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THE SOCIAL SAFETY NET: IMPACT OF THE 

RECESSION AND OF THE RECOVERY ACT 

HEARING 

BEFORE THE

COMMITTEE ON THE BUDGET 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, DECEMBER 9, 2009 

Serial No. 111–18 

Printed for the use of the Committee on the Budget 

( 

Available on the Internet: 

http://www.gpoaccess.gov/congress/house/budget/index.html 
(II) 

COMMITTEE ON THE BUDGET 

JOHN M. SPRATT, JR., South Carolina, Chairman 

ALLYSON Y. SCHWARTZ, Pennsylvania 

MARCY KAPTUR, Ohio 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL BLUMENAUER, Oregon 

MARION BERRY, Arkansas 

ALLEN BOYD, Florida 

JAMES P. MCGOVERN, Massachusetts 

NIKI TSONGAS, Massachusetts 

BOB ETHERIDGE, North Carolina 

BETTY MCCOLLUM, Minnesota 

CHARLIE MELANCON, Louisiana 

JOHN A. YARMUTH, Kentucky 

ROBERT E. ANDREWS, New Jersey 

ROSA L. DELAURO, Connecticut, 

CHET EDWARDS, Texas 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

JAMES R. LANGEVIN, Rhode Island 

RICK LARSEN, Washington 

TIMOTHY H. BISHOP, New York 

GWEN MOORE, Wisconsin 

GERALD E. CONNOLLY, Virginia 

KURT SCHRADER, Oregon 

PAUL RYAN, Wisconsin, 

Ranking Minority Member 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

MARIO DIAZ–BALART, Florida 

MICHAEL K. SIMPSON, Idaho 

PATRICK T. MCHENRY, North Carolina 

CONNIE MACK, Florida 

JOHN CAMPBELL, California 

JIM JORDAN, Ohio 

CYNTHIA M. LUMMIS, Wyoming 

STEVE AUSTRIA, Ohio 

ROBERT B. ADERHOLT, Alabama 

DEVIN NUNES, California 

GREGG HARPER, Mississippi 

ROBERT E. LATTA, Ohio 

PROFESSIONAL STAFF

THOMAS S. KAHN, Staff Director and Chief Counsel 

AUSTIN SMYTHE, Minority Staff Director 
(III) 

C O N T E N T S 

Page 

Hearing held in Washington, DC, December 9, 2009 ........................................... 1 

Statement of: 

Hon. John M. Spratt, Jr., Chairman, House Committee on the Budget ..... 1 

Prepared statement of ............................................................................... 2 

Hon. Gwen Moore, a Representative in Congress from the State of Wisconsin ............................................................................................................. 3 

Hon. Paul Ryan, ranking minority member, House Committee on the 

Budget ............................................................................................................ 4 

Prepared statement of ............................................................................... 5 

LaDonna Pavetti, director, welfare reform and income support division, 

Center on Budget and Policy Priorities ....................................................... 6 

Prepared statement of ............................................................................... 10 

Sue Berkowitz, director, SC Appleseed Legal Justice Center ...................... 19 

Prepared statement of ............................................................................... 22 

Patricia DeLessio, attorney, Legal Action of Wisconsin ................................ 25 

Prepared statement of ............................................................................... 29 

Ron Haskins, co-director, center on children and families, the Brookings 

Institution; senior consultant, Annie E. Casey Foundation ...................... 32 

Prepared statement of ............................................................................... 36 

(1) 

THE SOCIAL SAFETY NET: IMPACT OF THE 

RECESSION AND OF THE RECOVERY ACT 

WEDNESDAY, DECEMBER 9, 2009 

HOUSE OF REPRESENTATIVES, COMMITTEE ON THE BUDGET, Washington, DC. 

The committee met, pursuant to call, at 10:04 a.m. in room 210, 

Cannon House Office Building, Hon. John Spratt [chairman of the 

committee] presiding. 

Present: Representatives Spratt, Schwartz, Becerra, McGovern, 

Tsongas, Etheridge, McCollum, Andrews, DeLauro, Larsen, Moore, 

Connolly, Schrader, Ryan, Lummis, Nunes, and Latta. 

Chairman SPRATT. I call the hearing to order. I want to welcome 

everyone to our hearing this morning on The Social Safety Net: Impact of the Recession and of the Recovery Act. And let me begin 

by thanking Congresswoman Gwen Moore for suggesting this hearing and for her role in bringing it about and putting it together. 

At the beginning of this year, the economy was contracting, reeling would be a better word. Jobs were being lost at a rate of 

741,000 per month in the month of January. With Democratic leadership, Congress moved swiftly to enact the American Recovery 

and Reinvestment Act. The Recovery Act has boosted the economy 

by making public investments and by raising the social safety net. 

CBO recently estimated that as many as 1.6 million jobs have been 

created or saved by the Recovery Act through September of this 

year. Last week, the November jobs report showed nonfarm job 

losses slowing to 11,000 per month, from 741,000 in January. 

There is no question the labor market has improved. This improvement is welcome, but it is not nearly enough. The Nation still 

suffers the effects of the worst recession since the Great Depression. Looking to my own State of South Carolina, I can see the extreme hardship that is being caused by unemployment rates that 

are well above the national average. 

As we consider what additional steps can be taken in response 

to the effects of this economic downturn, it is important we have 

a clear view of the effects of the recession on the social safety net, 

the positive impact that the Recovery Act has had on the economy, 

especially with respect to low-income individuals. 

To pursue those questions, we have an excellent panel today, excellent for their own expertise in their individual fields and for the 

diversity they bring to this issue. I want to thank for participating 

LaDonna Pavetti from the Center on Budget and Policy Priorities, 

Sue Berkowitz from the State of South Carolina, South Carolina 

Appleseed Legal Justice Center, Pat Delessio of Legal Action of 
2 

Wisconsin, and Ron Haskins from the Brookings Institution. All 

four panelists are well versed in the social safety net and bring 

their own various perspectives on the economic and social impact 

of the recession and the Recovery Act. 

Before turning to my colleague, Mr. Ryan, for his opening statement, let me yield to Congresswoman Moore for an amplification 

of the opening statement I just made. Ms. Moore. 

[The prepared statement of Mr. Spratt follows:] 

PREPARED STATEMENT OF HON. JOHN M. SPRATT, JR., CHAIRMAN, COMMITTEE ON

THE BUDGET

When President Obama was sworn into office at the beginning of this year, the 

economy was in deep contraction and jobs were being lost at a rate of 741,000 per 

month. Failed Republican economic policies had brought the financial system dangerously close to a complete meltdown and had driven the economy into its deepest 

recession since the 1930s. Regrettably, the financial crisis and ensuing recession 

amplified a trend of falling incomes and rising poverty across the United States. 

Under Democratic leadership, the 111th Congress moved swiftly to enact the 

American Recovery and Reinvestment Act, which has jump started economic activity 

by making much-needed public investments and by bolstering the social safety net 

of federal public services. The positive impact of the Recovery Act is already being 

made apparent, and more economic activity will be generated as stimulus dollars 

continue to spend out. The Congressional Budget Office recently estimated that as 

many as 1.6 million jobs had been created or saved by the Recovery Act through 

September. Last week, the November jobs report showed nonfarm job losses slowing 

to 11,000 for the month, highlighting the improved conditions in the labor market. 

Of course, this improvement is not yet enough. The nation still faces brutal, lingering effects of the worst downturn since the Great Depression. Job losses are stabilizing, but double digit unemployment is unacceptable for a nation as prosperous 

as ours. Looking to my own state of South Carolina, I see the extreme hardship 

caused by unemployment rates that are, sadly, above the national average. Now 

that Recovery Act dollars are flowing into South Carolina, we hope to see significant 

improvements in the coming months, particularly to the lives of those individuals 

most adversely impacted by the recession. 

In addition to creating jobs through infrastructure projects, the Recovery Act bolstered the safety net to help low-income families and individuals cope with the 

downturn and to boost consumer spending. The Center on Budget and Policy Priorities recently estimated that seven programs of the Recovery Act have kept 6.2 million Americans, including 2 million children, out of poverty in 2009 through new 

and expanded income support programs. The Recovery Act also cushioned the downturn in the labor market by providing temporary assistance to unemployed Americans while they search for new jobs. Because low-income individuals tend to quickly 

spend the benefits they receive, these Recovery Act programs also exhibit a particularly high bang-per-buck, helping to generate demand for goods and services 

throughout the economy. 

Even though the Recovery Act has returned the economy to a path of growth and 

is providing much-needed assistance to unemployed and low-income Americans, the 

labor market is expected to remain highly distressed, and state budgets face increasing shortfalls that threaten greater harm to low-income populations. As provisions 

of the Recovery Act begin to expire, Congress may consider extending support to 

those hardest hit by the recession. Given the nation’s tenuous fiscal situation inherited from the previous Administration, however, we must focus on the Recovery Act 

provisions that have proven most effective. This hearing provides the Budget Committee with an opportunity to examine the effect of the Recovery Act on the social 

safety net and to explore which programs could be most beneficial if they are extended. 

We are very fortunate to be joined by an excellent panel of witnesses, and I want 

to thank them for their participation in this hearing. First, we have with us this 

morning LaDonna Pavetti from the Center on Budget and Policy Priorities. Dr. 

Pavetti is the Director of the Welfare Reform and Income Support Division at the 

Center. Second, we are joined by Sue Berkowitz, representing the South Carolina 

Appleseed Legal Justice Center. An old friend of the Committee, Ms. Berkowitz directs a non-profit law office dedicated to advocacy for low-income people in South 

Carolina. Third, we have Pat Delessio of Legal Action of Wisconsin. Ms. Delessio 

is an attorney who provides free civil legal services in Milwaukee to low-income peo-
3 

ple and senior citizens. Fourth, from the Brookings Institution, we have Ron 

Haskins. Dr. Haskins is a Senior Fellow and Co-Director of the Center on Children 

and Families. All four panelists are well versed in the social safety net and bring 

with them valuable perspectives on the economic and social impact of the Recovery 

Act. 

We very much appreciate your joining us today. Before turning to you for your 

testimony, let me first turn to Mrs. Gwen Moore, who was instrumental in arranging this hearing, for any statement she cares to make. 

Ms. MOORE. Well, thank you, Chairman Spratt and Ranking 

Member Ryan, and members of the Budget Committee, for participating in this important and timely hearing. I also want to thank 

all of our esteemed panelists and witnesses for being here today 

with a very special thanks to Pat Delessio from Legal Action of 

Wisconsin, who braved near blizzard conditions and doesn’t know 

whether she will be able to get back. She flew out here from Milwaukee to be with us here today. 

In January of this year, when President Obama took office, the 

Nation was at the brink of an economic crisis due to massive layoffs, business closings, and involuntary part-time employment. 

Many Americans were forced to foreclose on their homes and file 

for government assistance in order to provide for themselves and 

their families. Between January 2008 and June 2009, the economy 

lost roughly 6 million jobs. In 2008, 9.8 million people were counted 

as poor. And 14.6 percent of U.S. households were food insecure 

throughout the entire year, the highest recorded rate of food insecurity since the measurement began in 1995. Across the country, 

states were experiencing grave budget shortfalls. And to make matters worse, the social safety net had all but fallen through as more 

and more Americans saw their food stamps, child care benefits, and 

TANF benefits disappear. 

The reality is that it is impossible to have a work-based safety 

net without work. It is the greatest oxymoron of all; it is like jumbo 

shrimp. In my State of Wisconsin employers cut nearly 129,600 

jobs since 2008, the steepest year-to-year drop in 70 years of data, 

and TANF caseloads have gone from 9,366 in October 2008 to 

11,118 in 2009. This is an increase of nearly 2,000 caseloads in just 

one year. 

Faced with insurmountable odds and cumulative 3-month job 

losses of 2.1 million in early February, Congress passed the American Recovery and Reinvestment Act, ARRA, a bill that pumped 

nearly $800 billion of emergency funds into states and localities to 

stimulate our ailing economy and job market and provide funds to 

low-income communities experiencing dramatic shortfalls due to 

the economic downturn. 

The Recovery Act created a new and temporary Temporary Assistance to Needy Families emergency contingency fund. Think of 

that, a temporary-temporary assistance of needy families, emergency contingency fund. I mean, you talk about temporizing. The 

fund was made available to states for increased expenditures for 

basic assistance, short-term, nonrecurrent benefits and subsidized 

employment. The Recovery Act included $20 billion for the Food 

Stamp Program, our Nation’s most important food assistance program, which helps roughly 35 million Americans feed their families 

annually. And certainly that 35 million represents only a portion 

of those who are eligible and in need. Additional funds were nec-
4 

essary to meet the increased need, as well as to fund the 13.6 percent increase to maximum food stamp benefits, which went into effect in April 2009. 

An analysis done by the CBO and the Council of Economic Advisers concluded that the Recovery Act saved or created between 

600,000 and 1.6 million jobs as of August 2009. And in September, 

the Center on Budget and Policy Priorities released an analysis revealing that the Recovery Act prevented more than 6 million Americans from slipping into poverty. The CBPP also concluded that the 

bill has helped reduce the severity of poverty for 33 million more 

Americans. 

The truth of the matter is that the Recovery Act not only worked 

to soften the blow of the recession on the Nation’s poor by giving 

direct assistance to households through increased funding for education, health care, child care, child support collection, temporary 

assistance for needy families and homelessness assistance, but it 

also created and preserved public and private sector jobs. 

In October, the Department of Labor estimated that the number 

of newly laid off workers seeking unemployment insurance fell by 

1,000 to a seasonally adjusted 530,000 last week. DOL also revealed that the number of people continuing to claim benefits 

meanwhile had dropped sharply by 148,000 to 5.8 million, which 

was below analysts’ expectations. While I am pleased with the drop 

in unemployment insurance claims, there is still work to be done. 

And we must continue to do all we can to continue to make these 

figures decline and come out of this recession. 

As states continue to benefit from funding included in the Recovery Act, it is my hope that Congress will continue to work to reduce 

poverty, create jobs, and stabilize our economy. I really look forward to this distinguished panel and their testimony, and I yield 

back. 

Chairman SPRATT. Thank you, ma’am. Mr. Ryan. 

Mr. RYAN. Thank you, Chairman. I also want to welcome all of 

our witnesses. Pat, I wasn’t sure you were going to make it here. 

I know what is going on back home. So nice of you to be here. I 

am sure you came out about a half a day earlier than you probably 

otherwise planned on doing it. And you have seen the impact of 

this recession up close, which brings valuable insight on the effectiveness of the various government safety net programs. 

I also want to welcome back to the Committee Ron Haskins. Ron, 

as many of you know, was the Staff Director of the Ways and 

Means Subcommittee on Human Resources. He helped craft one of 

the most successful entitlement reforms in the federal government’s history, the 1996 welfare reform law. 

As is painfully obvious to all, American families have been struggling and they continue to struggle in this weakened economy. 

Since the official start of this recession back in December of 2007, 

nearly 6 million jobs have been lost. Regrettably, a trillion dollar 

stimulus added dramatically to the Nation’s debt, but did little to 

improve the Nation’s dire economic situation. Unemployment hovers at around 10 percent still and economists are forecasting a 

sluggish and mostly jobless recovery in the year to come. So at this 

point, even many formally middle class families have found them-
5 

selves relying on some degree of public assistance for the first time 

in their lives. 

Clearly it is critical that we here in Congress ensure the safety 

net programs remain available and strong for those who truly need 

and depend on them. But in responding to today’s recession, we 

had better remain mindful of the even greater economic crisis we 

will face if we don’t get a handle on Washington’s ongoing explosion of spending and debt. 

We must also reform our largest and least sustainable entitlement programs, which are today on a path to grow themselves 

right into extinction. These immense fiscal problems threaten to 

overwhelm the budget and smother any real hope for a strong economic recovery in the future. Incredibly, only plans likely to go 

anywhere here in Washington are those that will make these programs and problems dramatically worse. 

I will again remind my colleagues that should we fail to get 

Washington’s fiscal house in order, the biggest losers will be our 

Nation’s most vulnerable, those who depend on the continuation of 

the very federal safety net programs that are going broke today. 

We can and we must reform these programs to preserve the safety 

net, and the sooner we get to work on these critical reforms, the 

better. 

Again, I want to thank you, Chairman Spratt, and I want to 

thank my good friend, Congresswoman Moore, for putting this 

hearing together and the witnesses for their testimony today. 

[The prepared statement of Mr. Ryan follows:] 

PREPARED STATEMENT OF HON. PAUL RYAN, RANKING MINORITY MEMBER, 

COMMITTEE ON THE BUDGET

Thank Chairman Spratt. 

I too would like to welcome all of our witnesses. 

In particular, Pat Delessio from Wisconsin, who has seen the impact of this recession up close, and brings valuable insight on the effectiveness of the various government safety net programs. 

I would also like to welcome back to this Committee Ron Haskins—who, as the 

former staff director for the Ways and Means’ subcommittee on Human Resources, 

helped craft one of the most successful entitlement reforms in the Federal Government’s history—the 1996 Welfare Reform law. 

As is painfully obvious to all, American families have been struggling—and continue to struggle—in this weakened economy. Since the official start of this recession, back in December of 2007, nearly 7.2 million jobs have been lost. 

Regrettably, the trillion-dollar ‘stimulus’ added dramatically to the nation’s debt, 

but did little to improve the nation’s dire economic situation: unemployment hovers 

at about 10%, and economists forecast a sluggish and mostly jobless recovery in the 

year to come. 

So at this point, even many formerly-middle class families have found themselves 

relying on some degree of public assistance for the first time in their lives. 

Clearly, it is critical that we here in Congress ensure these safety nets remain 

available—and strong—for those who truly need and depend on them. 

But in responding to today’s recession, we had better remain mindful of the even 

greater economic crisis we will face if we don’t get a handle on Washington’s ongoing explosion of spending and debt. We must also reform our largest—and least sustainable entitlement programs—which are today on path to grow themselves right 

into extinction. 

These immense fiscal problems threaten to overwhelm the budget, and smother 

any real hope for a strong economy in the future. Incredibly, the only plans likely 

to go anywhere here in Washington are those that will make these problems dramatically worse. 

I will again remind my colleagues that—should we fail to get Washington’s fiscal 

house in order—the biggest losers will be our nation’s most vulnerable: those who 
6 

depend on the continuation of the very federal safety net programs that are today 

going broke. 

We can—and we must—reform these programs to preserve the safety net; and the 

sooner we get to work on these critical reforms, the better. 

Again, thank you Chairman Spratt, and I thank our witnesses for their testimony 

today. 

Chairman SPRATT. Thank you. Thank you, Mr. Ryan. Before 

going forward, a few housekeeping details. I first ask unanimous 

consent that all members be allowed to submit an opening statement for the record at this point. Without objection, so ordered. 

Let me say to each of our witnesses that your entire statement 

has been copied and will be made part of the record, so you can 

summarize as you see fit but you are the only panel today. There 

are four of you. We welcome you to give a complete account of your 

testimony and take more than the typical 5 minutes that are allotted to witnesses. Thank you each of you for coming. We look forward to your testimony. 

We will begin with Dr. Pavetti. 

STATEMENTS OF LA DONNA PAVETTI, DIRECTOR, WELFARE 

REFORM AND INCOME SUPPORT DIVISION, CENTER ON 

BUDGET AND POLICY PRIORITIES; SUE BERKOWITZ, DIRECTOR AND ATTORNEY, SOUTH CAROLINA APPLESEED LEGAL 

JUSTICE CENTER; PAT DELESSIO, ATTORNEY, LEGAL ACTION OF WISCONSIN; AND RON HASKINS, SENIOR FELLOW, 

ECONOMIC STUDIES, AND CO–DIRECTOR, CENTER ON CHILDREN AND FAMILIES, THE BROOKINGS INSTITUTION 

STATEMENT OF LA DONNA PAVETTI 

Ms. PAVETTI. Thank you for inviting me. What I would like to do 

today is focus my testimony on three points. The first point is what 

role ARRA has played in keeping millions of individuals out of poverty and also in reducing hardship among others. The second is 

that I would really like to talk about our SNAP and the TANF program and contrast what has happened in those so we understand 

which parts of the safety net are working and which are not. And 

then what I would like to do is talk about the need for continued 

assistance and how we might think about as we move forward 

what still remains to be done. 

So first talking about the impact of ARRA, the chairman and 

Congresswoman Moore both mentioned a study that the Center did 

on looking at ARRA and its impact on poverty. We looked at seven 

provisions of the Recovery Act that provide income directly to individuals or families. And when we did that, we found that there are 

6.2 million fewer people who are in poverty and 33 million who 

have less poverty than they would otherwise have. I think the important part of that is that not only did ARRA have the impact of 

having less poverty, but it also provides income to people who are 

most likely to spend it, and what that does is it keeps the economy 

moving and it keeps people employed other than the people who 

are spending it. So I think that is sort of an important part. It is 

really doing two things at the same time. 

I think that the other part of the ARRA I would like to talk 

about is state fiscal relief. ARRA provided $140 billion in fiscal relief to states through two mechanisms, through enhanced funding 
7 

for Medicaid and through the Fiscal Stabilization Fund, which was 

targeted primarily to education. And state fiscal relief helped to 

mitigate the recession through several different means. First, it 

helped states to maintain critical services. When states received 

the enhanced Medicaid funding, they were able to do two things. 

One, they were able to keep people employed who were in the Medicaid program and are health providers, and they also were able to 

keep eligibility at the levels that it would have been without state 

budget cuts. So what we have seen is an increase or expected increase in Medicaid—in people receiving Medicaid because there 

was a maintenance of effort to get that enhance matched. They 

couldn’t reduce eligibility. So we see more people who are actually 

receiving assistance from that program than we would have otherwise. 

The other is that ARRA helps avoid layoffs of public employees, 

and one thing that I think many of us see and are concerned about 

is in education that has been especially true of teachers—there are 

many teachers that would have been laid off that are not and are 

still in our schools. And then the other is that it prevents the contraction of private sector economic activity again because that activity that supplies goods and services continues and it keeps the 

economy moving. 

And I think that it is important that economist Mark Zandi has 

found that state fiscal relief has a very high multiplier effect and 

for every dollar spent by the federal government it results in a 

1.41—a $1.41 increase in the gross domestic product. The Department of Education found that more than 255,000 education jobs 

and nearly 63,000 jobs in other areas have been retained. 

I think one of the difficulties with some of what has happened 

in the stabilization is that it is hard to count what has been retained rather than what has been added. But I think an important 

point of what ARRA has done is that things are far less worse than 

they would have been had those provisions not been in place. 

Now what I would like to do is talk about one last piece of 

ARRA, which is the TANF Emergency Contingency Fund. And as 

Congresswoman Moore again mentioned, there is $5 billion available to states and that money is very targeted so that it does go 

directly to families in need. It is a way to help states who have increases in their caseload to meet these increased payments. It allows states to provide emergency assistance to stave off crisis so 

that they can help families to avoid foreclosure or, if they are behind in their rent or their utility payments, to avoid them from becoming homeless and then to create new subsidized employment 

programs so that states really have been able to use this to maintain a work focus in their TANF programs, which otherwise would 

have been difficult. 

One example that I would like to provide is just to give you a 

flavor of how states have used this is to use Oregon. Oregon has 

been hit very hard by the recession. There has been a huge increase in the number of people who are unemployed. In thier TANF 

program, they have been serving an additional 6,000 families a 

month and they are expecting to draw down almost $75 million 

from the TANF emergency fund for 2009 and 2010. And without 

that additional funding, Oregon would have eliminated their TANF 
8 

program for two-parent programs and reduced eligibility for employment related day care, and they potentially would have had 

other cuts to be able to account for some of the—to be able to meet 

some of their budget gaps. So they have been able to avoid all of 

those cuts, families are continuing to receive assistance, and again 

Oregon is an example where the program that is very work focused 

was able to shift and provide a safety net for families who need it 

and it also did it very quickly. 

