closely associated with deprivation than low income. so looking at consumption gives you a better idea of people's living standards. what i'm going to show you is what we call well measured consumption. that's food at home, rent, utilities, gasoline, percentage of the value of cars, and the rental equivalent of owned homes. now rent and food at home, food consumed at home, are the bulk of spending at the bottom, and those are fairly easy to report. people know their rent, people know about what they spent each month on grocery bills. so here is the pattern of spending by single mothers. we focus on single mothers since they are most affected by welfare reform. and here i am reporting the spending by households, adjusted
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for inflation and family size. and this figure shows the changes since 1990, when welfare reform was just getting started at the state level. what you see is that consumption at various percentiles, the top two percentiles here are the fifth and tenth percentiles. consumption at each of these percentiles went up pretty steadily. at the bottom it went up by about 50%, leveled off around 2008 and hasn't, unfortunately, increased much since then. but it's at a level 50% higher than what it was in 1990, when welfare reform, at least at state level, was getting started. so we see clear evidence that those at the bottom are not being left behind.
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there is strong evidence that the numbers that edin and shaefer relied on, the sipp, are misleading or probably just wrong. what i showed you is consistent with evidence from other sources. if you look at the biggest expenditure of households, housing, you can do that with the american housing survey. if you look at the bottom 20% of single mothers, which is a group well below the poverty line, way below the poverty line, their living unit has more rooms, more square feet, more bedrooms. it's more likely to have air conditioning and other appliances than it did when welfare reform was passed. leaks and peeling paint are down. so we see that living conditions, in very clear,
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objective measures, show that those at the bottom are doing better than they were when welfare reform was passed. now what are the problems with , the income data that i am telling you to dismiss? well, it's that people no longer want to report their income to household surveys. so if you look at the cps, the source of our official income data, 63% of tanf and general assistance recipients don't report what they receive. 44% of those getting general assistance, or tanf in the sipp used by edin and shaefer don't report. 61% of those getting pension income don't report it in the acs or the cps. unfortunately, we don't have comparable sipp numbers, but probably a lot of people don't report.
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43% of snap recipients don't report in the cps, 19% in the sipp, and a substantial share of other program recipients don't report in the survey of income and program participation. now these problems are getting worse, which is important because one of the emphases in the edin and shaefer work is how the number of people who are living on $2 a day has gone up. what i think the evidence indicates is going on is that there is bigger holes in the data. since 2000, on average we missed about 36% of tanf dollars, 39% of unemployment insurance, 46% of the workers compensation program in the sipp.
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and the trend is that about seven percentage points, in addition are missed every 15 years. this has been a long-term trend going on for about 30 years. fifteen years is a period over which edin and shaefer are looking. now those numbers that i just reported are including dollars that the census bureau imputes or guesses at, and that has doubled for most programs since 1990. if you look at tanf, our main cash welfare program, i've already told you that about a third of people don't report their benefits at all. well, of those that are reported, or at least recorded
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in the survey, 40% of those dollars are guessed at by the census bureau. so in other words, only 41% of the dollars that are reported in the survey that edin and shaefer use were reported directly by recipients. the other dollars were either completely missing or made up by the census bureau. now the evidence that i just went through shows the failure to capture government programs, but what about informal earnings and transfers from families and friends? those are even harder to capture. here let me quote from the introduction to kathy edin's first book. "making ends meet shows that almost all poor single mothers supplement their regular income with some combination of off the books employment and money from
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relatives, lovers and the fathers of their children. few keep a record of such income. even if they knew the annual total, they would not necessarily report it to the census bureau." so those are sources of income that we really aren't even ever going to get with income data, but with consumption data you have a chance of looking at something that reflects those sources of income. now when people in the past have looked at the very bottom of the distribution, they have tended to ignore the data, at least for ent.bottom few perc so blank and cheney, for , example, argue that those data are likely to be errors. we should ignore them. if you do a calculation very similar to what robert rector
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did, but you look at the bottom 5% of the income distribution of single mothers and you look at their spending. so this isn't going down quite as far in the distribution as he did. you find that their spending averages 6.3 times their income. their spending is about at the 40th percentile, even though their income is in the bottom 5%. now what do edin and shaefer do? well, they use these income data that i've already told you you should ignore, and robert has emphasized as well. they repeatedly make choices that exaggerate extreme poverty, and let me go down the list.
