The Politics of Policy Change

Welfare, Medicare, and Social Security Reform in the United States

Daniel Béland

• Publisher: Georgetown University Press
• Year: 2012
• Print ISBN: 9781589018846
• eBook ISBN: 9781589018891
• Topic: Politics & International Relations
• Subtopic: Social Policy
• Index: Politics & International Relations

For generations, debating the expansion or contraction of the American welfare state has produced some of the nation's most heated legislative battles. Attempting social policy reform is both risky and complicated, especially when it involves dealing with powerful vested interests, sharp ideological disagreements, and a nervous public.

The Politics of Policy Change compares and contrasts recent developments in three major federal policy areas in the United States: welfare, Medicare, and Social Security. Daniel Béland and Alex Waddan argue that we should pay close attention to the role of ideas when explaining the motivations for, and obstacles to, policy change.

This insightful book concentrates on three cases of social policy reform (or attempted reform) that took place during the presidencies of Bill Clinton and George W. Bush. Béland and Waddan further employ their framework to help explain the meaning of the 2010 health insurance reform and other developments that have taken place during the Obama presidency. The result is a book that will improve our understanding of the politics of policy change in contemporary federal politics.

Chapter One

Welfare Reform, 1996

In August 1996 President Bill Clinton signed into law the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). This legislation ended the Aid to Families with Dependent Children (AFDC) welfare entitlement program for poor, single-parent families and replaced it with a new conditional benefit named Temporary Assistance to Needy Families (TANF). As suggested by its title, TANF is a time-constrained benefit with most welfare recipients restricted to a five-year lifetime limit on receipt of federal welfare benefits. PRWORA also imposed new work requirements on those receiving TANF that were significantly tougher than existing arrangements. Hence, welfare policy stands in contrast to the other two policy domains discussed in this book. While there have been changes of some significance to the organization of Medicare, and while the relationship between private and public pensions is gradually shifting, neither of the major social insurance programs providing benefits for the elderly and the disabled—Medicare and Social Security—has been overhauled and restructured in one dramatic legislative episode in the manner that welfare has. That is, despite some continuity with the past, the 1996 welfare reform was a path-breaking transformation that directly impacted on the lives of millions of Americans as it restructured the relationship between the state and welfare recipients. It was, in short, a landmark reform in both ideational and institutional terms, and, as evidenced in the following analysis, its distinctly conservative ideological trajectory was reinforced by the 2005 reauthorization of the 1996 law.

It is important to understand the events of 1996 in the wider framework of previous welfare reform efforts, some successfully legislated and some not, at both federal and state levels. In particular, some of the state-led initiatives in the early 1990s acted as an entering wedge—constituting a form of institutional layering—that provided ammunition to those calling for a comprehensive reform at the federal level. Looking at the story of welfare reform over an extended period illustrates the overall shift in ideological perspectives that culminated in the 1996 law. The longer time frame also demonstrates the importance of welfare’s policy legacies and the critical nature of legacy interpretation, which is directly related to the complex politics of issue ownership.

The purpose of this chapter is to examine how conservatives were able to develop their ideas about what was wrong with AFDC into such an effective political weapon that, in the mid-1990s, a Democratic president signed into law a set of rules that would have been denounced as an example of right-wing extremism a quarter century earlier. The 1996 Green Book, then effectively an annual encyclopedia of social policy data, commented that the passage of PRWORA was “the first time that major welfare entitlement benefits have been repealed or substantially altered” (US Congress 1996, 1328). Certainly any comparison of the principles of PRWORA with some of the earlier attempts at welfare reform, notably Republican president Nixon’s Family Assistance Plan, shows how far ideas about welfare policy had evolved since the early 1970s (Waddan 1998). Perhaps more precisely, the comparison over time shows how ideas that were seen as being on the fringe of political discourse in the late 1960s had become “mainstream” a generation later. When looking at the emergence and triumph of conservative ideas vis-à-vis welfare policy, it is also crucial to understand the response of liberals, and to ask why the constituencies defending the existing AFDC arrangements proved to be so vulnerable politically.