Regarding subsidized employment, so far we have more than a 

dozen states that have received approval to create or expand their 

subsidized employment programs, and I think California is a good 

example, being a very large state. They are planning to draw down 

$300 million to create subsidized employment and L.A. alone is 

planning to provide 10,000 jobs to people who would otherwise not 

have them. But there will be programs throughout the state. New 

York State is also spending about $53 million on subsidized employment, and that is a combination. What they have done is taken 

some of the ARRA funds and added some of their state funds so 

that they can create funds to do health care outreach, they can do 

green jobs, and they can provide subsidized employment for people 

who otherwise would not be employed. So that I think is a good example of the ways in which the contingency fund is actually playing out in the states. 

Now, what I would like to do is turn and talk a little bit about 

the safety net’s overall response to the recession. So we had programs in place prior to ARRA that were really intended to be a 

safety net for families. So I think sort of thinking long-term, one 

thing we need to ask ourselves is how well have those programs 

actually been working. And I think there is both a good news and 

bad news story here. On the good news story, enrollment in the 

Food Stamp Program, also known as SNAP now, is at an all-time 

high. Caseloads have increased by 30 percent since the beginning 

of the economic downturn. And they have increased in every state. 

So the program has really responded to the increased demand and 

again they have done so very quickly. 

The TANF story is a very different story. The TANF caseloads 

are starting to increase, but what happens is if you look at TANF 

nationally, there has been a very small increase. If you look from— 

we actually looked from March 2008 to March 2009 in a preliminary analysis, and nationally you see an increase of about 5 percent. If you look at that national increase it really masks what is 

going on in the states. And there is this extreme variation of what 

is going on in the states. There are some states that have had very, 

very substantial increases in TANF caseloads above 25 percent. So 

again Oregon being one of those, South Carolina is another. There 

are about six states that have had more than 15 percent increases. 

But there are more states that—where the caseload has either remained flat or is actually declining, was declining at start of the 

recession, and has continued to decline because states that have 

caseloads declines that are at 10 percent or greater, and again 

those have continued. 

So I think we need to sort of ask ourselves why has TANF not 

been responsive given that we know there is greater need. And I 

think there are a lot of reasons, we don’t know all the details, but 
9 

I think we can look and sort of draw some conclusions based on 

what we are seeing. One is that states for 13 years have been focusing on caseload decline, and they have really been slow to shift 

that focus. A measure of success for TANF was that the caseloads 

went down. The work participation rates really have discouraged 

states from serving people who can’t get jobs quickly. And the easiest way to meet those work participation rates is not to serve people who can’t be employed, and even in this economy states are still 

concerned about how they will meet those rates. And it affects their 

behavior about who they serve and how they actually operate their 

programs. 

Many states have policies and procedures in place that make it 

very, very difficult for people to get on to assistance and especially 

difficult if they can’t demonstrate that they can work 40 hours a 

week and meet those work requirements. 

The other is that TANF does have a stigma attached to it for 

many families, and so there are some families who may need some 

assistance who don’t pursue it because of the stigma attached, because they don’t know that they are eligible and because of time 

limits that they may have already reached. 

The other thing that I think is important in looking at sort of 

what is happening in food stamps and TANF, one of the things we 

are seeing in food stamps is an increase in what we refer to as zero 

income households. So they are households that have no other income. Those are—many of those families are families who historically or prior to reform would have been on TANF and are not on 

TANF. So again we have food stamps providing this safety net but 

food stamps cannot help people to pay their rent, it can’t help them 

pay sort of—meet their basic needs. So again there is sort of a good 

side and a bad side story to that. 

Finally, what I would like to do is talk about strategies for how 

can we strengthen the safety net and I am going to talk about 

three. There is more in my testimony. And I am going to focus on 

two that are short term and one that is longer term. But the short 

term, first, is to provide additional funding to states to really help 

them with the administrative costs of providing foods stamp benefits to individuals. One thing that has happened in states is that 

trying to meet the demand, and actually processing those applications, is creating just a huge problem administratively for states. 

And because of budget crises, people are being laid off even though 

there are more applications. So one thing we could do to help states 

meet that demand and get benefits in the hands of people more 

quickly is to help them on the administrative side. 

The second is to provide—is to phase down state fiscal relief 

more gradually. When we consider how to provide a safety net for 

people, you shouldn’t lose sight of the long-term consequences. If 

you look historically at what has happened in recessions, unemployment recovers slowly and poverty recovers more slowly. So that 

if we really believe what has happened historically will continue to 

happen, the need is going to continue for an extended period of 

time and we need to really sort of be prepared for thinking about 

that. So despite improvements in the economy and the fiscal relief 

that states have received, the fiscal conditions in states look almost 

as bad in fiscal 2011 and 2012 as they did for 2009 and 2010. And 
10 

the current recovery funds helped them to take part of their gap 

and close that. But it is not going to go away. 

So our recommendation is to really think about how we can 

gradually decrease the amount of money that goes to states but not 

put them in a position where they will have to close those gaps 

quickly and be unable to. We know that states have already started 

to plan their budgets so that it is important to do something quickly and we know that without additional fiscal relief, many of the 

services that have been helpful to families will be cut. states have 

already indicated that if the FMAP doesn’t continue, that they will 

start to cut back eligibility so that they can again meet their budget requirements. 

Finally, on the longer term is really thinking about what can 

we—how can we use TANF reauthorization, which comes up next 

year, to really improve TANF’s responsiveness to economic 

downturns and also to improve its performance as a work program. 

I think that we have made—TANF is a very different program 

than when we instituted reform. And I think it requires a different 

discussion about what comes next. And I think that—I think we 

would be remiss if we didn’t use the opportunity that is coming up 

to really take a step back and say where has it performed well, 

where is it falling short, and how can we make it a safety net that 

really is for the long term and really can deal with the ups and 

downs of people’s lives as they happen. 

So in just summary, what I would like to do is just say that the 

stimulus has provided important help to both states and to individuals and both of those mechanisms of getting money in the hands 

of poor people who will spend it is an important way to help the 

economy to recover as well as states to help them provide important services. 

And second is that we really need to be thinking about this as 

a long-term issue. It is not going to go away in the short term. And 

so we need to really be thinking about what is the path—long-term 

path to recovery so we don’t lose ground from what we have already accomplished, and I will stop there. 

[The prepared statement of Ms. Pavetti follows:] 

PREPARED STATEMENT OF LADONNA PAVETTI, DIRECTOR, WELFARE REFORM AND

INCOME SUPPORT DIVISION, CENTER ON BUDGET AND POLICY PRIORITIES

Thank you for the opportunity to testify today. My testimony will focus on four 

points: 

• Poverty was high at the start of the recession and it is likely to remain high 

for an extended period. Some of the most effective measures to boost employment 

(and reduce poverty) in a weak economy have and will continue to be those that 

provide financial relief to people struggling to make ends meet and to states facing 

large budget shortfalls. 

• The recovery act passed in February has kept this serious recession from being 

even worse. It has not only moderated the decline in GDP and increase in unemployment, but also prevented millions of Americans from falling into poverty and 

has helped some states to forgo significant cuts that would have weakened the safety net for very poor families with children. 

• The Supplemental Nutrition Assistance Program (SNAP), formerly food stamps, 

has responded quickly to rising need in all states, but the Temporary Assistance for 

Needy Families (TANF) cash assistance program has lagged behind and has been 

moderately or substantially responsive in only 20 states. 

• To help ease hardship and avoid short-circuiting an economic recovery, Congress will need to adopt policy solutions that are responsive to both immediate 

needs and the long-term consequences of the recession. 
11 

1 ‘‘Estimated Impact of the American Recovery and Reinvestment Act on Employment and 

Economic Output as of September 2009,’’ Congressional Budget Office, November 2009, p. 1. 2 ‘‘Preliminary Analysis of the President’s Budget and an Update of CBO’s Budget and Economic Outlook,’’ Congressional Budget Office, March 2009, p. 29. 

RECENT AND HISTORICAL DATA ON POVERTY AND INCOMES UNDERSCORE CHALLENGE

Recent Census Bureau data show that the nation lost substantial ground in 2008 

on poverty and incomes. The number of people living in poverty jumped by 2.6 million, to 39.8 million people. The poverty rate rose to 13.2 percent, the highest since 

1997. Real median household income declined 3.6 percent, the largest single-year 

decline on record, and reached its lowest point since 1997. 

History suggests that the road to recovery from the current economic crisis will 

be long. Unemployment has been slow to recover after recent recessions, and poverty even slower. In the recession of the early 1990s, unemployment did not peak 

until 15 months after the recession ended. In the 2001 recession, unemployment did 

not peak until 19 months after the recession ended. Poverty often takes even longer 

to start its recovery. After each of the last three recessions, poverty continued rising 

or failed to decline in the first year after unemployment began to fall: 

• In 2004, the first year the annual unemployment rate declined following the 

2001 recession, the poverty rate rose to 12.7 percent, up from 12.5 percent the year 

before. The number of poor persons rose 3.3 percent or 1.2 million. 

• In 1993, the first year the annual unemployment rate declined following the 

1991 recession, the poverty rate reached 15.1 percent, not statistically different from 

the prior year’s 14.8 percent. The number of poor persons rose a statistically significant 3.3 percent. 

• In 1983, the first year the annual unemployment rate declined following the 

1981-82 recession, the poverty rate reached 15.2 percent, not statistically different 

from the prior year’s 15.0 percent. The number of poor persons rose a statistically 

significant 2.5 percent. 

The pattern suggests that poverty could take years to start falling, and even 

longer to return to its pre-recession levels. These figures are particularly grim because they come after the disappointing record of the 2001-2007 expansion. Poverty 

was actually higher—and median income for working-age households lower—at the 

end of that expansion than during the 2001 recession. Since the nation began collecting these data, such a dismal record during an expansion has never occurred before. 

These data include only the early months of the recession. The figures for 2009, 

a year in which the economy has weakened further and unemployment has climbed 

substantially, will almost certainly look worse. The figures may worsen again in 

2010 if unemployment rises somewhat further or even if it plateaus, as a growing 

numbers of individuals who are currently unemployed may exhaust their unemployment benefits during 2010 before they find new jobs. However, the expected increase 

in poverty would be substantially greater if not for the responsiveness of the social 

safety net and the additional assistance provided by the American Recovery and ReInvestment Act of 2009 (ARRA). 

Recovery Act Keeping Millions of Americans Out of Poverty and Helping Forestall 

Cuts in Critical Human Services 

The recovery act’s primary goal was to help the broader economy, and evidence 

suggests it is having a significant positive impact. The Congressional Budget Office 

estimated in November that in the third quarter of calendar year 2009, ‘‘an additional 600,000 to 1.6 million people were employed in the United States, and real 

(inflation-adjusted) gross domestic product (GDP) was 1.2 percent to 3.2 percent 

higher, than would have been the case in the absence of ARRA.’’1 CBO estimated 

this spring that ‘‘The boost to total employment [because of the recovery act] peaks 

at about 21⁄2 million jobs in the second half of 2010.’’2 In addition, the recovery act 

has had the important secondary effect of significantly ameliorating the recession’s 

impact on poverty. 

SEVEN ARRA PROVISIONS KEEP 6.2 MILLION AMERICANS OUT OF POVERTY

The Center on Budget and Policy Priorities recently examined seven provisions 

of the recovery act that provide direct assistance to individuals—including three tax 

credits for working families, two improvements in unemployment insurance, expanded nutrition assistance, and one-time payments to senior citizens, veterans, and 

people with disabilities—and estimated that these provisions will result in 6.2 million fewer Americans (including 2.4 million children under 18) being counted among 
12 

3The seven provisions included in the analysis are: (1) new Making Work Pay tax credit; (2) 

expanded Child Tax Credit; (3) expanded Earned Income Tax Credit; (4) additional weeks of 

emergency unemployment compensation; (5) a $25 per week supplement for unemployed workers receiving unemployment benefits; (6) one-time payment of $250 to elderly and people with 

disability; and (7) increased Supplemental Nutrition Assistance program benefits. For additional 

information, see: Arloc Sherman, ‘‘Stimulus Keeping 6 Million Americans Out of Poverty in 

2009, Estimates Show,’’ Center on Budget and Policy Priorities, September 9, 2009, http:// 

www.cbpp.org/cms/index.cfm?fa=view&id=2910. 

the nation’s poor in 2009.3 Because the government’s official measure of poverty considers only cash income and would therefore miss many of the tax-based and noncash income supplements in the recovery act, our analysis used a broader poverty 

measure recommended by the National Academy of Sciences. 

Two provisions included in our analysis, the new Making Work Pay Credit and 

the increase in SNAP benefit levels, kept the largest number of individuals out of 

poverty. The Making Work Pay Credit, which provides a tax credit of $400 for workers earning up to $95,000 ($800 for a couple earning $190,000) kept 1.6 million individuals, (including 500,000 children) out of poverty. The 13.6 percent increase in 

SNAP benefit levels kept 1.1 million individuals out of poverty, including 500,000 

children. 

The increase in SNAP benefit levels illustrates the important role that provisions 

aimed at addressing economic hardship can play in stimulating the economy. This 

provision was included in ARRA to provide a very fast and effective economic stimulus that could help to push against the tide of economic hardship that low-income 

individuals are facing. Te increase went into effect in April 2009. Through September 25th, according to USDA, it had provided about $4.5 billion in federal support to low-income households across the country. 

The added SNAP benefits ripple through the economy. When a family uses its 

SNAP benefits to shop at a local grocery, this helps the grocer pay his or her employees and purchase more from his or her suppliers. That, in turn, helps the suppliers pay their employees (as well as the truckers who deliver their products), and 

so on. Based on analysis from USDA’s Economic Research Service, the $4.5 billion 

temporary increase in food stamp benefits has resulted in a total of about $8 billion 

in total economic stimulus. 

The estimates from our analysis represent only a fraction of the overall impact 

of the recovery act on poverty because the seven provisions we included account for 

only about 26 percent of the act’s total funding. We were unable to model billions 

of dollars in assistance that would further reduce the number of Americans in poverty. These include Pell grants and education tax credits, funding for state health 

insurance programs, child care, child support enforcement, and assistance to homeless individuals and to TANF recipients. 

STATE FISCAL RELIEF HELPS STATES CONTINUE TO PROVIDE CRITICAL SERVICES AND

AVOID LAYOFFS

ARRA included about $140 billion to provide fiscal relief to states. This funding, 

provided to states through enhanced funding for Medicaid and a Fiscal Stabilization 

Fund targeted primarily to education, has helped states substantially. Without it, 

both state budget cuts and state tax increases would be much larger. The best estimates suggest that the fiscal relief in ARRA has allowed states to close 30 percent 

to 40 percent of their budget gaps this year. Without this aid, states would have 

been forced to institute even more severe actions that would have placed a greater 

drag on the economy. 

State fiscal relief helps to mitigate the impacts of the recession through several 

different means. It helps states continue to provide critical services and it helps 

them avoid layoffs of public employees. It also prevents the contraction of private 

sector economic activity and the loss of private-sector jobs in firms that supply goods 

and services to state governments or that sell their products to state employees who 

would otherwise be laid off, or to people who otherwise would have less purchasing 

power because, in the absence of fiscal relief, state programs they rely on would be 

cut or their taxes would be raised. 

The temporary increase in the share of the Medicaid program paid by the federal 

government (known as the Federal medical Assistance percentage or ‘‘FMAP’’) has 

provided states with additional funding to cover the costs of providing Medicaid for 

low income families. The maintenance of effort requirement associated with the enhanced funding has protected Medicaid eligibility criteria—and more people cast 

into the ranks of the uninsured—to cover state budget shortfalls. Similarly, a portion of the State Fiscal Stabilization Fund was dedicated to helping states and localities maintain K-12 and higher education funding. To receive the funding states had 
13 

4Total education funding through ARRA, including both fiscal relief and programmatic funding, was found to have created or saved 326,593 education jobs. US Department of Education, 

‘‘American Recovery and Reinvestment Act Report: Summary of Programs and State-by-State 

Data,’’ November 2, 2009. 5 Executive Office of the President, Council of Economic Advisers, ‘‘The Economic Impact of 

the American Recovery and Reinvestment Act 2009,’’ September 10, 2009. 

to fund K-12 and higher education at no less than the fiscal year 2006 level in fiscal 

years 2009, 2010, and 2011. 

The ARRA funding for state fiscal relief has been effective at creating and preserving jobs. Economist Mark Zandi has found that a temporary increase in state 

and fiscal relief has a high ‘‘multiplier effect,’’ meaning that every $1 spent by the 

federal government results in a $1.41 increase in the gross domestic product. The 

Department of Education found that more than 255,000 education jobs and nearly 

63,000 jobs in other areas have been retained or created through the Fiscal Stabilization Fund, for a total of 318,000 jobs saved or created through September 30 

by the Fiscal Stabilization Fund.4

No official reports are available on the jobs impact of the fiscal relief funding provided through Medicaid, but there is little question that the Medicaid funding has 

resulted in the retention or creation of both public and private-sector jobs for health 

providers, in large part because more people remain insured than would have been 

the case without the funding. The President’s Council of Economic Advisers looked 

at the first six months of ARRA Medicaid funding and found a strong relationship 

between that funding and jobs.5

TANF EMERGENCY CONTINGENCY FUND HELPS STATES TO FORESTALL CUTS IN BENEFITS

AND PROVIDE CASH ASSISTANCE AND SUBSIDIZED JOBS TO MORE FAMILIES

Congress included $5 billion in the recovery act for a TANF Emergency Contingency Fund (ECF) to provide states with additional resources to help families meet 

their basic needs. States can qualify for these funds if they provide cash assistance 

to more needy families with children, spend more to provide one-time non-recurring 

benefits to help families stave off a crisis, or create subsidized employment opportunities for jobless individuals. Over $1 billion in Emergency Funds have already been 

authorized with about two-thirds of this amount based on increased spending on 

TANF basic assistance. States are still in the process of submitting requests for 

these funds—and it is too soon for states to apply for funds for the last half of 

2010—so we don’t yet know how much of the $5 billion they will use and what the 

overall impact on poverty will be. However, we do know that this fund has made 

it possible for some states to meet the increased demand for assistance, to avoid significant cuts in cash assistance and services for very poor families with children and 

to maintain their commitment to providing work opportunities for TANF recipients. 

Below are examples of how three states—Oregon, Florida and Maryland—are planning to use these funds. Between March 2008 and March 2009, these state’s TANF 

caseloads increased by 27, 14 and 13 percent, respectively. 

• Anticipating that it will be able to draw down $74.9 million from the TANF 

ECF for 2009 and 2010, Oregon expects to cover the costs of providing cash assistance to an average of 6,226 more families per month and to forestall cuts that would 

significantly weaken the safety net for poor families. Without this additional funding, Oregon would have eliminated its TANF program for unemployed two-parent 

families, reduced eligibility for employment-related day care, further reduced transitional payments for newly employed parents, and eliminated enhanced grants for 

families with a disabled household head applying for Supplemental Security Income 

or Social Security Disability Insurance. 

• Florida expects to draw down at least $76 million to cover the costs associated 

with providing cash assistance to an average of an additional 6,406 families each 

month. The state expects to draw down $5.4 million to provide subsidized temporary 

employment for unemployed individuals. For example, a county that lost 1,200 jobs 

due to a plant closing plans to use a portion of the funds to provide subsidized employment to 75 individuals who would otherwise be unemployed. 

• Maryland expects to qualify for over $30 million in TANF Emergency Funds for 

2009 and for additional funds for 2010. This includes $17.7 million in basic assistance used to provide cash benefits to an average of an additional 3,107 families each 

month, and $12.5 million used provide non-recurrent short-term benefits such as 

emergency assistance payments to families who might otherwise lose their current 

housing or be unable to stay employed. Maryland plans to use some of these funds 

to cover the additional staff costs associated with processing a greater volume of applications for assistance. 
14 

6 Cindy Redcross, MDRC, ‘‘Using NDNH Data to Evaluate Transitional Jobs,’’ presentation at 

the National Association for Welfare Research and Statistics annual conference, July 13, 2009. 

Additional funding to create or expand subsidized employment programs has been 

authorized for over a dozen states. These programs will provide jobs for low-income 

individuals who would otherwise be unemployed. Rigorous evaluations of similar 

programs have shown they are successful at providing short-term employment opportunities when parents are unable to find unsubsidized jobs on their own.6

• California is planning to draw down $300 million from the TANF ECF to create 

subsidized employment programs throughout the state. San Francisco is planning 

to use its share of funds to expand its JOBS NOW! program to provide subsidized 

employment to an additional 1,000 unemployed and underemployed parents by September 2010. Participants will undergo a vocational assessment to determine their 

skills and interests, after which they will be assigned to an appropriate job based 

on their employment readiness and the level of personal support needed. Los Angeles is implementing the state’s largest program with plans to provide subsidized employment to 10,000 unemployed individuals. 

• New York provides another example. The state is currently implementing a $39 

million effort to provide three different types of subsidized employment opportunities to unemployed individuals. The state will spend $25 million to create a new 

Transitional Jobs Initiative to provide paid, subsidized work experience—combined 

with educational opportunities related to work—to TANF-eligible individuals including disconnected youth and the formerly incarcerated. The state will spend $7 million to create a Health Care Job Subsidy Program that will hire health care outreach workers to help low-income individuals maintain eligibility for public health 

care programs and to connect them to other preventative health care services. Finally, the state will spend $7 million to create a new Green Corp Jobs Subsidy program that links eligible individuals to job skills training, basic education, and career 

advancement opportunities in entry-level, high-growth energy efficiency and environmental conservation industries. The Health Care and Green Jobs programs each 

include $2 million of money from New York’s general fund to provide subsidized employment opportunities to single individuals receiving cash assistance from the 

state’s general assistance program. New York also increased its wage subsidy program by $10 million to make it a $14 million program. The state will spend a total 

of $53 million from ARRA and the general fund to create subsidized employment 

opportunities for unemployed low-income individuals. 

ARRA CHILD CARE ASSISTANCE HELPING WORKING FAMILIES AFFORD CHILD CARE

Congress recognized the vital importance of child care assistance in helping lowincome families obtain jobs and remain in the workforce by including $2 billion for 

the Child Care and Development Block Grant (CCDBG) as a part of the recovery 

act. CCDBG is the largest federal source of funding to states for child care assistance and serves children birth through age 13. ARRA child care funds are one-time 

funds to help states recover from the economic crisis by creating new jobs and serving more families. Like the TANF Emergency Contingency Funds, the CCDBG 

ARRA funds are available until September 30, 2010. 

As of mid-November, states, territories, and tribes had drawn down a total of 

$244.8 million in child care funds, or 12.3 percent of the $2 billion allocation. States 

are beginning to accelerate their draw down rate now that they have an understanding of federal reporting requirements, and have approved state plans. States 

report to the Child Care Bureau that they are spending the money in the following 

ways: 

• Reduce waiting list or avoid service cuts (11 states) 

• Increase payment rates (11 states) 

• Provide assistance during an extended period of job search (10 states) 

• Lower copayments (4 states) 

• Improve child care quality (41 states) 

SNAP RESPONDING QUICKLY AND SYSTEMATICALLY TO RISING NEED

SNAP—formerly known as the Food Stamp Program—has responded quickly and 

effectively to support low-income families and communities during the economic crisis (see Figure 1). National enrollment in SNAP is at an all-time high. In August 

2009, 36.5 million people, or 1 in 8 Americans, were enrolled in SNAP, including 

an estimated 17.7 million children, or 1 in 4 children in the United States. Nationally, caseloads have increased by 7 million people, or 24 percent since last August, 

and by nearly 9 million people (or nearly one-third) since the beginning of the eco-
15 

nomic downturn. Caseloads have increased in every state, with 39 states experiencing all-time caseload highs in the last 12 months. 

