Welfare and Public Policy
Author’s Note: This material comes from a graduate thesis and is offered here, minus title page, as reference material on welfare policy. While the immediate subject of the work, TANF reauthorization in 2002-3, is in the past, the debate over welfare policy continues. The historical treatment of welfare policy at the Federal level, especially in its’ pre-New Deal form, may be of interest to those who wish to consider material on the origins of the American welfare state.
WHITHER WELFARE REFORM? TANF REAUTHORIZATION IN 2003
This paper discusses what form TANF reauthorization should take. A comparison of TANF’s goals when enacted in 1996 with outcomes to date is used to judge program success. Based on a literature review that covers welfare programs, both in America and Europe, from Classical times to the present age, general themes are highlighted in policy thought and what measure of success they enjoyed when embedded in policy.
Recommended changes centered on reducing incentives to divorce and seek child support; ending remaining non-citizen eligibility for any form of welfare (and enforcing current provisions); and focusing on providing supportive services to welfare recipients seeking and finding work, in preference to training programs other than basic literacy/GED offerings.
WITHER WELFARE REFORM? TANF REAUTHORIZATION IN 2003
2002 was the original deadline for TANF reauthorization. Gridlock prevented legislation from reaching President Bush’s desk, even without considering whether the form of such hypothetical legislation would have met with his approval. A one-year extension expires in 2003; with elections looming the following year, the time is at hand for Congress to act.
The questions to be answered revolve around what form reauthorization will take. Does the current program achieve its goals? Are TANF’s goals the proper ones? What will happen to the more controversial provisions of the 1996 legislation, especially the ban on non-citizens receiving welfare and the establishment and enforcement of child support orders as a condition for receiving assistance?
A literature review and analysis revealed that policymakers, ancient and modern, European and American, have crafted welfare states without regard to the lessons of history, which leads to common errors manifesting themselves in sub-optimal social responses to welfare legislation. TANF partially corrected for this; however, some aspects of welfare reform require further refinement.
Recommended changes in a reauthorized TANF bill include removing financial incentives for custodial parents ending marriages without good cause; eliminating the remaining eligibility categories for non-citizens seeking to draw welfare, and increasing the emphasis on supportive services designed to facilitate job acquisition and retention, with training having a secondary place in the poverty-fighting arsenal of front-line case managers.
The author wishes to thank the staff at the Library of Michigan for their invaluable assistance in obtaining materials related to the research underlying the literature review, to Gus Breyman and Holly Bandfield at WMU’s Lansing Campus for their unflagging support during my matriculation, to my beloved wife, Julie, for her constant encouragement and for her service as proofreader, critic, and all-around administrative support. He also extends thanks to the Michigan National Guard, who financed his education through the Montgomery G.I. Bill and state tuition reimbursement. Lastly, I give thanks to God, to Whom be all glory, for He is the Author of all good works.
In Memoriam, Daniel Patrick Moynihan, 1927-2003
Table of Contents
Chapter 1 – Introduction ………………………………………………….1
Chapter 2 – Literature Review…………………………………………….3
Chapter 3 – Conclusions…………………………………………………23
Chapter 4 – Policy Recommendations……………………………………27
Chapter 5 – Recommendations for Further Research…………………….32
CHAPTER 1 – INTRODUCTION
Welfare since the great society
“Boob bait for the Bubbas.”
-Sen. Daniel Patrick Moynihan (D-NY), 1992
on then-candidate Bill Clinton’s promise to
“end welfare as we know it.”
On August 16, 1996 President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, which ended 31 years of Great Society welfare programs, the centerpiece of which was Aid to Families with Dependent Children (AFDC), a New Deal holdover expanded by Lyndon Johnson as part of the War on Poverty. The legislation passed by a Republican-dominated Congress and signed by a Democratic President fulfilled the latter’s 1992 campaign promise “to end welfare as we know it.” Replacing AFDC was Temporary Assistance to Needy Families (TANF) a time-limited welfare program with strict and progressively increasing time-limits for assistance that was itself time-limited. The legislation, as written, had to be reauthorized by the end of 2002; legislative gridlock necessitated a one-year extension of that deadline. Debate now rages about whether to reauthorize the current program, with or without modification, or whether to replace it with another system.
The purpose of this paper is to examine, in considering whether to reauthorize TANF, the program’s performance in light of its’ stated goals, as enshrined in the enacting legislation. Based on an evaluation of how TANF has reshaped welfare to accomplish its’ authors purposes, one may discern the outlines of how best to frame reauthorization legislation to best achieve those goals, if performance has not been optimal. It is also worth considering whether or not the goals established for TANF recipients are still the ones toward which the program should aim, or if experience should inform policy in constructing a more effectual artifice for the direction of our energies.
