Fix bloated welfare system

By Gary D. Alexander

Seventeen years ago this August, President Bill Clinton signed into law Temporary Assistance for Needy Families (TANF), an antipoverty initiative involving "block grants" to the states that replaced the nation's formerly open-ended cash-welfare program. Hailed as a breakthrough, the 1996 legislation contained a provision that disqualified noncitizens from program eligibility unless they had lived in the United States for at least five years.

Why the bipartisan reform didn't permanently preclude noncitizens from the program is not clear, yet even this five-year rule is among several provisions that many states have resisted implementing. That oversight may explain why the Boston bombing suspects and their parents had benefited from more than $100,000 in TANF money, food stamps, and public housing since coming to America in 2002.

Apart from indicting federal agencies that have granted legal status to noncitizens, the complicity of the safety net in subsidizing Islamic extremism in the Bay State should wake up lawmakers to the need for truly fixing the welfare system.

Since the end of the Reagan presidency, the American welfare state has mushroomed beyond any proportion to actual need. More than 80 different "means-tested" programs are deeply embedded in at least nine federal departments; welfare expenditures have grown faster than the economy and population growth, faster than increases in the poverty rate, and faster than federal expenditures on defense, education, Social Security, and Medicare.

Counting programs such as Medicaid, TANF, food stamps, the Earned Income Tax Credit, housing aid, energy assistance, Head Start, and Supplemental Security Income, federal antipoverty spending has increased in real terms from 2.2 percent of GDP in 1989 to a projected 4.3 percent in 2013. You read that right: Nearly two decades after we "ended welfare as we knew it," welfare spending as a percentage of the national output has nearly doubled in real terms.

Including matching state funds, the welfare system is now a $1-trillion-a-year monstrosity. Judging from my experience managing the system in two states for nearly 15 years, I can attest that the myriad of assistance programs are riddled with fraud, waste, and abuse. The dysfunction is not merely enabled by recipients who game the system - or by noncitizens who shouldn't even qualify. The system also represents a cash cow for bureaucrats, caseworkers, service providers, and a host of consultants and peddlers who plan, implement, and allegedly evaluate these programs.

Moreover, lack of transparency makes it difficult to separate legitimate expenses from illegitimate ones. Indeed, welfare played a big role in the $125 billion of "improper payments" acknowledged by the federal government in 2010, including overpayments, inadequately documented payments, and blatant fraud. Using numbers provided by the Center for Medicare and Medicaid Services, about $22.5 billion of those wrong payments can be attributed to Medicaid, the largest welfare program, accounting for 39 percent of all federal welfare dollars. Improper Medicaid payments at the state level represent an additional $10 billion.

Yet all is not lost, especially for governors willing to say enough is enough. In Pennsylvania, for example, I implemented for Gov. Corbett a "program integrity" initiative across the Department of Public Welfare, the state's largest agency. By ferreting out fraud, waste, and abuse - including the return of a modest asset test for food stamps - we lowered projected spending by close to $2 billion and delivered a $141 million surplus in 2012.

In Rhode Island, I helped former Gov. Donald Carcieri identify substantial savings through a redesign of the Medicaid system that exempted the state from the overkill of federal micromanagement in exchange for a five-year spending cap. We not only improved care quality, outcomes, and access, but also gave recipients more choices while saving the taxpayers approximately $100 million. And we brought in total Medicaid spending at billions of dollars below the spending cap.

Other states have achieved similar success. In Indiana, former Gov. Mitch Daniels delivered Medicaid at a fraction of the cost for a small group of recipients with its flexible "power accounts" that incentivized healthier behaviors among the caseload.

Those who think expanding the welfare burden is a virtue may consider these state initiatives counterproductive. Indeed, some Democrats were furious when Clinton signed TANF. But the American people know that preserving a safety net for the truly needy does not require a bloated bureaucracy that spends tax dollars indiscriminately and enables dependency.

As in 1996, that electorate is looking for elected officials who will take on the welfare industry, push for a TANF-like overhaul of the entire system, and deliver on Clinton's claim to truly end welfare as we know it.