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first, they don't count in-kind transfers. they use a short time period in the worst month. they compare a boom period, 1996, to the bottom of the worst recession since the great depression, 2011. they use a price index that overstates inflation, so the income cutoffs that they used wrenches fast -- rise too fast. and they do not look to see whether low income means low spending, means really a low standard of living. and most importantly, they use broken income data that is beyond repair. so where does that leave us in terms of tanf reform? let me just mention this briefly. existing bloc grants may be insufficiently responsive to economic downturns and provide states too much spending latitude, but that's an open
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question. work requirements probably could be improved. besides family living standards and work, we should also be thinking about non-marital fertility, which is just way too high. unfortunately, we lack good evidence that making welfare more work centered decreases non-marital fertility. but even small reductions would be important, given the costs of non-marital fertility that are so high. concluding, i think we could have a productive discussion about how the safety net, including tanf, should be reformed to ensure that the most needy are supported and work is encouraged. but statements about a rise in extreme poverty are based on
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faulty data and should be dismissed. conservatives should acknowledge that our programs have reduced deprivation, but liberals should acknowledge that we are spending more and more and not always spending it well. so let me stop there and let robert doar continue. ms. marshall: thank you, bruce. mr. doar: so thank you very much, jennifer, for having me. the heritage foundation, it's a great honor to be here, and also to thank you, robert, for your work on this over many, many years. as jennifer said, i'd like to bring the perspective of the practitioner, a former welfare commissioner in new york city, new york state, how do we react to all this sort of back&forth between scholars and academics about data and numbers and poverty rates. and i will tell you that it plays a large role in our life,
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is that welfare commissioners like myself in new york have to worry about the conventional wisdom, the common wisdom, the media wisdom about this data. to the extent that there is a kind of misleading perception that is driven from one important work or a bunch of important work, it can be a real problem. so it's extremely important that we have work like bruce's and robert's and scott winship at the manhattan institute and others, that have called into question this perception that those at the very bottom in the wake of welfare reform are worse off than they were. and my conclusion after looking at it is that a fair reading would conclude that it isn't true, that welfare reform did not lead to an increase in severe poverty among the very poor single parent households in the united states. and allowing that perception to become part of the dialogue and the discussion severely undermines the credibility of people who in other circumstances would say, and want to say we ought to follow the evidence, we ought to pay
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attention to the data, we ought to have evidence-based policymaking. so from my perspective it's very important that we get fair, careful, thorough readings of this, not driven by ideological objective to tarnish or undermine the undoing of the cash entitlement that came with welfare reform in 1996. and to some degree i think that's part of what it's all about, is there is an element that just never was happy with the ending of the entitlement of cash welfare 1996, and they would like to find ways to somehow bring it back. the second point i want to mention is one that was echoed in both presentations. it is sometimes not clearly understood, and that is the role of tanf in the broader safety net. tanf is a small program among many others. as bruce said, we assist people in need through the unemployment insurance, jobs programs, snap, public health insurance, earned income tax credit, childcare tax credits, childcare subsidies, housing. and any understanding or
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discussion of safety net policies for the poor, the very poor need to take into account the role that all of those play. and in, in most of the time commentators on both sides, when they want to herald the success in reducing material hardship or increasing work will talk about how all of the things have lead to reductions in poverty, except when their objective is to tarnish the tanf program. then all of a sudden all of the burden of responding to recession falls on the temporary assistance for needy families program, which as i said is only a small program affecting a certain population. that reminds me, you know, i was the commissioner in new york city at the beginning of the great recession, and i remember one of those classic meetings where, you know, the deputy mayors call together the key players and want to know what are you going to do? things are really getting bad out there. what are you going to do to
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respond to the need that is going to come because of this recession? and we went around the room, and the person who did unemployment insurance talked about that. the person who did housing talked about that. the person who did snap, who was me, food stamps, i talked about what we would do. public health insurance, we talked about that. tax credits, we talked about that. and then someone said, what about tanf? and what i said, representing the tanf program, was, well, we'll see. because part of what happens when a recession hits is that people seek assistance for the needs they have at that time given their circumstances. many people go to unemployment insurance first and that's all they need. then they might need snap and they'll take that. then they might need public health insurance or they might get a tax credit benefit that allows them to muscle through a difficult time. it takes a long time to have to turn to the cash welfare program. the use of the data, where people say, well, in the wake of the recession tanf merely budged, therefore tanf was unresponsive or our safety net was unresponsive, is just false.