Many of TANF’s provisions were controversial. Ending welfare assistance to non-citizens caused and continues to cause heated debate. Linking welfare to child support collection from absent parents has also generated controversy from TANF’s inception to the time of this writing. Providing supportive services to facilitate employment, to include purchasing automobiles for welfare recipients, has its advocates, as does a more training-based approach to enhancing their employability.
This paper will strive to compare TANF’s outcomes versus those intended by its’ framers, in assessing what changes, if any, ought to be made in drafting reauthorization legislation. The three topics listed above – providing or not providing welfare benefits to non-citizens, linking child support collection to the welfare system, and supportive services versus training – will be the items of primary focus.
CHAPTER TWO – LITERATURE REVIEW
Welfare policy is not written upon a tabula rasa; it is influenced, and ought to be, by the analysis of what has come before the present epoch. There is a wealth of literature available analyzing the course of welfare policy in the United States, covering all phases of American history, but especially the post-1965 Great Society era and the ongoing Welfare Reform epoch. Current writings on TANF’s performance, along with classic works examining the fate of Great Society welfare programs are covered below, in an attempt to both understand what ills TANF was crafted to address, and whether or not it is accomplishing the mission that its’ framers intended of it.
I.) Welfare Before TANF
Hazlitt (1974) undertook to explore the effectiveness of anti-poverty programs from Roman times to that of his writing. Hazlett’s conclusions (p. 67) were that citing Haskell (1939) the effect of establishing a public dole was to not only feed, at below-market process or even for free, those intended to be helped through a short-term crisis (with the legislation calculated to serve the short-term political needs of its’ author, Gaius Gracchus), but also anyone willing to stand in line to receive it. Successive means tests, first applied by Sulla and then Caesar and Augustus, produced short-term declines in those on the welfare rolls, only for numbers to creep back up over time in each instance. The end result of this policy – Bread and Circuses – is too well known to require further explication here.
England’s Poor Laws likewise proved singularly ill-suited to relieve the problems that begat them. Going back to 1536, following Henry VIII’s break with Rome and the subsequent pillage of the mediaeval Church, heretofore the principal source of alms, English Parliaments had enacted legislation for poor relief. From their inception, the Poor Laws included work components, such as requiring that stocks of flax, wool, hemp, thread, iron, and the like be kept on hand by municipal authorities to keep the poor engaged in useful labor (p. 72). Contrary to the intent of policy, the number of public wards increased: Hazlitt cites 18th century statistician Gregory King as estimating that one-fifth of the population was on the dole (p. 73). The institution of a guaranteed minimum income, adjusted for the consumer price level and for family size, was instituted in 1795. Geometric increases in spending followed, but the result was social unrest (pp. 73-74).
A reform commission report, commissioned by the Whig government in 1862, running to 362 pages, documented the policy failures of the old regime – benefits high enough to discourage work, and idleness, family breakup, and vice the common denominators of the hereditary welfare class. The report, authored in part by famed economist Nassau Senior, concluded that an out-of-wedlock child was no financial burden to a welfare mother, “and two or three are a source of positive profit” (p. 78).
The Commission recommended the following principle be central to the new Poor Law then being framed: “The main principle of a good Poor-Law administration [is] the restoration of the pauper to a position below that of the independent laborer.” (Hazlitt, quoting Encyclopaedia Britannica, 1965). The reforms springing from the Report centered on the Workhouse System – with two cardinal principles combined – a lower standard of living that the “working poor” enjoyed and labor “harder and more irksome” than that which the “working poor” typically preformed. The new system had its’ critics (echoes of Dickens’ Scrooge come to mind – “Are there no workhouses?”), and in 1905 another Commission produced another report, leading to Chancellor of the Exchequer Lloyd George’s “War Budget” of 1913, designed to fight poverty (p. 83).
Germany constructed the first modern, comprehensive welfare state, embodying the principles of social insurance, under Qtto von Bismark, in 1879. So central to later social insurance systems were the Bismarkian initiatives that Richman (2001, p. 47) quotes John Kenneth Galbraith as saying, approvingly, “The welfare state was born in the Germany of Count Otto von Bismark.” The legislation emanating from Bismarck’s resolve to pursue pragmatic policies designed to protect the laboring classes established, sickness, accident and old-age insurance programs. They did not, however, provide general poverty relief.
Rainwater and Yancey (1967) examined the Moynihan Report on Lyndon Johnson’s War on Poverty (included as an appendix) in light of its findings and the political controversy that they evoked. Moynihan linked the rise in welfare use with the collapse of the black family unit. A firestorm of controversy, from critics on both the Left and Right, ensued. Conservatives attacked Moynihan’s advocacy of affirmative action; liberals accused him of “blaming the victim,” in pointing out how the actions of those on relief often had led them, and their families, there in the first place.
