American Dream

by Jason DeParle

  Among those unsettled by Clinton’s plan was the man whose work helped inspire it, David Ellwood. Though he was sometimes described as Clinton’s welfare adviser, they had met only in passing, and they never spoke during the campaign. As the architect of a mostly liberal plan with one conservative plank, Ellwood had often worried that time limits would be taken out of context. He wasn’t for time limits at all unless they came wrapped in a much larger package of benefits and services. He thought the words “end welfare” sent all the wrong signals, and, as he feared, they set off an arms race. Outflanked, George Bush launched a shrill counterattack, and ten states accepted his offer to launch experiments, mostly with new penalties. Soon Ellwood was openly fretting. “I don’t think these are issues that are best discussed under the klieg lights and sound bites of a presidential campaign,” he said. A few weeks after Clinton’s election, Ellwood wrote a paper rejecting a national overhaul, calling instead for experiments in a handful of states. “We simply do not have all the answers about how to transform the welfare system,” he wrote. “For me, the greatest fear is that desperately needy people will be cut off welfare and hurt.” Introduced at a meeting as the godfather of time limits, Ellwood said, “I deny paternity.”

  As he was leaving his office for Christmas break, Ellwood’s phone rang. Donna Shalala, the incoming secretary of Health and Human Services, said she had spoken to the president-elect. Clinton wanted him to join the administration and help draft the welfare plan. Offered a once-in-a-lifetime chance, Ellwood set aside his doubts and sped to Washington, hoping the phrase “end welfare” would be forgotten. “Vacuous and incendiary,” he later called it. His partner in drafting the president’s plan was the slogan’s author, Bruce Reed.

  It is hard to conjure, at this remove, how captivating Clinton’s election was to the small army of scholars, social workers, bureaucrats, and advocates who make social policy their lives. After twelve years, the words antipoverty policy had come to seem oxymoronic—the policy of Presidents Reagan and Bush had been not to have one. (“We fought a war on poverty and poverty won,” Reagan had famously said.) Clinton raced into office like a grad student in overdrive. Universal health care! Empowerment Zones! Replicate the South Shore Bank! Out of exile to government they flowed—Harvard professors, Rhodes scholars, authors of the definitive books. It was, for its shining moment, a poverty nerd’s Shangri-la.

  Though it left much of the liberal establishment uneasy, the welfare plan (or what seemed like the plan) had many potential virtues. One has only to look at, say, Jewell’s first years in Milwaukee to see how the themes of “opportunity” and “responsibility” might apply. The decrepit office at Twelfth and Vliet offered little of the former and demanded none of the latter. While politicians always pay lip service to work, part of what set Clinton apart was his apparent willingness to include community service jobs in the mix of welfare solutions. A term with no fixed definition, community service (or “workfare”) jobs could involve scenarios with widely varying duties and pay, and it wasn’t clear what Clinton had in mind. The Left feared punitive, make-work schemes, and the Right feared expensive boondoggles. But the subsidized posts had several possible sources of appeal (and might help different people in different ways): they might prompt the poor to find regular employment, polish their acculturation skills, or, if nothing else, create a safety net into which the principle of reciprocity is woven. The innovation in Clinton’s formula was the conjunction: work rules and last-resort jobs. He didn’t just talk of making work mandatory. He talked of making it possible.

  Still, it seemed virtually certain that Clinton was raising expectations he couldn’t fulfill. End welfare? No sooner had Congress passed the JOBS program than the rolls had surged to new highs. Of the 5 million families on AFDC, nearly 3 million had been on for more than two years. Putting them all in workfare posts would require an effort on a par with the WPA. While new services might move more people into private jobs before they hit the two-year wall, the first major study of a JOBS-like program had just appeared, and it had cut the rolls just 2 percent. Even if Clinton doubled or tripled that rate, enforcing a universal work requirement might still take several million community service jobs, at tremendous cost. By just mailing checks, the government spent an average of about $5,000 per family each year; a work slot (with child care for just one child) would cost about $11,700. The bill for 2 million of them would raise welfare’s annual costs by more than $13 billion, nearly 50 percent. Nothing like that seemed remotely possible. Anyone armed with a pencil and napkin - could see that Clinton had three likely options: start small, spend big, or riddle the rules with loopholes. There was a sense among the experts that a train wreck was coming.