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it just isn't consistent with the way the programs really work. people work through these programs to the extent that they them, and tanf the last stop on the bus, and often is not necessary because other programs rush to their aid in their wake. and i do have one small quibble with robert rector, and i hesitate to say this. but one of the distinctions in the language we use, is you notice robert said post-welfare poverty and pre-welfare policy. and he used the word welfare to apply to all forms of assistance. i believe that's correct. in the world that i come from, there's a big distinction between what we would call cash welfare and what we would call work supports. and the theory is, whether you buy it or not, is that something is welfare, and therefore has a kind of negative connotation, when it doesn't support working people, when it supports people non-disabled, able-bodied adults but who are not working. when it supports them, that's cash welfare. that's the old welfare world.
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that's what we reformed with welfare. the other forms of assistance are work supports. they may also undermine the work incentive. they may have consequences that aren't necessarily good, but the idea, the earned income tax credit or other forms of assistance that increase wages, we don't often call that welfare. so i didn't want to make that point because in the distinction we do need to understand we reformed one program and we expanded a lot of others. some of those don't reward or don't promote work to the extent that they should, and we should be talking about that. we should not be talking about undermining or changing the program that helps lead a lot of people into work and out of poverty. the next point i want to make has to do with the term called disconnected moms. so, in the language, the popular language that comes out of works like kathy edin's and luke shaefer's, two dollars a day, disconnected moms, there's a lot
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of misinterpretation. and i think it's in some respects intentional. so $2 a day, when you read the book it really wasn't about two dollars a day. it's two dollars a day of cash. they are not counting the various forms of other assistance. and disconnected moms, the connotation that comes with that, when you read about disconnected moms is that they are out there somewhere, not earning, having no other source of income, with children in the household, and no one is caring for them. there's no connection to the safety net or to caregivers or government officials or charities. and the fact is, that's just not true. every single one of the disconnected moms is on snap. they're on a large federal program administered at the state or local level that issues them a card for which they can buy groceries, with which they can buy groceries. that comes every month, that requires a periodic visit to an office or engagement with a caseworker. virtually all of their children are on public health insurance,
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which requires the same sort of connection to a large part of our safety net. they are not disconnected. the tragedy is not that they are out there on their own, unattended to. the tragedy is that the programs to which they are connected is turning a blind eye to the fact that they say, i have no earnings, i have no other income. just give me food stamps. to me that's a tragedy. and we ought to be talking about why those programs don't respond to that situation, which is very easy to discover, by going out and reaching out and talking about ways we can get you into the labor force. instead, the common response among some is, let's fix those other programs so they can get cash too, and still be, i think, in as bad shape, but certainly not disconnected in any case. so let me just put a little more detail to that. so i ran the tanf program and i ran the snap program both for the city and the state of new york. it would be very easy for me in
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new york city, and it would be very easy, in my judgment, for virtually any administrator of the food stamp program to ask their data people, produce a list, working age, non-disabled, households with children in them with adults who report no earnings. give me the list by zip code. give me the list by city. give me a list by county. give me the list by any kind of subdivision. and then you would have in your hand this list of disconnected moms and these folks who are apparently far worse off in the wake of welfare reform. and you have their address, their phone number, and you could go out and do something about it if you wanted to. and even better perhaps, if the rules were like this, and they are not, you could report your activities to the public and the federal government and say, what have we done? but now it's not a requirement, it's not encouraged, and we don't know to what extent agencies that have a connection
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to the families, the people that are worried about this group, to the extent that they exist, could do something about it and i think that's a shame. i think we could do a lot more there. when we give in to the language and we listen to the language and we aren't clear about what it really means, the public gets a different perception or the wrong perception. now my final point about sort of how a programmatic person would react to this has to do with the benefits and the successes of the welfare reform act of 1996. i think virtually even people on the left and the right and the middle all agree that for a large portion of the former afdc recipients, single parents on cash welfare of the country, the introduction of work requirements and expectations and time limits, which, by the way, robert deserves a lot of credit for making happen, the introduction of those requirements led to them going to work, increasing their income from earnings, and reducing