What Moynihan had found, as Assistant Secretary of Labor for Policy Planning, was that the correlation between unemployment and family breakup, strong in minority households prior to 1960, had virtually disappeared by 1963. What he had discovered became known, in James Q. Wilson’s coining of a phrase, as “Moynihan’s Scissors,” the crossing of two formerly parallel lines: unemployment and family dissolution. Declining joblessness for the first time showed a sustained decline as welfare dependency rose. Moynihan cites family disorder, stemming in part from the legacy of slavery, and in part from the disempowerment of working-class males, who live in a matriarchcal world, and who can be replaced by a welfare check (pp. 30-34). What Moynihan observed in the data relating to minority families then is applicable to all lower-income groups today, and has been so for some time. Bennett, (1992, 2001) among others, has documented illegitimacy rates, crossing boundaries of race, that exceed those that alarmed readers of The Moynihan Report in 1965.
Banfield (1970, 1974) examined the root causes of poverty, delinquent behavior, and social deviance in general. He concluded that what sets the chronically poor (as distinguished from the catastrophically poor) from more successful classes are individual time preferences. The notion of deferred gratification is absent from the motives of individuals to the extent that they are found among the lower ranks of society. Banfield noted that even in the case of the idle rich, their idleness and pleasure-seeking are by choice, and that it normally does not endanger the financial or social foundations of their place in society, whereas the drive for immediate pleasure among the indigent is second nature to them (1974, pp. 53-63).
Murray (1984) presented a history of welfare policy and programs from the Great Society to the time of writing, and in so doing examined outcomes with attention to indicators of program success. He argued that experience demonstrates the futility of expecting welfare recipients to escape from poverty when cash payments and benefits are structured so that they provide disincentives to achieving self-sufficiency through work.
In examining how the availability of welfare affects the decision-making process of those potentially able to receive it, Murray begins with some assumptions: “When large numbers of people begin to behave differently from ways they behaved before, my first assumption is that they do so for good reason” (p. 154). Murray contends that the poor operate with a shorter time horizon than do those better off because, “Poor people play with fewer chips and cannot wait as long for results.” (p. 155) What Murray says the architects of what he refers to as the “zeitgeist” of the 1960s welfare program innovations failed to see is that, “the behaviors that are “rational” are different at different economic levels.” (p. 155)
Murray’s analysis of how then-current social programs operated at cross-purposes between what their framers intended and what policy actually encouraged were summed up in what he termed the “Laws of Social Programs” (p. 211). They are:
- The Law of Imperfect Selection – Any objective rule that defines eligibility for a social
transfer program will irrationally exclude some persons (p. 211). This leads to inevitable calls
for expanding eligibility and thus the number of potential recipients.
- The Law of Unintended Rewards – Any social transfer increases the net value of being in the
condition that prompted the transfer (p. 212). While the rewards may be minimal, they
exceed, in many cases, what the disutility of unskilled, entry-level labor produces.
- The Law of Net Harm – The less likely it is that the unwanted behavior will change
voluntarily, the more likely it is that a program to induce change will cause net harm (p. 216).
The “Thirty and a Third” rule that existed for a time under AFDC was one of Murray’s
examples for the operation of this principle. Unwanted behavior (welfare dependency)
increases in the face of attempts to change it by subsidizing work. Recipients rationally
choose the maximum short-term benefit, in terms of generating optimal income while
suffering the least disutility from having to labor as possible.
Murray produced a decision matrix displaying the possible choices that a hypothetical teenage couple facing the prospect of an out-of-wedlock pregnancy. The choices available were live separately without welfare; live together without welfare (married or unmarried); and live separately with welfare. In 1960, the calculus favored marriage, as AFDC alone did not provide enough to maintain two households, and offered no benefits in a male resided with the mother-child dyad. Additionally, the woman obtained some security and promise of support if she married, while the man obtained companionship, which he could not if she accepted AFDC, with its concomitant ban on live-in males, married or otherwise. (Additionally, cohabitation was rare in 1960, and carried a stigma in society only erased when deviancy was defined down by the rapid spread of the practice.)
By 1970, Murray illustrated a change in the logic of the decision matrix. Live-in boyfriends were now acceptable under AFDC policy (keeping paternity a secret became common). Now, his check became unnecessary, since a more robust benefits package would support a three- (or more) person household, without recourse to the dead-end labor that was usually the lot of teenagers. (Murray uses a drycleaner as the prototypical employer in both 1960 and 1970 – the minimum wage in exchange for hot, hard, unpleasant labor with little hope of advancement.) Marriage no longer makes sense to the male, as the benefits of companionship may be obtained without the risks of divorce [Murray did not mention the “no-fault” divorce revolution, which began in California with Gov. Reagan’s signing of that state’s first-in-the-nation law in 1969.] and the associated tether of child support. In essence, welfare had replaced the low-income father as the most stable source of support. In the second decision matrix, work did not pay.
