Why LePage’s and Fredette’s proposed welfare reforms are bad policy

Robert W. Glover, University of Maine

Yesterday, Governor Paul LePage announced that he would be submitting a welfare reform proposal for the next legislative session. In addition, he will be resubmitting two additional proposals from House Republican Ken Fredette of Newport, initially rejected by the Democrat-controlled Legislative Council. The proposals aim to crack down on “welfare misuse”—placing restrictions on where and how benefits can be accessed.

While billed as “common sense reforms” for a system that Mainers know is “broken,” applying a critical lens to these proposals reveals problematic potential outcomes and an unfair double standard towards those in lower socio-economic classes.

First, let’s look at a few details about the programs that LePage and Fredette are looking to reform. Many of the proposed changes zero in on the use of electronic benefit transfer or EBT cards. These cards basically function like a debit card and are the means by which those receiving state assistance access their Temporary Assistance for Needy Families (TANF) benefits and “Food Stamps.” The latter are obviously no longer in stamp form, so this is sometimes called a “food supplement” to reflect this. The TANF portion on the card gives families cash pay bills and to buy basic necessities; those allocated for food can only be used to buy food.

The benefits are relatively small. For TANF, the maximum monthly amount for a family of three in Maine is approximately $485, 32% of the federal poverty level (a figure which has not risen in 12 years). In 2013, in the state of Maine, the average individual benefit for food supplements worked out to a little over $4 per day. Enough to subsist on, and perhaps avoid homelessness, but not much more. National data suggests that families receiving assistance allocated their money accordingly, with those on assistance operating on extremely tight budgets relative to those that are not.

So who accesses these benefits? According to a 2010 study that surveyed over 6000 Maine families that had received TANF benefits, 92% of respondents were women acting as head of household. Often these women have young children; the median age of a child receiving TANF benefits is two years old. Most are eager to work and stay on TANF assistance for a short time, the average length of assistance being 18 months. TANF recipients had worked an average of 3 jobs over the past 5 years, and 97% had work experience. However, wages are often quite low with the average wage of a TANF recipient being $8.36 an hour.

These families are often forced into TANF by one or a combination of factors: housing costs (more than 81% respondents would likely be unable to pay rent without TANF benefits), domestic violence (nearly 25% of TANF recipients reported applying in an effort to escape an abusive relationship), access to child care (28% of respondents cited lack of access to affordable child care as a reason for seeking assistance), limited mobility (46% of respondents did not own a vehicle and 80% had difficulty getting transportation when they needed it), or disability (67% of all TANF households had at least one family member with a disability).

It is with all of these facts in mind that we should assess LePage and Fredette’s proposals, which aim to do several things. Upon closer evaluation, these “reforms” start to look like really bad ideas, with potentially devastating implications for families already struggling.

For instance, LePage has proposed restrictions on where recipients can use their EBT cards. Presumably, this is rooted in the claim that benefits are being used for things like alcohol, cigarettes, and lottery tickets. While food supplements cannot be used for anything but food (even things like soap or toiletries), TANF is supposed to function essentially as “cash.” It would be very hard to restrict what that money was being used for without incredibly intrusive and cumbersome interventions into the lives of those receiving assistance.

However, the reality is that we lack any systematic evidence that such “misuse” is widespread. The LePage administration made this a priority early in the administration, hiring on eight additional investigators in 2011 to root out alleged cases of fraud and setting up a fraud hotline where citizens could report suspected cases of abuse. This cost the state an additional $700,000 that year. It resulted in only 45 cases being referred to law enforcement (out of the many thousands who receive some form of assistance). This is hardly a stunning return on investment.

Nor are such restrictions on location of use a wise idea, given the fact that so many of those receiving benefits lack access to transportation. If the goal is to limit EBT use to places such as grocery stores or supermarkets, this could induce unnecessary hardship, particularly in a rural, sparsely populated state such as Maine.

Equally dangerous are Fredette’s proposals regarding “up-front” documentation, which would require potential recipients to show evidence that they had applied for at least three jobs prior to applying for TANF. Anyone who has dealt with a government bureaucracy knows that such requirements necessitate review and induce delays. Those applying for assistance in the state of Maine often apply at a state of crisis, as the numbers above suggest. Sudden job loss, an unsustainable and dangerous abusive relationship, threat of homelessness—these are the situations that compel the vast majority of applicants to seek assistance. Establishing further obstacles to dealing with such crises implies either ideologically driven misconceptions or sheer heartlessness.

However, the broader point is that all of the conservative principles of “limited government intervention” seem to go out the window when it comes to dealing with the poor. As the numbers cited above demonstrate, the majority of those receiving benefits work and pay taxes (or at the very least, have done so recently). In fact, they’ve probably paid a higher percentage of taxes than those at the top of the socioeconomic ladder. The notion of “handouts for moochers” may make for good political rhetoric, but it’s not the reality here. Recipients are utilizing systems they’ve helped to support with their tax dollars. And as the data above suggests, for the vast majority of families, TANF and food supplements are a necessary and temporary form of assistance to prevent hunger and homelessness.

What’s more striking is that we never seem to want to apply the same scrutiny to the significantly larger benefits that flow to businesses and corporations. For instance, one of the recurring critiques of business incentive programs such as the Pine Tree Development Zone is that we lack any means to assess whether such incentives are providing tangible economic benefits to the state of Maine. These programs have cost the state of Maine $46 million since 2003. Wal-Mart employs the largest number of people in the state relying upon public health insurance, in large part due to its low wages, yet has received over $20 million in subsidies in Maine.

These are government benefits, welfare in essence, given to business interests rather than low-income individuals and families. When we fail to place the same scrutiny and direct the same calls for accountability to these organizations, the bias and double standard of these calls for “reform” becomes clear.

Recommend this article
Research Shows

About Research Shows

Education. Jobs. Health. Poverty. Crime. Immigration. Environment. Campaigns. Rights. What does research show? Avoiding jargon, Maine’s Scholars Strategy Network explores pressing issues and democratic life.