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their poverty. big chunks of people. so even when you read in the literature of the progressive left, they acknowledge, oh yes, our programs have done a lot to help the working poor, and the working poor's poverty rates have gone down. so they acknowledge that. and then they turn to this issue concerning, but then there's this other. and that happens a lot in social services offices because when you design a program, you will often have the person there, deeply compassionate, as i am, wanting to make sure that we are helping people in need, as people who have worked in this business definitely have, who will say, but what about this worst-case scenario? what about this contingency? what about what if this happened? and all of a sudden you are designing a program to make sure that nothing bad happens at the lowest common denominator. and when you do that, when you subsidize or design a program that provides an entitlement without expectations, you will get more people taking advantage of an entitlement without expectations, and you will get
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less work. and all of the benefits that you derive from introducing a work-based welfare program will be gone. you have to be very careful about that because one of the greatest aspects of welfare reform that i don't think gets enough attention is that it's said in a way that the previous policy did not, recipients of cash welfare in the united states can go to work. they may be already are going to work but they can go to work. they are capable. they have assets which we should build on. not they are just a bundle of liabilities which we should care for. in saying that, they went to work and they took up the challenge. and so i often like to remind people who talk about the history of welfare reform or the benefits of welfare reform, or what newt gingrich did or bill clinton did or various other people did, i'd like to remind them that the real heroes of the welfare reform story from 1996 where the recipients and applicants themselves, who proved that what others had
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thought about them wasn't true, that they were capable, that they could go to work. and all i want to make a point about that is that if you design your program to direct it to the problem, which i think is kind of a phony problem, described by kathy edin and luke shaefer, you will undermine the benefits of the program you designed for all that other group who responded to the challenge and went to work and reduce their poverty levels. so with that i will close. thank you. ms. marshall: thank you, robert doar and bruce meyer and robert rector. this is a really helpful complement of presentations to think through the assertions about welfare reform having harmed those who are the least well-off in our society, discussing the problems with the data that are used to give that misimpression, the challenges with the data sources, the surveys, what this all means at a programmatic level and how we could do a better job of helping
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those low income persons in general, and particularly those in the most dire need. so we'd like to open it at this point to the audience to ask questions for a few minutes. there will be a microphone coming around. we are live streaming this and broadcasting it, so please do wait for the microphone. right here, down in front. >> data from the book you have been siding appears to have been pretty flawed in a lot of ways. is that due to ignorance, or is it deliberately misleading, or could you venture a guess? second question is, have you been able to have a one on one with these authors with your data, their data, and see what shakes out? do they come round to your way of thinking? or have you had that conversation? mr. rector: what i would say about that is that anyone who researches poverty and uses this
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type of income data knows, and doctor meyer has just overwhelmingly great research in demonstrating that this income data isn't any good. and the more you ask of it, the less accurate answers you are going to get. and in particular, it's no good at either end of the distribution. the farther down you go and the farther up you go, the more likely you are to get nonsense. so if you go down to the very end, you've got pure nonsense. from the time i studied this when i was in graduate school back when reagan was president, there are always people showing up in the census records with zero income for the year. and i used to say, well, what happened? did they starve to death? they had been in there forever, and they clearly don't have zero income. and you can't take that seriously. so what we have here is people attempting to use these studies to measure people with nearly zero income. and then as doctor meyer explained, you know, they leave food stamps out and all the others. they leave out the informal
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earnings for the most part and so forth. so the data isn't any good and they are asking bad data questions that it can't possibly answer. you can't try to determine whether there are a million children that have no welfare benefits using a survey this missing 20 million benefits per month. i think they just wanted to get a sensational number and that's what they did. some of the previous research by kathy edin has been very good, but this book was not. ms. marshall: others? >> i don't want to question motives. i can't look into their heart and figure out what they are doing. mr. doar: i do know kathy and i know luke and i talk to them periodically and have appeared in panels like this, and i have told them, they know i have written about them and sent what i wrote about them to them. i think that there is a motivation that comes from kathy's ethnography research,