In order to make work “pay,” Murray proposed limiting benefits to Unemployment Insurance only to break the cycle of dependency that traps the poor in generational welfare (p. 230). Among the expected results Murray anticipates from eliminating all other federal welfare programs (presumably to the extent that they are not replaced by essentially the same thing at the state or local level) is a change in the calculus that now operates against “doing the right thing” in marginal circumstances (p. 229). Murray’s examples include a single mother refusing welfare to work for a scant increase over what her non-working counterparts receive in cash assistance; a teenage boy choosing to marry the mother of his child, forgoing the approval of friends who opt for letting the state care for their offspring, et cetera. Murray’s point is that the existence of something for nothing makes the extrinsic reward of doing something amount to almost nothing.
Moynihan (1994) examined the roots of deviant (in the broadest sense) behavior and how it becomes “normal” in underclass subcultures as the tolerance level for what had formerly been unacceptable (if not actually unlawful) behavior relaxes in the face of rising levels of such behavior. Puritan New Englanders put Quakers in stocks for refusing to doff their hats; this constituted a sizeable portion of the “crime” of an earlier era (p. 10). Presumably, as non-conformism became more common, it had to be dealt with, eventually, as an acceptable alternate lifestyle, thus, in Puritan terms, “defining deviancy down.”
Moynihan quotes Preston (1984) who referred to the sharp rise in out-of-wedlock births as, “the earthquake that shuddered through the American family in the past 20 years (p.13).” Moynihan goes on to say, “And yet there is little evidence that these facts are regarded as a calamity in municipal government. To the contrary, there is a general acceptance of the situation as normal (p.13).” What the Moynihan Report had considered to be a crisis – black, inner-city divorce and illegitimacy rates approaching 25% (contained in Rainwater and Yancey, 1967, pp. 6-9) – was by 1992 accepted, if not as desirable, than as the normal state of things, at levels cited by Moynihan as approaching 76% in Washington, D.C., for example (p. 14).
Quoting Gill (p.13), Moynihan writes that there is, “an accumulation of data showing that intact biological parent families offer children very large advantages compared to any other family or non-family structure one can imagine.” Thus, accepting alternate family arrangements (divorce and out-of-wedlock parenthood), when made as a matter of deliberate choice, legitimizes practices known to be socially harmful and productive of future disorder. Seen in this light, the acceptance of once-scandalous behavior is a case study in “defining deviancy down.”
The barrier to redefining deviancy upward is often, Moynihan notes, erected by those whom he characterizes as “opportunistically” profiting from lowering standards of behavior, due to the “transfer of resources, including prestige, to those who control the deviant population. This control would be jeopardized if any serious effort were made to reduce the deviancy in question. This leads to assorted strategies for redefining the behavior in question as not all that deviant, really” (p. 13). Moynihan argues for a “No Surrender” policy that does not permit minor transgressions of the social order to be overlooked, lest they become a gateway to more serious misbehavior. This could include out-of-wedlock parenthood, family abandonment, and easy divorce.
Bennett (1993, 2001) modeled The Index of Leading Cultural Indicators on The Index of Leading Economic Indicators. This Empower America (a think tank founded by Jack Kemp, William Bennett, and a number of other neo-conservative figures) report provides numerous indices of social decline: out-of-wedlock births, divorce rates, et cetera, to support the thesis that since 1960, the forces of social integration have been outstripped by those of social disintegration, which the authors link causally to the advent of Great Society social legislation, especially the expansion of AFDC into the centerpiece of national welfare policy.
Published in 1993, the Index provides a snapshot of welfare-related social maladies, including divorce rates, out-of-wedlock births, and cohabitation outside of marriage, quantified in terms of magnitude and graphed as trends over the preceding three decades, on the eve of the enactment of welfare reform. These figures provide a good baseline against which to measure national progress under TANF in reversing the trends so clearly illustrated in the report’s charts and text.
The initial report’s figures can be viewed in contrast with those from the most recent available annual edition of the Index. The resulting comparisons display the relative progress (or lack thereof) of American society as a whole in altering those trends in deviant social behavior that TANF was explicitly designed to address.
The 2001 Index reported that many of the trends most directly relevant to welfare policy had either reversed or at lease reduced their rate of decay. Among the more notable statistics cited are these:
- Out-of-wedlock births increased 18% from 1990 to 1999, after rising
523% between 1960 and 1990.
- Cohabitation increased by 50% during the 1990s, after a tenfold rise from
1960 to 1990.
