This is your safety net on block grants

March 16th, 2015 at 4:51 pm

Good old Ez Klein provides a highly efficient and important summary of what can happen when the federal government turns the administration of a program over to the states in the form of a block grant:

A block grant takes money the federal government is already spending on a program and gives it to the states to administer — usually with fewer rules and conditions. That’s it. The hope is that states will use the money more efficiently. But block grants can cost more, cost the same, or cost less than the funding mechanisms they replace. Block grants change how money is spent, not necessarily how much money is spent.

We’re talking about block grants because the Republican budget resolutions are coming out this week and as Ezra emphasizes, recent such budgets have used this mechanism to propose deep cuts in Medicaid and SNAP (food stamps). That is, they don’t just turn the programs over to the states with the same principle that funding will go up and down with need. They set the funding to some fixed formula, like population growth plus inflation, or, even worse, as was the case with TANF (Temporary Assistance to Needy Families), a fixed, nominal amount–it’s been $16.5 billion since 1996!

Clearly, this completely strips the critical counter-cyclical function from the safety net.

But while Klein said a lot about what could happen, Bernstein will show you what did happen. The first figure below, from this earlier analysis, shows how as unemployment rose in the Great Recession, SNAP rose with need while TANF’s fixed block grant prevented it from responding in the same way.

tanf1

The next figure, from my CBPP colleague Donna Pavetti, shows how much more AFDC (TANF’s non-block-granted predecessor) rose with unemployment in the relatively mild early 1990s recession compared to how it hardly rose at all in the far deeper recent recession.

tanf2

The final figure, also from Pavetti, switches from an unemployment metric to a poverty metric, showing how block granting led to a marked decrease in TANF’s response to need.

tanf3

I’ve got a longer piece I’ve been working on which I hope to post shortly pointing out that this budget tactic by the R’s is completely predictable. They won’t raise tax revenue (though tax cuts are OK), they want to boost defense spending, they want to balance the budget in 10 years, and they won’t go after near-term entitlements (Soc Sec, Mcare), except the ones that help the poor. So that means cuts to SNAP and Medicaid, delivered through block grants.

That’s some deeply cynical and just downright mean-spirited budgeting.

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5 comments in reply to "This is your safety net on block grants"

  1. Tom in MN says:

    “mean-spirited budgeting” is a feature, got to force those lazy folks to find jobs.

    A plot showing that the total number of needy did not go down as TANF was reduced (which the 25% of families helped in 2012 implies) would show that you can’t force people to get jobs that don’t exist more directly.

    We also need to remember that TANF was done by Clinton. Dems have been wimps on these issues for a long time and they need to get back to pointing out that hungry children cost us all more in the long run than increasing TANF will. And that’s not counting any counter-cyclic boost that it could give if it was not a fixed block grant.


    • Chris G says:

      > … and [Democrats] need to get back to pointing out that hungry children cost us all more in the long run than increasing TANF will.

      And they also need to point out that the fact there are hungry kids in a country as resource-rich as ours is a national embarrassment. They (“we”, actually, as I am one) need to push back on mean-spirited budgeting.


  2. PeonInChief says:

    Former Congressman John Burton who, as a mainstream Democrat was never one of my favorite people, said that block grants were a really bad idea, as it was very easy to, after a few years, cut them out completely. He was talking about the Nixon Administration’s decision to turn Model Cities grants into a block grant program. And sure enough, the block grants were cut entirely in the mid-1980s.


  3. Mike says:

    Mr Klein and Bernstein… Food stamps have grown far out of proportion to need, population, and our economy during the Obama administration. Taxes go up. Family income goes down.. Not sustainable. Cut taxes and cut spending… Liberal democrat socialist government and economic principals do not work


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