SNAP benefits also help protect the economy as a whole by helping maintain overall demand for food during slow economic periods. In fact, SNAP benefits are one 

of the fastest, most effective forms of economic stimulus because they get money into 

the economy quickly. 

UNEVEN RESPONSIVENESS OF TANF CASH ASSISTANCE CASELOADS

In most states, TANF cash assistance programs have lagged far behind SNAP in 

their responsiveness to the economic crisis and to rising poverty. The state variation 

is significant. Nationally, the total number of families with children receiving cash 

assistance remained essentially flat between March 2008 and March 2009; the 

SNAP caseload increased by 19 percent during this same period, reflecting large increases in poverty. TANF caseloads either have not been responsive at all to the 

economic downturn or have been only minimally responsive in 31 states; caseloads 

declined in 13 of these states, remained essentially flat in eight and increased by 

one to five percentage points in ten. Caseloads responded moderately in another 14 

states, increasing by between 6 and 15 percent. Caseloads increased by more than 

15 percent in only six states: New Hampshire, New Mexico, Oregon, South Carolina, 

Utah and Washington. 

The lack of responsiveness of the TANF caseload, which is striking when compared to the surge both in unemployment and in SNAP caseloads, is likely attributable to several factors. For the last 13 years, states have been focused on reducing 

their TANF caseloads for a variety of reasons—fiscal, ideological, and as a measure 

of effective performance—and even during the current economic crisis, states have 

been slow to shift away from this emphasis. It is important to note that even prior 

to the economic downturn, TANF was not accessible to many families who needed 

it. In 2005, the TANF cash assistance program served only about 40 percent of eligible families compared to 80 percent of eligible families in 1995. Many states have 

policies and procedures in place that make it difficult both for eligible applicants 

to obtain benefits and for recipients to continue receiving benefits even if they continue to be eligible. Some states require applicants to participate in work activities 

for a period of time before they can qualify for aid, but some families may be in 

crisis and have difficulty in meeting these requirements until they begin to receive 
16 

help in meeting basic needs. Many states have eased their enrollment processes for 

SNAP and Medicaid but have not extended these improvements to TANF; others actively discourage TANF applicants. In some cases, families in need may not pursue 

TANF because of stigma, erroneous information about eligibility, time limits or 

other reasons. 

INCREASING THE RESPONSIVENESS OF THE SAFETY NET AND RESPONDING TO THE LONG- TERM CONSEQUENCES OF THE RECESSION

Although the recovery act has provided significant help to many low-income families, more needs to be done. Serious challenges will remain for the next several 

years, and they demand a continuing response. Some of the most effective measures 

to help the ailing economy are those that provide fiscal relief to people struggling 

to make ends meet and to states facing large budget shortfalls. Congress should consider the following actions to increase the responsiveness of the safety net and to 

respond to the long-term consequences of the recession. I divide my recommendations into two categories, short-term actions that should be taken before the end of 

2009 and longer-term actions that should be taken by the end of the current fiscal 

year. 

SHORT-TERM ACTIONS

• Provide additional funding to states to help them handle the staffing costs of 

responding to greatly increased numbers of jobless households applying for food 

stamps. SNAP caseloads are at an all-time high and are continuing to rise. States 

are increasingly unable to handle the increased workload associated with enrolling 

more people in the program. Many states, facing budget crises that stem from the 

economic downturn, are cutting staff across large numbers of state agencies including food stamp administration. Other states are achieving reductions by freezing all 

new hiring and leaving open positions unfilled. (States normally pay 50 percent of 

the costs of administering the SNAP program.) Very large backlogs and bottlenecks 

are showing up in a growing number of areas across the country, with long waits 

for application interviews and delays in application processing. 

Additional funding to help states cover administrative costs will get help into the 

hands of people that qualify for it more quickly. It will also increase jobs in two 

ways—both directly by employing more state staff, and indirectly by getting food 

stamps into the hands of eligible families more promptly. The current backlogs are 

reducing the effectiveness of the investment Congress made in the ARRA legislation 

in temporarily expanding food stamp benefits. ARRA provided $290.5 million in administrative funds to states to help them manage rising caseloads through 2010. An 

additional $300 to $500 million over the next two years would help states provide 

SNAP benefits to the growing numbers of families affected by the economic downturn. We also recommend a maintenance-of-effort provision, perhaps at 97 percent 

of state spending on basic state SNAP administrative costs in fiscal year 2008, to 

prevent states from substituting the new funds for existing state SNAP administrative funding. 

• Provide states with additional resources to provide cash assistance payments, 

emergency assistance and subsidized employment to low-income families beyond the 

September 30, 2010 deadline. The ARRA TANF Emergency Fund has provided 

states with additional resources to cover 80 percent of the costs of providing TANF 

cash assistance payments, one-time emergency payments and short-term subsidized 

jobs to more families. The TANF block grant has been frozen for 13 years. When 

the TANF program was established in 1996 as a block grant, a TANF Contingency 

Fund was created as part of the new program and funded so that it would be available for states to draw upon in an economic downturn. The Contingency Fund lasted 

for 13 years, but it will be depleted this quarter, because more states have drawn 

down these funds recently due to the severity of the downturn. 

As currently structured, neither the regular TANF Contingency Fund nor the 

ARRA TANF Emergency Fund will provide states with the resources they need to 

support low-income families through a long recovery. ARRA provided $5 billion for 

a new, temporary TANF Emergency Fund, and some funding remains in it, but that 

funding expires on September 30, 2010. Without an early signal that additional 

funding will be available, states will include cuts to their TANF basic assistance 

programs in their budgets for FY 2011 and they will not expand existing or create 

new subsidized employment programs if they believe such programs will need to be 

dismantled within six to nine months. 

There are two options for addressing this problem. First, the ARRA TANF Emergency Fund could be extended for one or two more years, or it could be made permanent and replace the TANF Contingency Fund. Second, the TANF Contingency 
17 

Fund could be refunded and restructured to build on the ARRA TANF Emergency 

Fund model which does a better job at providing extra resources directly to families. 

• Phase down state fiscal relief more gradually. Despite improvements in the 

economy as a whole, state fiscal conditions for state fiscal years 2011 and 2012 look 

as bad as those for 2009 and 2010. We estimate that state deficits in state fiscal 

year 2011 will be about $180 billion, some $40 billion of which states will be able 

to close with recovery act funds. For state fiscal year 2012, we project state budget 

deficits of $120 billion, with essentially no recovery act funding available to reduce 

the deficits. 

One strategy to address these shortfalls is to provide a reduced level of federal 

stimulus (through some combination of the enhanced FMAP provision and the Stabilization Fund) to states for a period of time beyond December 31, 2010, when the 

current recovery act funding ends. Congress could, for example, provide additional 

funding targeted to states in serious economic and fiscal distress to close a portion 

of projected state shortfalls in 2010-2011 and 2011-2012. States would still need to 

close the majority of the shortfalls, themselves. In this way, federal assistance would 

phase out gradually rather than ending abruptly after December 31, with adverse 

consequences for both vulnerable families and the U.S. economy. 

It would be helpful to send a signal soon about whether additional funding will 

be available, since the new budget cuts and tax increases the states will institute 

to balance their 2011 budgets will take effect next summer or even earlier. (State 

fiscal year 2011 begins on July 1, 2010 in most states, and the budget planning 

process begins long before that). Unless states know that additional federal aid is 

coming, they will begin cutting spending and raising taxes by July to close the 

shortfalls in their fiscal 2011 budgets. The large resulting state budget cuts and tax 

increases would counteract a sizeable share of the federal stimulus and heighten the 

risk of a double-dip recession. These state actions could result in a loss of 900,000 

jobs and reduce demand by as much as $260 billion over the next two fiscal years, 

threatening to place a serious drag on the economy and weaken the recovery. Florida has announced that when ARRA funding expires, it will cut almost 80,000 individuals from its Medicaid programs and other states are expected to pursue similar 

actions in the coming months. 

• Prevent the income limits for CHIP, Medicaid, free school meals, food stamps, 

and other programs from being lowered amidst a severe economic downturn. Unless 

Congress passes legislation that keeps the poverty eligibility threshold constant next 

year, the income limits for low-income programs that tie their income limits to the 

poverty line (or a multiple of it) are set to drop. A comparable provision is in place 

with respect to the Social Security Cost of Living Adjustment (COLA). Were it not 

in place, Social Security benefits would be lowered in 2010 to reflect a negative costof-living-adjustment rather than staying constant. 

If income limits for poverty programs are not held constant, the poverty eligibility 

threshold for a family of four will fall from $22,050 to an estimated $21,850 in January 2010. The poverty threshold for a single individual, such as an elderly widow 

living alone, will fall from $10,830 to an estimated $10,690. We estimate this will 

cause 40,000 to 45,000 households to be cut off food stamps alone (or not to be allowed on the program in the first place). The number of families or children losing 

eligibility for other programs such as Medicaid and CHIP, free school lunches, and 

the like also will run into the tens of thousands. This issue can be addressed by 

freezing the new poverty guidelines for program eligibility, which HHS will issue 

in January, at their 2009 level. Cutting struggling families off these programs in 

a weak economy would not represent sound economic policy, since affected households will have to cut their purchases. It also would cause significant hardship. A 

simple freeze of the HHS poverty guidelines would solve the problem. 

• Renew the Emergency Unemployment Compensation program. Last year, Congress created the Emergency Unemployment Compensation program, which currently provides additional weeks of federally funded unemployment benefits to unemployed individuals who have exhausted their regular state benefits. (Congress 

has created a similar program in every recent recession.) The recovery act expanded 

this program and extended it through December 2009. This and other unemployment insurance provisions in the recovery act have helped millions of unemployed 

workers weather the recession better than they otherwise would have. The additional weeks of benefits are also one reason why the recovery act has kept the decline in economic activity from being even worse in this recession. With unemployment expected to remain very high throughout 2010, Congress should extend the 

EUC program and the other UI provisions created by the recovery act for another 

year. The need for an EUC extension is especially great given the record level of 

long-term unemployment, since these are the workers the program assists. 
18 

• Help unemployed families maintain health insurance coverage. Recognizing 

that some unemployed workers would not have sufficient financial resources to continue their health insurance coverage through COBRA, Congress included a provision in the recovery act that provides for premium reductions and additional election opportunities for health benefits under COBRA. This provision allows individuals to pay 35 percent of their COBRA premiums, with the remaining 65 percent 

being reimbursed through a refundable, advanceable tax credit. This provision is set 

to end this month, as well. Given that unemployment remains high, this provision 

should be extended for another year. States should also be allowed to provide temporary health insurance coverage through Medicaid for workers who become unemployed during the recession, such as those who are not eligible for COBRA or cannot 

afford the remaining COBRA premiums. The federal government would cover the 

full cost of the coverage through 2010. Such a proposal was included in the Housepassed version of the recovery act. 

LONGER-TERM ACTIONS

• Use TANF Reauthorization as a vehicle to improve TANF’s responsiveness during economic downturns and improve its performance as an employment program 

for low-income parents. TANF cash assistance programs aim to serve two different 

functions: (1) to provide a safety net during times of family crises and when jobs 

are not available, and (2) to help low-income parents find and maintain employment. Under the program’s current structure, these two functions often are at odds 

with each other, particularly when unemployment is rising and jobs are hard to 

find. In addition, the current performance standards discourage states from providing assistance to families most in need. When TANF is reauthorized next year, 

Congress should identify improved performance measures that encourage states 

both to provide a safety net for very poor families when they need it and to help 

them improve their long-term employment outcomes. It should also encourage state 

innovation and provide states with additional funding to improve the employment 

prospects of the families least likely to succeed in the paid labor market on their 

own. Adequate child care funding should also be provided to increase parents’ 

chances of achieving long-term success in the paid labor market. 

• Make tax credits expansions included in ARRA permanent. ARRA expanded eligibility for the Earned Income Tax Credit (EITC), the low-income component of the 

Child Tax Credit (CTC) and the American Opportunity Tax Credit. The ARRA expansions made very low-income working families with nearly 3 million children eligible for the CTC for the first time, and families with 10 million additional children 

eligible for a larger CTC. The ARRA expansions also provide larger EITC payments 

to low-income families with three or more children and married families. ARRA also 

made it possible for low income families who do not earn enough to owe income 

taxes to qualify for up to $1,000 per year through the American Opportunity Tax 

Credit to help defray college tuition costs. These changes will expire at the end of 

2010, if Congress does not pass a law implementing the presidents’ proposal to 

make them permanent. We estimate that the EITC and CTC expansions have lifted 

more than 900,000 people, including 600,000 children out of poverty. If these 

changes are not made permanent, these individuals will fall back into poverty. 

• Pass the Hunger Free Schools Act (H.R. 4148 and S. 1343). The number of children in poverty and struggling against hunger is increasing. The federal child nutrition programs have an important role to play in making sure that low-income children have access to nutritious food. The Hunger Free Schools Act would help ensure 

that poor children receive the free school meals for which they are eligible and that 

they are enrolled with much less paperwork. The bill would allow schools in very 

poor neighborhoods to provide free meals to all their students. Instead of spending 

time and resources sorting through applications from very poor children, these 

schools could focus on serving healthy meals to all students. Nationwide, an estimated 6,000 schools (under the Senate version of the bill) to 12,000 schools (under 

the House version), serving roughly 3 to 6 million children, could qualify for this 

new option. Also, to help poor children receive free meals no matter where they attend school, the bill would require schools to use data already collected and 

scrubbed by Medicaid to enroll children for free meals automatically if their income 

is below 133 of the poverty line. An estimated 3 million children would benefit (some 

of these children would benefit from the simplification of automatic enrollment, others would be enrolled for free meals for the first time). These proposals should be 

priorities for the reauthorization of the child nutrition programs because they would 

improve access to free meals and are well-targeted to the poorest children and to 

schools that serve very poor areas. 

Chairman SPRATT. Thank you very much. Sue Berkowitz. 
19 

STATEMENT OF SUE BERKOWITZ 

Ms. BERKOWITZ. Thank you, Mr. Chairman and members of the 

committee. I appreciate the opportunity to speak to you today on 

the Recovery Act and how it is impacting the State of South Carolina, specifically to be talking about the unemployment insurance 

program. 

I am Sue Berkowitz with the South Carolina Appleseed Legal 

Justice Center and we provide advocacy on behalf of the low-income community, specifically working on safety net programs, including SNAP, welfare, Medicaid, and also recently we have had 

the opportunity to work on unemployment insurance. I worked 

with the legislature recently as it attempted to undo a huge mistake that it made by failing to change certain state laws to us to 

take advantage of the generous programming that Congress had 

provided to the states for extended benefits. And, Mr. Chairman, 

I want to thank you and your staff for all you did to help us in 

recognizing the grave error that the State of South Carolina made 

and the fact that—which I found absolutely remarkable—that they 

came in for a special session to fix this to allow extended benefits 

for thousands of South Carolinians who otherwise would have lost 

their unemployment insurance benefits, which is something that 

just could not happen in our state, especially during these hard 

economic times. 

South Carolina is, like every other state in the Nation, experiencing incredible problems due to the recession. But I think our 

state, with an unemployment rate that is right now hovering at 

about 12.1 percent, is facing just slightly harder conditions than 

many other states. We have been double digit for most of the year 

and it is now predicted that starting next year we will probably be 

at around 13 percent unemployment. I cannot tell you what this 

does to families who are already in distress but also to middle class 

families who are now finding themselves faced with joblessness. 

During the past year, our need for our safety net programs has 

dramatically increased in the state. 

Unfortunately, at the same time, our state is facing a huge fiscal crisis. While the $1 billion that we have had to cut from our state 

budget probably seems like a small amount of money relatively 

speaking to Congress, when you think about a state that its budget 

was only 7 billion, it is almost one-sixth of our budget that has 

been cut and I cannot tell you what it has done to dramatically 

hurt so many of our safety net programs. 

State agencies have seen cuts, like our Department of Social 

Services, of up to 25 percent of their state dollars. And this is going 

to ultimately impact the number of families that are being served. 

As Ms. Pavetti said, in South Carolina, unlike some other states, 

we have seen a dramatic increase in our TANF program. We have 

seen an 11,000 recipient increase since last year at this time. And 

that is after this program had been relatively flat in its growth for 

the past number of years. I think what is even more telling is that 

in the SNAP program, formally food stamps, we have had a participation rate increase of 100,000 individuals in the last year. Our unemployment rate has increased 4 percentage points over the last 

year and unfortunately our Medicaid rolls have remained relatively 

flat while I don’t think it is a lack of need and we are now looking 
20 

into seeing what our agency and our current administration is 

doing to suppress rolls. We think that, while our number of uninsured are increasing, in fact this program should be seeing huge increases as well. 

What this shows is that the safety net programs are the lifeline 

to assist families in need. And that can’t be even more so than during these times of recession. And that all these benefit programs 

provide critical help to our state’s poorest and most vulnerable citizens and that these dramatic program increases show that the 

needs of our state, the needs of our citizens are being—have dramatically increased and that the funding that has been provided to 

the states has never been more needed. 

Of course, one of the most important provisions that was passed 

in ARRA are the UI provisions which have helped thousands of individuals in our state and over a million people in our country. In 

February, ARRA funded a comprehensive set of protections to help 

unemployed workers throughout the year, and I should say that a 

similar approach will be necessary in 2010 as long-term unemployment continues at record levels. With ARRA we have expanded the 

Emergency Unemployment Compensation program, which was just 

extended in November to provide four tiers of benefits to workers 

who run out of the basic 26 weeks of assistance. And this can range 

from 34 to 53 weeks, depending on the level of unemployment in 

the state. And needless to say, in South Carolina, with our high 

unemployment, we are taking advantage of the maximum amount, 

full federal funding of the extended benefit program, which means 

another 13 to 20 weeks of benefits, that normally would be paid 50 

percent by the states now is paid 100 percent by the federal government. An increase of $25 per week to both state and federally 

funded UI benefits and nearly 9 million workers are now collecting 

either the state or federally funded benefits that are now qualifying 

for this additional benefit each week. 

ARRA also included the COBRA subsidy, 65 percent COBRA subsidy, which was to last for 9 months. This means that for individuals who are finding themselves unemployed and would otherwise 

find themselves uninsured are able to afford to keep their health 

care insurance. And this benefit has not only an economic benefit 

to the individuals. It has been a huge economic benefit to our state. 

South Carolina has really seen a huge increase—a huge benefit as 

a state from this money, unfortunately because of our high unemployment rate. $126 million has been made available to families because of that $25 a week benefit. 

And also from the EUC benefit are 327 million additional dollars. 

Our state unemployed numbers are growing not just in amount but 

in length of time they are staying unemployed. The extended benefit programs are particularly helpful to states with substantially 

higher unemployment rates but also longer durations of unemployment. Our recovery is slow and many unemployed workers are still 

unable to find assistance, and I should say that the calls that we 

received after the extension of the emergency benefit program to 

our office were tremendous. We received calls from individuals who 

had worked their entire lives but found themselves laid off. And 

one story that really resonated for me was from a woman from 

Charleston who called to thank us, to thank our office because she 
21 

had read that we had been involved in working with the legislature 

to tell me she had done everything she had done to try to find a 

job but was still unemployed and it was partly because of her age. 

It was hard for her to find employment and she really felt that it 

was going to continue to be difficult in the environment that she 

was facing and that without this extended benefit, she and many 

other people who are in the same position would have found themselves without any way to support themselves and would be falling 

off a financial cliff. 

I should also say that the COBRA subsidy is critical. While we 

haven’t had—had the uptake in the COBRA subsidy that we would 

like to see, we have seen double the number of people taking advantage of it in keeping their health insurance, and just the numbers show why that is important. While the average monthly benefit in South Carolina is about $1,060, the average COBRA benefit 

is about $1,090. The math shows that if you are on unemployment, 

you cannot keep your health insurance. This subsidy has allowed 

many people to keep their health insurance while facing unemployment, and I have also talked with individuals, including an interesting young man who never thought he would find himself in a 

position of being unemployed. He didn’t know about the COBRA 

benefit initially but when he realized that it was available, has 

been able to keep his health insurance, not have to worry about the 

stresses of looking for a job while also being uninsured. 

And we receive many calls from individuals from around the 

state who are facing the problems of recession. We know that this 

$25 a week, while it may seem minimal, makes a huge difference 

to individuals. For many people in our country, about 800,000 people according to the numbers from the Center on Budget and Policy 

Priorities, we know it has kept them out of poverty. 

We also know that people on unemployment insurance are less 

likely to face food insecurity. The National Employment Law 

Project did a survey recently—well, last year—of unemployed individuals and many of them, the majority of them have stated that 

without unemployment benefits they would probably be faced with 

skipping meals, something that we know is not an option for any 

of them. 

So what I ask from you today is to consider the extension of the 

unemployment provisions of ARRA. While what has been done for 

the states has been remarkable and incredibly helpful, we are not 

out of the woods yet and our workers still depend on both the EUC, 

the money that is needed by the state for the EUC benefits, the 

extended benefits, the full federally funded extended benefits, as 

well as for those who are facing uninsurance insecurity because 

they will not have the COBRA benefit, and that needs to be done 

sooner rather than later. 

Our state is probably already sending out the notices to those 

who are in the extended benefit program and, as we know, states 

are working with antiquated computer systems and are under 

great stress now trying to keep up with all of the benefit programs 

and keeping up with the extensions. And in order to solve the problem of gaps for service for the individuals, we need Congress to act 

on this as soon as possible. 
22 

I cannot thank you enough for what you have done for the states 

and the fiscal relief that you have provided to our state during this 

very difficult time, but more importantly to the individuals that we 

serve. The thousands of people who have been served by all of 

these programs are being able to keep their body and soul together 

because of the SNAP program, because of TANF, and because of 

UI. And as we field the calls from people who are facing losing 

their homes, keeping the lights on, trying to make sure that they 

can feed their families, we can direct them to these programs and 

we want to be able to continue to direct them to these programs 

but also recognize that our state that is also struggling and needs 

the fiscal relief. 

I thank you once again for the opportunity to speak to you about 

these important programs. 

[The prepared statement of Ms. Berkowitz follows:] 

PREPARED STATEMENT OF SUE BERKOWITZ, DIRECTOR, 

SC APPLESEED LEGAL JUSTICE CENTER

I want to thank Chairman Spratt and members of the House Budget Committee 

for the opportunity to speak with you today about the impact the recession and Recovery Act is having on social safety net programs; specifically unemployment insurance. I am Sue Berkowitz, director of the South Carolina Appleseed Legal Justice 

Center. SC Appleseed is a non-profit law office dedicated to advocacy for low-income 

people in South Carolina. Through my work with SC Appleseed I have been a key 

participant in formulating state welfare, Medicaid and SNAP (food stamp) policy for 

the citizens who use these services in our state. 

I recently had the opportunity to work with the South Carolina legislature as it 

enacted changes to our state UI laws to fully realize the benefits of the American 

Recovery and Reinvestment Act of 2009 (ARRA). This change enabled thousands of 

unemployed individuals in South Carolina who were facing the expiration of their 

extended unemployment benefits to access these emergency benefits. I want to 

thank Chairman Spratt for your leadership to secure this needed benefit in the federal appropriation, but more importantly your office’s rapid response that enabled 

us to correct the mistake made by our state when it failed to make needed changes 

to access these funds. Through your efforts we were able to save lifeline unemployment insurance benefits to those individuals facing the exhaustion of their UI. I am 

plesased to tell you that we have received numerous calls from grateful beneficiaries 

who were facing the exhaustion of their benefits. Without your involvement in this 

effort many unemployed South Carolinians would be facing a huge crisis today. 