Welfare Since the Enactment of TANF
The Personal Responsibility and Work Opportunity Reconciliation Act (PROWRA), which created TANF (1996), was intended by its’ Congressional architects to correct what were seen as the policy failures of the old AFDC regime. The legislation specifically stated that it was written to pursue certain statutory goals:
In brief, they include reducing dependency and out-of-wedlock pregnancies;
developing employment opportunities and more effective work programs;
and promoting family stability. (§270.20)
TANF’s operative paradigm rests upon the idea that, “Work is the cornerstone of welfare reform.” (§271.20) Specific and progressively more challenging work performance measures were built into the legislation, requiring states to meet target percentages for the proportion of their cash assistance populations with earned income, especially two-parent family cases.
Fagan, Rector, Johnson, and Peterson (2002) compiled extensive graphical data on the effects of single and married parenthood on numerous indices of family health, such as black family poverty levels, adolescent cocaine use, and as a predictor of adult incarceration probabilities, et cetera. These are often the same indicators of social health that TANF’s drafters sought to alleviate by means of their legislative reforms.
Among their findings were that child poverty dramatically increases outside marriage. While 7% of children in two-parent, married households lived in poverty (data taken from the National Longitudinal Survey of Youth, 1979-96), the number rises to 51% for never-married, female-led family units. Broken marriages and cohabitant couples who later marry fared about as badly at keeping their children out of poverty (22% and24%, respectively). (p. 6) Most poor children (62%) live in single-parent households. (p. 7)
The authors found welfare dependency to correlate negatively with marriage. 71% of single-parent families received some form of means-tested welfare, as compared with 12% of intact, two-parent households, during the period surveyed (1979-96).
Haskins, Sawhill, and Weaver (2001a) looked at the results of welfare reform in areas such as non-marital births, to see if the intent of the legislation is appearing in trends visible in indices of social health. Single mothers’ employment rates rose following enactment of TANF; child poverty began a steady decline in 1994, predating welfare reform (aside from AFDC-granted waivers for demonstration projects) by two years. Non-marital births leveled off at about the time PROWRA was signed; teen pregnancies began their decline in 1991, and at the time of writing had reached levels not seen since the 1970s.
The authors note (p. 5) that:
A few studies have suggested that tougher child support enforcement reduces non-marital
childbearing, and one study of an experimental program in Minnesota that rewarded work
and two-parent families…found that the program increased both entry into marriage and the
stability of existing marriages.
The authors concluded that:
The overall pattern of welfare and work associated with welfare reform seems clear.
The welfare rolls have declined greatly, more mothers than ever are working…
and poverty have dropped substantially. This pattern of outcomes suggests that
welfare reform, along with the strong economy and supports for working families,
produced some notable successes. (p. 7)
Haskins, Sawhill, and Weaver (2002b) considered the unfinished business of welfare reform in pondering what shape TANF reauthorization ought to take. The authors framed the central question as being, what was the real purpose of TANF in the first place? Citing the legislation, they state that it was to, “assist needy families, fight welfare dependency by promoting work and marriage, reduce non-marital births, and encourage the formation and maintenance of two-parent families.” (p. 2)
The authors expect that what they call the tension between conservative goals – work and family formation, and liberal concerns with income support for the needy – will continue to be of primary importance in framing the terms of the dialogue. A second area of contention will be the block grant formula, which under TANF are based on historical levels of AFDC spending, which states are partially responsible for, because of their choices in setting benefit levels. (p.2) A third, and related, issue is expected to be the continued allocation of supplementary funds to states with historically high poverty levels.
Although non-marital birth rates have stopped climbing, they remain high by First World standards. “Few states have made a concerted to develop policies to reduce non-marital births” (p. 3). The deteriorating economic prospects among low-income fathers may also attract Congressional attention. The authors note that while, for example, black female labor force participation rose between 1992 and 1999, black male rates fell, in a reprise of what Moynihan (1965) found concerning black educational attainment (and, by implication, future employment prospects).
Child support is another area of concern to all sides, the authors note (p. 6). Both liberals and conservatives want to see more child support money go directly to the custodial parent. They also note that, “There seems to be nearly universal agreement that all payments on overdue child support should go to mothers, not the government, once mothers leave welfare…” (p. 6). The authors predict that there will be strong, bipartisan support for this idea during reauthorization.
Child Support Enforcement under PROWRA
Blank and Haskins, ed. (2001) compiled a series of articles by various authors, ranging across the ideological spectrum, on how TANF had performed and on what form TANF reauthorization should take. Garfunkel (p. 442) noted that the child support reforms incorporated into TANF are a lineal extension of legislative efforts dating back to 1974. However, the revolution in child support
enforcement [author’s term] yielded very little: mothers’ receipt of support increased from 30% to 31%, 1979-99 (p. 445).