  The politics were as hard as the substance. Voters loved the abstract thought of “ending welfare.” But Republicans wouldn’t want to spend the money, and Democrats would rather spend it on other things. The public employees unions, an important part of Clinton’s base, were adamantly opposed, rightly seeing an army of workfare warriors as a threat to their jobs. (Why pay someone to sweep the street if a welfare recipient will do it for free?) Shortly after his arrival in Washington, Ellwood visited some Democrats on the House Ways and Means Committee, where any bill’s journey would begin. Representative Jim McDermott of Washington said, “It’s stupid for the president to keep talking about ending welfare after two years.” Robert Matsui of California warned, “You’ll open a Pandora’s box.” Harold Ford, a machine boss from Memphis, summoned reporters to say that any workfare plan that failed to pay at least $9 an hour would be dead on arrival. Ford was known on the Hill as a flake, but not just any flake. He was chairman of the welfare subcommittee.

  Outsiders weren’t the only ones with doubts. Ellwood had come into office openly fretting. Donna Shalala, Ellwood’s boss, had served as the chairwoman of the Children’s Defense Fund, which had opposed even the weak work rules of the JOBS program. Shalala’s predecessor at the advocacy group held an even loftier administration post. Her name was Hillary Rodham Clinton. Shalala barely mentioned welfare at her confirmation hearing, which left Moynihan ranting about the “clatter of campaign promises being tossed out the window.” The biggest questions surrounded Clinton himself: did he really mean to “end welfare”? At times, he sounded surprisingly tough, like after the 1992 Los Angeles riots when he pledged to “break the culture of poverty.” But when I talked to him during the campaign, he was citing the kinds of escape clauses that could render work rules meaningless. He talked of exempting people from the two-year limit if they were in “a meaningful training program,” an exception of potentially vast proportions. And he said he wouldn’t take away the checks of recipients who declined to work, merely reduce them—the same weak penalty that had hampered earlier welfare-to-work programs. “I don’t think that you should punish the kids,” he said. One likely outcome was that Clinton would send a few more people to the JOBS program, with a few workfare jobs at the end—JOBS Plus. It might be a small step in the right direction, but it wouldn’t bring welfare’s end.

  Among the wild cards was the senior senator from New York, Daniel Patrick Moynihan, a dyspeptic skeptic and one whose support Clinton would sorely need. It would take a psychoanalytic society to fully explore the senator’s feelings toward the end-welfare president. Personally he seemed to resent being upstaged as the Democrats’ welfare thinker; politically he, perhaps alone, remained invested in the JOBS program, one of the few legislative triumphs of a career long on insight but short on laws; practically, he didn’t see how time limits - could work without an unaffordable work program (and even then he had doubts). Above all, he judged Clinton insincere, a man plying voters with promises he knew he couldn’t fulfill. Moynihan spent half his time worrying that nothing would happen and half worrying that it would. As the new chairman of the Senate Finance Committee, he would have more power over Clinton’s plans than any member of Congress. Upon arriving in Washington, Ellwood paid him a visit and found a gangly, snow-h
aired man in a bow tie, issuing a prophecy of doom. “So, you’ve come to do welfare reform,” he said. “I’ll look forward to reading your book about why it failed this time.”

  David Ellwood wasn’t accustomed to failure. When he arrived in Washington at age thirty-nine he had already accomplished more than most scholars do in a lifetime. A tall, doughy math whiz who masked his young face with a scruffy beard, he was teaching at Harvard in his midtwenties and had tenure by the time he was thirty-five. His research on welfare caseloads was pathbreaking, and his 1988 book, Poor Support, became an instant antipoverty classic. As a Minnesotan who wore “Save the Children” neckties, Ellwood had the air of a dogooder from Lake Wobegon. But he also had a habit of lapsing into lecture mode that often struck colleagues as arrogance. Professors are paid to think of themselves as the smartest people in the room. Ellwood had spent his life as a prodigy professor.

