Mitt Romney said last week that if the safety net “needs a repair, I’ll fix it.” It does need some repair, as our recent blog series explained. That is, the safety net works but still has some serious gaps.
The positive news is that the safety net, bolstered by temporary expansions enacted during the recession, has helped hold the line against poverty and hardship in the past few years. Without safety-net programs, the poverty rate would have been 28.6 percent in 2010, nearly twice its actual 15.5 percent rate (using a measure of poverty that includes the impact of tax credits and safety-net programs like food stamps that provide non-cash benefits).
Moreover, under broader measures of poverty, the poverty rate rose only modestly between 2007 and 2010 despite the tremendous increase in unemployment. This outcome reflects the strength of the safety net, as bolstered by temporary measures enacted in the Recovery Act that Census data show kept 7 million Americans out of poverty in 2010.
But the safety net also has significant holes. For example:
In the typical (or median) state, working parents are not eligible for Medicaid if their incomes exceed just 63 percent of the poverty line ($12,027 for a family of three), as a new Kaiser Foundation report shows. Non-working parents, such as those who have been laid off, are ineligible for Medicaid if their incomes exceed 37 percent of the poverty line (or $7,063 for a family of three). And, in most states, non-disabled adults under age 65 who are not raising minor children are not eligible for Medicaid at all.
As a result, very large numbers of poor individuals — including many of the working poor — are uninsured.
The Affordable Care Act will fill this coverage hole by expanding Medicaid to cover non-elderly adults with incomes up to 133 percent of the poverty line. A number of presidential candidates and other political figures, including Governor Romney, have pledged to repeal the law, however, which would leave this hole in place unless a repeal measure is accompanied with strong alternative ways to expand coverage for these low-income individuals.
TANF policies that emphasize employment — combined with other policy changes, such as expansions of the Earned Income Tax Credit — moved more people into the labor market, particularly during the booming economy of the late 1990s. But the current downturn has exposed serious shortcomings in TANF.
TANF benefits have eroded over time and now are below 50 percent of the poverty line in all states — and below 30 percent of the poverty line in most states. In addition, the share of needy families who receive any benefits has fallen sharply. In 1996, TANF cash assistance reached 68 families with children for every 100 such families in poverty; in 2009, it helped just 27 families for every 100 in poverty.
Largely because of these trends, Census data show that the safety net now does much less than it used to to lift children out of deep poverty — that is, to lift them above half of the poverty line.
A big reason for TANF’s sharp decline is that it is a block grant, so federal funding stays flat even when need rises during recessions. This is noteworthy because both the Ryan budget that the House adopted last year and proposals put forth by various presidential candidates (including Romney, Newt Gingrich, and Rick Santorum) would use TANF as a model for sweeping changes to programs such as Medicaid and SNAP and convert both programs to block grants.
These shortcomings deserve policymakers’ attention. We need a strong safety net both because not everyone can work (due to age, illness, and other factors) and because there often are not enough jobs for all who want them — such as now, when there are four job-seekers for every available job.
A well-functioning safety net also helps the economy by making recessions less severe than they otherwise would be. It expands to cover more people when unemployment climbs and poverty increases, thereby cushioning the loss of purchasing power and keeping the economy from weakening further and preventing still more job loss.
Note: The Center on Budget and Policy Priorities is a non-partisan organization and takes no position on political candidates.