Baskerville (1999) cites a number of statistics to show that court-ordered child support, far from being a boon to children [as intended by TANF] is a major inducement to divorce, which is undeniably a disaster for those same children allegedly aided by child support. His contention is that with in excess of two-thirds of divorces being filed by women (higher in cases involving children), and the great majority of those not being cases alleging abuse, adultery, or abandonment, that there would appear to be an incentive for women, lawyers, and courts to use divorce for personal gain.
While “deadbeat dads” make headlines, a study cited by Baskerville (Braver, 1999) found that 90% of non-custodial fathers who could pay court-ordered support, did so. Even in cases involving young, never-married fathers, a majority contributed to the support of their children, even when they liven in female-headed households with government assistance that provided a higher standard of living than the support-paying, low-income fathers enjoyed.
Baskerville concludes that the conflict of interest that exists for courts, lawyers, social service bureaucracies and advocacy groups to facilitate divorces as a source of business revenue is so obvious as to make the family court, “little less than a system of organized crime.” (p. 3) This creates a situation in which, “In short, child support is the financial fuel of the divorce industry. It has very little to do with the needs of children and everything to do with the power and profit of large numbers of adults.” (p. 4)
Contra Baskerville, Jensen (1999) argues that child support enforcement is an essential weapon in fighting child poverty, and that the overall results of stepped-up child support enforcement is positively impacting the welfare population. Further, she states that, far from being overly aggressive, child support collection is running far behind what is actually owed to the custodial parents of children in the United States, with $41 billion outstanding at the time of writing.
Mincy and Sorensen (1998) delved into the myth of the “Deadbeat Dad” in terms of non-custodial fathers’ ability to pay child support. The authors conclude that many men, faced with unrealistic child support orders and low-wage employment prospects, are forced to choose between supporting themselves and paying child support. Arrearages, accumulating during periods of unemployment and underemployment, lead to debt levels that these “turnips” can not realistically hope to pay off, and garnishment orders confiscate so much of their pay that it becomes impractical for them to support themselves outside of the cash economy.
Sorensen and Oliver (2002) in a Discussion Paper included in Assessing the New Federalism series, examines the effects of stricter child support collection procedures imposed by Congress in 1996 as a part of welfare reform. While finding that child support payments collected have increased both in terms of nominal dollar figures and as a percentage of child support ordered by the courts, families receiving child support are often still not self-sufficient. Men owing support may be in or near poverty themselves, and their payments, even when complete and timely, are often not enough to lift their children out of poverty.
The authors noted that three of four federally-mandated child support enforcement policies measured in their study, three (improving the paternity establishment process, adopting comprehensive new-hire directories, and enacting license revocation legislation) were included in the PWROWA legislation (p. 19).
PROWRA mandates that states establish paternity in 90% of relevant cases. While acknowledging that the act of establishing paternity does not of itself equate to payment of child support, it does facilitate the issuance of a support order, the authors noted. (p. 23) Regression analysis conducted on child support payment rates included paternity establishment as a variable, reflecting either an increase or no increase in paternity establishment.
“Wage withholding is the primary method used by the child support program to ensure the regular payment of child support and it is considered by many in the child support community to be its best enforcement tool” (p. 23, citing Legler, 2000). Given that, comprehensive new hire directories were seen as a means of non-custodial parent tracking for the facilitation of keeping withholding orders current. This factor was included as a variable in the analysis.
License revocation legislation allows for the suspension of driver’s, professional, occupational, and recreational licenses of non-custodial parents owing back child support or who fail to respond to warrants issued in paternity or support proceedings. This remedy is not required, although encouraged, be PROWRA. It is the third factor included in measuring the effectiveness of enacted reforms in child support collection.
Paternity establishment and new hire directory legislation had positive impact on child support order establishment and on support collection. License revocation was not shown to have significant impact in either case.
A finding of note is that the only children helped, out of all children potentially involved in support order situations, are those living with never-married mothers with less that 300% of the poverty income level. (p. 38) Additionally, child support payments lifted only 5-7% children receiving it out of poverty. (p.10)
Sachs (2002) cited Sorensen as having found that only 5% of non-custodial fathers unable to pay child support due to illness, injury or unemployment were successful in having their support order adjusted to reflect their reduced income. Consequently, arrearages accumulate, with interest, and per the federal Bradley Amendment, judges cannot forgive back child support owed.
Immigration and Welfare
Borjas (2002) stated that making non-citizens ineligible for most federal welfare provided through TANF was one of the most controversial aspects of welfare reform. Borjas found that there has been a relative decline in immigrant welfare use, excluding California, which has foreign-born numbers of such magnitude on the dole that it skews the data for the entire country if not excluded.