Before looking at the development of welfare policy in more detail, one immediate point to establish is that, even though PRWORA was signed into law by a Democratic president, it is clear that the legislation was a triumph for conservatives and represented the culmination of a sustained conservative ideological campaign attacking a key pillar of the welfare state. PRWORA was a complex bill that affected eligibility and access to a variety of means-tested benefits and services, especially for immigrants. Its primary objective was clear: to bring an end to the AFDC program that had originally been part of the 1935 Social Security Act. Critical to comprehending why this reform was so significant is the fact that AFDC was a cash benefit that distributed money to poor, largely single-parent families with children—clearly one of the most vulnerable family types in society. In 1996 AFDC benefits were distributed to more than 4.5 million families. Of these, only 302,000 were receiving benefits via the AFDC-UP program available to two-parent families, where the principal wage earner had a recent work history but was then unemployed (US Congress 1998, 402). For all intents and purposes, PRWORA explicitly targeted poor, female-headed households with a primary goal of moving them off welfare and into work. Interestingly, and indicating a slightly different but still conservative priority, PRWORA also promoted the traditional family unit as an ideal type in its opening paragraphs of Title 1, which emphasized the importance of marriage: “Marriage is an essential institution of a successful society which promotes the interests of children.”¹ This commitment to marriage promotion remained a secondary feature of the bill, but it did reflect important strands of conservative thought.²

Underlying the overall policy initiative was the belief that AFDC had effectively constituted a give-away program that violated traditional American respect for work ethic and individual responsibility. In the eyes of its critics, AFDC had undermined the independence of welfare recipients themselves by trapping them into a cycle of dependency and ultimately self-defeating behavior and had simultaneously bred resentment among taxpayers who were frustrated at having to fund what many perceived as the indolent lifestyles of those on welfare. Whatever the merits of that argument, it was clearly derived from conservative ideas emphasizing the primacy of personal responsibility and individual agency rather than a wider socioeconomic structural context. To some liberal commentators, this analysis harkened back to the New Poor Law of 1830s Britain with Malthusian enthusiasm (Katz 1993; Handler and Hasenfeld 1997; Somers and Block 2005).

The Historical Development of AFDC

First known as Aid to Dependent Children (ADC), AFDC was established as part of the Social Security Act of 1935.³ Despite being created alongside Social Security, AFDC was never regarded as an equal partner to that program. Unlike the social insurance schemes that were put in place for wage earners to cover pensions and unemployment, AFDC did not depend on recipients having made previous contributions; instead eligibility was based on the criteria of circumstance and need. Thus, AFDC did not have an actuarial relationship between contributions and benefits, meaning that AFDC recipients could not make a claim that they had “earned” their benefit entitlement. As noted in chapter 3, the actuarial logic of the Social Security system was modified and weakened in 1939, but throughout that program’s history, the discourse depicting Social Security as a deserved reward for contributions paid through a working life (i.e., payroll tax) has helped sustain its popularity. In turn, the lack of an equivalent sense that AFDC was an earned right meant that its recipients were more liable to be regarded with suspicion than were Social Security beneficiaries (Fraser and Gordon 1992). Furthermore, a key decision made during the legislative process in 1935 placed control of AFDC under the auspices of the Social Security Board rather than the Children’s Bureau (Gordon 1994, 267–73). This meant that AFDC was run by “a male dominated agency that consistently built up contributory insurance and downplayed the development of non-contributory public assistance programs” (Skocpol 1992, 535).⁴ From the start, therefore, AFDC and Social Security had different distributional logics built into their operation that produced correspondingly different policy legacies and feedback effects.

But because AFDC was designed to provide income support for poor, single parents with children at a time when the expectation was that mothers would not do paid work but would concentrate their energies on parenting, it might be supposed that the program would treat its recipients sympathetically given their “unfortunate” circumstances. As Edwin Witte expressed it, the aim was “to release from the wage-earning role the parent whose task is to raise children” (quoted in DeParle 2004, 86). Such sympathy and empathy, however, was severely limited in its application. It did not translate into a significant sum of hard cash, even for those who were eligible for benefits. A defining feature of AFDC in its early days was that eligibility was strictly limited to those mothers who were deemed worthy of help. In practice, this meant widows and a few “deserted” mothers. Any claimant could find herself subject to rigorous investigation to check on her appropriate worthiness, with these checks being particularly intrusive when it came to investigating sexual behavior (Gordon 1994, 298). Moreover, for those who were granted benefits, even if the stated intention was to allow these women to play the role of mother rather than worker, the actual benefit levels were often so low that recipients had to supplement their income through undeclared work. One of the features of AFDC’s demise was that this initial ambivalence about whether the program should pay out meaningful benefits was replaced by a more categorical hostility to the notion that single mothers be subsidized to stay out of the workforce; but from the start, the reality, if little recognized, was that AFDC recipients were often already working to make ends meet (Edin and Lein 1997).