South Carolina like every state is experiencing problems due to the recession and 

these problems are having a huge impact on our lower income residents. Since this 

economic downturn South Carolina has consistently ranked as experiencing one of 

the highest unemployment rates in the nation. The lastest unemployment figures 

demonstrates that over 12% of our population is unemployed, well above the national average, putting us at number four in the country. An economic summit was 

held at the University of South Carolina last week with a number of our state’s 

leading economists predicting that our unemployment number could be over 13% by 

next year. 

During the past year as our numbers of unemployed has grown the need for our 

safety net programs has become even more important. While the demand for these 

services increase South Carolina is facing a huge fiscal crisis, cutting 1 billion dollars from our budget. While this may seem like a small number in many states, it 

represents over one sixth of our state budget. Safety net programs, TANF, SNAP/ 

Food Stamps, TEFAP, Medicaid and unemployment insurance are often the only resource that will help individuals and families in poverty or near poverty maintain 

their ability to meet their basic needs. During this economic downturn we are seeing 

a growing number of South Carolinians turn to these programs with a dramatic increase in the participation of all of these benefits. Within the past twelve months 

the state Family Independence Program (TANF) roles have increased by more 

than11,000 recipients. This progam had remained relatively flat over the years, indicating that the need by families has enlarged due to this recent recession. Even 

more telling SNAP (food stamp) participation has grown by 150,000 over this same 

time. All of this is happening while our state is cutting staff and absorbing more 
23 

work with less resources. At the same time our unemployment rate has risen 4%. 

Just the last week 1,500 new claims were reported due to new layoffs in manufacturing. Unfortunately, the Medicaid roles have remained relatively flat, despite the 

number of eligible children and families who are in need of this very important benefit. I am concerned this is due to our current state administration’s efforts to suppress enrollment as a way to control the budget. Safety net programs are the lifeline 

that assist families meet their basic needs. They need to be strong during all economies, but are even more necessary during times of recession. All of these benefit 

programs provide critical help for our state’s poorest and most vulnerable citizens. 

What all of these dramatic programaticeincreases demonstrate is that these safety 

net programs are working to catch those families and individuals before they fall 

between the cracks. Congress’ response through ARRA has been crucial to make 

sure that all those in need can be served, especially during this difficult time. 

South Carolina Appleseed routinely repsonds to requests from individuals and 

families who are struggling to keep body and soul together due to limited resources. 

Because South Carolina has consistently ranked high in poverty and unemployment, 

SC Appleseed has always worked to provide our callers with information that will 

direct them to needed benefits. During this recession we have seen a dramatic rise 

in calls and emails from individuals who are facing financial ruin due to unemployment. Many of these families have never been faced with such a dramatic loss in 

income. Our program is working to save homes, keep lights on and ensure that 

there is food on the table for those finding themselves without employment. The 

foreclosure rate in South Carolina is high and SC Appleseed is working with the 

South Carolina Foreclosure Task Force to help save homes. We are training attorneys to represent consumers and working to achieve loan modifications. Free health 

clinics and community healthcare centers are overwhelmed with requests due to our 

huge number of uninsured. South Carolina’s food banks and food pantry’s are reporting a remarkable increase in participation, with many of the customers coming 

for help identifying themselves as former donors. One in four children in our state 

lives in a family receiving food stamps. The recession has hit our vulnerable citizens 

hard as well as creating additional families who are now in need of help. Our safety 

net programs help to ensure families maintain during these difficult times, and we 

must work to help all eligible families take advantage of the programs. 

An essential program helping these distressed families is the unemployment insurance provisions of ARRA. The success of this provision of ARRA has impacted 

thousands of South Carolininans and over one million unemployed workers in the 

United States. Unfortunately it sets to expire at the end of this month. This would 

be catestrophic to these individuals who are struggling to meet their basic needs. 

My office has received a number of calls from unemployed workers around the state 

who were facing the discontiuation of benefits prior to the recent change in our state 

law allowing the extension. These callers expressed gratitude for our small part in 

helping with the passage of the extension language, but they also expressed concerned as to what they will do if an additional funding extension is not granted. 

ARRA, enacted in February, funded a comprehensive set of protections to help unemployed workers throughout the year. A similar approach will be necessary in 

2010 as long-term unemployment continues at record levels. Features of the 2009 

ARRA included: 

• The Emergency Unemployment Compensation (EUC) program, which was expanded in November to provide four tiers of benefits for workers who run out of 

their basic 26 weeks of state assistance (ranging from 34 weeks to a full 53 weeks 

of benefits for workers in states with unemployment rates over 8.5%). 

• Full federal funding of the Extended Benefits (EB) program, which provides another 13 to 20 weeks of benefits that are normally paid for 50% by states. 

• An increase of $25 per week in both state and federally funded UI benefits. 

Nearly nine million workers are now collecting either state or federally funded benefits that qualify for the $25 weekly supplement. 

• The 65% COBRA subsidy, which lasts nine months. Employer surveys show 

that the number of workers participating in the COBRA program has doubled since 

the subsidy took effect, although participation remains below 20% of all those eligible. 

• The suspension of the federal income tax on an individual’s the first $2,400 of 

unemployment benefits. 

ARRA funds have been a huge economic benefit to our state. For example, the 

additional $25.00 a week UI benefit increase has meant that an additional 

$126,314,637 has been made available to families dependent on UI benefits. In addition, unemployed South Carolina workers have received $327,865,566 from the EUC 

program. Our state’s unemployed are not only growing in numbers, but in the 

length of time, they are staying unemployed. The extended benefit programs of 
24 

ARRA are particularly helpful to those states with substantially higher unemployment rates. South Carolina’s recovery is slow and many unemployed workers are 

still unable to find work making these UI extensions their only hope for survival. 

Without ARRA’s unemployment provisions, our state would not have been able to 

maintain these additional weeks of UI benefits and many families would be falling 

off the financial cliff. As a high unemployment state, this program benefits both the 

individual families collecting UI and our economy as a whole. 

While we have not had a huge utilization uptake of the COBRA provision, for 

those in South Carolina who do make use of this benefit, it has had an enormous 

impact. The average monthly COBRA premium in our state is $1,090.00. With the 

average monthly UI benefit in South Carolina being $1,061.00 it is virtually impossible for an unemployed worker to maintain his or her insurance through COBRA 

without this subsidy. The average COBRA premium in South Carolina is 102% of 

the monthly benefit. I have had the opportunity to talk and counsel with individuals 

in our state who have benefited from this program and have attested to me they 

would currently be among South Carolina’s uninsured without this assistance. 

The calls to SC Appleseed from distressed families have dramatically increased 

during the recession. We hear from those who are facing the dilemma of unemployment; unsure how to maintain their current bills, feed their family and save their 

home. Many of these households earned middle-class wages, and had never been 

forced to rely on any benefit or safety net program. A layoff in today’s economy will 

often result in extreme economic hardship, including sending household incomes 

well below the poverty level. Unemployment benefits play a major role in preventing 

this catastrophic decline. According to a Congressional Budget Office study measuring the income effects of unemployment benefits on jobless workers collecting benefits in 2001 (the last recession) and 2002, only 7 percent of unemployment recipients had family incomes below the official poverty level before losing their jobs. 

After job loss, nearly one-quarter (23 percent) of the families of long-term jobless 

workers collecting benefits fell into poverty as measured by the official poverty 

guidelines. However, without UI benefits, the poverty rate would have more than 

doubled, with one-half of the families ending up in poverty. The Center on Budget 

and Policy Priorities has provided estimates that the ARRA’s unemployment insurance extension and $25 increase in weekly benefits checks have kept 800,000 people 

out of poverty. The importance of unemployment benefits for families of jobless 

workers is also reflected by food consumption of the unemployed. On this most basic 

indicator of family subsistence during tough times, there is no doubt that unemployment benefits help families avoid serious hardship. In 2008, The National Employment Law Project (NELP) conducted a national survey of the unemployed found 

that unemployed workers who did not receive UI benefits were twice as likely as 

those with benefits to be forced to skip meals in order to get by financially. Without 

UI, many families in our state would plunge into economic ruin; with UI, they are 

able to maintain a modest existence. 

Between January and March of next year, the number of people in the United 

States without federal jobless benefits is expected to swell to nearly three million 

workers if the ARRA is not reauthorized. These figures take into account the impact 

of the ARRA’s December deadline on the extensions of unemployment benefits. The 

critical benefits provided to jobless workers by the ARRA are set to expire at the 

end of the year, which means that even with the latest 14 to 20 week extension enacted in November, 30,000 workers a day will be left without any jobless benefits 

in January. They do not include the number of workers who will no longer qualify 

for the ARRA’s COBRA subsidy program when it expires in December. Any delay 

reauthorizing the ARRA will have devastating consequences not just for workers 

and the struggling communities hardest hit by the recession. By early December, 

state agencies that administer unemployment benefits will be forced to notify workers that the program will be shut down by the end of year, as required by federal 

law. If Congress does not reauthorize the programs as soon as possible, this ARRA 

deadline will create total chaos for the state agencies and workers facing an uncertain future. 

While these benefits assist the individual households that are faced with being 

unemployed, unemployment insurance is an enhancement to our state’s economy. 

The federal funding appropriated to South Carolina helps families maintain housing, utilities, food and other necessities. These funds circulate directly in our economy having a multiplier effect by to helping to support businesses and workers and 

stimulating the economy. These dollars spent inside South Carolina lessen the ripple effect that long-term high unemployment brings to our local economy. 

I would urge that the ARRA’s provisions for unemployed workers be extended another year, through to the end of 2010. Specifically, these include the current EUC 

program (providing 20-33 weeks of benefits), the $25 weekly increase in benefits, the 
25 

suspension of federal income tax on the first $2400 of benefits collected in the year, 

and the 65% COBRA subsidy. With the unemployment rate continuing to rise and 

job losses mounting, the situation for workers will continue to deteriorate even as 

the recovery takes hold on other fronts. Under these circumstances, it is essential 

that we provide those who are more recently unemployed with no less support than 

those who lost their jobs earlier in the recession. 

In addition, I would urge Congress to simplify the two federal extension programs 

now on the books, the Emergency Unemployment Compensation and the Extended 

Benefits programs, that now impose major burdens on the states. Instead of operating these two programs side by side, Congress should temporarily fold EB into the 

EUC program, not unlike the program that was in place in 1990s. With a merger 

of these programs, state and local governments would no longer have to pay dollar 

for dollar all the costs of the EB program for laid-off government employees, an existing requirement that today imposes a steep and onerous burden on state and 

local finances when they can least afford it. In addition, state UI agencies will no 

longer have to spend precious time and resources implementing the onerous tracking requirements that govern EB claims. 

Millions of Americans and their families are facing personal crisis and depending 

on our leaders to continue to provide the help they need during this time of economic crisis. While helping these individuals we are ensuring that our local economies continue to recover and begin to prosper. While there is a fiscal price tag that 

goes with this help, our country cannot afford not to extend the unemployment provisions of ARRA. Without the safety net programs that are now in place, many families would be in even greater distress unable to meet their basic needs. I thank you 

for seeing the need to make sure these programs were funded in ARRA as I do not 

know how they could cope without this help. 

These difficult times are not over, and Congress needs to ensure these programs 

continue to be available to help those who are struggling due to unemployment and 

the recession. On behalf of SC Appleseed and the low-income community we represent, we are asking Congress to enact the needed extension of unemployment benefits for workers, to remove the unnecessary burdens on states and workers that the 

extended benefits program is causing. These continuations will help our unemployed 

and assist our state economy as it begins its recovery. 

Chairman SPRATT. Thank you, Sue, very much. And now Ms. 

Delessio. 

STATEMENT OF PAT DELESSIO 

Ms. DELESSIO. Good morning, Chairman Spratt, Congresswoman 

Moore, and members of the committee. Thank you for the opportunity to speak here today. 

I have to admit that when I was first contacted by Congresswoman Moore’s office I was a bit hesitant. I was certainly honored 

by it. I said don’t you really want someone who knows a little bit 

more about economics or funding streams or statistics, and they 

convinced me that they didn’t. And so I am here today to talk for 

the men and women who come into our office at Legal Action. 

We are the legal services office, a federally funded legal services 

office serving southeastern Wisconsin, and daily we see women and 

men in desperate straits. They are not a uniform group of people. 

They are single parents, the chronically underemployed and unemployed. But they are also—and these numbers are increasing—twoparent families, people who have recently lost their jobs and increasingly calling from outside the City of Milwaukee from our suburbs and our surrounding counties. They are as varied as the people of Wisconsin, white, black, Hispanic, Hmong, Russian, and increasingly, Somali refugees. And they are from many different 

places and different backgrounds. But they are all seeking one 

thing, and that is the ability to live in dignity, to pay for their rent, 

to provide for their children and to live without the uncertainty 

and fear that poverty brings. 
26 

I would like to give you some examples, as I did in my written 

testimony, of some of the people we see. One is a single father recently who contacted us, who in the best of times struggles to care 

and make a home for himself and his cognitively disabled son, 

whose unemployment is about to run out, and who has been unable 

to find a job. 

Another is a two-parent family living in one of our wealthiest 

counties, Waukesha, to the west of Milwaukee, who both have lost 

their jobs and are living on unemployment, are trying to meet their 

mortgage payment, and for the first time in their lives are receiving food stamp benefits. 

Another is a single mother also living in the suburbs, carrying 

for a disabled son, as well having recently lost her job after losing 

her husband suddenly, and is suddenly facing being plunged into 

poverty and facing a life of uncertainty. 

Another is a client that I have known for quite some years. She 

is a 40-year-old mother employed at a local hotel who has worked 

on and off most of her life and who has seen her hours at the hotel 

because of the economy gradually cut until she could no longer afford to pay her rent and she has exhausted her TANF time limits. 

Another is a young mother who—we see a lot of young mothers— 

who spent most of her life going from one foster home to another, 

who lacks a high school diploma and who has been unable to receive the education or training she needs to move into long-term 

employment. 

The final example I would like to give is an 84-year-old mother 

who contacts me every time her son, who is on medical assistance, 

needs help. He is bedridden, an adult who she has cared for most 

of her life. And she calls us because she is unable to get any response from her county agency. And I think she is a good example 

of what we have seen as the counties in Wisconsin, we have a 

county-state system. The counties administer our safety net programs. As they have become increasingly burdened with ever increasing caseloads, it is difficult to reach them. And what we have 

noticed is that we are increasingly receiving calls from the disabled 

because of course their means of access to county workers are much 

more limited. Many of them cannot leave their home, so they are 

dependent on reaching workers by phone, which has become in 

many areas impossible. 

These people represent the numbers that we see, people who are 

struggling to pay their rent, who are skipping meals so their children can eat, who can’t buy their prescription medicine because 

they don’t have health insurance or because their medical assistance benefits have not been processed timely, and who don’t have 

a job anymore to get up to go to in the morning. 

And just as we have seen the spread of poverty increase throughout the state, we are also seeing that the depth of poverty is much 

worse. In recent years, and increasingly so, we have been seeing 

families without any income at all. It is just hard to imagine that 

you have no income stream. And they live in that way for months. 

These are people living doubled up, tripled up; all our shelters are 

full on any given day. They move from one family member to another trying not to wear out their welcome. 
27 

Behind these people of course there are the numbers and poverty 

in Wisconsin. We have been one of the fortunate states until recently. It was long stable at about 8.8 percent of our population. 

It has now grown to 12.6 percent. In Milwaukee County, long 

mired in financial distress, 17.3 percent of our people live in poverty, with some areas of the city reaching a staggering 40 percent. 

In a large swath of Northwestern Wisconsin, a largely rural area, 

poverty has also been historically high and now exceeds 14 percent. 

And for Wisconsin’s children, like children elsewhere, the poverty 

rate has grown and it is 1 out of 7 children. In Milwaukee County, 

it is 1 out of 4. And the severity of people living in extreme poverty 

for children, that has also grown in Wisconsin from about 3 percent 

to 7 percent. 

The response to the increase can be seen like in other states in 

the increase in our SNAP program or foods stamps. The Institute 

for Research of Poverty in Madison, Wisconsin, out of the university, indicates that from March 2007 to March 2009, our SNAP participation increased 37 percent. And this increase was not uniform. 

Milwaukee County has long accounted for about half of our food 

stamps population. It is now one-third. So even though the increase 

in Milwaukee County was about 33 percent, in other counties the 

increase was even higher, exceeding 40 and in some cases 50 percent. And now in Wisconsin, about 10 percent of our 5.6 million 

people rely on foods stamp to feed themselves and their children. 

And nearly 1 in 5 of Wisconsinites receive health care through 

our medical assistance program. I am proud to say that we have 

a very comprehensive medical assistance program reaching out to 

all children in the state who are not covered by private insurance. 

In contrast to our SNAP program, as you have heard for other 

states, Wisconsin is similar in that our TANF program has not responded to the recession, or responded only modestly at best. Like 

every other state after the institution of TANF, our Wisconsin 

Works, or the W–2 program as we call it, caseloads dropped dramatically. They rose briefly to about 10 to 12,000 in the early part 

of 2000, between 2000 and 2004. But by December of 2006, the 

number on cash—and we also measure people who receive noncash 

benefits. I am going to give you the people receiving cash benefits— 

was about 6,349. That number has increased to only about 8,628 

as of October of 2009. And this is far below the increase that we 

saw in early 2000 when the recession was much milder. 

When you compare this to our foods stamp population, out of the 

269,000 families receiving foods stamps, about half of those or 

slightly more than half are families with children. In a study by 

the Department of Children and Families in November of 2008, 

they identified 12,608 families receiving foods stamps who have 

zero income, no income at all. These are families with children. 

Sixty-four percent of these zero families, as they term them, live 

outside the City of Milwaukee. And that doesn’t even measure the 

number of families living below 115 percent of poverty, which is 

our TANF eligibility limit. It doesn’t measure people who move in 

and out of poverty. It just measures on that particular day when 

they identified families those who had no income. And thinking 

long term, the low participation rate is only one of the program 

failures of our TANF program. Even in the best of economic times, 
28 

our TANF program, W–2, has really failed to show any measurable 

improvement in the well-being of our participants and children. 

Yes, it has decreased caseloads greatly in Wisconsin. But it has 

been done it at the cost and expense of increasing poverty within 

Milwaukee and the rest of Wisconsin. 

It is our experience based on our extensive representation of families—and this includes reviewing their records maintained by the 

TANF office—that many of them exhaust their precious time on 

W–2 without any increase in their skills or ability to obtain and 

maintain employment. After leaving W–2, many of the families we 

see remain mired in the same cycle of moving from one low-wage 

job to another without any opportunity for anything better. And 

our experience, which is extensive, is supported by studies done by 

the Legislative Audit Bureau as well as the Chapin Hall Center at 

the University of Chicago. The Legislative Audit Bureau found that 

41 percent of the W–2 participants who obtained jobs, obtained 

temporary agency jobs. So these are temporary staffing jobs which 

women can really obtain on their own. They don’t really need the 

W–2 agency to find those jobs for them. And in fact in most cases, 

they did obtain them on their own. And these are the same types 

of jobs that women receiving AFDC in the past always were able 

to obtain. The other percentage, large percentage, 29 percent, were 

employed in retail services and fast food. Again, these are traditionally the types of jobs women are able to find on their own 

which don’t offer future and often don’t offer a guaranteed 40 hours 

of work a week. 

The Chapin Hall study, which followed W–2 applicants, a group 

in Milwaukee County only, from 1998 through 2003, showed only 

an increase of about 4 to $500 in their earned income from 1999 

to 2003. They also found that a quarter of the study group—and 

these were people who had applied for TANF. Some of them had 

gone on for periods of time. Some of them had never received W– 

2, but they were diverted into jobs. A quarter of the study group 

had no income, employment or W–2 payments when they were 

looked at in 2003. But in addition, nearly 1 out of 4 of the study 

group noted that they had been subject to a material hardship in 

the prior year, defined as a lack of money to pay rent, bills or utility bills, becoming homeless or having to double up with friends 

and relatives. 

At the same time as our TANF caseloads plummeted, childhood 

poverty in Wisconsin has increased. As I noted before, extreme poverty defined as families living with incomes less than 50 percent 

of the poverty level rose from 3 to 7 percent. 

Now, as the previous speakers have indicated, like other states, 

Wisconsin would be in even worse shape if we had not received 

funding through the Recovery Act. In Wisconsin, foods stamp benefit spending has grown from 37 million in August 2008 to 70 million in September of 2009, bringing much needed revenue into our 

state and of course helping the families that receive those benefits 

to provide nutritious food for them and their children. The increase 

in our state’s medical reimbursement rate, which runs from 60 to 

roughly 70 percent and state officials have indicated that brought 

$1.2 billion in enhanced federal match in Wisconsin, has also provided additional revenue and has allowed us to avoid any cutbacks 
29 

in our medical assistance program which now extends to all children in the state without access to other coverage. And even 

though state Department health and services was able to provide 

$4.2 million in Recovery Act funds to our county agencies who as 

I said administer income maintenance programs, these counties, 

they have had furloughs, they have had cutbacks, are struggling 

desperately to meet the ever increasing demands on our services. 

And again, we are receiving many more contacts in our office from 

people who cannot receive services from their counties and these 

are counties outside of Milwaukee as well as Milwaukee because of 

the cutbacks and the demand on workers’ times. 

So it is really imperative that the funding of the Recovery Act 

be extended in order to prevent further cutbacks in benefits and 

further delays in services. We also must address the plight of 

TANF eligible families and the unemployed. And I wanted to talk 

a little bit about the area of Milwaukee and southeastern Wisconsin—— 

Chairman SPRATT. Ms. Delessio, could I ask you to sort of—taper 

it to an end. I am not trying to rush you to finish. But if you could 

bring it to a conclusion, we will come back to you with some questions. 

Ms. DELESSIO. In fact I am almost done. I wanted to talk to you 

about the jobless rate in Milwaukee. Because after this is all over, 

Milwaukee is still going to be in the state that they are currently. 

A recently released report from the Center for Economic Development at the University of Wisconsin said that at least since 2000, 

the unemployment rate for black males in the City of Milwaukee 

has ranged from 46 percent to 51 percent. That is half of our population of black men. So long-term and short-term, what we need is, 

I think the biggest thing and I listed a number of things that I 

won’t repeat in my testimony, but I think the most important thing 

is to look at TANF and to see how we can redesign the program 

or create a parallel program to address the needs of the unemployed and families especially during the times of economic crisis. 

In closing, I would just like to relay what a client said to me recently when she said all I really want is a job that guarantees me 

40 hours a week so I can keep a roof over my family’s head and 

feed my children. And I hope that when you consider extending 

funding and when you look at reauthorization of TANF, that you 

think of her and what she desires. Thank you very much. 

[The prepared statement of Ms. Delessio follows:] 

PREPARED STATEMENT OF PATRICIA DELESSIO, ATTORNEY, 

LEGAL ACTION OF WISCONSIN

Mr. Chairman, Members of the Committee, thank you for the opportunity to testify on the effect of the recession and the Recovery Act on safety net programs and 

families in Wisconsin. 

Legal Action of Wisconsin is the legal services office serving 39 of Wisconsin’s 72 

counties. In our Milwaukee office, where I have practiced for over 20 years, the majority of the individuals and families seeking our assistance have traditionally been 

single parents, the disabled, and the elderly residing within the city of Milwaukee. 

Some are employed, many more are not. 

Since the recession we have noted a gradual change in those seeking our help. 