While immigrant welfare use has declined, it has done so at a slower rate than is the case for the general population. The question of whether open immigration and relatively (by home country standards) welfare benefits is sound policy is implicit in the study’s examination of its subject.
Borjas (1997) explicitly linked welfare use with changes in the type of immigrants that were more likely to emigrate to America at the time of writing than in the pre-1965 era. His contention was that immigrants at present are more likely to be unskilled, and thus to face poor prospects of being able to support themselves and their families.
Further, Borjas cited evidence that ethnic networks disseminate information about welfare availability, taken from studies examining the Russian and Chinese communities. He noted that foreign-language newspapers often contain (as case studies found) detailed information about the welfare application process, and that Chinese-language bookstores were found to have pamphlets containing instructions on the SSI application process (p. 2).
Kirkorian (1997) examined Social Security policy for the eligibility determination of SSI applicants who are non-citizens. He found that SSI, which is a welfare program not covered by TANF, and which is one that case workers direct welfare applicants to in cases where they may be eligible, is available to otherwise-qualified aliens after they work 40 quarters (10 years), which, in effect, vests them in the system, in terms of eligibility. They can earn more than four quarters in a single year by counting the quarters worked by parents (if under 18) or a spouse.
The Social Security Administration posts eligibility information on its website verifying Kerkorian’s findings. The online address for alien SSI eligibility information is: http://www.ssa.gov/notices/supplemental-security-income/spot-non-citizens.htm.)
McGrath (2002) described the “magnet” effect of relatively generous benefits available in Lewiston, ME for Somali immigrants (granted refugee status), seeking a place to emigrate. Originally settling in suburban Atlanta, the initial group scouted out better benefits, (especially relating to public housing, incidentally) and upon emigrating to Lewiston, encouraged others to follow. Over 2,000, at the time of writing, had moved to the city of 36,000, creating problems of assimilation and social service system overload.
Supportive Services and Job Retention
Brabo, Kilde, Peske-Herriges, Quinn, and Sanderud-Nordquist (2002) developed their study in response to a call for papers for Rediscovering the Other America: A National Forum on Poverty and Inequality. He examined outcomes from a program that provided cars to welfare recipients living in rural areas of west-central Wisconsin.
The premise of the program is that single parents (the bulk of welfare recipients) living in rural settings cannot reasonably expect to manage the transportation challenges associated with work and daycare while relying on often-nonexistent public transit. “Operation Jump Start” helped the
target population, many of whom had poor credit, obtain late-model, environmentally-friendly (the project’s coordinators have an environmental focus) economy cars, such as the Geo Prizim or Saturn SL1, through assisted financing, including help with a down payment. Program
coordinators believed that having quality, low-cost-of-ownership vehicles would remove barriers to self-sufficiency that relate to transportation for program participants.
The study’s authors conclude that the program achieved its’ success criterion, which was to enable participants to achieve a measure of economic independence denied them by previously by circumstances relating to lack of reliable, affordable transportation. As a use of public
finds, the authors conclude that down payments (half of which is paid back) and financial assistance are cost-effective, in that participants more readily find jobs, keep them, and earn benefits, including health insurance, previously funded from public coffers.
Ong (2002) studied the effects of car ownership on Los Angeles-area welfare recipients. He found that if one computes the total cost of car ownership (including insurance) and then compares changes in the total cost of ownership with employment levels for welfare recipients, that a $100.00 change in insurance costs correlated with a 4% greater likelihood of securing work, and that a predicted car ownership increased the odds of finding a job by 9%. This, the author found, is because most people do not work and live in the same neighborhood, and private automobile ownership allows for job search over a greater geographic area. This is especially important for inner-city residents, because while most Americans commute, the availability of suitable jobs is lesser in central cities than in the suburbs.
Income Support/Income Disregards
Berlin, Bancroft, Card, Lin and Robins (1998) analyzed Canada’s Self-Sufficiency Project (SSP), a demonstration project that was intended to “learn about the potential unintended effect of welfare-based work incentives” (p. vi). One of SSP’s goals, as “an experimental program designed to make work pay for single parents who leave welfare for a job,” was, “to increase the number of welfare recipients who leave welfare for work.” (p. 3) Earnings supplements, coupled with generous earnings disregards, were offered to new welfare recipients using a classic research design model. Randomly selected recipients were informed of their eligibility for the program if they remained on Income Assistance (IA) [Canada’s general, means-tested welfare program]. Human Resources Development Canada (the federal welfare and training department) authorized the research to determine if income supplementation would lead to greater work participation, and to see if unwanted side effects were observed.
Among the latter, two that were tested for were an “Entry Effect,” in which the added benefit leads to a corresponding rise in the number of people applying for welfare, and an “Exit Effect,” which would be observed as a delay in leaving welfare, as recipients opt to receive enhanced benefits over relying on wages alone.
