http://www.timesonline.co.uk/tol/news/world/us_and_americas/article57334
99.ece

February 14, 2009

Obama warned over ‘welfare spendathon’

The new administration's economic stimulus plan may undo reforms that
cut the dole queues, critics say

RONALD REAGAN started it, Bill Clinton finished it and last week Barack
Obama was accused of engineering its destruction. One of the few
undisputed triumphs of American government of the past 20 years – the
sweeping welfare reform programme that sent millions of dole claimants
back to work – has been plunged into jeopardy by billions of dollars in
state handouts included in the president’s controversial economic 
stimulus package. 

As Obama celebrated Valentine’s Day yesterday with a return to his 
Chicago home for a private weekend with family and friends, his success 
in piloting a $785 billion (£546 billion) stimulus package through 
Congress was being overshadowed by warnings that an unprecedented 
increase in welfare spending would undermine two decades of bipartisan 
attempts to reduce dependency on government handouts. 

Robert Rector, a prominent welfare researcher who was one of the 
architects of Clinton's 1996 reform bill, warned last week that Obama’s 
stimulus plan was a “welfare spendathon” that would amount to the 
largest one-year increase in government handouts in American history. 

Douglas Besharov, author of a big study on welfare reform, said the 
stimulus bill passed by Congress and the Senate in separate votes on 
Friday would “unravel” most of the 1996 reforms that led to a 65% 
reduction in welfare caseloads and prompted the British and several 
other governments to consider similar measures. 

Though some researchers have questioned the true impact of Clinton’s 
“workfare” reforms, they were wildly popular with millions of US 
taxpayers tired of subsidising what many saw as a generation of 
slackers. 

Despite dire warnings that reduced benefits for single mothers and 
deadlines on entitlement would create a social calamity – one liberal 
senator warned at the time that children would be “sleeping on grates” – 
the 1996 reforms cut welfare rolls from more than 5m families in 1995 to 
below 2m a decade later without a discernible increase in hardship. 

In the American political lexicon, welfare has since become a dirty word 
– often referred to as the W word – and nothing arouses US tabloid ire 
more than the hint that taxpayers’ money is being wasted. 

When it emerged that Nadya Suleman, the mother of octuplets born in Los 
Angeles last month, was a “single mom” with six children already and was 
relying on welfare assistance, she was transformed overnight from 
fertility goddess to the target of death threats. 

Obama argued last week that his bill was essential for reviving the US 
economy and protecting victims of the credit crunch. Yet his Republican 
rivals have seized on the billions lavished on new welfare spending to 
stir the conservative faithful from their postelection misery and 
reunite the opposition. 

“If you like government dependence, you will love the plan they are 
jamming through Congress,” declared Michael Steele, the new chairman of 
the Republican National Committee. 

Rector, a senior scholar at the conservative Heritage Foundation, argued 
that Obama’s spending proposals in effect encouraged individual states 
to add more families to their welfare rolls; the more Americans sign on 
to the dole, the more state budgets will benefit from US Treasury 
payouts. 

“They have completely overturned the fiscal and policy foundations of 
welfare reform,” Rector complained. 

Supporters of the bill argue that the current crisis is so grave that 
intellectual quibbling about the nature of welfare has to take second 
place to the upheaval transforming millions of American lives. 

“How can you tell someone who has lost his income to look for another 
job if there aren't any more jobs?” asked one Obama backer. 

While some scholars are beginning to suspect that Clinton’s welfare 
reforms were fatally flawed – or at least viable only during an economic 
boom – Republicans are not alone in fearing that Obama’s hastily 
concocted package is the first step towards the creation of a quasi-
socialist welfare state. 

Even Mickey Kaus, a prominent liberal blogger, has denounced what he 
describes as the “get more people on welfare” provisions of Obama’s 
bill. Writing at Slate, the political website, Kaus said: “Lack of jobs 
isn’t a reason to loosen work requirements . . . Have the Dems never 
heard of ‘workfare’? 

“Give recipients useful community service work, and if they do the work, 
then they get the [welfare] cash.” 

Returning to Chicago for the first time since his inauguration last 
month, there were other pressing matters on Obama’s mind – not to 
mention the minds of millions of Americans still enthralled by his every 
move. Where would he take his wife Michelle for a romantic Valentine’s 
dinner? How much time would he spend in the gym? Would he fit in a game 
of basketball? 

Opinion polls last week showed that for all his administration’s errors 
in his first three weeks in office, the new president has lost little of 
his personal appeal. He continues to enjoy an average 64% approval 
rating. 

Yet after another fracas over the withdrawal of the Republican senator 
Judd Gregg as Obama’s choice for commerce secretary – the second time a 
nominee has given up the post – Obama’s chief of staff, Rahm Emanuel, 
was obliged to insist that it was not “amateur hour” at the White House. 

Obama also stumbled over a curious claim that his stimulus plan would 
enable Caterpillar, one of America’s leading manufacturers of heavy 
earth-moving equipment, to start rehiring workers. He was promptly 
contradicted by the company’s chief executive, who said he had no such 
intention and was planning more lay-offs. 

The dangers are beginning to pile up for the novice president and his 
struggling economic crew. Tim Geithner, his treasury secretary, tripped 
up with opaque attempts to explain how the administration would fix the 
banking crisis, while from every corner of the country there were 
alarming indications that increased government intervention in the lives 
of ordinary Americans could prove an invitation to waste. 

In Wisconsin, the state that forged a pioneering path in welfare reforms 
in the 1990s, residents were astonished by a newspaper investigation 
that disclosed that a $340m (£236m) programme offering taxpayer-financed 
child care to low-income working parents was riddled with fraud and 
expensive loopholes. 

In one case, a family of four sisters who had 17 children between them 
put all of them together, took it in turns to babysit them and over the 
past three years claimed $540,000 (£374,000) in perfectly legal state 
childcare subsidies. 

Examples like that fuel American suspicion that so-called “big 
government” invariably turns out to be inefficient, expensive and easily 
exploitable. And there has been no bigger government action in the US 
than the stimulus package presented by Obama. 

Few dispute the need for some kind of stimulus, but has Obama got the 
details right? The Republicans do not think so and, led by Gregg, they 
are already shunning the president’s bipartisan overtures. 

Perhaps more worrying for the president is that some of his natural 
liberal supporters are not feeling all that confident either. In a 
telling commentary last week, Paul Krugman, the 2008 Nobel prize-winning 
economist, declared that Obama’s stimulus victory “feels more than a bit 
like defeat”. 

Krugman added: “I’ve got a sick feeling in the pit of my stomach – a 
feeling that America just isn’t rising to the greatest economic 
challenge in 70 years.” 

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