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where she is in the households of folks who are struggling and are in need and have got all kinds of problems facing them. and that makes her want to see , what does this mean more broadly. remember, the book is a combination of ethnography and data. and the other thing that she did discover, and i think is out there and we haven't mentioned, is the extent to which states are behaving differently with regard to the current tanf program and the way the offices receive or accept people. i think kathy got some examples, and god knows i ran a welfare office so i know not every office, not everything goes all beautifully. it looked pretty negative. one story she tells is that a woman went to the cash welfare office in illinois. i know, by the way, a democratic state with democratic mayor and democratic governor at the time. but went there to a program run by illinois state of welfare, and she stood in the line and she got in the line at 7:30, and
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when she got up to the door to see someone about getting some assistance, the person said, well, if you weren't in the line before 7:30, we can't see you today. and that kind of thing, there is evidence of that. there is some concern about that, and i think that led her to believe or to sense that the absence of the entitlement had led to states not feeling any pressure that they had to at least take an application or see someone who came to the door. and then finally the last thing i'll say is that bruce and a few others, but more bruce than anyone else, has really, some of the evidence about the failures of both in the response rate and on the accuracy rate, as well as the failure to count benefits, we really have come more firmly to a conclusion that those surveys are really badly flawed than we did even 4 years ago. maybe that's an exaggeration, bruce, but it seems to me that you are stronger now about how bad those surveys are than you
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might have been 3 or four years ago. is that right? mr. meyer: i think that's fair. jim sullivan and i believed that the income data were not capturing people's well-being quite a while ago, but we didn't have what you might call the smoking gun, where we could look and see if when you add the benefits to people's income who didn't report them, then you really can see that a big share of people at the very bottom had much higher income than it had first seemed. mr. doar: there's one other thing. the block grant, the $16 billion in 1996, and it's still $16 billion roughly now. and i actually like that. but for people on the left, that is just like the biggest crime
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at all because a major social program has not expanded, has not continued to grow. and i think that there's a desire to find a way, to find an argument for spending more through the tanf program, and that might have motivated some of the findings. ms. marshall: next question. yes, sir. >> following up on this conversation. professor meyers wrote a nice article about a year ago on what's wrong with surveys nowadays. it was a response having gutted the income surveys but relied largely on the expenditure surveys. could you tell us why you think expenditure surveys are so good? since you told us that the upper end of the response is awful and the expenditures figures are probably really off too. mr. meyer: sure. i mean, that's a fair question. so when you look at the income surveys, the problem is that there are just so many
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different sources of income. we've gone through, we have probably already listed a dozen programs and there are lots of other programs that matter too. so you have to get all of those, you have to get all the different sources of income. formal jobs, informal jobs. you need to get transfers from family, friends, fathers of children, lovers. all of those things, it's just a tall requirement to get all of those categories because you could have someone that's just relying on a couple of those, and if one or both of those aren't reported then it looks like that person has zero income. now on the other hand, with consumption, it's principally, you know, at least the way that
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we do it, we focus on rent and food consumed at home. and a few other categories but those are the bulk of the spending. and people know their rent. they're very happy to report it. they're much less willing to talk about their income. it's just a more sensitive topic. so the best work that has looked at participation in the consumer expenditure survey finds that when you look at the lowest percentiles of income at the zip code level, so you look at the zip codes that have the lowest income, their response rate is slightly higher than the average. so if anything, it looks like
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the consumer expenditure survey over-represents people at the bottom. mr. rector: one way to put this, what we are essentially saying is the government, the federal and state governments spend about a trillion dollars, over a trillion dollars a year on 80 different programs providing benefits and services to low income people, and basically the government does not know where that money goes. a program like the eitc, there are 20 million beneficiaries. in the normal current population survey of census, they just impute who receives that. they have no idea who gets that money, absolutely no idea. and considering that there's large-scale fraud in the program, you can't make imputations for fraud. they have no idea where that money is going. the basic methodology for these income surveys was invented in 1948, when truman was re-elected.