Our contacts are increasingly from persons who were recently employed, two parent 

families in which both parents have lost jobs, individuals who have exhausted their 

unemployment benefits, and individuals living in the city’s suburbs and surrounding 

counties. In addition, we have noted that many more of our clients live in extreme 
30 

1The above numbers are taken from regularly issued reports by Wisconsin’s Department of 

Health Services and the Department of Children and Families, 1999 and 2005 audits of the W– 

poverty, without any income stream at all. Many are homeless, living in shelters, 

doubled or tripled-up with relatives or friends, moving from place to place, or on 

the streets, and they have lived that way for months. Others live without any heat 

and/or electricity in their homes. Among them are: • the single father caring for a cognitively disabled son whose unemployment benefits are about to run out and who has been unable to find a job, • the two parent family residing in one of Wisconsin’s wealthiest counties who 

have both lost their jobs and are desperately trying to pay their mortgage and survive on unemployment benefits and food stamps, • the single mother living in the suburbs caring for a son with cerebral palsy who 

recently lost her job and whose husband died suddenly leaving them without health 

insurance, • the 40 year old mother who was employed at a local hotel who has seen her 

hours gradually cut until she can no longer pay her rent and who has exhausted 

her TANF time limits, • the 21 year old mother of two who spent most of her childhood moving from 

one foster home to another, who lacks a high school diploma, and who has been unable to receive any help with education or training to move beyond the of cycle lowwage temporary employment she is caught in, and • the 84 year old mother caring for her disabled adult son who lost his medical 

coverage and his home health care services because his mother was unable to reach 

a county worker to complete a medical review due to the increased caseload and demands on workers’ time. 

The recession, as both our experience and recent numbers tell us, has both widened and deepened the reach of poverty in Wisconsin. 

For many years the official poverty level in Wisconsin, with a population of 5.6 

million people, was relatively stable at approximately 8.8 percent. In April 2009 the 

University of Wisconsin’s Institute for Research on Poverty, using data from the 

2007 census, found that the poverty rate had increased to nearly 11 percent. Recently released numbers from the University of Wisconsin indicate that the rate has 

climbed further, reaching 12.6 percent of the state’s population. 

The increase in poverty is reflected in a doubling of Wisconsin’s unemployment 

rate to 9.4 percent between March 2007 and March 2009 and a sharp increase in 

the use of food stamps or SNAP benefits. The Institute for Research on Poverty’s 

report found a 37 percent increase in food stamp use for the above period. Statistics 

released by the state’s 

Department of Health Services show that as of September 2009, 10 percent of 

Wisconsin’s population now depends on food stamps to survive. In addition, nearly 

one of out of every five residents receives health care through our state’s Medical 

Assistance program. 

Poverty in Wisconsin, as in most states, is not evenly distributed. In Milwaukee 

County the poverty rate, based on 2007 census figures as reported by the Institute 

for Research on Poverty, is 17.3 percent, with some areas of the city of Milwaukee 

reaching a staggering 40 percent. For rural residents in a ten county area of northwestern Wisconsin the rate exceeds 14 percent. And children in Wisconsin, like children in the rest of the nation, fare worse. One out of every seven children, or 14 

percent, live in families below the poverty level. In Milwaukee County the number 

climbs to 25 percent. In addition, more than half the children in Milwaukee County 

reside in families with income below 200 percent of poverty. 

The increase in the use of SNAP benefits reflects these regional differences and 

also highlights the spread of poverty throughout the state. Historically Milwaukee 

County represented approximately half of the state’s food stamp caseload. While use 

in Milwaukee County remains high with 20 percent of its residents relying on benefits, the recent 33 percentage increase in Milwaukee is less than the increase in 

other counties. In a number of counties SNAP participation has increased more than 

40 percent and, in some areas, more than 50 percent. Milwaukee County now represents one-third of the state’s growing caseload. 

While the state’s SNAP usage has grown dramatically our TANF program, known 

as Wisconsin Works or W–2, has failed to respond to the current recession. Since 

the end of AFDC the number of families receiving cash assistance has dropped dramatically. In August 1998 that number was 10, 383. From 2000 through 2004, as 

a result of the recession at that time, the caseload grew by approximately 2000-3000 

cases. After the state reinforced up-front job search and other requirements that 

number dropped to 6, 349 by December 2006. As of October 2009 the number has 

increased only modestly to 8,628 families, below the increases of the early 2000s. 1
31 

2 program by the state’s Legislative Audit Bureau and a series of 2006 reports issued by the 

Wisconsin Council on Children and Families entitled collectively as TANF turns 10. 2This number of families identified as ‘zero income’ is the number on a particular day and 

does not capture those families cycling in and out of employment or those who earn less than 

115 percent of poverty, the eligibility limit for W–2. 3This data is taken from the Employment and Training Institute’s survey of job openings in 

the seven counties of southeastern Wisconsin conducted during the week of May 29, 2009. 

In contrast to our W–2 population, as of September 2009 there were 269, 383 

households receiving food stamps in Wisconsin, slightly more than half of these 

households included minor children. In a report entitled the ‘take-up’ study the state 

Department of Children and Families found that in November 2008, before the recession worsened, there were 12, 608 families receiving food stamps with zero income, all of them potentially eligible for W–2. 2 It is noteworthy that 64 percent of 

these zero income families resided in counties other than Milwaukee. 

The low participation numbers are only part of the program’s failures. Even in 

the best of economic times, the W–2 program has failed to demonstrate any measurable improvement in the well-being of its participants and their children. It has 

been our experience, based on representation of W–2 families, that many exhaust 

precious months on W–2 without any increase in their skills or ability to both obtain 

and maintain full-time employment. After leaving W–2 many parents remain mired 

in the same cycle of low-wage employment they were in before without any opportunity for long-term employment. 

A 2005 study by the state’s Legislative Audit Bureau found that 41.8 percent of 

W–2 participants who obtained jobs were employed by temporary staffing agencies 

and 29 percent were employed in retail services, fast food and other eating establishments. Historically these are the same jobs women receiving AFDC in the past 

secured on their own. In a series of 2006 reports issued by the University of Chicago’s Chapin Hall’s Center for Children, it was found that W–2 applicants in Milwaukee County who later obtained employment experienced only a slight increase 

in median income from $7,139 in 1998 to $7,425 in 2003. The Chapin Hall study, 

which followed a group of Milwaukee families from their W–2 application in 1999 

through the end of 2003, also found that a quarter of the study group had no income, employment or W–2 payments when earnings were examined in late 2003. In 

addition, nearly one out of four study group participants reported at least one material hardship in the prior year, defined as the lack of money to pay rent or essential 

bills, becoming homeless or having to double-up, and/or losing utility services. 

It should also be noted that at the same time that our TANF caseloads plummeted childhood poverty in Wisconsin increased. According to an August 2006 report released by the Wisconsin Council on Children and Families, the percentage 

of children in poverty rose from 12 to 14 percent between 2000 and 2004 and the 

number of children living in extreme poverty rose from 3 to 7 percent. Extreme poverty is defined as families with incomes less than 50 percent of the poverty level. 

These numbers are consistent with what we have seen over the last ten years. 

The downward spiral Wisconsin and other states have experienced as a result of 

the current recession would be significantly worse if not for the Recovery Act. In 

Wisconsin, food stamp benefit spending has grown from 37 million in August 2008 

to 70 million in September 2009 bringing much needed revenue into our state. The 

increase in the state’s Medicaid reimbursement rate from 60% to roughly 70% (1.2 

billion in enhanced federal match) has also provided additional revenue and allowed 

Wisconsin to maintain its comprehensive health care program that extends to all 

children in the state without access to other coverage. While the State Department 

of Health Service has been able to provide 4.2 million in Recovery Act funds to county income maintenance agencies, these agencies are struggling to meet the ever increasing demands for services and families throughout the state are experiencing 

delays in receiving needed assistance. It is imperative that the funding of the Recovery Act be extended in order to prevent cut backs in benefits and further delays in 

service. 

Specific efforts must also be made to address the plight of TANF eligible families 

and the unemployed. A recent study released by the Employment and Training Institute at the University of Wisconsin-Milwaukee reported that for the seven counties of southeastern Wisconsin, including Milwaukee, job openings were down by 

16,100 from May 2006. The report finds that the job gap in the region is 13 jobs 

seekers for every full time job opening. In the inner city of Milwaukee the job gap 

is 25 to 1. In addition, the Employment and Training Institute reports that ‘the 

labor market has nearly dried up for unskilled workers lacking a high school diploma and occupation specific experience.’ 3 The report authors found that in May 
32 

2009 there were only an estimated 500 job openings for unskilled workers compared 

to 6548 in May 2006. 

Compounding the above numbers is the long term jobless rate for African-American men living in the city of Milwaukee. Research conducted by the Center for Economic Development at the University of Wisconsin—Milwaukee found that since at 

least 2000 the number of unemployed black men residing in the city has ranged 

from 46.8 percent of the population to 51.1 percent. These numbers underscore the 

fact that cities such as Milwaukee which have lost their traditional manufacturing 

base were already in dire straits long before the current recession. 

Recently a client said to me ‘all I want is a job that guarantees me 40 hours a 

week so I can keep a roof over my family’s head and feed my children.’ To help this 

mother and the millions of other workers and parents like her immediate and longterm solutions must be considered, including: 

• extension of federally funded unemployment benefits beyond December 2009 to 

assist workers who have or will exhaust their benefits, 

• continuation of funds to states for administration of safety net programs, 

• creation of subsidized or transitional employment, 

• expansion of youth employment programs with incentives that encourage states 

to make such programs available to young custodial and non-custodial TANF eligible parents, 

• extension of the time limit for claiming TANF emergency contingency funds and 

incentives to states such as Wisconsin that have not yet submitted a request for 

funds, 

• incentives that encourage states to provide assistance to TANF eligible families, 

especially during periods of economic recession, and to develop integrated employment, training and work programs that will lead to long-term employment, and 

• maintenance of funding for homeless prevention programs and increased funding for subsidized housing. 

Chairman SPRATT. Thank you very much. 

Dr. Haskins. 

STATEMENT OF RON HASKINS 

Mr. HASKINS. Mr. Chairman, members of the committee, thanks 

for inviting me. I consider it a great honor to be asked to testify 

before this committee. I am going to focus on only one issue, and 

that is the role of work in American social policy and more specifically the impact of the welfare reforms of 1996 and the Temporary 

Assistance for Needy Families program, called TANF, on work and 

American social policy. 

A little background: for at least 2 or 3 decades before we passed 

the welfare reform law of 1996, Congress had enacted a number of 

provisions in the old Aid to Families With Dependent Children program, which was the forerunner of TANF, and a major cash assistance program for welfare to try to encourage work. They were all 

a failure. And there are various theories about why this might be 

the case, but one of those theories was put in for us in 1996 and 

that was that we need to have strong work requirements, they 

need to be backed up by sanctions, including losing benefits if people did not meet the work requirements, as well as sanctions on 

states. This is a little known fact about welfare reform. The states 

were also sanctioned—the federal government withheld money if 

they didn’t meet their work requirements. And I want you to know 

that the states played a very big role—a bigger role. I was on staff 

here for 15 years. And states played more of a role in drafting this 

legislation than any other legislation I know about. So the states 

were culprits, if you want to think of it that way. 

Let me first show what happened as a result of welfare reform, 

especially in the 1990s. If you look at a second chart here—I guess 

this thing isn’t going to work on that screen—but the second chart 
33 

shows that the welfare rolls fell dramatically. Nothing even close 

to this had ever happened before. The welfare rolls virtually never 

fell. They just kept going up on AFDC. There were a few years that 

they declined a little bit; the most ever was 2 percent. And they 

fell by half and then eventually reached 60 percent. So it was unprecedented. 

Secondly—no, no. Go back to the other chart. Look at the top 

chart. This is a crucial point. This is the income of all female headed families—they are the most likely to be on welfare—in the bottom 40 percent of the distribution. So roughly speaking, all female 

headed families, earning under $20,000, many of which were eligible for welfare and here is what happened to their income. The red 

line graph is their earnings, plus the earned income tax credit. And 

as you can see, that went up very substantially. It has decayed a 

little bit starting with the recession of 1980 and it is still going 

down a little bit. And the blue graph is their income from welfare, 

a collection of welfare programs, not just cash welfare, but a collection of welfare programs. 

So you can see welfare is going down, earnings plus earned income tax credit is going up, and families at the maximum were 25 

percent better off in income. Now, this would not apply to every 

state, but these are national data from the Census Bureau. So welfare definitely increased earnings which in turn increased income. 

And then if you look at the last chart down there, it shows what 

happened to poverty. And as you can see, poverty declined throughout this period up until 2000. It declined for both kids and female 

headed families. That is a crucial group to analyze welfare reform. 

And it also declined substantially for all kinds of children, but especially black children. Both poverty among black children and 

poverty among children in female headed families reached the lowest level ever. And even now after 2008, when we have had the recession of 2001 plus the recession of 2000—that began in December 

of 2007, poverty is still lower than it was before welfare reform. 

And as the top chart shows, work played a huge part in that. So 

I think it is safe to say—and maybe some of you will want to argue 

about this a little bit—that welfare reform was quite a success. 

There are some weak points. I mentioned some of those in my 

testimony. There is a lot of work that we could do. There is a group 

at the bottom that is worse off. There is no question about that. 

We haven’t paid enough attention to them. Donna Pavetti is probably the country’s leading expert on states that have tried to address this problem of the mothers that are really down and out. 

And also a problem that we already knew about that has turned 

out to be true is Horatio Alger does not apply to moms who leave 

welfare. They leave it in the old days $8.50 an hour and you come 

back 2 years later and they are making $9.00, you come back 2 

years later and they are making $9.25. There is not a nice progression. We should be able to do something about that, but so far after 

spending billions of dollars we haven’t figured out how to do it. 

So there are some problems. I am not whitewashing welfare reform. But generally, it has been a success and it established a principle that everybody has to face. And that is as long as people are 

only on welfare they will never escape poverty. If we have a welfare system that does not encourage work, we will have a substan-
34 

tial number of people who will never escape poverty. We do not 

give enough in foods stamp and cash benefits for people to escape 

poverty. 

So now we come to another challenge, which is the recession. The 

recession of 2000 and 2001 was not very deep. It didn’t have that 

much of an impact on unemployment. It had a lot more impact on 

males than it did females. So the poverty went up a little bit, but 

child poverty still stayed quite low and the percentage of women 

who were working, and especially low-income women, stayed quite 

high, much higher than before welfare reform. But now it is much 

more serious. Many more people are losing their jobs. We don’t 

know the full impact of it yet because we don’t have good data for 

2009. And I think that is going to change substantially some of the 

things I have shown you there. 

So I think the first thing that we should say, both sides of the 

aisle, is this is a problem, this is a problem and we need to figure 

out what we should do about it. 

So the essence now of TANF, like many other social programs, 

is that they are both friendly to work—and TANF is, I would even 

say, demanding, and programs like the EITC and food stamps are 

friendly to work. And, taken together, I call this the work support 

system. 

You have strong work requirements, but you also have programs 

that help people when they go into the economy because they cannot earn enough, many of them. They earn $12,000 to $14,000 a 

year. That is not enough to support a family. So we have the 

earned income tax credit, we have food stamps, we have Medicaid. 

Congress, in its wisdom, substantially modified all those programs, starting in the mid-1980s, and they are much friendlier to 

work now. So it is not unusual for someone earning $12,000 or 

$13,000 to have a package of benefits that is $25,000 to $30,000, 

but they have to work to do it. So we want to emphasize work, we 

want to retain the emphasis on work and the work support system. 

But, secondly, it has to also be a safety net. I think we are in 

agreement on that, and we should be frank about this. And the evidence now, if you look at the next chart, is that it is not a very 

good safety net. 

You can see the substantial increase in unemployment. And unemployment insurance, if you look at the graphs for unemployment 

insurance, look at a graph for food stamps—this is a point that previous witnesses have made—they did exactly what a safety net program should do. If things decay and unemployment goes up, then 

benefits should go up, more people should qualify for benefits. 

Look at the bottom line. That is TANF. There is hardly any response through 2008. There is apparently a lot more responsiveness now. I have given evidence of that in my testimony. But I 

think it is still weak. We need to know a lot more about how this 

has responded. But, on the first blush, it is a big problem. 

So why is it that TANF has such a different pattern than these 

other programs? LaDonna has already given some very good reasons. I do think the fact that states—it became almost a badge of 

honor that—I often heard governors talk about this, you know, ‘‘My 

caseload is down 15 percent.’’ ‘‘Well, mine is down 20 percent.’’ It 

got to be almost a number-one qualification of having a good TANF 
35 

program was reducing the rolls. And that is important, but a lot 

of other factors are important, as I have shown you here. 

And so the states were so much in the habit of reducing the rolls 

that they did not respond very quickly. So that is a big issue. We 

need to figure out why this happened. 

Now, LaDonna also has given away my main point, which is: I 

think that this committee and the Ways and Means Committee and 

the Education Committees in both houses and the Finance Committee in the Senate should focus on this. Next year, we are supposed to reauthorize welfare reform. It provides a perfect occasion 

to look specifically at many of the problems I have mentioned but 

especially this problem, because TANF appears not to function as 

a safety net. 

And I want to draw one thing to your attention that is extremely 

important. And that is, there was a recent editorial in the Post that 

some of you may have seen that charged that the people who wrote 

the 1996 welfare reform bill were cavalier or disregarded low-income families and so forth. It was signed by a Democratic President. Half the Democrats in the House and the Senate voted for 

the bill. It was a bigger bipartisan vote on that legislation than on 

Medicare and Medicaid in 1965. So we are all in this together, so 

to speak. 

It is a false charge that people weren’t worried about that. There 

are four provisions in the bill that were intended to make it a safety net and to respond when people were unemployed. The most important one was called the contingency fund that had $2 billion in 

it. It was never used through 2000. It was hardly used in the recession of 2001. Now it is about to run out of money, according to the 

CBO, because states are really using that money. There were other 

provisions in there, as well. 

So that is the place to begin. Why did it take so long for those 

to work? And now, in addition, we put a new provision in, which 

you did in ARRA, which was $5 billion for, in effect, an emergency 

contingency fund, and states are using that money as well. So that 

is where to begin. Why aren’t those programs working better? Why 

did it take the states so long to take advantage of them? 

I think this is a big challenge. And I want to—my last comment 

is, I want to call to your attention—and, please, if you don’t believe 

this, ask me questions—as long as people are only on welfare, they 

and their children will never escape poverty for working-aged families. They cannot escape poverty, by definition, unless they cheat 

and don’t report their income. 

So we have to have a system that helps people get jobs. And they 

are going to be low-income jobs. Most of them are going to be lowincome jobs. They are going to be flipping hamburgers, to use the 

old phrase. And we need a government system that supports them 

while they work. And we have constructed that. So the work part 

of this is really working; now we need to figure out why it doesn’t 

work better during recessions. 

Thank you. 

[The prepared statement of Ron Haskins follows:] 
36 

PREPARED STATEMENT OF RON HASKINS, CO-DIRECTOR, CENTER ON CHILDREN AND

FAMILIES, THE BROOKINGS INSTITUTION; SENIOR CONSULTANT, ANNIE E. CASEY

FOUNDATION

My goal in this testimony is to clarify one of the most important issues in American social policy. This issue, which has been evolving since passage of the Social 

Security Act in 1935, has been brought to the forefront by the recession that now 

plagues us. The issue is who should be expected to work and how far should social 

policy go in demanding work. 

The elderly, the disabled, and children are the easiest to deal with. Hardly anyone 

expects members of these large demographic groups to work, although even here 

there are important issues of definition. The definition of the elderly for the purposes of Social Security is being gradually increased from 65 to 67 as a result of 

recommendations by the Greenspan Commission in 1983.1 Some policy analysts 

have recommended that the age of eligibility should be increased still further. There 

is little or no pressure from the public or major organized groups to change the definition of age for purposes of program eligibility, but it is a good bet that when Congress finally decides to seriously address the nation’s cancerous budget deficit, the 

definition of elderly will get close scrutiny. 

The definition of disability is one of the great conundrums of American social policy. There is a large class of people who have medically established physical disabilities about which there is little or no disagreement, although some people with extensive physical disabilities who could easily qualify for disability payments choose 

to work. The definition of emotional and behavioral disabilities is more tortured. I 

recall that during the debate over welfare reform in 1995, a senior analyst at the 

Congressional Research Service testified that, due to the interaction of unclear statutes and regulations plus confused interpretations of the statutes by the Supreme 

Count,2 the definition of childhood disability in the Supplemental Security Income 

(SSI) program was essentially behaving in an age inappropriate way. Clay Shaw, 

the subcommittee chairman, immediately remarked that under that definition half 

the members of Congress were qualified for SSI. 

The welfare reform law of 1996 significantly tightened the definition of disability 

in the SSI program. Before 1996, anyone found to be addicted to drugs or alcohol 

was entitled to a guaranteed cash benefit and health care coverage. The welfare reform law simply eliminated alcoholics and drug addicts from both the SSI program 

and the Social Security Disability Insurance program by dropping them from the 

definition of disability.3 There may have been negative impacts on addicts who 

would have been eligible for SSI under the old definitions but are no longer eligible, 

but if there are no one has demonstrated them in a good study. 

These definitional problems with age and disability are relatively modest compared with the lively debate conducted over the years about the eligibility of ablebodied adults—especially mothers—for welfare benefits. Before the 1996 reforms, 

mothers who met a test of low resources and low income were entitled to cash welfare from the Aid to Families with Dependent Children (AFDC) program and their 

entire family was covered by Medicaid and the Supplemental Nutrition Assistance 

Program (SNAP; formerly food stamps). From time to time Congress passed provisions that encouraged able-bodied mothers to work or prepare for work.4 But these 

provisions were weak and ineffective. In a typical year before welfare reform passed, 

data from the Department of Health and Human Services showed that less than 10 

percent of AFDC recipients participated in a work program or a program in which 

they searched for work. Few of these participated full-time. By contrast, nearly 35 

percent of the caseload was enrolled in educational activities, although the evidence 

that these educational experiences led to work was minimal.5

Perhaps the most important single issue in the 1996 welfare reform debate was 

that Republicans wanted to have tougher work requirements but Democrats were 

reluctant to put impoverished mothers at risk by penalizing them if they didn’t 

work. The Family Support Act of 1988 had strengthened work provisions somewhat, 

but still, as the data just cited demonstrates, the overwhelming majority of adults 

on AFDC did not work or prepare for work. 

That changed with the election of President Bill Clinton in 1992 and the Republican takeover of Congress in the 1994 elections. Clinton campaigned on limiting 

time on welfare and emphasizing work requirements. Although he did not deliver 

on this promise in his first two years in office, upon achieving a majority in the 

1995-1996 session of Congress, Republicans immediately introduced a bill that 

backed up work requirements with sanctions and time limits and provided states 

with a block grant featuring fixed funding that gave them a strong incentive to help 

adults leave welfare. The Republican bill strictly limited the amount of education 

that could count as work on the philosophy that only work led to more work. After 
37 

a bitter Congressional fight that lasted until July 1996, a bill that had tough work 

requirements backed by sanctions and time limits passed on a bipartisan basis and 

President Clinton signed the bill in August 1996.6

This seminal legislation marked a fundamental change in American social policy.7

The AFDC program, with its entitlement to cash welfare, was repealed and replaced 

by the Temporary Assistance for Needy Families (TANF) program. The new program emphasized work over welfare and was followed by unprecedented reduction 

in the welfare caseload and major increases in work by poor mothers (see Figure 

1). Up to 70 percent of mothers leaving welfare found employment.8 By 2000 the 

percentage of single mothers who were employed reached nearly 75 percent, an in-
38 

crease of over 20 percent since 1995 and the highest level ever.9 Throughout this 

period, child poverty fell rapidly even as cash welfare payments fell, and both poverty among black children and poverty in female-headed families reached their lowest level ever (Figure 1). Even at the recession of 2001, employment among single 

mothers stayed well above its 1995 level and the poverty rate for children in femaleheaded families remained about 20 percent lower than before welfare reform. A reasonable conclusion from these numbers is that as many as 2 million or more of the 

mothers who had been on welfare were capable of productive work.10 Thus, the 

AFDC definitions of who should qualify for welfare on more or less permanent basis 

and who should be required to work had been flawed The 1996 reforms significantly 

changed the definition of who was expected to work and the willingness of the nation’s social policy to penalize those expected to work if they didn’t. 

