Dear Peter,

       In the cover article of the March Atlantic, you say that signing last year’s Republican welfare-reform bill was “The Worst Thing Bill Clinton Has Done,” something that will “hurt millions of poor children” while doing little to promote work. Indeed, you quit your position as an assistant secretary of health and human services to protest the president’s action. (Be honest: Were you really going to stick around for his second term, even if he’d vetoed the bill?) Many of my friends have found your article a crystallizing summary of why they opposed the bill and consider Clinton an unprincipled opportunist. The Economist called it a “searing indictment.” You have George Will and Anthony Lewis on your side, as well as Robert Reich, Sen. Edward Kennedy, and Sen. Daniel Patrick Moynihan (who anticipates “something approaching an Apocalypse”).
       I didn’t find your article convincing at all, but then that’s not surprising. My journalistic ego is heavily invested in the notion that Clinton’s decision was, on balance, the right one. What is surprising is the way you ignore or underplay the evidence that has been accumulating since that decision. Neither of us, nor anybody else, knows whether the law will ultimately be a triumph or a disaster. There are too many uncertainties. But Clinton’s reasoning is looking stronger and stronger, and yours weaker and weaker.
       A note about what I won’t argue. I won’t claim that the new welfare law is wonderful. We could each imagine much better bills; they might not even be that dissimilar. (Like you, I favor a large program of public jobs.) The issue is only whether the result of the new law will be better than what would have happened if Clinton hadn’t signed it. Second, we agree that parts of the bill really are terrible, specifically the cuts in assistance to elderly and disabled legal immigrants, and the gratuitous cuts in food-stamp aid. Clinton thinks these cuts are terrible too–he is said to have described the legislation as “a decent welfare bill wrapped in a sack of shit.” The immigrant and food-stamp cuts are the sack of shit. He is trying to reverse many of them. But your article’s point is precisely that it’s not just those provisions that are disastrous. You also denounce the core of the bill: the replacement of the basic federal welfare program, Aid to Families with Dependent Children, with a “block grant” that states can spend on aid programs of their own devising. “The immigrant and food-stamp parts of the bill are awful,” you argue, “but so is the welfare part.”
       Is it really? Here are three reasons why it’s not:
       1) The caseload is dropping. You say, “welfare rolls have actually decreased somewhat” over the past two years. That’s a highly strategic understatement. In fact, as welfare reform has been debated and implemented, caseloads have been falling through the floor. Nationally, they’ve fallen about 18 percent since 1994, and they are still dropping. The magnitude of this drop wasn’t clear when Clinton signed the law last year, though conservatives predicted it (liberals tended to discount the possibility). True, the drop might not necessarily be good news, if women with children are being forced off the rolls into degradation. But there is little evidence, as of now, that this is happening. Massachusetts surveyed those who left welfare during two months last year. About half went into jobs; another 19 percent no longer qualified for aid because of other income (primarily child support) or support from family and friends. Most of the remainder no longer had children young enough to receive aid, or else they had left the state.
       And it’s not just that people are leaving the rolls. Fewer are applying. In Wisconsin, new applications dropped almost 50 percent after the introduction of reforms encouraging (and ultimately requiring) work. This at least suggests that potential recipients are responding to the end of the welfare “entitlement” by making other, better choices with their lives–taking jobs, perhaps even avoiding out-of-wedlock births.
       Note that even if those who have disappeared from the rolls haven’t taken jobs, the caseload drop is probably still good news. Some erstwhile recipients may marry or live with a breadwinner. Others may be living with relatives who then have ways (and reasons) to encourage work or marriage that government caseworkers don’t have.
       Is welfare reform responsible for the caseload drop? A strong economy is certainly part of the explanation (though the big welfare increase of the late 1960s occurred in a booming economy). But reform has played a part. A USA Today survey discovered that the caseload began to drop especially rapidly in the four months of 1996 that followed Clinton’s signing of the welfare bill. And, not surprisingly, caseloads have fallen most in the states that most diligently attempt to require recipients to work. Both Wisconsin and neighboring Minnesota have strong economies–in Minnesota unemployment averaged 3.9 percent from 1994 through 1996; in Wisconsin it averaged 4.0 percent. But Minnesota’s caseload dropped only 4.9 percent last year. Wisconsin, which instituted a relatively strict work requirement, saw a drop of 28.4 percent. (Even in Milwaukee, which has a substantial inner-city ghetto, caseloads have fallen by 23 percent.)
