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Tighter TANF requirements may be ripe for debt limit accord

Changes to cash benefits for needy families have attracted less attention than Medicaid, food stamp rules

Top Ways and Means Democrat Richard E. Neal of Massachusetts says he doesn't want to prejudge the outcome of talks.
Top Ways and Means Democrat Richard E. Neal of Massachusetts says he doesn't want to prejudge the outcome of talks. (Bill Clark/CQ Roll Call file photo)

​Major changes to means-tested federal benefit programs don’t appear to be in the cards as negotiators head into the final stretch of debt limit negotiations.

But President Joe Biden has left the door open to smaller tweaks, which could mean tighter work requirements for families to receive cash assistance under what used to be known as “welfare.”

That could help give the GOP a policy win they’re looking for and seal a deal to raise the nation’s borrowing cap and avoid what Treasury Secretary Janet L. Yellen says would be an “economic and financial catastrophe.”

The House GOP debt limit bill would close what Republicans call “loopholes” in the Temporary Assistance for Needy Families program, which provides grants to states to fund monthly payments and other services for low-income recipients.

[Contours of debt limit deal start to take shape]

Backers say the changes will push states to move more people into the workforce, where they can earn more money to support their families than the meager cash assistance beneficiaries receive. Critics say it could result in states withdrawing support from the people who need it most, but are unable to work for various reasons.

Cash assistance to families with children or mothers who are pregnant and who are financially needy is the largest program funded by the TANF block grant, created as part of the 1996 welfare overhaul.

States are required to help pay for the assistance. In fiscal 2021, the TANF block grant paid $16.5 billion while states were required to pony up $10.6 billion.

Existing rules

The program already comes with work requirements.

The statute requires 50 percent of families who receive assistance to be engaged in a work activity for at least 30 hours a week — or 20 hours a week for a single parent with a child under age 6. States face losing part of the block grant if they do not meet that standard.

Few states have had to meet that standard, however, because they are allowed to lower the required percentage by either reducing the caseload compared to what it was in 2005, or spending more state money on the program than required, according to the Congressional Research Service.

Ways and Means Committee Republicans said in a summary of the GOP proposal that in 2021, only six states had to comply with the 50 percent requirement, while 34 states used credits to reduce the work requirement to zero. In its report, the CRS said the credits allowed those states “to have no families engaged in work or activities but still be in compliance with their work participation standard.”

The GOP legislation would reset the baseline for calculating reductions from the caseload in 2005 to the caseload in 2022. The number of families receiving benefits dropped by over 50 percent during that time, however, from around 2.1 million to less than 1 million, according to Department of Health and Human Services data. That means under the House bill, states would have few if any credits available to reduce the number of recipients that have to work.

That’s the point, according to Matt Weidinger, a senior fellow at the American Enterprise Institute, a right-leaning think tank. He said the changes are aimed at fulfilling the objective of the 1996 law to move more people into jobs.

“The real purpose of doing this is to reboot the work participation requirement and once again expect states to engage half of their caseload in activities,” said Weidinger, a former Ways and Means GOP aide.

In a lot of states, he said, no recipients are required to work. “So that kind of hamstrings the idea that the program has an effective work requirement — at least in some places and on average across the country.”

States would have to move more recipients into work activities, which can include subsidized and unsubsidized employment, job search assistance, community service, and vocational education. There are complicated rules that specify how many hours of work are required depending on the age of children and limitations on how long recipients can participate in certain activities.

Critics of the GOP proposal say that by scaling back the ability to use the caseload reduction credit and requiring 50 percent of recipients to work, the plan would limit states’ flexibility to tailor services that will help recipients to find jobs.

The rules for meeting the work requirement are complicated, identifying some activities as “core” and others as “noncore,” and specifying how many hours have to be spent in core activities rather than noncore activities.

LaDonna Pavetti, senior fellow at the left-leaning Center on Budget and Policy Priorities, believes states won’t provide aid to the people who need it most — but are unable to work — in order to meet the 50 percent standard.

She said the bill would bring the caseload reduction credit down to zero, ensuring that “states would have to have 50 percent of all their work-eligible caseload in countable activities for the required number of hours.” And while some states have a zero percent work requirement, that doesn’t mean some aid recipients aren’t working anyway.

The bill also would eliminate the provision that allows states to claim a “caseload reduction credit” for spending more state money than required on the program.

A third change would discourage states from providing small TANF payments to people who receive Supplemental Nutrition Assistance Program benefits and are working to bolster the work activity percentage in TANF.

Slimmer savings

All told, the Congressional Budget Office estimates the provisions would reduce federal spending by a little more than $6 million over a decade — a relative drop in the bucket considering TANF grants are expected to cost $166 billion during that time.

For Democrats trying to keep major changes to benefit programs out of any debt limit deal, such a limited impact may be attractive.

Biden has already ruled out a sweeping new work requirement for some Medicaid beneficiaries in the House GOP proposal that would cut spending by $109 billion over a decade. Increasing the age that work requirements apply to certain food stamp recipients would cut $11 billion during that time and may also be a heavy lift, making TANF changes a more likely concession to GOP negotiators.

The president on Wednesday said he wouldn’t accept any changes that “go much beyond” what’s in current law. Biden acknowledged his vote for the 1996 welfare overhaul, for instance, which has helped cut the program’s caseload to less than one-quarter what it was at the time that law was enacted.

“It’s possible there could be a few [changes], but not anything of consequence,” Biden said.

But House Minority Leader Hakeem Jeffries, D-N.Y., called all of the work requirement proposals a “nonstarter” in a press conference Thursday, arguing they should be left to the normal legislative process and other measures such as the upcoming farm bill. And the CBPP thinks that the TANF changes could result in 540,000 families losing cash assistance and increased child poverty.

House Ways and Means ranking member Richard E. Neal, D-Mass., said he worried about forcing people back to work who’ve been out of the labor force for a long time and need job training. He also said that for “the number of people in America that have severe addiction problems that are receiving government support, I think it’s going to be very hard to get them into the workforce.”

However, Neal said he’s rarely seen a legislative negotiation where each side gets everything they want, and that he didn’t want to tie Biden’s hands.

“I’m hesitant to pick out a small piece when there’s the overarching issues that might bring a deal together,” he said. “My own posture on negotiating is once you agree to certain parts of it, you agree not to go back and revisit them. So if they have to do some small things to build some confidence, I want to give the administration latitude.”

Lindsey McPherson contributed to this report.

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