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it really hasn't improved any since then, ok? it was a bad survey in 1948, when there were very few government programs and they were just really trying to measure employment. this program, this survey has been flawed for over 65 years. it's time for the government to actually know where its money goes. and the only way to do that is to do a survey where you pick up demographic data but then you go the snap program, you go to the tanf program, you go to the eitc and you match the social security numbers so you actually know what income came into that house. and what you would find is something that's dramatically different. you would find that in fact welfare does raise people's living standards because it's economic resources. and the poverty rate would be much lower. you would also find that we are
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spending a lot more than people on the left would like to pretend we are, but you'd at least have truthful data to make decisions on. ms. marshall: next question, sir, in front. >> thank you all. tyler o'neil from pj media. i'd just like to ask you if there is a political figure that really stands for the sort of welfare reform that you would like to see, and just how disappointing perhaps our presidential candidates might be. ms. marshall: i think this panel will not be able to engage in the electoral politics. so maybe we could think about, i know there are some people who are very instrumental in the welfare reform passage and have been important in the conversation over the years that you could speak to. mr. rector: well, i would say that the actual person who was the most important to welfare
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reform 20 years ago was jim talent, then-congressman missouri, subsequent senator. he put welfare reform in the contract for america. he essentially designed the programs in the house that later became the ultimate policy. the goals that we had back then i think are valid goals. they were not to cut welfare spending, they were not to boot people onto the street, but rather to say that welfare should not be a one-way handout, that welfare should assist people who need assistance but it should also encourage and demand work, and more importantly i think where , welfare reform has fallen short is we were very concerned 20 years ago about the percentage of children that were born outside of marriage, which has continued to go up and which is the root cause not only of poverty but many, many other social problems. we need to do something to
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address that. i think the next stage in that is very clearly that we need to change these welfare programs, starting with the eitc, that currently penalize low-income mothers and fathers when they get married. that's an absolutely crazy thing to do. if you were to just sit down and abstract and invent, what should we really not do in welfare, it would be let's put a financial penalty on every low income mother and father when they decide to marry. ms. marshall: robert doar, let me ask you. you've worked with a lot of people in political office over the years implementing these programs. what were the important characteristics that you saw in those that helped the implement before? mr. doar: mr. doar to me the tht matter most is the sense that there ought to be, as robert said, you know, 25 years ago, there ought to be a reciprocal relationship, that there ought
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to be some sense that the receiver of assistance, assuming they are able-bodied and can work, that they need to do something or be required to do something. work requirements and work expectations. that's the most important thing to me, and a willingness to talk honestly about the benefits for children of two involved and active married parents in raising them and bringing them to adulthood. not that single parents can't do it and that they aren't facing real challenges, but we ought to just be honest that we are not going to solve all these problems unless we get some help from the family as well. so those are the characteristics that matter to me the most. i'll stop there. ms. marshall: next question. yes, right over here. >> you've talked a lot about the flawed calculation of income, including expenditures. do you also calculate debt, including credit card debt in the poverty rate? mr. rector: you've got to take this first. [laughter]
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mr. meyer: sure. so when we look at consumption, or maybe more properly spending, we don't factor in debt, but let me explain why income is a better way of looking at things, . even when people, maybe especially when people are getting into debt. mr. rector: you mean expenditures are better. you said income. mr. meyer: i'm sorry. thank you. why you want to look at expenditures. thank you, robert. so if you have people that are in debt then they are not going to be able to spend all of their income. they're going to have to scrimp a bit to pay back those debts. if you look at what they are able to spend on food and
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housing and other things then you're going to get a better measure of their well-being. similarly, if people are living maybe beyond their long-term means, you'd like to know that and you'd like to see if they are living in a nice house, driving a nice car, you'd like to be counting that. and so in both cases, if you look at what they are spending, you are going to get a better measure of their living standards than if you looked at income. in a case when people are saving and dis-saving. probably the best two examples are you have a lot of, say, college students who are really living pretty well even though they have very little income. or you have an elderly couple that own their own home, or they