       The clearest implication of the caseload drop, which your article deliberately downplays, is that there will now be much more money available for reform–for providing jobs and child care, which costs more than just sending welfare checks. Under the old AFDC system, federal payments to the states varied with the caseload, and those payments would now have dropped automatically. Under the new block-grant system, the federal payment of $16.4 billion remains fixed at its record high 1994-95 level, despite the 18 percent smaller caseload. In effect there is at least an 18 percent boost in funding for welfare, compared with what would have happened if Clinton hadn’t signed the bill. This extra money is there whether the caseload drop is due to the strong economy or due to welfare reform itself.
       So it is wrong to say, as even the editor of S
LATEhas said, that the bill requires expensive work programs but “supplies less money” to do them. It supplies more money. And it’s wrong for you to cite a Congressional Budget Office estimate that “the bill falls $12 billion short of providing enough funding over the next six years” to put recipients to work. That CBO estimate did not take into account the extra money freed up by the caseload drop. An 18 percent drop would almost certainly be enough to wipe out the $12 billion shortfall. (The crude math: 18 percent of $16.4 billion times six years is $17.7 billion.) None of this guarantees that states will use the extra money to provide work and child care–they could siphon it off into road building or tax cuts–but most states will have the money if they want to use it.
       2) The bill’s “draconian” provisions are phony. You cite two requirements of the law as especially onerous. The first is “an absolute lifetime limit of five years, cumulatively, that a family can be on welfare. … The big hit, which could be very big, will come when the time limits go into effect … [and] a large group of people in each state will fall into the abyss all at once.” The mainstream press has played up the five-year limit as well, noting, as you do, that the law allows states to exempt a mere 20 percent of the caseload.
       But, as you know, the law sets a time limit only on the use of federal dollars. States provide about 45 percent of welfare funding themselves, and nothing prevents them from using that money to keep families on the rolls past five years. That’s the huge, eviscerating loophole in the “absolute” five-year limit. The “20 percent exemption” is just gravy. A recent Wall Street Journal article described the successful efforts of Mark Greenberg, a very smart lawyer at the Center for Law and Social Policy, to show states how to get around the time limits. “If a state doesn’t want the time limit to run, it has substantial ability to do that,” Greenberg notes.
       Even crazier is your assertion that “the states are chafing under the requirements about the percentage of the caseload that has to be participating in work or related activities.” In fact, states are discovering that the requirements are surprisingly easy to meet, or to evade. In 1998, for example, each state must nominally get 30 percent of its caseload into “work activities.” But read the law’s fine print and you see that states get to subtract the caseload drop since 1995–about 15 percent, on average, and growing. States also get to count the approximately 8 percent of the caseload that already works part time–so they are up to 23 percent before they even start. Add on various other exemptions and reductions (for vocational education, for example, or teens in high school) and you realize that any governor who thinks he can’t easily meet the bill’s work requirements through the end of the century just isn’t paying attention.
       3) Let 50 reforms compete. Basically the law lets states do what they want with welfare. If they want to spend money to provide public jobs and child care (as we both hope they do), the money will most likely be there. If they prefer to keep welfare families on the dole, they will be able to do so, whatever the “absolute” limits and requirements seem to say. The overriding rationale for the law is precisely the freedom it gives the states: With 51 jurisdictions trying various reforms, we will find out soon enough which ones work and which ones don’t.
       That wouldn’t have happened if Clinton had vetoed the bill. Your article suggests that without the bill states could still “experiment with reform under the existing law.” But in fact state reforms had to be approved by the Department of Health and Human Services, for which you worked. One of the states that applied for such permission was Wisconsin. The Wisconsin proposal wasn’t perfect, but it was mighty close. It required work of virtually all welfare recipients, but if private-sector jobs were unavailable, it proposed to provide tens of thousands of public “community-service” jobs. Wisconsin offered subsidized child care to single mothers who needed it–not just to mothers on welfare, but also (as you recommend in your Atlantic piece) to poor working mothers who have never gone on welfare. It even offered subsidized health care–again, not just to those on welfare, but to all low-income families.
       What was the reaction of your department (HHS) to this promising, relatively liberal, well-funded proposal? Permission was never granted. Why? In part because Wisconsin didn’t offer to pay community-service wages that increased with family size–as if private jobs pay wages that increase when you have another child. For me, at least, this was the final straw. If you and the other officials at HHS wouldn’t allow the best welfare reform in the nation to proceed–at a time of maximum reformist pressure, with an election looming and the president himself praising Wisconsin’s plan–then it was time to eliminate the HHS veto over reform.
       Recently I debated you on the radio, and you actually boasted that HHS never granted Wisconsin permission to try its reform! But now that Clinton has signed the block-grant bill, Wisconsin doesn’t have to ask you. Which is why, I think, signing the bill was one of the better things Bill Clinton has done.