Washington eyes welfare reform, but it's entitlement spending that looms large
If the Trump administration and Congress tackle welfare reform this year — perhaps a big "if" in an election year — they'll still likely leave the largest drivers of the national debt untouched, making little difference in the country's fiscal future, policy experts tell CBS News.
President Trump has declared welfare reform a "very big topic under this administration," and a potential agenda item for 2018. Speaker of the House Paul Ryan is also interested.
"We are looking at it," Mr. Trump said during Camp David meetings on Saturday, surrounded by leaders in Congress and his administration. "It's a subject that's very dear to our heart. We'll try and do something in a bipartisan way."
But it's Social Security, Medicare and Medicaid — more than the more than 80 smaller welfare programs — that are driving up the country's debt, say experts at the kind of right-of-center think tanks whose proposals the Trump administration and Congress might be most willing to consider. Together, Social Security, Medicare, and Medicaid make up nearly half of all government spending, the total of which was roughly $4 trillion in 2017, according to the Congressional Budget Office. Those smaller programs account for about $366 billion or 9 percent of the total federal budget in 2016, according to the Center for Budget and Policy Priorities — not an insignificant sum, but not enough to right the country's fiscal woes, noted Robert Doar, a fellow in poverty studies at the American Enterprise Institute who served as the commissioner of the New York City Human Resources Administration under Mayor Michael Bloomberg.
"If you're trying to save money, there really isn't that much money in 'poor people's programs' to save, with one huge exception, and that's Medicaid," Doar said.
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"If it's spending and debt the Trump administration and Congress are primarily concerned about, they should look first at entitlements," said Veronique de Rugy, a senior research fellow at George Mason University's Mercatus Center in Virginia.
"They should, in an ideal world, be going after Social Security and Medicare," she said.
But that seems unlikely.
During the presidential campaign, Mr. Trump declared he would not touch Social Security, insisting that the country needed to honor a deal made long ago and eliminating waste and fraud in the system might help secure its future. But the problem with Social Security is a "structural one," de Rugy said, with fewer than three workers paying for every retiree, a massive shift from the 45 workers per retiree when the program began. That could shrink to two workers per retiree by 2030.
"Republicans usually have kind of cold feet when it comes to Social Security and Medicare," de Rugy said. Their feet grow even colder when lawmakers are defending their seats.
"In an election year, there's no chance of talks of reforming Social Security and Medicare," she added.
Part of the problem in addressing welfare reform is how it's defined — not everyone agrees on what "welfare" is, and not everyone agrees on what "reform" means.
"In order to analyze and reform welfare, we have to define what welfare is," said Robert Rector, a senior research fellow who focuses on poverty issues at the Heritage Foundation.
Welfare is different from entitlements, which encompass mandatory spending programs like Social Security and Medicare, programs largely dependent on age. Welfare programs are generally means-tested programs, meaning they depend on a person's income. Whether Medicaid qualifies as welfare depends on who you ask.
Medicaid has long contributed to increased spending, even before it was expanded under the Affordable Care Act. But all last year, during the various Obamacare repeal attempts, the Republican-led Congress was unable to scale back the program, and the possibility of changes in an election year seem even less likely.
What welfare reforms might Congress try?
Still, if Republicans are serious about improving welfare programs in a way that aids the neediest and helps lift people out of poverty, there is plenty of room for improvement, said Oren Cass, a senior fellow at the Manhattan Institute. He said he's seen enthusiasm grow in the GOP in recent years for improving the actual programs.
"A key distinction that I think has some potential, and there is a lot of interest in the Republican Party, is, between cutting welfare and making it work more effectively," Cass said.
A couple major areas in need of reform stick out to de Rugy.
Streamline and consolidate programs
The Trump administration and Congress need to consolidate duplicate or similar programs, de Rugy advises, placing them all under the same tent.
"There are several housing programs, there are several food programs, there are all sorts of programs, and there are many duplicates of all of them," de Rugy said.
Use block-grant funding structures
Turning more programs into a block-grant structure, giving states a set amount of money such as is the case in the cash assistance program Temporary Assistance for Needy Families (TANF) is another major change Congress should undertake, she said. That way, states can decide how to most effectively use a limited resource.
Eliminate marriage penalties
Rector said Congress also needs to address how the current welfare system discourages marriage by eliminating benefits when a recipient increases his or her income through marriage, calling that penalty a "disastrous" situation. The real marriage penalty isn't in the tax system, but in the safety net, he added. Marriage is one of the best societal mechanisms for keeping children out of poverty, so penalizing marriage is counterproductive, Rector noted.
"It's the single largest problem in the welfare system," Rector said.
Incentivize job training and work
Doar said the most helpful policy shift for families would be for Congress to encourage those who can work to work, through work training programs, and not penalizing people by eliminating their benefits entirely once they find work. While some programs do require recipients to work, in others, such as the Supplemental Nutrition Assistance Program (formerly known as food stamps), and Medicaid, "There isn't a sense that people who could work or who might want to work are being encouraged enough or sometimes pushed enough to take advantage of employment opportunities that are available in their communities," Doar said.
Work requirements could be something along the lines of a minimum of 10 hours per week, requiring enrollment in a training program, in exchange for food or other assistance, Doar said. If someone consistently fails to show up, those benefits would be eliminated.
"There are ways to structure a work requirement that is not 'get a job or get out of here,' and Democrats have to acknowledge that because they've administered those kinds of programs, and Republicans have to be able to accept something less than full-time work or no assistance," Doar said.
To critics of such requirements, fearing they could hurt children dependent on those adults, Doar pointed to the TANF work requirements imposed by the Clinton-era welfare reforms of the 1990s.
"They weren't sloth work requirements, they were hard work requirements," Doar said. "... Child poverty didn't get worse."
In fact, child poverty continued to decline after those reforms, according to Census Bureau data.
Consider a wage subsidy
Cass had another suggestion for providing for low-income families while encouraging work at the same time — transforming the Earned Income Tax Credit (EITC) into a more generous, paycheck-by-paycheck wage subsidy.
"Frankly, I love the theory of the earned income tax credit," Cass said. "I think it's right that part of the problem is it was never designed to be a way to get significant amounts of money to a very significant amount of the workforce."
Much of the debate in Republican circles is between spending less on safety net programs, or simply spending money more effectively on safety net programs, Cass said. He hopes there can be some bipartisan interest in shifting some funding away from say, Medicaid, to something "a little more flexible" in the form of a wage subsidy for low-income families.
Sen. Marco Rubio, R-Florida, suggested something similar with the EMPLEO Act in 2016, a proposal Cass helped craft that would allow the federal government to subsidize the minimum wage so employers would, in theory, hire more workers at a lower cost to themselves.
"A genuine wage subsidy just looks at how much you're earning each hour and puts your money into the paycheck at the end of the week," Cass said.
Address child care needs
But if more people are being pushed to work, the Trump administration and Congress need to recognize the government needs to do more in the way of childcare, Doar said.
"The one part of the safety net program that is weakest is child care," Doar said.
"They didn't really do anything on that matter in the tax bill, and everyone seems to acknowledge that if you're pushing more to work, we could have more and better-affordable child care options for low-income working families," Doar suggested.
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The Trump administration and Congress can start reforming the social safety net, but without a serious look at Medicaid, Social Security and Medicare, it's virtually pointless from a fiscal standpoint, Doar said.
The idea that the federal government "can save real money in the rest of the welfare program, that's a lie. That's just not true," Doar added. "It's not big enough to have any real significant impact on our budget problems."