  Like Bruce Reed, his bureaucratic rival, Ellwood came to welfare policy from an affluent childhood steeped in liberal politics. But while Reed heard the hoofbeats of Idaho’s militant Right, Ellwood’s sensibilities took hold in a pocket of splendid, benevolent isolation. The Ellwoods had their own wooded acre on Christmas Lake, a half hour away from downtown Minneapolis but a world away from its concerns. Even when he ventured overseas in high school, Ellwood wound up in Sweden. Thinking big ran in the family; just as Ellwood’s embrace of time limits altered the welfare debate, his father upended the even larger world of health policy. As a pediatric neurologist, Paul Ellwood grew disenchanted with fee-for-service medicine and in the early 1970s he suggested an alternative model. He called it the “health maintenance organization,” or HMO, only to grow anguished as it became a vehicle more for cutting costs than improving care. Vexed reformers, father and son, each would launch a revolutionary idea and despair as it gained a life of its own.

  When Ellwood got to Washington shortly after the inauguration, welfare had already been relegated to the back burner, as Clinton turned to deficit reduction, a free-trade bill, and especially his promise of universal health care. The decision to elevate a health-care bill over his welfare plan has been endlessly second-guessed, not least by Clinton himself, who has called it one of the major errors of his presidency; some analysts think that in defining him as a big-government liberal, the decision may have cost him the Congress. Yet at the time Clinton had reasons to proceed as he did. There were 14 million - people on welfare, but three times as many without health insurance. Medical inflation was out of control, and if recipients were going to live decently as workers, they would need health care. One thing the second-guessers forget is that, given the hostility on Capitol Hill, a bill that passed in 1993 would have been a weak bill, “ending welfare” cosmetically. While the delay may have been necessary, Clinton did compound the damage by failing to provide any welfare timetable and letting the issue slip far from his view. To placate Moynihan, he promised in February 1993 to appoint a task force. But he didn’t name its members for months, and the group was still doing its lost, lonely work a full year later.

  Sometimes the action hides in plain sight. While he was stalling, Clinton made two moves that came to matter much more than his task force and his plan. In a speech to the National Governors Association a few weeks after taking office, he repeated a pledge to approve even those state experiments with which he disagreed. During the campaign, the stance had been attacked as a Clintonian fudge, but to the governors he defended it as federalism—letting various flowers bloom—especially if the experiments were evaluated. With everyone looking for a national bill, waivers seemed a small matter. But by the end of his first term, more than forty states were running experiments, one of which would sweep up Angie, Opal, and Jewell. While the waivers mattered substantively (long before the new law passed, the old one was coming apart a comma at a time), politically they mattered even more, since the governors’ taste of state control whetted their appetite for new power. “I’m a big waiver guy,” Clinton told his aides. “Let ’em rip.”

  In his talk to the governors, Clinton repeated another campaign pledge, to expand wage subsidies for low-income workers with kids. The “earned income tax credit” is an obscure name for an antipoverty program, and obscurity is part of its strength. While its bipartisan pedigree dates back to the Ford administration, most voters have scarcely heard of it. Because its benefits are reserved for workers, it - doesn’t get labeled welfare. But what the program does is send out checks—big checks, millions of them on a sliding scale to low-wage workers. In part to lure people off welfare, Clinton had promised to increase the payments so that anyone working full-time could lift a family of four out of poverty. “If you work, you shouldn’t be poor,” Clinton had said, in a phrase he cribbed from Ellwood. Unlike the phrase “end welfare,” which was powerful because it was vague, this one was powerful because it was precise. There was an exact minimum wage and an exact poverty line, and Clinton had pledged to bridge them. When a draft plan came up short, Ellwood joined the effort to rewrite it, and a few weeks after landing in town he was summoned to the Oval Office, where the leader of the free world quizzed him on the phase-out rate. (The phase-out rate!) Clinton signed off on an expansion that nearly doubled the program’s size, and with his first budget made the EITC the most important antipoverty program since the Great Society. The next year alone an additional four million families got checks of up to $2,500. Because it made it easier for women like Angie to survive on low-wage jobs, Clinton later cited the tax credit expansion as “one of the things that made welfare reform work.” But because the details were technical and uncontroversial, and because it happened in an early rush of events, it attracted passing notice. The poverty reporter for The New York Times didn’t even write about it. He—um, I—was busy looking for that national plan.