It is important to point out that most of the jobs taken by mothers leaving or avoiding welfare paid low wages, around $8 per hour in 2000.11 Many of the mothers were nonetheless better off than they had been on welfare because Congress and 

a series of Presidents had expanded programs that provided cash and in-kind assistance to low-income working families. Specifically, the Earned Income Tax Credit 

(EITC) and other tax programs, day care, SNAP, and Medicaid were all expanded 

or modified to make it easier for low-income working families to receive the benefits. 

The dramatic welfare-to-work revolution met the quiet and drawn-out revolution of 

expanded work support programs to produce a total family income for working 

mothers that was higher than welfare even for mothers who had low-wage jobs. 

The story so far is a solid success for the nation’s social policy.12 But the current 

deep recession is raising a serious challenge to the optimistic picture I have painted. 

Now the employment of females heading families has declined almost to its pre-welfare level. The 1996 reforms were successful when the economy was strong, and 

even during a mild recession like that of 2001. But that recession was nothing more 

than a modest thunder storm; the current recession is a hurricane. The question 

arises: how does the TANF program perform in a hurricane? 

Figure 2 shows the unemployment rate, and enrollments in the TANF, SNAP, and 

Unemployment Compensation programs between November 2007, a month before 

the recession began, and either December 2008, August 2009, or October 2009 depending on the program and the availability of data. Assume that means-tested programs should automatically (without legislative action) increase during a recession; 

assume further that the unemployment rate is a useful measure of the severity of 

a recession. It follows that the graphs in Figure 2 for enrollment in TANF, SNAP, 

and Unemployment Compensation should follow the graph for the unemployment 

rate. Unemployment benefits and SNAP roughly conform to the pattern of unemployment, that is, as unemployment rises, enrollment in both programs rises as 

well. But TANF does not.13

More recently, a story published in June in the Wall Street Journal, based on a 

survey of 30 states that account for 88 percent of the U.S. population, found that 

the TANF rolls in 23 or the 30 states increased between March 2008 and March 

2009.14 The rolls in two states increased by more than 20 percent during this period. These findings, if confirmed by official data, suggest that the TANF program 

in many states may now be responding appropriately, albeit on a delayed basis, to 

the recession. 

Should TANF, the nation’s major cash benefit program for needy children, provide 

benefits to more people during a recession? Put this way, I think most Americans 

and most members of Congress would say yes. But we don’t need to rely on guesswork. There is direct evidence on this question in the case of members of Congress. 

Anticipating that single mothers leaving or avoiding welfare would have trouble 

finding work during recessions, the authors of the 1996 reforms put three important 

provisions to fight recessions in the legislation.15 The first allowed states to save 

federal dollars frothe TANF block grant without limit for a rainy day (see Section 

403(e) of the Social Security Act). As the welfare rolls declined after 1996, many 

states were able to save money because they were paying much lower cash welfare 

benefits. All of this saved money could be used to pay TANF benefits during a recession. The second provision allowed ‘‘needy’’ states that were experiencing high unemployment to, logically enough, count more job search as work. The third and most 

important provision, called the Contingency Fund, created a pot of $2 billion to be 

given to states that had high unemployment or substantial increases in SNAP enrollment during an economic downturn (see Section 403(b) of the Social Security 

Act). These three provisions demonstrate unequivocally that congressional Republicans and Democrats realized that recessions could be a problem for work-based 

strategies of helping the poor, that people on welfare would have trouble finding 

jobs during a recession, and that states would therefore need more flexibility and 

additional funds to pay benefits to a rising caseload. Over the first decade of welfare 
39 

reform, this issue of giving states additional money to handle a rising caseload was 

moot. During the booming economy of the last half of the 1990s, only one state 

qualified for money from the Contingency Fund. Even during the rise of unemployment in the mild recession of 2001, only a few states qualified for Contingency 

Funds jobs. But now that a serious recession has arrived, many more parents have 

lost their jobs and as many as 18 states are now or have been qualified for contingency funds since the recession began. So many states have qualified that the Congressional Budget Office projects that the Contingency Fund will run out of money 

early in 2010.16 Anticipating this evaporation of money from the Contingency Fund, 

in February of this year Congress put a provision for giving states up to $5 billion 

of additional money to pay for expand welfare rolls in the American Recovery and 

Reinvestment Act (ARRA). This action, consistent on its face with the intent of 1996 

law to give struggling states additional Republicans charging that Democrats were 

trying to undermine the work requirements of the 1996 law.17

Leaving aside the political fight over the new emergency fund, and keeping in 

mind the fact that since 1996 it has been federal policy to give states more flexi-
40 

bility in meeting work requirements and more money when their caseload increases 

during recessions, we should now raise the question of why, as shown in Figure 1, 

states seem to have been slow to increase TANF enrollment during the current recession. National caseload data on TANF enrollment show that the caseload increased by only 3 percent between December 2007 when the recession began and 

December 2008 (Figure 2). Further, caseload declines continued in 20 states, including drops of over 10 percent in five states.18 Why, in other words, is the TANF 

graph in Figure 2 so different from the graphs for unemployment compensation and 

SNAP? 

There is no doubt that states are giving TANF benefits to a much smaller fraction 

of eligible families that ever before. In 1995 before welfare reform, fewer than 

900,000 of the families qualified for welfare benefits did not receive them; by 2005 

this figure had increased to well over 3 million and it seems likely that the figure 

is higher still today. There are several possible explanations for why eligible parents 

are not being enrolled in the TANF program. These include increased stigma of 

being on welfare that makes families more hesitant to sign up; the alternative many 

mothers have of living with partners, friends, or relatives who have income; and living for a period on savings or borrowed money. But some of these families with children are facing difficult financial challenges, especially when there are more than 

three times as many of them as there were before welfare reform. 

Another possible explanation of the sluggish increase in TANF enrollment is that 

states, now in the worst financial shape they have been in for decades, have taken 

various actions to prevent parents who cannot find a job from coming on welfare. 

Foremost among these actions could be requirements—such as a 30-day job search 

before qualifying for welfare—that states impose on adults applying for welfare. 

Many states also conduct a protracted application process that could feature administrative hassle for applicants, causing some to give up before the application process is completed. Another administrative technique to trim the caseload is strict enforcement of rules that can lead to families losing their welfare benefit because of 

minor infractions. A recent survey of states conducted by the Urban Institute indicates that 42 states have programs that aim to ‘‘discourage enrollment’’ as the 

Urban Institute puts it.19 On the other hand, many states operate diversion programs that try to help adults intending to join the welfare rolls find jobs instead. 

Depending on how states help these parents find jobs, the diversion approach can 

make great sense for some families, especially those who would like to avoid welfare 

if they can. 

Another possible explanation for the delay in TANF caseload increases is that administrative problems are causing state TANF programs to take longer to respond 

to rising unemployment. As we have seen, last year, with unemployment rising rapidly, the national TANF caseload continued to decline in 20 states and rose only 3 

percent nationally. The trend toward increasing caseloads is continuing this year, 

and many more states are experiencing caseload increases. When we have complete 

data on TANF caseloads for 2009, it could well be found that caseload increases are 

greater in percentage terms than in 2008 and that many of the 20 states with declining caseloads in 2008 are now experiencing caseload increases. Thus, state 

TANF programs may be responding to the recession by bringing more families onto 

the rolls, but with a time lag. Further, some states may be responding more quickly 

than others. Because TANF is a state administered program, it is to be expected 

that evaluations of state performance in responding to the recession will show large 

variability across states. 

CONCLUSION

Congress and the administration should carefully investigate the response of the 

TANF program to the recession that began in December 2007. Next year’s reauthorization of the 1996 welfare reform law provides the perfect opportunity to learn a 

lot more about the response of TANF to the recession and on the basis of this 

knowledge to determine whether additional reforms are required. 

In conducting its investigation, Congress and the administration should define its 

goal as understanding how to maintain the strong work requirements in the TANF 

bill while providing temporary cash assistance to destitute families that cannot find 

work. The impact of the 1996 welfare reform law on employment and earnings by 

poor single mothers shows that most of these mothers are capable of finding jobs 

and improving their total family income during normal economic times. It would be 

a serious mistake if the nation’s response to the current recession were to dismantle 

the 1996 reforms and return to an AFDC-like program that provided cash welfare 

with few or no strings. That major policy shift would solve the problem of admitting 

more destitute mothers to welfare during a recession, but it would return us to the 
41 

days when millions of able-bodied mothers accumulated on the rolls and became victims of welfare dependency. 

Moreover, the combination of strong work requirements in the TANF program and 

the system of supplemental benefits provided to low-income workers—especially the 

EITC, SNAP, child care, and Medicaid—is the most effective poverty fighting strategy the nation has developed since the War on Poverty began in the 1960s. That 

strategy enabled us to achieve the lowest poverty level among female-headed families and among black children ever recorded within four years after passage of the 

1996 welfare reform law. Most—but not all 20—of those concerned about the wellbeing of low-income families, regardless of their political views, now realize that 

families cannot escape welfare unless they work.21 A return to the pre-1996 policies 

that caused welfare dependency is a return to a policy of guaranteed poverty. 

However, even the below-poverty benefits of TANF and SNAP are better than no 

public support when parents cannot find work. The nation’s welfare system should 

be premised on strong work requirements, but it should also adapt when unemployment rises and allow workers who can’t find jobs and who are not qualified for Unemployment Compensation to receive cash welfare. The 1996 reformers recognized 

this principle and included provisions in the law intended to make sure states had 

greater flexibility and enough money to pay for expanded welfare rolls during recessions. Similarly, the current Congress recognized the problem and drafted a new 

provision, included in the ARRA that would provide states with additional funds to 

ensure they could pay for expanded welfare rolls. 

Despite these provisions, it appears now that many states may have been too slow 

to take destitute families back on the rolls. We lack sufficient information to determine exactly why states may have been slow. So let’s use next year’s welfare reform 

reauthorization to find out. Permanent policies made during a recession are likely 

to constitute an overreaction to dire circumstances. My own view is that the TANF 

structure of strong work requirements with provisions for flexibility and additional 

funds during recessions is sound but that its provisions on helping states have 

enough money on hand to increase their rolls when parents experienced high levels 

of unemployment may not have worked as planned. Our goal now should be to find 

out why and to determine what changes in federal and state policy would allow 

states to respond more quickly and completely during the next recession—but without any permanent loosening of the work requirements. 

ENDNOTES

1 National Commission on Social Security Reform, Report of the National Commission on Social Security Reform (Washington, DC: Social Security Administration, January 1983). 2Sullivan v. Zebley, 493 U.S. 521 (1990). 

3Similarly, the definition of childhood disability was tightened so that approximately 100,000 

children were dropped from the SSI roles and many hundreds of thousands of children have 

since been denied SSI coverage under the new definition. Taken together, the two changes in 

the definition of disability are now and will continue to save taxpayers billons of dollars each 

year. 4 House Committee on Ways and Means, 1990 Green Book (Government Printing Office, 

1990), pp. 337-545; House Committee on Ways and Means, 1994 Green Book (Government Printing Office, 1990), pp. 337-359. 5 House Committee on Ways and Means, 1996 Green Book (Government Printing Office, 

1996), pp. 423-424 6The combined House and Senate vote was 406 to 122. See Ron Haskins, Work Over Welfare: 

The Inside Story of the 1996 Welfare Reform (Washington, DC: Brookings Institution Press, 

2006), p. 331. 7The bill also greatly reduced welfare benefits for noncitizens which removed a disincentive 

to work; ended the SSI benefits of drug addicts and alcoholics which removed a disincentive to 

work; and simplified and increased funding for child care, which provided an incentive to work. 8Gregory Acs and Pamela J. Loprest, TANF Caseload Composition and Leavers Synthesis Report (Washington, DC: Urban Institute, March 28, 2007). 9 James Ziliak has shown that the employment rates of never-married mothers, the group 

most likely to be on welfare, increased even more rapidly than the employment rates of all single mothers; see James P. Ziliak, editor, Welfare Reform and Its Long-Term Consequences for 

America’s Poor (Cambridge: Cambridge University Press, 2009), pp. 4-5. 10 Ron Haskins, Work Over Welfare: The Inside Story of the 1996 Welfare Reform (Washington, DC: Brookings Institution Press, 2006), Chapter 15; Rebecca M. Blank, ‘‘What We Know, 

What We Don’t Know, and What We Need to Know about Welfare Reform,’’ in Welfare Reform 

and Its Long-Term Consequences for America’s Poor, edited by James P. Ziliak (Cambridge: 

Cambridge University Press, 2009); Jeffrey Grogger and Lynn A. Karoly, Welfare Reform: Effects of a Decade of Change (Cambridge: Harvard, 2005), Chapters 5-7. 11Gregory Acs and Pamela J. Loprest, TANF Caseload Composition and Leavers Synthesis 

Report (Washington, DC: Urban Institute, March 28, 2007). 12 I have argued elsewhere that two important problems with welfare reform were that some 

mothers who lost their cash welfare did not work steadily. As a consequence, many of them were 

worse off financially than they had been before welfare reform. Another serious issue is that 
42 

most of the mothers leaving welfare failed to move up the job ladder to jobs with higher wages 

and employee benefits. There remain serious issues that should be examined thoroughly if Congress takes up reauthorization of welfare reform as scheduled in 2010. See Ron Haskins, Work 

Over Welfare: The Inside Story of the 1996 Welfare Reform (Washington, DC: Brookings Institution Press, 2006), Chapter 15; Rebecca A. Blank, ‘‘Improving the Safety Net for Single Mothers 

Who Face Serious Barriers to Work,’’ The Future of Children 17, no. 2 (Fall 2007): 183-197. 13These data are consistent with a front page story in the New York Times on February 2 

that drew attention to the claim that TANF was underperforming during the recession; see 

Jason DeParle, ‘‘Welfare Aid Isn’t Growing as Economy Drops Off,’’ New York Times, February 

2, 2009, p. A1. 14Sara Murray, ‘‘Numbers on Welfare See Sharp Increase,’’ Wall Street Journal, June 22, 

2009. 15 A fourth provision, the ability to borrow money at interest from the federal government, 

was little used. 16Personal conversation with Jonathan Morancy of the Congressional Budget Office on December 7, 2009. See also http://www.acf.hhs.gov/programs/ofa/tanf/apprTANFemerfund.html. 17Sara Murray, ‘‘Numbers on Welfare See Sharp Increase,’’ Wall Street Journal, June 22, 

2009, A1. 18 Urban Institute, ‘‘Highlights of State TANF Programs in 2008,’’ Washington, DC: Author, 

2009. 19 Ibid. 20Peter Edelman and Barbara Ehrenreich, ‘‘Why Welfare Reform Fails the Recession Test,’’ 

Washington Post, December 6, 2009. 21The combined maximum cash benefit from TANF plus the cash value of SNAP benefit provides families with income equal to about half the poverty level in the median state. See House 

Committee on Ways and Means, 2008 Green Book (Government Printing Office, 2008), pp. 7- 

51 to 7-52. 

Chairman SPRATT. Let me ask two questions and then turn it to 

Gwen Moore, and then we will go to others. 

First question: Pete Edelman’s article in the Post this weekend, 

is this the gist of what he was pointing to, that TANF had been 

changed significantly, but other programs which, in the past—cash 

assistance which had been available, were no longer available because they were left on the cutting-room floor in welfare reform? 

Mr. HASKINS. It just isn’t true. We have shown the data. Food 

stamps have been very responsive. We are spending more on food 

stamps, and there are more people on food stamps than ever before. I did not put Medicaid on there, but the same thing is true 

of Medicaid. They are at historic highs. 

So the safety net, those other programs have responded very appropriately. LaDonna is from the Center on Budget and Policy Priorities. Their credentials as a conservative organization are in 

lousy order, and they have constantly said that those programs responded very well because they were constructed that way. We 

thought TANF would respond well, too, but it hasn’t for some reason. 

So I just think that Peter is mistaken. 

Chairman SPRATT. Would you call that this single biggest deficiency in the safety net? 

Mr. HASKINS. Yes. I think the TANF program—it looks like it is 

a deficiency in the safety net, yes. 

Chairman SPRATT. And what would you do in short to fix it, 

make it more—— 

Mr. HASKINS. I don’t think we know enough to have a good answer. The obvious, the most straightforward answer was to give 

them more money, which we did in the contingency fund and now 

you have done in ARRA. And maybe the ARRA provision is the one 

that really convinces the states to try this. 

But I think there—and here is another big point—these are state 

programs. The federal government has very little control over the 

particular characteristics of the state programs. And it was the 

states that made these decisions. And what you will find, if you 
43 

look into this, is some states were quite good. If you look at Florida, which is surprising, a very conservative state, they responded 

early and quickly, probably more than almost any other state. Now 

more states are responding. 

And you need to bring the states in and ask them, why did it 

take you so long? How come you weren’t responsive early? As the 

unemployment rate went up in your state, how come there wasn’t 

a TANF response? 

I think we need to dig into that, as I have said. I think it is a 

problem, but I think it is solvable. The key is to solve it without 

destroying the mandatory work provisions in TANF. 

Chairman SPRATT. Ms. Moore? 

Ms. MOORE. Well, thank you, Mr. Chair. 

And I very much enjoyed this entire panel. 

I guess, just having listened to the four of you, the conclusion 

that I have come to, looking at these charts and graphs—and correct me if I am wrong—is that basically we have a kind of a safety 

net for people who are unemployed, who have been working and 

they go on unemployment insurance, but we don’t have a safety net 

for people who basically don’t have a job and depend on TANF. 

I guess, with respect to why the states didn’t roll out assistance 

earlier, I guess I want to yield to Pat Delessio from our state to 

describe—she was at the scene of the crime in Wisconsin when we 

ended welfare, the first state to do that—and describe her struggle 

with ‘‘job ready’’ and lack of educational opportunity. And perhaps 

that will address some of the points that you raised, Dr. Haskins, 

as to why people can’t get out of poverty. 

Pat, will you describe—— 

Ms. DELESSIO. Well, I can tell you, in talking with state officials, 

why they feel like the caseloads haven’t increased. And it is, in 

part, due to our system, our county/state system, where our counties or private agencies run W–2, operate the W–2 program. And 

what state officials have told me is that, even though they have 

told the counties to let more people on—and that is exactly what 

they said, let more people get on W–2—they have been reluctant 

to, because the money up front isn’t there. Especially counties and 

county boards are afraid to expend funds that they don’t know if 

they are going to be able to support these families for as many 

months as they need to. 

And in Wisconsin, I think we have been famous for reducing our 

caseload. And we did it basically by changing the rules, by saying 

that people who were job-ready, you know, who were able to work 

even though they didn’t have a job, couldn’t receive W–2. 

Ms. MOORE. Well, thank you for that brief review. 

And I guess my next question would be to Doctor—I can’t read 

your name because I don’t have my glasses on—to Dr. Pavetti. You 

know, I don’t understand—there seems to be a difference in whether or not poverty was reduced. There is a claim that among women 

who worked—that there was a reduction in poverty among children. But I really question those metrics since I know, in the case 

of Wisconsin, we really didn’t track people who were just thrown 

off the rolls and what happened to them. 

And so, when you look at your chart, Dr. Haskins, and see that, 

even though SNAP programs have increased, UC has increased, 
44 

there are zero-income families that are using SNAP, the fact that 

TANF didn’t increase, it would indicate to me that we don’t have 

a true metric of how many children are truly living in poverty and 

women who are living in poverty. 

So could you respond to that for me, please? 

Ms. PAVETTI. Well, part of the problem in trying to sort this out 

has to do with looking at averages, because what happened is that 

there were winners and losers when we did welfare reform. So 

there are people who did go to work and who were moved out of 

poverty. And then there were a group of families who really have 

very low-incomes who are far worse off. 

So, I am sorry I don’t have it here, but I can provide it, where 

we have charts where we look, over time, at what has happened. 

And you can see that there are parts of the safety net that really 

have increased in the number of people that they have moved out 

of poverty. And you see a huge gap in what has happened in 

TANF. 

So what we are seeing is a story where there is a group of people 

who have not as great needs, who have been able to make that 

transition, who are doing better. So you see them moving out of 

poverty. And then you see this group at the bottom whose incomes 

have just plummeted and are doing far worse. 

So it is a story that is more important to look at deep poverty 

and what is happening there. So I think that is—— 

Ms. MOORE. And averages are not a good thing. They are damn 

statistics. 

Dr. Haskins, let me let you weigh in on this. Because you have 

claimed—and I just haven’t seen where we have reduced the poverty, just like, you know, people who don’t work aren’t out of poverty on AFDC. I don’t see that they have gotten out of poverty by 

the TANF program either. 

Mr. HASKINS. The Congress pays billions of dollars to have one 

of the best statistical systems in the world. There is no question 

about problems with our definition of poverty, but poverty definitely declined, no matter how you measure it. Throughout the second half of the 1990s, it declined dramatically, more than it has 

since the 1960s. And you can quibble if you want to, but, you know, 

those are the numbers. And I think everybody agreed that that actually happened. 

Ms. MOORE. Well, I don’t agree, but my time has expired. Thank 

you. 

Chairman SPRATT. Mrs. Lummis? 

Mrs. LUMMIS. Thank you, Mr. Chairman. 

And thank you, members of this panel. It is a great discussion, 

considering the importance during this time, these recessionary 

times. 

Mr. Haskins, first for you, CBO’s analysis of the President’s 

budget forecasts a debt spiral, with debt levels not seen since 

World War II and a tripling of net interest payments on the debt 

over 10 years. 

Are you concerned about the impact of a debt spiral and its potential consequences for economic growth on the health of our safety net programs? We know we need safety net programs, but is the 
45 

overall health of our economy putting our safety net programs at 

risk? 

Mr. HASKINS. Yes. And, in fact, let me tell you an interesting 

thing that has occurred over the past 6 or 7 years. A number of 

quite liberal foundations that focus on children and children’s programs have funded organizations like Brookings, like the Center on 

Budget and Policy Priorities and other organizations that, roughly 

speaking, are both liberal and conservative, specifically to do everything they can think of to, A, call to the public’s attention how serious our debt crisis is and, B, work with Congress, if possible, to try 

to encourage people, especially people on budget committees, that 

we have to do something and we have to do it now. 

And the reason they are doing that is that they are afraid that 

we are going to reach budget Armageddon, in which we very substantially cut programs and increase taxes. And the programs that 

they are worried will be vulnerable are the children’s programs. 

And so, they would like to see us reduce the deficit in an orderly 

way. 

Yes, a deficit is a big problem, and it is a threat to the safety 

net. 

Mrs. LUMMIS. Thank you. 

Sue Berkowitz, you were quoted in The Wall Street Journal as 

saying, ‘‘The cash assistance funding in South Carolina is crowding 

out money to help people find jobs.’’ Does that ring a bell? 

Ms. BERKOWITZ. No, not at all. 

Mrs. LUMMIS. Well, let me go on and ask the question. So maybe 

that is an inaccurate statement. 

Ms. BERKOWITZ. I am not sure where that came from. 

Mrs. LUMMIS. Okay. According to the GAO, there are more than 

40 federal programs that send funding to the states for job training, including the Workforce Investment Act programs that are 

supposed to be available to all job seekers. 

Do you know, is your state coordinating with these programs effectively, the TANF program with the job training programs? 

Ms. BERKOWITZ. I think there has been some disconnect in our 

state, and I wouldn’t want to use South Carolina right now as an 

example of what is going on, on a state level, between the state 

agencies. There have been some concerns with our Employment Security Commission and what they have been doing to assist people 

in job searches and with job trainings. I will tell you that our 

TANF agency has been attempting to do what they can to help individuals identify better paying jobs and to increase their income. 

