American Dream

by Jason DeParle

  The Clinton team paid Rector no mind, but it wouldn’t have mattered if it did. The Congressional Budget Office made the binding estimates, and CBO’s hands were tied, too. The analyst, John Tapogna, couldn’t just guess; he had to have data, and a raft of more rigorous studies suggested that work programs did little to cut the rolls. It’s tempting to see the failed forecasts as an indictment of the welfare establishment—Tapogna was Ellwood’s former graduate student—but it’s really a comment about establishments in general: sometimes the experts just don’t know. “We were all captive of a self-limiting expertise,” Tapogna said, looking back. Rector put it like this: “You’ve got somebody who’s spent his whole life explaining why men can’t fly . . . and there go the Wright brothers, taking off.”

  Short on money, long on delay, Clinton finally released his plan on June 14, 1994, late enough in the legislative session that there was little chance it would pass. He never did find the money; CBO later ruled that the $12 billion plan was still $5 billion short. Nor did he resolve the core issue of whether to time-limit the jobs. With Reed and Ellwood unable to agree, they took the issue to Clinton in a May Oval Office meeting. He sent them back to fashion a vague compromise, involving periodic reviews to make sure people in the work program were really looking for private jobs. Even as he released his plan, Clinton remained on both sides. “There has to be something at the end of the road for people who work hard and play by the rules,” he said. But in a little-noticed exchange the next day, he defended his program by saying it had “absolute cutoffs. . . . You can just say, ‘You’re not eligible for benefits.’ ” As revealing as his nondecision was the way in which Clinton had made it—on the fly at a ten-minute meeting. Despite his fame as a policy wonk, the real surprise about Clinton and his plan was how little time he spent on it. He simply wasn’t engaged. A year later, he would disown it himself, telling a columnist, “I wasn’t pleased with it, either.” That seemed like a typical dodge, but it may have expressed a deeper truth: he spent so little time working on it, it must not have seemed like his own.

  So did it end welfare? At the time, for all the spectacle involved, there was a case to be made that it did. Yes, it had its share of loopholes and a glacial phase-in schedule. Still, if the law took effect as drafted, most recipients would eventually have to take a community service job or lose all cash aid. That was the crux of Clinton’s end-welfare pledge, and in following through he’d proposed something tougher than any other president had. In retrospect, so much of the action was deferred, it was impossible to say what actually might have happened. Whatever the bill might have done later, there was something it - couldn’t do now—satisfy the outsized expectations the promise to end welfare had raised. “Tinkering,” Tommy Thompson called it. At the rollout event, Clinton seemed subdued. The North Koreans were threatening to make nuclear arms; a showdown with Haiti’s dictators was brewing; his health care plan was on life support; and the White-water prosecutor had just quizzed him under oath about the suicide of his friend and aide, Vincent Foster. In turning to welfare, Clinton spoke at the Kansas City bank that gave Harry S. Truman his first job—it now hired welfare recipients—and returned to his theme that work saves souls. “It gives hope and structure and meaning to our lives,” he said. He repeated the story of Lillie Harden’s son: when “they ask him ‘what does your mama do for a living?’ he can give an answer.” But he also said, “Let us be honest—none of this will be easy to accomplish.”

  As Clinton’s ebullience waned, Ellwood’s grew. “I’m really proud of what we got,” he said. “I really, really am.” He began to imagine the plan might even catch fire before the fall elections. A few weeks later, the House held its first hearing, with Ellwood as the star witness. One of the interrogators was Bob Matsui, the California Democrat who had been skeptical of time limits all along and felt irritated by Ellwood’s professorial air. Matsui thought it would be folly to debate welfare in a campaign season, when he feared the harshest measures would prevail. To make sure the administration got the message, he turned Ellwood into a piñata. A giant check-writing machine? Matsui declared himself offended: no one called Social Security a “check-writing machine”! A two-year limit? He demanded the evidence it would work. Pass a bill this year? Some people might say Ellwood was trying to “enhance his own résumé” before going back to Harvard. But “we would never suggest that!” The public flogging went on for two days, and the way congressional hearings are staged, there was little that Ellwood could do. Ellwood staggered away, knowing the bill was dead for the year. Matsui flew home to wait out the elections, figuring the climate the following year would be more conducive to temperate change.