Another critical feature of AFDC, embedded in the program at its birth, was the degree of discretion that remained with state and local governments. Hence, in a critical fashion, AFDC differed from Social Security and Medicare. That is, while all three were legislated at the federal level, AFDC was the only one of these programs that split funding and regulation between federal and state governments. Thus, while much of the later debate about the AFDC program was conducted in general ideological terms, the importance of state-to-state variation should not be underestimated in terms of either the day-to-day consequences for welfare recipients or the overall political impact of relatively weak federal supervision. The original draft of the 1935 legislation contained relatively broad federal guidelines about eligibility and benefit levels, but these were significantly watered down through the legislative process (Gordon 1994, 273–75). Instrumental in diminishing federal government regulation were members of Congress from the South, who negotiated their own preferences with the Roosevelt administration. Consequently, there were few clear national standards about who was eligible for AFDC and what payment they should receive. Once again, in the words of Witte, “No other federal aid legislation has ever gone to such lengths to deny the federal government supervisory power” (quoted in DeParle 2004, 86). Not surprisingly, especially in the South, these arrangements led to the systematic exclusion of most African American mothers from the welfare rolls (Teles 1996, 24). There were also significant discrepancies in benefit levels. For example, in 1940 the average national monthly AFDC payment was $32.39. In Alabama, however, the monthly average benefit that year was $13.63 (Gordon 1994, 276).

Overall, the early days of AFDC’s development provided mixed messages. A program granting relief to poor, single-parent families was established; in theory, it was meant to help mothers and their children survive without recourse to the labor market. Yet there were minimal federal norms in terms of the state-by-state implementation of this program, and there were strong aspects of discrimination in its street-level application. Thus, from the start AFDC provided an ambiguous ideological message that in turn left a somewhat confused policy legacy. By the 1990s the dominant interpretation of that legacy was that AFDC was a failed program because of the very provision of benefits that allegedly demeaned welfare recipients, undermined their independence, and, therefore, trapped them in a self-destructive cycle of welfare dependency. But there was not a clear, linear ideological progression from the 1930s through to the conservative conventional wisdom of the 1990s about the “failure” of AFDC. Indeed, the conservative movement gained its momentum as a result of a backlash against the perceived deviation in welfare policy and liberal thinking of the 1960s and early 1970s. At the end of the 1960s, the conventional wisdom of many liberals was quite different from that which transformed welfare policy in the 1990s. Even as the welfare rolls expanded dramatically throughout the 1960s, many liberals came to believe that AFDC was a failed program because it was discriminatory and provided inadequate benefits.

It is clear, and in stark contrast to the Social Security and Medicare programs, that the policy regime surrounding AFDC was regularly under fire. Up until 1996 the program proved to be robust under fire because the consensus that the program needed repair was not matched by agreement on how to fix it. By the end of the 1960s, following a dramatic expansion of the AFDC caseload, the demand for “welfare reform” was a constant refrain in American politics, even though it was not immediately evident that this would result in the triumph of conservative policy ideas.

The development of welfare policy and politics exemplifies some of the key theoretical propositions of this book about the role of ideas and institutions in policy change. From the late 1960s through to the 1990s there were important, presidentially led efforts at welfare reform that were thwarted at veto points embedded in US political institutions. Importantly, the policy and ideological impetus behind these reform efforts changed over time and, in 1996, a combination of factors proved conducive to the passage of path-breaking reform. Critical political actors in the shape of congressional Republican leaders and a Democratic president saw legislative action as desirable. For the former, PRWORA was an ideological triumph reflecting many of the ideas that conservatives had promoted with increasing stridency for the previous two decades. For President Clinton, who was committed to reform of the existing system but had reservations about the details of PRWORA, strategic as well as policy considerations encouraged the decision to sign rather than veto the bill. In 1992 Governor Clinton had used the issue of welfare to help define his political identity. Specifically, he repudiated the idea that Democrats were “soft” on welfare recipients and in doing so challenged the presiding pattern of issue ownership whereby Republicans criticized Democrats for their overly generous welfare policies. In 1996, with electoral considerations again to the fore, President Clinton was determined to share the credit for welfare reform and not cede issue ownership of welfare back to the GOP. Thus, this is a story that emphasizes the importance of ideas and the manner in which political actors frame policy questions in order to highlight the relevance of their narrative. The road to PRWORA also illustrates the significance of both formal and informal institutional rules and particular policy legacies and the interpretation of those legacies. Clinton’s embrace of welfare as an issue in a deliberate effort to challenge prevailing orthodoxies also illustrates that issue ownership can be a complex and changing matter. Finally, while PRWORA was a sharp rather than incremental reform, the chapter will outline how reform advocates were able to point to smaller-scale experiments in welfare reform conducted at the state level as models for change at the federal level.