I would also want to respond to something that Dr. Haskins said 

when he was talking about whether or not the TANF program, 

while people are working, whether it has actually taken them out 

of poverty. And I would say that, in looking at what has happened 

with the state agencies and the pressures that have been put on 

them with the threat of sanction if people are not put to work, is 

what we are doing is we are finding people jobs that are not paying 

living wages, that they are not able to actually support their families through work. 

The majority of the people that I have counseled with over the 

years want to work. They don’t want to be dependent on the TANF 

program. The bigger problem for them is whether or not, with work 
46 

and with the other social safety net programs they may be able to 

access, whether that is going to allow them to be able to afford to 

work but, more importantly, as to whether or not they are going 

to be making money to take them out of poverty. 

In South Carolina, while our TANF rolls had gone down tremendously prior to this current recession, it really was not taking children and families out of poverty. So I think that we need to be 

doing a better job. We need to be more responsive in helping that 

particular population with accessing better paying jobs. 

Ms. PAVETTI. Can I just, sort of, add something to that? I think 

one thing that is important is that the same disincentives in TANF 

that serve people who need more than just job search to get a job 

exist in the WIA system, and even to a greater degree. So, often 

what you hear when you talk to WIA people is that they are not 

set up to be able to provide the employment services that they feel 

that TANF recipients need. They just don’t—they have so many 

issues going on in their lives, and they need a different kind of support that WIA struggles to provide, as well. 

And, again, both in TANF and in WIA, a huge part of the issue 

is the way we have set up performance standards that really reward states for serving people who are most able to get jobs on 

their own. And until we change those incentives about how we 

measure our performance, we are not going to be able to provide 

the work supports that people need to be able to get into the labor 

market. 

So I think that is, sort of, where some of the disconnect comes, 

is neither program is set up to deal with the reality of what people’s lives are and what their needs are to actually make that transition. 

Mrs. LUMMIS. I would like to give Dr. Haskins an opportunity to 

respond to that little round. 

And while you are doing that, could you perhaps address some 

of the duplication that may occur within safety net programs? And 

is there a way to consolidate them and to make them more efficient 

and perhaps more flexible so they could respond to the kinds of 

needs in a recessionary time that may be different from needs in 

a robust economy? 

Mr. HASKINS. Let’s talk first about the numbers of people who 

are just on welfare and people who are working at low-wage jobs. 

If you are just on welfare, roughly speaking, the cash value of 

food stamps and the welfare in a typical state is about $10,000. 

The poverty line for a family of three is around $20,000. So you are 

halfway to poverty. If you have a job for $12,000, you get $4,500 

if you have two children from the earned income tax credit and 

around $3,000 or $4,000 in food stamps. So you are almost at the 

poverty level with a job of just $12,000. If it is minimum wage, that 

is about a half-time job. 

So it should be clear to everybody that work, even at a low-wage 

job—and granted, the low-wage job does not take you out of poverty, but that is where government comes in. We have built this 

fabulous system. Congress made, I would say, at least 30 reforms 

over a period of 15 years to expand these programs and make them 

friendly to low-income workers. And now we are saying that, you 

know, it doesn’t work. It does work. It is a very good system. 
47 

Yeah, there is a lot of duplication. There was duplication in 1996, 

as well. We ended, I think, something like seven programs, which 

I was involved in at a staff level, and you never had a great experience until you have tried to end any program that the federal program has established. And we ended, I think, six or seven of them 

and created block grants. 

Now, block grants have their problems. I think LaDonna Pavetti 

is about ready to explode down there. But I think the TANF block 

grant, if we had had an inflation adjustment, it would have been 

a great success. 

We also created a block grant out of daycare. This is an exact response to your question. We ended several daycare programs, some 

of them entitlements, put all the money in a block grant, increased 

the amount of money, gave it to the states and said, ‘‘You figure 

it out. You are responsible for regulations.’’ We made them spend 

some money on quality, because quality is a big issue, but basically 

we gave them free reign. 

And I think almost everybody agrees that has worked well. We 

still have a problem with quality, but we serve a lot of people in 

daycare. There is not enough money in there to serve everybody, 

but you could solve that by putting more money in there. In fact, 

I think we should put more money in the block grant. 

So, yes, there is a way to promote efficiency. 

Mrs. LUMMIS. Thank you. My time is up. 

Ms. MOORE. Will the gentlelady yield? 

Mrs. LUMMIS. I will yield. 

Ms. MOORE. Thank you. I want to thank the gentlelady, and I 

will not be long. 

I guess I just wanted to ask Dr. Haskins and the other panelists, 

don’t you think that, by allowing a couple of things, that perhaps 

time limits is a barrier to really helping people get out of poverty 

and also limiting the type of education and training that we can 

provide for people in order to lift them out of poverty and to really 

help those people develop the skill sets that are important for our 

economy—there seemed to be a lot of focus in the 1996 reform to 

limit the amount of education and training. And we have, sort of, 

shot ourselves in the foot, in my opinion, by doing that. 

And thank you. 

Ms. PAVETTI. It is not just—limiting education and training is a 

part of it. But I think the limit is far greater than that, and it goes 

to the issue of the coordination. 

What we have done in TANF is we have created a very narrow 

definition of what the appropriate path to work is, and it is a definition that doesn’t really respond to the range of needs of people 

on TANF. 

So even states that are trying to coordinate with vocational rehabilitation, for their recipients who have disabilities, what they find 

is a conflict because the narrow definition of TANF means that 

they cannot meet the requirements by going to voc rehab. 

So I think what we need to do is to acknowledge that there are 

many different paths, and the best path to work for one person is 

not for the other. And for some, the only way they are going to 

move out of poverty and even need less of the supports that we provide, if they are working, is through education and training. 
48 

And states that really, sort of, do all of these gyrations are trying 

to make those opportunities available. So I think what we need to 

do is to think about a broader range of activities that really will 

lead people to work. And it will address a lot of issues, including 

the education conundrum. 

Mr. HASKINS. Time limits, I think, were essential for sending a 

message that—the name of the program is Temporary Assistance 

for Needy Families. It is not temporary unless there is some limit 

on time. 

There is an exception, though. A state can have 20 percent of its 

caseload above the time limit. So there is flexibility even in the 

time limit. Very few states ever reached that. Very few people have 

reach the 5-year time limit because they are gone by then because 

the program did send this very clear message. 

Education and training; the logic is wonderful. Wouldn’t we all 

love all of our kids and all of our young adults to go to college or 

at least get a 2-year degree or learn to be a plumber or something? 

There was a time when we spent $27 billion a year on these programs. We now spend something like $7 billion or $8 billion, because evaluation showed almost consistently that they produce 

very modest impacts. 

I think what you have in your mind is that we have a lot of people on welfare who are dying to have education. That is not true. 

There are some. And the states have a 30 percent exemption. They 

can have 30 percent of their caseload in educational activities. So 

there is flexibility now for them to have people in education, and 

a few states are close to the 30 percent limit. 

But TANF is a program for people to learn to work and get into 

the labor force. And that is what the program should primarily do, 

while leaving some room for education. But it is very difficult to 

show that the education has an impact on the people’s subsequent 

wages or even their ability to complete a 2-year degree. 

Ms. DELESSIO. If I could just add something, I think, in terms of 

education and training, it really is a range. And from what we see 

from our W–2 program is that most people don’t really increase 

their skills in any sense while on W–2. And, you know, short of a 

college education, people could be given very specific, through our 

technical college training programs, 6 months to a year that will 

lead to jobs that actually exist in the market. And we have not 

even attempted to do that. 

So I think, you know, we really do need to rethink how we provide incentives to states within those time limits. You know, the 

time limits are for the participants, but they should also be for 

states to help people move into work that is going to last. 

And we talk about minimum wage jobs. I think what we see is 

that, yeah, people get these minimum wage jobs, but they really 

don’t last. It may be in theory that if you get this job and you work 

40 hours a week, you are going to have this income on an annual 

basis. But what we see is that their hours are cut gradually or the 

jobs disappear altogether, and they move from one minimum wage 

job to another with periods of unemployment in between. And that 

is the reality. So it doesn’t really lead to a job that is going to last 

you and move you further along the economic scale. 

Mrs. LUMMIS. Will the gentlelady yield back? 
49 

Ms. MOORE. This is your time. 

Mrs. LUMMIS. Okay, Mr. Chairman. I yield back my time. 

Chairman SPRATT. Mr. McGovern? 

Mr. MCGOVERN. Thank you very much. 

I appreciate all of you being here. I want to thank Gwen Moore 

for organizing this hearing, and I appreciate your testimony. 

For the record, I should say that I, too, believe that we need to 

get our budget deficits under control, but I don’t want to do it by 

balancing the budget on the backs of the poorest of the poor in this 

country. So I hope that we can find other ways to do this without 

further exacerbating the problem of all these people in poverty. 

As a United States congressman, I am ashamed to state that 

hunger is getting worse in this country. And you have all testified 

that the demand for food stamps and emergency food is increasing. 

Over 36 million people, one in eight Americans, are on the SNAP 

program. And, nationally, caseloads have risen by 7 million people, 

or 24 percent, since last year. Caseloads are up 28 percent in my 

home State of Massachusetts. 

And I think the increase speaks to the extraordinary need in 

Massachusetts as well as the hard work by the state to be able to 

deliver benefits to eligible people. The increased demand for food 

stamps is happening at a time when state budgets are in crisis. 

States across the country are cutting their human service agency 

staff at the very time that they need more staff to be able to manage the flood of new applications. 

In parts of Texas, new applicants for food stamps must wait 60 

to 90 days to get an appointment. This is the case despite the fact 

that the federal law mandates that benefits be processed within 30 

days. And while Texas is the most extreme case, delays are common all across the country, even in my home state. 

So Congress has provided $300 million in additional administrative funds as part of the Recovery Act, thanks to Congresswoman 

Rosa DeLauro. But there was no maintenance of effort tied to the 

funds or a requirement that states continue to spend what they 

were funding and not just use federal money to facilitate cuts. So, 

in some states, the funding provided much-needed relief. In other 

states, the funds delayed staffing cuts, and, in other cases, the 

money was supplanted. 

So I have a couple of questions. 

Dr. Pavetti, in your testimony, you pointed out that SNAP is responding quickly and effectively to help low-income families during 

the economic crisis. But you and others have described how, in 

many states, TANF caseloads have remained virtually flat or declined. 

And we have all talked about the need for further investigation 

and hearings down the road, and maybe we need to adjust the 

TANF program. But the reality is, people right now need help, and 

people are not getting these benefits. There are people who are unable to pay their rents or electric bills or buy clothes for their kids. 

So I get that we need to look to the future. I guess my question 

is, what can we do right now in the short term to increase the responsiveness of TANF during this terrible economic crisis? 

And my other question is to Ms. Delessio. I know the number of 

people on the food stamp program has been rising dramatically. 
50 

And I mentioned the caseloads in Massachusetts are up 28 percent, 

and in some states they are up 40 percent. But it is my understanding that the food stamp participation has gone up by 37 percent, or 123,000 people, I think, in your state. 

I know that states are struggling to manage the increased applications for food stamps, and new applicants can’t get through to 

file applications or they must wait a long time to get their benefits. 

At the same time, many states are cutting their caseworker staff 

as a result of budget cuts. 

Is that the case in your state? And are these delays increasing 

the demand for the reliance upon food bank assistance? And would 

some additional assistance with administrative funds for staffing or 

overtime help some of these states manage its backlog? 

Again, my question really is—we have a problem right now. So, 

within the existing rules and regulations, with all that exists right 

now, how do we immediately respond? I got the request to look forward, but the problem is now. People who don’t have food right 

now are hurting right now. 

Ms. PAVETTI. One is I think that we need to look at what message states are hearing about meeting the work participation rates. 

Because as long as states believe that they have to meet the work 

participation rates, they are going to continue to make it difficult 

for people to get on to the rolls who cannot meet those rates. States 

face very serious budget constraints, and the thought that they 

could have a penalty imposed and lose more money is a constraint. 

So I think we need to think about how do we, sort of, have states 

realize that this is a different time and to think about that differently. I don’t think you have to eliminate a focus on work to do 

that. But I think that is an important piece. 

The other is, I think we need to look at whether or not the maintenance of the 20 percent funding requirement in ARRA is constraining states from being able to access those funds. States just 

don’t have the money to come up with the match. So we have been 

working with foundations who have been willing to try and, sort of, 

figure out whether they can help states to leverage their funds. So 

I think that is another thing, is looking about in the very short 

term whether there is a way to do that. 

The other thing I think that we could do is to use the increase 

in SNAP to really try and encourage—states can identify the families who are in dire straits, and whether you can do something to 

really encourage families to take advantage of those. 

The other thing is the same thing on the unemployment insurance. What has happened is that there are—work is a part of most 

people’s lives on TANF. It is no longer an issue that people are not 

working or haven’t worked. But only half of the people who have 

worked and who may be eligible are applying for unemployment insurance. So we may need to be doing some outreach to get more 

people to take advantage of those benefits. 

And then the other thing is, I do think the additional relief to 

states to help them to meet the demand more on an administrative 

level with some of the maintenance of efforts that were left out, I 

think, is an important step that will help. You know, states just 

don’t want to think about more people. They are so stretched with 
51 

having to do that, so I think we need to make it feasible for them 

to do that. 

Ms. DELESSIO. I just want to echo a little bit, in the State of Wisconsin, we were going to try to draw down the emergency funds. 

And they have indicated that they need more time to come up with 

the money to match. So that has been a real problem, and they 

have indicated that they would like to use that money, and we fully 

support this, for transitional jobs. 

In terms of the—Wisconsin is a little bit complicated because of 

our state/county system. So some counties are furloughing workers, 

others are not, although I think many more are. And some counties 

are experiencing worse delays in processing, but we are beginning 

to see it everywhere throughout the state. 

The food banks: Recently I heard there was a 20 percent increase 

over this time last year; that just measures the last year. And I 

would think there is probably more demand for food. But, again, 

I think the states are going to have—they are already struggling 

to keep up with processing applications. And I can’t emphasize 

enough how much this has hurt the elderly and disabled, again, because their means of access to counties are just much fewer. They 

don’t have the ability to walk down. 

So I think it is very significant. And if states don’t receive additional funding, at least in Wisconsin, that we can pass through our 

counties, we are going to see increases. 

Ms. PAVETTI. One other quick point is that the TANF regulations 

only allow people to look for jobs and have it count for 4 to 6 

weeks; in an economy like this, the expectation that somebody with 

low skills, low levels of education can find a job after looking for 

work 4 to 6 weeks is completely unrealistic. 

Mr. HASKINS. There is a provision in law that allows more— 

called a ‘‘needy state’’ provision that allows them to go above the 

4 to 6 weeks. So something like that is already in law. Maybe it 

isn’t generous enough. 

Ms. PAVETTI. It isn’t generous enough, Ron. It is 12 weeks. We 

are talking about extending unemployment for very long periods of 

time. So there is something, but it still isn’t enough. 

Mr. HASKINS. I just want to point out to the committee that the 

people who wrote the 1996 legislation thought of that and put flexibility in there. Maybe it is not enough. That is the kind of thing 

we ought to find out. 

I want to draw two considerations to your attention, thinking 

about giving states yet more to meet the need in their states. First 

of all, we have a deficit right now of a trillion dollars. The Budget 

Committee is responsible over the long run for figuring out how to 

pay that back. If you don’t, then our kids are going to pay it back. 

So if we want to spend more money, where does it come from? 

The second thing is—— 

Mr. MCGOVERN. Let me just say, I appreciate that a lot. But the 

reality is, for many, many years, we have been balancing the budget on the backs of the poor in this country. I mean, one suggestion 

is maybe we stop fighting so many wars that we don’t pay for, as 

a way to control the deficit. 

But, I mean, the notion that we are not going to help people who 

are desperately in need because we have a budget crisis, I think, 
52 

is unacceptable. We have to respond. I mean, people don’t have 

enough to eat. People are hungry in this country. We should be 

ashamed of that. 

And so I get the deficit stuff. And this is a committee where we 

are very much concerned with that. But the reality is that there 

are people who are hungry in the United States of America, and 

we have to respond to it regardless of the deficit. 

Mr. HASKINS. Could I make a second point? 

Mr. MCGOVERN. Sure. 

Mr. HASKINS. Just review what this committee and what the 

Congress has already done. The food stamp program was responding appropriately, and you even increased the food stamp program. 

People get more money from food stamps. The unemployment insurance program was responding appropriately. We are now spending something like $7 billion a month on food stamps, and we have 

dramatically expanded food stamps, or you have, and now the maximum benefit is 53 weeks. 

We entice the states to give more TANF dollars. We dramatically 

expanded the reimbursement rate for Medicaid. The Congress—I 

don’t know what else could you could do. You could do more of the 

same, I guess. LaDonna’s suggestion about the 10 percent match 

in emergency fund I think is a good idea. 

But the Congress has already done a lot. So those two considerations would give some people pause about how much more the 

Congress should do. 

Mr. MCGOVERN. Well, I will just conclude by saying I think what 

the Congress needs to do is to make sure that there is a safety net 

and that the safety net works. And I think what we are hearing 

today is that, notwithstanding good intentions, there are some 

holes in the safety net that we need to deal with. And these are 

real people, not statistics, not abstractions. 

But I appreciate all your testimony. Thank you. 

Chairman SPRATT. Ms. Tsongas? 

Ms. TSONGAS. Thank you, Mr. Chairman. And thank you, Congresswoman Moore, for hosting this and calling this hearing together. 

And I have appreciated very much your testimony. The stories 

are obviously very, very compelling. 

And I have one of my own. We have heard the statistics, and I 

don’t need to repeat them. But, this November, I held a roundtable 

event with social service agencies in a community that is experiencing 18-plus percent unemployment in my district, just to hear 

how they are dealing with the downturn and how I could help as 

we look at legislative solutions. 

Even with the incredible resources going toward the SNAP program as a result of the Recovery Act, too many in my district are 

still going hungry, just simply to reiterate what Congressman 

McGovern has said. I was overwhelmed by the number of agencies 

and nonprofits that reported hunger as the number one problem 

facing their clients. 

As one example of many, at the Lazarus House in Lawrence, 

they distribute eight tons of food each week, up from three and a 

half tons this time last year. And even that is too much, and it is 
53 

still not enough. So, clearly, in spite of our best efforts, hunger is 

a tremendous problem in this country. 

But I have a slightly different question that goes to a more structural issue looking forward, and that has to do with asset limitations in our programs, our safety net programs. 

Through categorical eligibility and some asset exemptions, we 

have addressed some but not all of the asset limits in the food assistance programs, but not in a very uniform way. Among federal 

antipoverty programs, more broadly, assets are treated very differently, creating a lowest-common-denominator effect for low-income families who may depend on more than one federal program 

to survive the downturn. 

These low asset limits require low-income families to spend down 

any modest savings, including retirement savings, they may have 

before they receive assistance. In my view, this is a penny-wise but 

pound-foolish strategy that ultimately costs the federal government 

more by forcing families, perhaps facing temporary needs, to permanently lose the assets that would help them once again escape 

from poverty once the economy improves. 

And to deal with that in a narrow context, I will be introducing 

a bill in January to address asset limits in SSI and peg them to 

inflation to begin to raise the lowest-common-denominator bar. 

My question, though, to all of you is, will families entering poverty as a result of the downturn be able to return to their former 

status once the economy recovers? Or are we seeing a new generation entering chronic poverty? 

The recovery is having a large impact on low- and middle-income 

families, but many are still struggling. What impact would higher 

asset limits have had on helping some families on the cusp of longterm poverty avoid it? 

Ms. PAVETTI. I think, again, this is probably an issue where 

there are different parts of the spectrum. So the families that have 

been successful at moving into the labor market have had success 

at increasing their incomes. I think that building up the assets is 

what they would all like to do and would help them. I think for 

people at the bottom, it wouldn’t. It wouldn’t help them as much. 

But I think that the simplification across programs is just a 

smart way to do business for government. It will save time and resources that can be used in other ways. 

As far as, though, sort of, what are the long terms, I think we 

need to acknowledge that the unemployment rate is going to be 

high for some period of time. And I know that Ron, sort of, worries 

that, you know, we are going to move away from this focus on 

work. But I think if we think more about long-term opportunity, 

it is a perfect time for people on TANF or on other programs to 

take advantage of education. And we need to make that a more viable opportunity for them. 

So I think that, yes, I have been concerned with the long-term, 

but I also think there are things we can do to fix some of the constraints that would allow people to use some of this time to just 

create a better future for themselves, and we should do that. 

Ms. TSONGAS. Would anybody else like to respond? 

Ms. DELESSIO. I would just like to note that, in Wisconsin, we 

have no asset limit for our medical assistance program for families 
54 

called BadgerCare. We have also eliminated it in our food stamp 

program and our child care program, which, in terms of administrative ease, has been great. 

We do have an asset limit for TANF, but it does allow families, 

middle-class families, now to utilize food stamps without having to 

worry about spending down assets. 

Ms. TSONGAS. Thank you. 

Ms. BERKOWITZ. And I would say, in South Carolina, we have different asset tests for different programs. We have an asset test for 

the TANF program, and we have a separate one for the low-income 

families. 

I think that there has been a real problem with families being 

able to engage in one-stop shopping, for lack of a better word. What 

we are seeing are people applying in one state agency and the 

other state agency not wanting to take the information from the 

first state agency because of the differences. That causes a lot of 

administrative costs. It causes suppression in going from one program to the other. And I think that it would be wonderful to see 

one asset test for all of the different programs and recognizing 

that, for some things, we need to eliminate certain assets completely. 

Ms. TSONGAS. Thank you. My time is up. Thank you. 

Chairman SPRATT. Mr. Andrews? 

Mr. ANDREWS. Thank you, Mr. Chairman. 

I would like to thank the panelists and my friend, Congresswoman Moore, for making this possible today. 

I certainly subscribe to the idea that, if we do not deal with the 

exploding budget deficit and the resulting debt, that the programs 

most likely to be hurt and the people most likely to be hurt are the 

ones we are talking about this morning: food stamps, TANF, housing assistance, and whatnot. 

I wanted to come back, Dr. Haskins, to your invocation of a budget Armageddon—because I think you are right; we are facing one— 

and ask you in the context of this morning’s discussion about some 

of the choices that we have. 

Do you agree that entitlement spending is one of the driving 

forces behind that budget Armageddon? 

Mr. HASKINS. Yes. 

Mr. ANDREWS. Do you agree that Medicaid and Medicare are two 

of the most important entitlements in that context? 

Mr. HASKINS. Yes. 

Mr. ANDREWS. One of the choices the Congress has is whether 

to scale back Medicare and Medicaid outlays by about $500 billion 

over the next 10 years in the health reform bill. No one on the minority side voted for that. 

Are you aware of any of their ideas to reduce Medicare or Medicaid outlays? 

Mr. HASKINS. In the past, the Congress—— 

Mr. ANDREWS. How about now? 

Mr. HASKINS. You know, I am not a staffer. I don’t know exactly 

what their proposals are. I am not responsible for them. As you 

well know, Republicans would be quite pleased to cut a number of 

programs, including some—— 
55 

Mr. ANDREWS. Well, of course, that is contrary to their behavior, 

though, because when they were in the majority, they did affect entitlement spending in Medicare. They increased it by $800 billion 

without paying for it in the Medicare Part D. 

So if you want to talk about the—one of the genesis points of this 

entitlement is that the former majority added $800 billion and did 

not offset it with revenues. And it opposed the present proposals 

to reduce outlays by about $500 billion over 10 years. As a matter 

of fact, the standard bearer of the party in the Senate, presidential 

standard bearer, attempted to strip all those savings out of the 

Senate bill last week on a floor amendment and failed, which I 

found to be uncharacteristically unwise. 

What about revenue options? The tax cuts that the erstwhile majority enacted in 2001 and 2003 are expiring in the next 18 months. 

If we let them all expire, we would add $2 trillion of federal receipts. If we only permitted those affecting the top 5 percent to expire, we would add about $800 billion to the federal receipts. 