  SEVEN

  Redefining Compassion: Washington, 1994-1995

  On November 9, 1994, the country awoke to two words Democrats never dreamed they would hear: “Speaker Gingrich.” Part emperor, part rock star, part talk-show host, he swept into town trailing spectacle and a dozen outlandish identities. He was the scorched-earth conservative who denounced his critics as “viciously hateful” and “totally sick.” He was the wacky futurist who lunched with Alvin Toffler and mused about space aliens. He was a modern Moses, who delivered his flock from forty years in the minority wilderness. As he completed his rise from backbench bomb thrower to self-styled world leader, his triumph seemed absolute. Suddenly Gingrich, more than anyone else, had the power to define “ending welfare.” It took Clinton seventeen months just to draft a plan; Gingrich, as leader of the Republican House, would write one and pass it in seventy-nine days.

  It was a chance that Gingrich had chased throughout his congressional career. The very name of his original caucus, Conservative Opportunity Society, served as a semantic counterpoise to his favorite target: the liberal welfare state. Gingrich had looked on in disbelief in 1992, when Clinton had stolen the welfare issue from the napping Poppy Bush. Relishing the chance to steal it back, he declined to take Clinton’s first call and vowed no compromise with the “left-wing elitists” in the White House. As long as the Democrats had controlled Congress, “ending welfare” had mostly seemed a rhetorical game. Now, wrote the GOP’s leading welfare aide, Ron Haskins, “the time for the real Reagan revolution is at hand. . . . we can now do to the welfare state what we could not do in the early 1980s.”

  But beyond railing at the word welfare, it wasn’t clear what Gingrich wanted to do. He had spent his career making trouble, not laws. He knew little about AFDC as a program, and he had never sat on the presiding committee, Ways and Means. Uncensored as ever, Gingrich ignited a furor after the election by rhapsodizing about orphanages, which his campaign document, the Contract with America, had mentioned as a welfare alternative. Yet he also showed more backroom savvy than is generally understood. In his new life as a legislative strategist, he soon hit upon the solution to virtually all his welfare woes. In policy terms, it was the equivalent of the girl next door, a vision of understated elegance that had been beckoning all along. The object of his newfound passion was something called a “block grant.”

  Every so often, an idea leaps from a list of perennial options and acquires the mystique of sacred doctrine. Republicans had favored block grants, like red ties and respectable cloth coats, since at least the Nixon days. One day, no one took them seriously as a welfare solution. The next day, doubts equaled heresy. In fact, someone had pushed block grants the previous year, an obscure Kansas congresswoman named Jan Meyers, who had badgered her GOP colleagues on the subject. But among those who had brushed her aside was Newt Gingrich. (“We thought it was too radical,” he later said.) The Contract with America included a block-grant option, but as a throwaway line that commanded no attention.

  Block grants differ from entitlement programs in two major ways. The first is financial. Entitlements guarantee aid to anyone who qualifies; spending automatically rises with need, and (in the case of AFDC) the states share the cost with the feds. They can’t tell Angie, “Sorry, the program’s broke—come back next year.�
�� Block grants offer fixed annual payments, regardless of need, and states manage as they see fit. Many housing and child-care programs are block grants, which is one reason they have long waiting lists. The second distinction is philosophical: since entitlements come with financial guarantees, they typically have more federal rules, whereas block grants set broad goals—“house the homeless”—and let states decide how to meet them. For Gingrich, the twin features of a block grant—limited federal funding and new state autonomy—combined to solve most of his problems. For one, it got him out of the financial bind that had always vexed welfare plans. As long as welfare remained an entitlement, the Congressional Budget Office would estimate work programs to cost billions and require Congress to find the money through tax hikes or budget cuts. But as soon as the program becomes a block grant, the cost-estimate game is over: Federal costs stay fixed by definition, no matter what states have to spend. Block grants also promised to bridge the ideological divide. Should the Republicans run work programs? Or just drop unmarried mothers from the rolls? With a new slogan, Gingrich could strike a posture at once radical and evasive: Let the states decide!