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own a car, and they, you know, frankly have a lot of clothes and furniture and other things so they don't need to spend a lot to be quite well off. and they may not be getting any income, but what we look at is, in the case of, say, a home owner, we don't look at what they are actually spending. we look at the value of owning the home and we look at the cars that they own and the value of having the car of a given make, model and year. we know that from the data. mr. doar: i want to just jump in here. one thing i want to make clear, none of us here are, i don't
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think, saying that people who are at the lower end of the income scale are doing tremendously well and that we resent their largesse. that's not the case here. we are responding to data and rhetoric and findings that are misleading about what's really happening, and we need to be clear and honest about that data. and that sometimes may lead us to say, well, actually they are better off than those other people say they are. but that, and that needs to be done if we are going to formulate good policy. but one of the things that i think bruce, i wonder if you would comment on this. if you started at zero in 1996 and were looking at consumption and rising inconsumption, and you looked at maybe the second fit or the third fit, the lower middle, and compared it to the bottom, did their consumption rise at the same level over the period? or is it possible that maybe the way things have shaken out in the last 25 years is that
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consumption has grown, due to government interventions at the very bottom and that people in the lower middle have actually not had as much growth, or am i wrong about that? mr. meyer: well, people near the poverty line have had a little less growth than those well below the poverty line. but people at the poverty line have had more growth than those in the middle, at the median. mr. doar: ok. so the lowest growth is at the median? mr. meyer: so the lowest growth is really at the median, yes. ms. marshall: all right, one last question, right here. >> hi, i just want, i want to kind of emphasize what the key take-aways are here because everything i have seen, people talk about we spend trillions and trillions of dollars on the war on poverty and things aren't much better now than when we started. so i guess using your data you
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guys have been talking about, how much better are we off? i mean, it sounds like you are saying that things have improved in the last 20 years since welfare reform. can you just kind of lay that out where we are now, and how things have improved, if they have improved at all. mr. rector: that's a very good question. the normal trope is we've spent $24 trillion on the war on poverty and the poverty rate is exactly where it was in 1967. the reason for that is garbage data. so we spend a trillion dollars a year providing cash, food, housing and medical care to low income people. that doesn't include social security and medicare. and of that trillion a year, in the normal government data, they count about 3% of that as income. so guess what? the welfare state doesn't have any effect. it doesn't have any effect because they deliberately don't count food stamps and earned income tax credit and all those other things as income.
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and the reason for that going back historically is that they want to exaggerate the number of poor people so we can spend even more money. so ben wattenberg used to say, if you don't count it, it doesn't count. the fact of the matter is that even the government cannot spend a trillion dollars a year and have no impact on anybody's living standard. there's a conservative canard that somehow the bureaucracy sucks up all that money. it doesn't. ok, it doesn't. [laughter] it goes to poor people, you know? it goes out, it's not really that hard to give free stuff away. all apologies to robert, it's not the hardest thing in the world. mr. rector: we give away money to low income people in massive amounts, and when you count that money, you do find that in fact the poverty rate is down. but the problem is that, honestly, that wasn't what lyndon johnson was trying to accomplish when he launched the war on poverty. he said he wanted to shrink the dole.
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he said he wanted to deal not merely with the symptom of poverty by giving people free stuff, but with the root causes, by which he meant he wanted people to be self-sufficient, able to have an income above the poverty level, without government assistance. now you have to take anything lyndon johnson said with a great grain of salt, but i actually think he actually meant that , because his image of a good welfare program was actually the civilian conservation core from the 1930's. people go out and shovel dirt and move wheelbarrows and get stronger and healthier. he really wanted people to flourish in our society, not be perpetually dependent. and by that measure the war on poverty has been a complete flop. people are no more self-sufficient today, or actually less self sufficient than they were when we started 50 years ago. and that's why we need to change the way welfare is given in a way that helps, that combines
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with the positive energies of the recipient toward work and marriage so that when you get a synergistic effect of the poor person helping themselves and the government reinforcing and complementing that positive activity rather than displacing it and saying just go home. we've got a free something for you. ms. marshall: bruce meyer, would you like to say anything in conclusion? mr. meyer: well, i think my colleagues have said things quite well. i'm happy to leave it there. ms. marshall: robert, anything else you'd like to say in conclusion? mr. doar: no, i think we've had a great discussion here. thank you very much. ms. marshall: thank you, robert doar and aei for cosponsoring with us today, and thank all of you for being here as well. we will have lunch for those of you who are in attendance out in the hall, and will you please join me in thanking our panelists. [applause]
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