What should we do, in your opinion? 

Mr. HASKINS. I have written, since I was no longer a staff member in Congress, that the solution to the deficit was half tax increases and half cuts in spending programs. So I certainly would 

have taxes on the table. 

Mr. ANDREWS. Good for you. 

Mr. HASKINS. But I would do it in the context where I would not 

increase taxes unless Democrats were willing to cut spending programs. I would put them together into one package, like we did 

back in 1993. 

Mr. ANDREWS. Which almost all of us voted to do in the health 

reform bill and no one on the other side did, in Medicare and Medicaid. 

Let’s talk about another source of the Armageddon. Ms. Delessio, 

you talk about a person in Wisconsin who is a single mother living 

with her son, caring for a son with cerebral palsy, recently lost her 

job and whose husband died suddenly, leaving them without health 

insurance. 

People below 200 percent of the poverty level typically spend 30 

percent of their income on health care. If the bill that was before 

the House, the health reform bill, were passed, the woman that you 

are talking about would probably pay about 3 percent of her income for health care, if that, because she may be Medicaid-eligible, 

but if that. She would pay about 3 percent and have a robust 

health insurance policy for herself. 

No one on the other side voted for that bill. Do you think that 

their judgment was right or wrong? 

Ms. DELESSIO. Obviously, I believe people should have health insurance and everybody should have access to health insurance. In 

fact, we were able to get this family on our BadgerCare program 

after they came to us. You know, when she returns to work, whether that will continue, I don’t know. But, I mean, I think that what 

we are seeing is, even among working people, increasing numbers 

losing their employer-sponsored health insurance. 

Mr. ANDREWS. And finally, Dr. Haskins, one of the ideas in the 

House health reform bill is to make single adults and all those ineligible for Medicaid who make less than 150 percent of poverty 
56 

level eligible for Medicaid. Do you think that would be a good work 

inducement for people who might otherwise choose not to work? 

Mr. HASKINS. I don’t. 

Mr. ANDREWS. What would be a better one? 

Mr. HASKINS. The current system that we have allows especially 

mothers leaving welfare to get at least a year of Medicaid coverage, 

and I would even give them more. 

Mr. ANDREWS. But how about a working person who makes 145 

percent of Medicaid who doesn’t get insurance from their employer? 

What should we do for them? 

Mr. HASKINS. Some subsidy might be appropriate, but I would 

not automatically make them qualified for Medicaid because, you 

know, it is almost impossible to pay for it. If do you it in the context of a huge bill where you are raising revenues and they are 

real, then that makes more sense. But there should be—— 

Mr. ANDREWS. As we are here. Because the CBO scored our bill 

as reducing the deficit by over $100 billion over 10 years. 

I yield back. 

Mrs. LUMMIS. Will the gentleman yield, before he yields back, to 

me briefly? 

Mr. ANDREWS. If the chairman permits. 

Mrs. LUMMIS. I have bills that would address your concerns that 

I would be happy to share with you after the holiday season. 

As a member of the Republican Party who was not here during 

the years that you described and that wants to take a new approach rather than the approach of the current majority party, 

which is to double the deficit in 5 years and triple it in 10, my response is to forget about what the Republicans did when they were 

in the majority and what you have done since you were in the majority and—— 

Mr. ANDREWS. If the gentlelady will yield—— 

Mrs. LUMMIS [continuing]. We would be happy to work with you 

to solve problems, instead of point fingers. 

Mr. ANDREWS. Well, since it is my time, I would ask the 

gentlelady a question. Does she favor permitting the tax cuts to be 

repealed or to keep them permanent? 

Mrs. LUMMIS. I favor reducing spending, which is something that 

neither Republicans nor Democrats have taken seriously. 

Mr. ANDREWS. Do you favor permitting the tax cuts to expire our 

not? 

Mrs. LUMMIS. I do not. I favor cutting spending. I favor cutting 

spending. 

Mr. ANDREWS. Thank you. 

Chairman SPRATT. Ms. DeLauro? 

Ms. DELAURO. Thank you, Mr. Chairman. 

I want to say thank you to my colleague, Ms. Moore, for asking 

for this hearing. 

I suppose one further comment on the deficit, in recent activity, 

at least in the House of Representatives, was—and, Mr. Haskins, 

I would be interested in your view and in my colleague’s—well, my 

colleague is leaving the hearing room. But what is your attitude 

with regard to the estate tax bill that was just passed by the House 

of Representatives? 
57 

Mr. HASKINS. I don’t know the particulars of the bill. I don’t have 

any opinion on that. 

Ms. DELAURO. On estate taxes in general, do you have any 

thoughts? 

Mr. HASKINS. No. 

Ms. DELAURO. Well, just to make a point to people who concern 

themselves with the deficit, that was $234 billion not offset. And 

don’t take my word for it; you are all statisticians, economists, et 

cetera. The beneficiaries of the estate tax are the richest 1 percent 

of the people in this Nation. So let’s not talk about deficits out of 

both sides of our mouths. Let’s talk about a current crisis that we 

have. 

I will just give you an example from my State of Connecticut. 

There is a 24 percent increase in the use of food stamps this year. 

It has risen by 55,000 people. We went from 231,000 to 286,000 

people. The unemployment rate in the State of Connecticut went 

from 4.9 percent to 9.8 percent in less than 18 months. 

Now, the numbers have consequences because the numbers reflect people’s lives. No job, no wages, no health care, no ability to 

take care of what people view as their responsibility: taking care 

of their families. 

And one of the things that has always been very interesting to 

me is listening to people who would say that, if we extend unemployment benefits and if we provide training and if we provide food 

stamps, that, in fact, people will stop looking for a job. That is the 

way that individuals are regarded. That is how they are demeaned, 

when fundamental to most human beings and their self-description 

is about their job and what they do and what contribution they 

make to society and their wherewithal so that they can take care 

of the economic security of their families. 

And if we want to live in a world of numbers and statistics and 

refuse to look at the plight of the people behind those numbers and 

statistics, then we are going down the wrong road, whomever 

serves here, Democrats or Republicans. This Nation is in a crisis. 

Do office hours every week. Look in people’s eyes, with the fear 

that they have that they can’t make it and there isn’t anybody out 

there to support them. 

We all do pretty well in this institution, and all the panel members as well. We take good care of ourselves. But they don’t have 

anywhere to turn. And, frankly, when they have turned here in the 

last several years, there has been a deaf ear. Well, I hope to God 

that our ears are open in this administration and that we are going 

to do something about this. 

And, Mr. Chairman, if you would give me a second to ask a couple questions, I would do it. I didn’t intend to make a speech, but 

I will be damned—excuse me—if we don’t call the shots for what 

they are right now and what is happening in this country. 

Let me ask about refundable tax credits. And I don’t know if it 

has been discussed because I wasn’t here for the whole hearing. 

The child tax credit, in particular. It is available to families with 

earnings of at least $3,000. If they earn less, they are too poor to 

claim the credit. 

And I guess what I will do—to Mr. Haskins and Dr. Pavetti, do 

you believe that, if we were to make the benefit, the child tax cred-
58 

it, partly available to families starting with their first dollar of 

earnings, that we could help to make a difference in terms of their 

economic security? 

Ms. PAVETTI. Yes. And I think that, again, it addresses, sort of, 

what I talked about of having, sort of, people at the top and the 

bottom. Again, so many families who end up on TANF or who end 

up on food stamps are workers who have lost their job for whatever 

reason, and we need to be able to figure out how do we support all 

families who work. 

So I think it is a reality that not everybody can work all the 

time. They lose their jobs for lots of different reasons. And so I 

think really trying to figure out ways to provide more support is 

a good idea. And I think the child tax credit, making that available 

to more families, is one way to do that. 

Ms. DELAURO. Thank you. Mr. Haskins? 

Mr. HASKINS. I would not. 

I support the child tax credit. I always wanted to make it refundable. Again, when I was no longer in Congress, I wrote articles and 

books recommending that we make it refundable. And the 

refundability that I favored was roughly the one that you have put 

in the ARRA, where you count income above I think it is $7,000. 

Ms. DELAURO. No, it is $3,000. We moved it from $8,500 to 

$3,000. 

Mr. HASKINS. Yeah, one of the earlier ones was $6,000 or $7,000. 

So I would support that. 

I would want to look at it in the context—we already have negative taxes for the whole bottom 40 percent of distribution, if you 

just consider income taxes. So we are already using the tax code 

to give a lot of money back to low-income families. We are doing 

a terrific job, and I have always supported that. But why we would 

give them more in the context of the kind of deficit we have now? 

Ms. DELAURO. Well, if you take a look—because if you go down 

from 3,000 to zero, you are really going to deal with the underemployed, in terms of people’s hours, which have moved from a certain number to less. 

But, quite frankly, in terms of the unemployed, you have lost 

your job, you have lost your health care, you have lost your child 

tax credit, because it is not refundable. So should we move in that 

direction? 

Mr. HASKINS. It is refundable, but you have to have an income 

to get it. 

Ms. DELAURO. So what happens to those families that have lost 

it? So is there anything that you would suggest that we try to do 

with regard to a tax issue? 

Mr. HASKINS. Yes. I think you have already done a great job. You 

have expanded unemployment insurance in almost every way conceivable, including consideration for COBRA health coverage, increasing the benefit for every American and making it go as long 

as 53 months. I mean, the Congress has already done a lot. 

Ms. DELAURO. No, not the Congress—— 

Ms. MOORE. Will the gentlelady yield? 

Ms. DELAURO. In a second, I will. 

Not the Congress. Not the Congress. I am going back to what my 

colleague said here. Not one single vote from the minority, not one. 
59 

And that is a story to be told to people whose livelihoods these 

folks purport to represent. Not one single person who believes in 

that effort. 

I would be happy to yield if I have the time to yield. I don’t have 

any time to yield. 

Ms. MOORE. Thank you for yielding, gentlelady. 

I just want to ask Dr. Haskins, because he has referred to the 

success of the unemployment insurance and the expansion on several occasions, to the extent we are talking about TANF, you know, 

that is typically a program, like AFDC, that is available to women, 

single women and children, and unemployment insurance is typically available to men. We have seen a lot of men lose construction 

jobs and those kinds of jobs that were covered by unemployment 

insurance. And women are very heavily employed as hotel workers, 

restaurants, and not covered by unemployment insurance. 

Do you see any difficulty or have any recommendations for us 

with respect to the disparity in the safety net for those people—for 

men who are covered by unemployment insurance and women who, 

despite their work efforts, are not covered by unemployment insurance? Is that a difficulty for you? 

Mr. HASKINS. First of all, there is nothing in the law, itself, that 

discriminates between men and women. And yet there are all kinds 

of complicated historical reasons and so forth that women happen 

to be in industries that, on average, they don’t accumulate the 

amount of time they need and especially the consistency. 

And the reason that they leave their jobs, I would say the number-one—LaDonna may have more information on this than I do. 

But several years ago, the number one reason that people did not 

qualify for unemployment insurance was not that they didn’t earn 

enough money in enough quarters, but they voluntarily left their 

job. So you may want to look at that or the Ways and Means Committee, which has jurisdiction, may want to look at that. But that 

has always been a criterion—— 

Ms. MOORE. I am just talking about pink-collar jobs where 

women can’t get unemployment. 

Mr. HASKINS. Well, I am telling you the reason they often are not 

covered is not that they are in pink-collar jobs. They make plenty 

of money to meet the quarter requirement and the dollar requirement. They often have voluntary separation from their jobs. 

Chairman SPRATT. Let’s go to Mr. Connolly, who has been waiting a long time. 

Ms. DELAURO. Yes. Thank you. 

Thank you, Mr. Connolly. 

Mr. CONNOLLY. I thank the chairman and thank the panel. 

One of the concerns I have, as somebody who spent 14 years in 

local government, is that when we talk about the safety net, we, 

of course, understandably, have been talking a lot about federal 

programs. But I am worried about the fraying of the safety net at 

the state and local level. 

If you look at what is happening, state after state, to their respective budgets, their ability to handle growing rolls of folks who 

need to seek help with the safety net, whether it be TANF or food 

stamps or Medicaid or state- or locally run free clinics or wellness 

centers, whatever it may be, affordable housing, emergency hous-
60 

ing, all of those things are at risk, given the most recent estimate 

that, come January, you may be looking at somewhere north of 

$400 billion in accumulated budget gaps that, by either constitution or by statute, must be closed. That has a direct effect on the 

safety net. 

And I wonder whether the panel might want to comment about 

that parallel reality that is equally bleak and very troubling, in 

terms of peoples’s lives that will be affected if states and localities 

have to cut back significantly to meet those budget gaps? 

Ms. BERKOWITZ. I think that the point you have raised is important. It is part of why the center has been advocating for one of 

the policies that we think is most important in the short term, is 

to extend fiscal relief to states. Because the states do have a huge 

role, and they do have to balance their budgets. And if they do not 

have additional resources to help them during these difficult economic times, what we have been talking about today is going to get 

much worse for many people. 

So we think that, you know, again, we are not talking about, sort 

of, a long term. We are talking about phasing down more slowly, 

so that states continue to get the extended FMAP and they continue to get the fiscal stabilization fund, they get extra help to help 

with the food stamps, we make the TANF—so there are, I think, 

a lot of things that we really think can be done in the short term 

that will really help things from getting as bad as they could. 

Mr. CONNOLLY. If I may, at risk of piling on, the original House 

bill, the Recovery and Reinvestment Act, had more money both for 

infrastructure to create jobs and for relief of states and localities 

for precisely the reason you laid out, both of which were pulled out 

by the three members of the minority party in the other body who 

were willing to negotiate but the price of their support was that we 

substituted AMT tax relief for the middle class for those two provisions. And, without arguing the merits of that, that is why the bill 

had even less than originally contemplated for those purposes. 

Mr. HASKINS. It had $144 billion in relief for states and localities, 

though. So it was still pretty generous, don’t you think? 

Mr. CONNOLLY. I do. But, as somebody who comes from a locality, I can tell you, it didn’t begin to address the problem, Dr. 

Haskins. And now we are going to be revisiting the problem, come 

January of next year, because the situation has deteriorated. We 

plugged some holes, but we didn’t plug as many as we wanted to, 

actually, in the original legislation. 

Ms. DELAURO. Will the gentleman yield for a second? 

Mr. CONNOLLY. Of course. 

Ms. DELAURO. $80 billion I believe it was roughly, $70 billion or 

$80 billion for the AMT, which, by all accounts and by every economist who wrote about this, had not one shred of a stimulative effect. And that was done as opposed to trying to do something about 

stimulating the economy. 

Mr. CONNOLLY. It was done at the price of political support in 

the other body. Because, as Ms. DeLauro pointed out, not a single 

member of that minority party here in this body was even willing 

to talk about the legislation. 

I am sorry. I interrupted you. 
61 

Ms. PAVETTI. Well, no, just quickly, I think that on the state fiscal relief, besides the, sort of, needing to have it, I think the other 

issue is it needs to happen quickly. Because states are doing their 

budgets now, and if they don’t know that there is additional funding coming, then they are going to be proposing both tax increases 

and cuts in their budget. And so, that is just critical. 

I mean, we estimate that if there is not additional stimulus, that 

you could have a loss of about 900,000 jobs. Because, again, states, 

if they don’t get the money, they have to close their budget gaps, 

and they will cut. And they will have to do that, and they will do 

it quickly. 

Mr. CONNOLLY. Dr. Haskins, one final question. My time is running out. I was very heartened to hear you say that, in your paper, 

since you have gone to Brookings, leaving here, you call for a combination of spending cuts and tax increases, obviously a sentiment 

not shared by our ranking member, Mrs. Lummis. 

I wonder, just having worked up here, is it your impression that 

members of the minority party would, in fact, ever be ready to support that proposition—that is to say, be willing under any circumstances to, in fact, vote for revenue increases that involve new 

taxes? 

Mr. HASKINS. No, I am not a fortune teller. I am a scholar. I 

study the past. I don’t know what they will do. 

But we will not get a budget deal to really have a serious impact 

on the budget unless taxes are increased or we reform taxes, which 

results in a net increase in taxes. Taxes have to be part of it, there 

is no question. 

Mr. CONNOLLY. But I assume—my final point—I assume, given 

the fact that you are an intellectual and you are dealing with the 

subject straightforwardly, I assume you would agree that those 

who take a pledge, a priori, that no matter what, no matter what, 

I will never, ever, ever vote for any kind of tax increase or anything 

that smells, looks, walks, or quacks like a tax increase, frankly, 

precludes an honest discussion about that issue if I have already 

sold my soul and my vote in advance. 

Mr. HASKINS. Look, I am a Republican. I was a loyal staffer up 

here on the Hill for many years. I don’t want to say things that 

are going to put the Republican Party in a difficult situation. But 

I can tell you, personally, I would never sign a pledge like that. 

Mr. CONNOLLY. Thank you. 

Thank you, Mr. Chairman. 

Chairman SPRATT. Thank you, Mr. Connolly. 

Ms. DeLauro, did you have another question you wanted to ask. 

Ms. DELAURO. I did, Mr. Chairman. And it had to do with—isn’t 

Mark Zandi the economist who says that, for every dollar spent on 

food stamps, there is $1.74 in GDP growth and, for every dollar 

spent on unemployment benefits, there is a $1.61 in economic 

growth. ‘‘By contrast’’—and this is Zandi—‘‘you put out a dollar for 

various business tax breaks, you only get 25 cents or less.’’ 

Just in terms of the explanation here, why the benefits affect 

economic growth, does continuing or expanding the benefits belong 

in job-creation legislation? 

Ms. PAVETTI. It does. And the reason why it does is that there 

is a multiplier effect. Basically what happens is that, particularly 
62 

in food stamps, TANF, unemployment insurance, those benefits are 

very well-targeted. They are targeted to people who are going to 

spend what they get. They don’t have the extra resources not to 

spend them. 

So basically what happens, in using food stamps as an example, 

is that when somebody goes to the store to buy food, basically what 

you have done is you create this chain where the store needs to 

hire people to be able to serve you; the suppliers stay in business 

because they need to supply the food that you are going to buy— 

I mean, the distributors; and then the suppliers who actually are 

producing the food. So there is a whole chain of people who benefit 

from that money that is going to food stamp recipients or from people who are going to spend it in the economy. 

On the other hand, while there is some benefit from tax increases, they are just not well-targeted. Some of it is a replacement 

for things that would have happened anyway. And there is no 

guarantee that it ends up actually being spent in the same way 

that money is very well-targeted. 

So it is this multiplier effect of what happens when you target 

benefits, and there are jobs that are maintained especially as a result of that. 

Ms. DELAURO. Any comment, Ms. Berkowitz? 

Ms. BERKOWITZ. Well, I would just add that the money that has 

been invested in South Carolina through food stamps, through unemployment is money that, as Dr. Pavetti said, it is money that allows businesses to exist, hire new employees, and stays in our 

economy. I can say that, without the additional infusion of federal 

dollars in our state while we are facing incredibly hard times, we 

would see a much higher unemployment rate and more people in 

need. 

Ms. DELAURO. So, in fact, your communities, your states can’t 

really succeed or you will fail without these increases in these benefits or seeing these benefits concluded at the end of 2010? 

Ms. BERKOWITZ. Oh, absolutely. I think that right now as our 

state is formulating its budget and we are looking at—and everybody keeps talking about the cliff when the federal dollars end— 

everybody is trying to figure out how are they going to project 

budgeting for the next year. And while we are already looking at 

additional budget cuts because of the weak economy, there is no 

question that there is going to be a ripple effect if there are not 

additional dollars that are appropriated and sent through fiscal relief to the states. And there is no question that that will more than 

likely have a disparate impact on safety net programs and the 

lower-income community. 

Ms. DELESSIO. I would totally agree with that. I think the same 

thing will happen in Wisconsin. And I think for areas that were already distressed, like Milwaukee, it will be devastating. 

Ms. DELAURO. Dr. Haskins, on the—— 

Mr. HASKINS. No comment. 

Ms. DELAURO. No comment? Okay. That is fine. 

I also wanted to add that the FMAP program, quite frankly, 

which ends on the 31st, what essentially will happen if nothing is 

done there and the states do not have any notification that we will 

be doing anything, come August what we will see is massive layoffs 
63 

in education. Because states will have to make a determination of 

whether to deal with health care and laying people off or where to 

do go to deal with the cuts there. So we will see that there will be 

a massive, again, layoff of teachers, et cetera. So that is why, in 

my view, relief to the states is critically important. 

I will make a final comment, and I didn’t get involved in the— 

we had moved on. I think one of the issues with regard to women— 

and we were talking about employment and unemployment. The 

fact of the matter is, with regard to women and what they do get 

to in their retirement years with regards to Social Security, yes, 

women have had in the past responsibilities as caregivers for children or for elderly parents. And, yes, it is a voluntary separation 

if there isn’t anybody home to take care of your kid. On the other 

hand, what we don’t do is to make sure that women who are in the 

same exact jobs as men, as we are in this body, we get paid the 

same amount of money, not the case for women, whether they are 

bus drivers, waitresses, engineers, news anchors, college professors, 

get paid 75 or 77 cents on the dollar. That has an enormous impact 

on what happens to them as they are making their way through 

their lives and the loss of income, but the incredible effect it has 

on their retirement, as well, which is why one of the highest cohorts of people in poverty today are women over the age of 75 or 

beyond, because we live longer. 

So, Mr. Chairman, you have been very, very indulgent with us. 

And thank you again, Gwen. 

Thank you. 

Chairman SPRATT. Ms. Moore? 

Ms. MOORE. Thank you, Mr. Chair. I just want to thank you 

again for enabling us to have this hearing. 

And I do want to say to each and every one of the panelists that 

you have been very clearly prepared and given us great information. 

I just wanted to say that one of the things that I have, sort of, 

noticed from all of your testimony, including Dr. Haskins’s testimony—I think he was very, very candid in his written and verbal 

testimony here—that the way we administer TANF is very haphazard as a safety net versus how we administer other safety net 

programs like the unemployment compensation program. 

If you are eligible for unemployment compensation, if you have 

worked, if you make a certain—the child tax credit—if you make 

a certain amount of money, you are treated very differently than 

if you are just drop-dead poor and have no skills. 

So, with respect to the reauthorization of TANF, I do think—and, 

Dr. Haskins, you pointed out very clearly in your testimony—that 

there is a lag time, which I think could be very deadly for some 

people. When I consider the possible blizzard that is going on in my 

area right now, I think about someone requiring you to do a 30- 

day work search before you can access any benefits. Or the administrative barriers that are put in front of you because the state, as 

Ms. Berkowitz has indicated, is terrified of the sanctions that they 

may receive. Or the stigma of receiving TANF funds versus rushing 

down to get your unemployment; and even being able to apply for 

unemployment online, quite frankly, making it very convenient for 
64 

you. And there is a disparity in men and women who qualify for 

unemployment compensation. 

And so, it occurs to me that, while we may not abandon the 

work-based program, as many of you have already indicated, it is 

going to be a long time before we have full employment—that is, 

only 5 percent unemployment nationwide. So we better look at reauthorizing TANF with the recognition that we need to reduce 

some of the strictures for people getting aid when they need it. 

Thank you so very much for your appearance, and thank you so 

very much for being prepared and for indulging us. 

Chairman SPRATT. Let me echo what Ms. Moore just said. You 

have, each one of you, added something to our understanding of 

this problem, and you have brought your own authoritative views. 

And we appreciate the time you have put into it and what you have 

left behind. We definitely have benefited from this hearing, and we 

appreciate, once again, your appreciation. 

Before closing, let me ask unanimous consent that any Member 

who wishes and did not have the opportunity to submit questions 

may have 7 days to submit questions for the record. 

The hearing is now adjourned. 

[Whereupon, at 12:18 p.m., the committee was adjourned.] 

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