  A state power agenda would also win Gingrich an important set of allies: the Republican governors. With their sweep of the 1994 elections, they controlled thirty statehouses, including those in eight of the nine largest states. Some, like Tommy Thompson in Wisconsin and John Engler in Michigan, were running experimental programs and could pose, with varying degrees of legitimacy, as veteran reformers. By contrast, the Gingrich “revolution” was powered by seventy-four freshmen legislators, all nationally unknown. (“We had a million freshmen who couldn’t spell AFDC,” Haskins, the welfare aide, said.) With Gingrich showing no signs of tempering his bombast, the governors could provide a reassuring front for an untested plan filled with risks for millions of poor women and children. “You could say to - people, ‘We’re not talking theory here,’ ” Gingrich said. “Go visit Wisconsin.”

  One question remained: why would the governors sign on? Politically, Congress was taking the nation’s toughest social problem and saying, “All yours!” Fiscally, the pact was just as perilous. The block grants wouldn’t even rise with inflation, while historically caseloads had shown nothing but growth. Had the governors bought in five years earlier, they already would have lost $11 billion. Chris Henick, the director of the Republican Governors Association, wrote the chairman of the national party to warn that the governors might “resist publicly any transfers of programs, assuming these programs may be a burden to their own budgets.” He added: “I wouldn’t blame them.” Governor George Voinovich of Ohio did resist, calling capped federal spending a “burdensome unfunded mandate.” Block grants also raised doubts from a message point of view. As Ari Fleischer, a spokesman for the House Republicans, later said: “I couldn’t understand how swapping one government entity for another was going to solve a very fundamental problem.”

  Yet just as Gingrich had hoped, most Republican governors couldn’t wait for the chance to get their hands on the welfare program. Running small experiments with big press releases, Thompson and Engler had won national fame, an example not lost on ambitious rivals. Ego was also involved. While Clinton had approved virtually every experiment the states had requested, the governors bridled at having to ask—seeing no reason, as Thompson liked to say, “to come in on bended knee and kiss the ring” of a Washington bureaucrat. And while they never surrendered their financial fears (or demands), with caseloads at a record high, all they had to do to break even was to keep them from growing still higher. Even with modest programs, Wisconsin and Michigan had already begun reducing the rolls; others bet they could follow.

  With Gingrich needing the governors, and the governors wanting power, the elements of a blockbuster deal were in place. It was sealed two weeks after the 1994 election at a meeting of the Republican Governors Association, which the GOP landslide transformed into a marquee event. Conveniently, the meeting in Williamsburg, Virginia, had already been designed, as an organizer wrote, for “a bit of gubernatorial spleen venting” at federal power. As a place to vent at central authority, colonial Williamsburg is hard to beat; tour guides in tricornered hats still walk the streets railing at George III. The host governor, George Allen, circulated an anti-Washington manifesto, which called for constitutional amendments to shift power back to the states. Everyone was quoting Patrick Henry. It was give-me-liberty-or-give-me-death time. Into this hyperbolic moment strode the hyperbolic Speaker-to-Be, peddling a vision of American greatness and the outline of a pact. Less federal money! More state control! Viva Patrick Henry! Welfare would only be the starting point for the block-grant revolution, with a hundred other programs to follow from health care to housing. As self-interest merged with true belief, the love fest went on for hours. The precepts were codified shortly after in a letter from Thompson, Engler, and Massachusetts governor William Weld: “We are willing to accept a reduction in funding if we are given the freedom to run these programs with few, if any, strings attached.”