The 1960s and the Expansion of AFDC

In 1950 the average number of families receiving AFDC monthly was 651,000. By 1960 that figure had risen to 803,000 (US Congress 1998, 402). Moreover, from the end of World War II through 1960, the number of African American families as a proportion of the welfare caseload nearly tripled, now making up to 40 percent (Gilens 1999, 106). Still, up to that point the “welfare expansion was incremental and bureaucratic—almost accidental,” resulting largely from the migration of many African Americans to northern cities where discrimination, while still apparent, was less systematic, and resulting from slight increases in the levels of income at which families were eligible to receive benefits (DeParle 2004, 88). During the 1960s the increase in welfare numbers was the product of much more deliberate action, and by 1970 the average number of families receiving AFDC monthly had jumped to just over 1.9 million (US Congress 1998, 402). While some of the increase during the 1960s was a result of more households becoming eligible as a consequence of their circumstances (that is, single parenthood and impoverishment), a significant part of the increase is explained by the fact that many more families whose circumstances had not changed had applied for benefits and many more of these had been deemed qualified for AFDC payments than had previously been the case (Teles 1996, 19–22).

Hence, by the end of the 1960s, eligibility for AFDC had expanded to such an extent that it did effectively constitute an entitlement program for poor, single-parent families. At the start of the 1960s, only about one-third of households applying for AFDC were successful, but by 1971 that number had risen to 90 percent (Katz 1989, 106). Corresponding to the increase in the numbers receiving AFDC, costs to government rose from 1 billion dollars in 1960 to 6.2 billion dollars in 1971 (Weaver 2000, 55).

While this more generous attitude toward welfare applicants was in tune with the mood music of the civil rights revolution of the 1960s and the attack on poverty by presidents Kennedy and Johnson, it is crucial to note that the most significant changes to the rules about eligibility came from unelected branches of government. Although Congress passed an amendment in 1962 that allowed states the option of paying AFDC to families where a father was present if the household had a recent history of employment (AFDC-UP), of more importance were the series of Supreme Court decisions throughout the late 1960s that removed much of the effective discretion that state and local officials had been able to use to determine eligibility for AFDC. Perhaps most notably, the Court overturned state rules that denied AFDC to those who had not fulfilled state residency requirements, or who were alleged to have “substitute fathers,” or where midnight raids had found a “man in the house” (Piven and Cloward 1971, 301–11; Teles 1996, 107–17). In one instance, referring to the 1962 amendments, the Court ruled that “federal welfare policy now rests on a basis considerably more sophisticated and enlightened than the ‘worthy person’ concepts of earlier times” (quoted in Teles 1996, 108). Thus, by the end of the 1960s the rules governing access to AFDC had changed significantly. This was not a consequence of deliberate legislative action but resulted from a process that amounted to significant incremental change effectively brought about by bureaucratic and judicial conversion.⁵ That is, while the goals of AFDC were not explicitly challenged by Court rulings, the management of the program in many areas across the United States was changed, and in doing so the impact of welfare policy was altered.

Whatever the merits of these Court rulings, the fact that it was unelected elites that opened the door to AFDC’s growth proved to be of long-term political significance as this chimed with later conservative complaints that the champions of welfare were out of touch with the values of most Americans. Furthermore, and in contrast to the political maneuvering surrounding the expansion of Social Security in the early 1970s, there was no scrambling among politicians to claim credit for the expansion of AFDC. Conversely, a movement in Washington, DC, at the turn of the 1970s to enact legislation that would transform welfare policy appears, especially in hindsight, remarkably liberal in nature.

The Politics of a Guaranteed Income

There is an intuitive convergence between the relaxing of conditions for receipt of welfare benefits and the advent of President Lyndon Johnson’s “War on Poverty,” but the two should not be conflated. For Johnson, the War on Poverty was to be waged by providing services rather than simply giving out cash to help the poor. The language of a hand up rather than a handout was a constant feature of his rhetoric (Davies 1996; Patterson 1994, 142–55). In the 1980s conservative critics lampooned Johnson and the War on Poverty for encouraging a descent into a benefits and dependency culture that allegedly harmed rather than helped swathes of America’s poor; yet Johnson’s antipoverty strategy was not based on increasing the “dole” but on expanding economic opportunity. However, by the end of the 1960s many policymakers had decided that sharing the country’s wealth through a better channeling of jobs and education was an unlikely prospect, and the simplest answer to poverty was to redistribute the existing wealth. Consequently, and in a quite remarkable contrast to the development ...

Table of contents

• Cover Page
• Series Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Preface
• Introduction
• Chapter One: Welfare Reform, 1996
• Chapter Two: Medicare Reform, 2003
• Chapter Three: The Failed Attempt at Social Security Privatization, 2005
• Conclusion
• References
• Index