  But there was no national plan. Four months after Clinton announced he was forming a task force, only its cochairs were clear: Reed, the keeper of the campaign flame; Ellwood, the academic; and Mary Jo Bane, another Harvard professor who had joined the administration. In June 1993, they were called to a meeting with Clinton, who was at his seductive best. Like Ellwood, he stressed that a welfare plan should appeal to “fundamental values.” Like Ellwood, he acknowledged the complexity involved: “A certain humility dictates we should try different things.” Like Ellwood, he knew the literature. Judith Gueron, the president of MDRC, briefed the group on a Learnfare experiment. While she cited its penalties, Clinton knew on his own that the program also paid bonuses to teen mothers who stayed in school; what most impressed him, he said, was the combination of carrots and sticks. The command of the data! The talk of values! The mix of urgency and restraint! Ellwood left the meeting enthralled. He wouldn’t see Clinton again for nearly a year.

  “Oh, that goddam task force!” Moynihan would say as, left to mark time, it grew beyond all manageable bounds, with thirty-six members splayed across seven “issue groups.” For all the seeming specificity of Clinton’s pledge—two years, then work—the central issues were unresolved. What would recipients do for the first two years? Would - everyone then work? Doing what? For what kind of pay? Would their wages be matched by the EITC? Would those who broke the rules lose their whole check or only a part? The Hards were led by Reed, mindful of the campaign promise still taped to his wall. The Softs were led by Wendell Primus, Ellwood’s deputy, who viewed ending welfare as a formula for increasing poverty. Ellwood was trapped in between, essentially a Soft trying to be Hard but torn and wanting consensus. They held hearings. They circulated drafts. They quarreled and leaked and quarreled about leaks. They became the butt of jokes. A series of field trips didn’t resolve things, but they did prove eye-opening, even while underscoring that open eyes can see what - they’re trained to see. Some members had never set foot in a welfare office before. In New Jersey, Reed was struck by the bitterness between mothers and their children’s absent dads, a problem he chalked up to AFDC. “It was so apparent what a destructive element the welfare check
had become,” he said. Primus focused on a Tennessee woman in an appalling shack, with holes in the roof and sewage in the yard. “What kind of program was really going to make her an independent, self-sufficient, taxpaying American?” he asked. Ellwood’s epiphany came in a Chicago welfare office, where he watched a deaf applicant struggle with a caseworker who cared more about copying her utility bill than the details of her life. “The only reasonable reaction is to be very angry that this is not a system about helping these - people,” he said. Soon after, a new phrase cropped up in his talks. He started criticizing welfare as a giant, dysfunctional “check-writing machine.”

  In the spring of 1993, as the group was just getting started, MDRC published the most influential study of the end-welfare age. The study, of a welfare-to-work program called GAIN, compared six California counties, five of which had favored education and training, hoping to prepare recipients for higher-paying jobs. The sixth, Riverside County, had stressed basic job-search classes and encouraged most people to take the first job they could find. “Get a job, any job,” was the Riverside mantra. After two years, Riverside had raised its participants’ earnings by more than 50 percent, making the program about three times as effective as its rivals. Most states were still pushing education and training in their JOBS programs, so the study had the effect of turning the conventional wisdom—train first, then work—on its head. The idea of forsaking education in favor of “dead-end” jobs may sound cruel, and the thought can be taken too far (Riverside did have some education and training). But it’s often what recipients want, at least initially. By the time they reached the welfare office, Angie and Jewell had already failed repeatedly in classroom settings; they wanted paychecks (or, at most, very brief training), not more open-ended classes. The Riverside philosophy quickly became the philosophy nationwide: work first.