  Would states’ rights really rescue the poor? There was ample room for doubt. It was the states’ failure to care for the needy that caused welfare to be federalized in the first place—their failure, in the 1920s and 1930s, to finance the Mothers’ Pensions. As a creed, states’ rights hadn’t fully recovered from its Eastland-era service of segregation. And even as they enjoyed a renaissance as “laboratories of democracy,” state bureaucracies could prove every bit as inept as federal ones. The child welfare systems of twenty-two states were in such disarray they had been placed under court supervision. While posing as reformist tigers, most governors hadn’t done anything with the welfare authority they already had; they were barely meeting the minimal requirements of the JOBS program. The average state had just 13 percent of its caseload in welfare-to-work activities, which, as Jewell had discovered, often amounted to nothing more than a few weeks of motivation class. Although most conservatives celebrated the Federalist pact, the thought of governors as brave crusaders had Robert Rector of the Heritage Foundation feeling bilious again. He denounced the governors as “panhandlers,” “sluggards,” and “obstacles to reform rather than engines of reform.” (“Rector has always been irritating,” Gingrich said. “That’s his major function in life.”)

  Leery of block grants, the Democrats prevented a bipartisan endorsement from the National Governors Association, at a meeting that turned into a showcase of frayed tempers and bad blood. Howard Dean of Vermont, the group’s chairman, accused the GOP of trying “to starve children.” Many critics feared a “race to the bottom,” with states competing to keep services and tax burdens low. One way to think of AFDC was as a program of matching grants, since each dollar of state spending brought at least a dollar from the feds. Even in a program as unpopular as welfare, that helped sustain benefits: states - could buy poor people a dollar of support for no more than fifty cents. Under block grants, the incentives are reversed; every dollar the state cuts is a dollar the state saves. And to those who said “Trust the states,” critics had a retort—“What about Mississippi?”—where despite the feds paying most of the tab, the state offered a family of three just $120 a month.

  But it was the Republicans whose votes counted, and among them the deal held. By the time Gingrich slammed down the Speaker’s gavel in January 1995, he had united the party around a new vocabulary. “Ending welfare” meant packing it up and shipping it back to the states.

  The bill shot through the House. Its secondary features would face revision in the long months ahead, but the core was set. There would be fixed federal funding. There would be vast state discretion. And there would be “hard” time limits (of no more than five years)—an idea that had sped from Ellwood’s head through Clinton’s mouth and into Gingrich’s hands. There would also be an obscure bit of mischief around the concept of “work requirements”; the bill retained the rhetoric of work, while avoiding the substance of work programs. Work, after all, seemed expensive.
While Gingrich solved the technical budgeting problem by moving to a block grant, the sums didn’t seem large enough to run much of a work program on the ground. Wary of being left to foot the bill, the GOP governors wanted no federal work rules at all. As first proposed, the bill required the states to enroll just 2 percent of their recipients in “work activities,” rising to 20 percent over time. And virtually anything could count as work, down to writing a résumé. That gave the Democrats a fresh line of attack—“Weak on work, tough on kids”—and earned Rector’s scorn, too. “A major embarrassment,” he said.

  The Republicans found a solution: creative accounting. They greatly raised the percentage of families required to work. But they allowed states to count people as “working” whenever they left the rolls, whether they really were working or not. The obscure device at play is called the “caseload reduction credit.” Think of it as giving states frequent-flier points every time they cut someone off welfare. Say a state is required to have 20 percent of its caseload in a welfare-to-work program and it cuts the rolls 15 percent; the new requirement becomes 5 percent. When fully phased in, the law required states to meet a work rate of 50 percent, a standard no state had ever met. But if they cut their rolls in half (as twenty states subsequently did), they - wouldn’t have to run a work program at all.

  Oddly, it was Rector, a workfare zealot, who hatched the idea. He had visited a work program in Sheboygan, Wisconsin, where he expected to see a crowd of recipients sweeping floors and answering phones. But most people had responded to work assignments by surrendering their welfare checks. “And I started saying the real effect of a work program is to reduce the caseload—that’s what you want to measure,” he said. Rector had half a point: if work programs pushed women like Angie to leave welfare and find real jobs, that’s the best result. But the credit doesn’t distinguish between those leaving for jobs and those leaving for homeless shelters; states get “credit” either way. They could invest in troubled women and prepare them for work. (Some, like Oregon, would do just that.) Or they could cut them off for minor infractions. (Some, like Mississippi, would do that, too.) Indeed, nothing in the bill required states to provide services to anyone—not training, not child care, not transportation—none of the benefits typically cited by the bill’s defenders. Putting people to work was a discretionary activity. The core curriculum was getting them off the rolls.