Federalism and U.S. Social Welfare Policy: Fundamental Change and New Uncertainties

2 Colum. J. Eur. L. 441 (1996)

Anne L. Alstott.  Associate Professor, Columbia University School of Law.

AUTHOR’s NOTE: This paper was written for the Frankfurt/Columbia symposium held in April 1996. In July 1996 the Congress enacted and in August 1996 the President signed major new welfare legislation. The new welfare law repeals the Aid to Families with Dependent Children (AFDC) program and replaces it with a new program of block grants to the states, called Temporary Assistance for Needy Families (TANF). The TANF program is similar, though not identical, to the block grant proposals described in Part Hl, and it raises the issues of federalism discussed in Part IMl. Thus, although the article’s references to AFDC and to pending block grant proposals should now be understood as historical, the broader concerns detailed in Part III remain at the center of national debate.

The assigned topic for this paper, “U.S. social welfare policy,” potentially encompasses virtually the whole range of domestic social policy, from education to health care, from labor policy to anti-poverty policy to tax policy. To make the project manageable, this paper focuses on the major transfer programs that provide cash grants, food assistance, and medical care for the elderly, the disabled, the unemployed, and the poor. Although any boundary between these and other programs is arbitrary, most Americans probably consider these to be the basic components of our social welfare policy.

The paper provides an overview of the major U.S. social welfare programs and briefly describes current legislative proposals that would change significantly the balance between federal and state control of some major welfare programs. Although these proposals would make only modest changes in the largest U.S. social welfare programs (Social Security and Medicare), which use federal funds to provide benefits to virtually all retired workers, the proposed changes would fundamentally restructure welfare programs for poor families (AFDC (Aid to Families with Dependent Children) and Medicaid). Under current law, these programs are funded and administered jointly by the federal government and the states. The proposed changes would curtail the federal government’s obligation to fund these programs and would grant to states significant power to set the terms of assistance.

Welfare “reform” is perennially part of the American political agenda, and pressure from the states for greater authority over the terms of welfare programs has been growing in the last decade. The election of a Republican congressional majority in 1994 cleared the way for the enactment in 1995 of legislation that would, only months before, have been considered almost too radical to warrant mainstream attention. After a presidential veto, the fate of the welfare legislation remains uncertain.

If the legislation in some form is enacted, its impact is unpredictable. Some predict that granting greater control to the states will create a rich variety of new welfare experiments that can find new ways to use scarce resources to meet the needs of the low-income population. Other forecasts are darker, predicting that state budget woes will dictate cuts in welfare benefits and services as states compete in a desperate “race to the bottom” to avoid attracting new welfare claimants. The third section of the paper briefly reviews arguments for and against the proposed “devolution.”