“The Early Effects Demonstration is designed to measure the effect of future availability [italics original] of an earnings supplement on the behaviour [sic] of newly enrolled Income Assistance recipients.” (p. 6) Randomly-selected entrants to the IA system could look forward to income supplementation, beginning after one year on IA, of income support, if they worked full-time (32 hours or more) that could boost their earnings by nearly 80%. (An example given is $8.00 per hour in wages plus $950 in supplementation – all figures are in Canadian dollars.) Support could be had for up to three years, as long as work requirements were met.
Berlin, et al., found that, most significantly, the one-year wait limited both entry- and exit-effects. The stigma of receiving welfare was often named in exit interviews with former recipients as being a significant factor in their decision to forgo welfare for work (p. 13). The “cost” of leaving IA grew slightly as the one-year mark drew near, as the opportunity cost to recipients rose in relation to the nearness of their first putative supplement check.
Exit effects were measured to answer the key research question: Would program group members prolong their stay beyond those of control group members in order to gain SSP eligibility? (p. 21) A modest delayed-exit effect was found by the researchers to exist in this regard, indicating that at least some recipients remained on welfare to take advantage of the wages-plus-supplements income potential.
CHAPTER THREE – CONCLUSIONS
…if any would not work, neither should he eat.
-St. Paul, 2 Thessalonians 3:10
From each according to his works, to each according to his needs.
-Marx and Engels, Communist Manifesto
Throughout the history of public welfare relief programs, there run two easily identifiable and opposing themes. One is summed up by the words of St. Paul, and orients policy along the lines of expecting work in exchange for alms. The other posits the transfer of wealth as being a necessary component of what economist Thomas Sowell called, “the quest for cosmic justice.” Under the former, as is the case with TANF, welfare was not treated as an entitlement, but as charity; policy modeling the latter treats the largess given to those on the dole as being their due, at least in some measure. This was implicit in AFDC, post-1965, and manifested itself in “welfare rights” advocacy.
Social science often goes to great lengths to prove what experience and common sense already taught. One might have reasonably expected that a system that subsidizes idleness or that provides incentives to lax morality would, in fact, produce more of both. Nonetheless, the literature shows a fairly broad consensus, from Moynihan and Banfield in the decade following the advent of Great Society legislation, to Murray, writing just prior to the beginning of the era of state-level experimentation, under HHS-granted AFDC waivers, with work-based programs that were forerunners to TANF, and Bennett, on the eve of reform, on what were the ills of the old, AFDC-centered system, and on its predecessors in England and Rome. The proffering of aid attracts those who otherwise would work, in addition those intended to receive alms. The resulting disincentive to labor leads to the same host of social ills wherever the welfare state manifests itself, be it ancient or modern. The eerie resemblance of the framers of the Great Society moralistic intonations to English anti-poverty nostrums of a half-century earlier, right down to the use of “War on Poverty” rhetoric, shows that policymakers who do not read – and learn from – history, are doomed to repeat it.
The post-TANF literature is generally more positive in assessing that program’s performance, either directly or as measured by aggregate social outcomes that welfare reform was intended to address, than was with the case with AFDC. Bennett (2001) reported that his chosen “Leading Cultural Indicators” had mostly stopped their steep decline of 1960-90, and had either leveled off or were showing a more moderate rate of declension.
An example of the historical hubris noted above is the income disregard. This type of incentive, designed to encourage work by not reducing a recipient’s grant dollar-for-dollar for the first few dollars earned, has been tried in the past, notably under AFDC, originally as the “Thirty and a Third” rule (Murray, 1984, pp. 163-164), which allowed the first $30.00 in earned income to be discounted in determining the amount of cash welfare to be awarded, and provided for a sliding scale that subtracted one dollar in aid for every three earned beyond the first $30.00. This policy did not make AFDC a successful program, in terms of encouraging work, yet the income disregard was not discarded, having found new life under TANF.
As an example, Michigan’s Family Independence Agency (FIA) used guidelines (Appendix B), as of this writing, that offer a $200.00 monthly income disregard. With a cash grant of $424.00 for a family of three, a welfare recipient can either have an income of $424.00 without working, or $624.00 without losing one dollar of her cash grant. For each dollar beyond $200.00 earned, a proportionate decrease, at a rate of 80% of earned income, is made in the recipient’s grant. Thus, as shown in the example in Appendix B, the hypothetical recipient can earn, by working 25 hours per week at the minimum wage, $553.00 a month ($5.15 x 25 hours/week x 4.3 weeks/month). The recipient can also choose to collect $424.00 as a cash grant without working (although admittedly there is a work requirement attached to receipt of a cash grant). Finally, the recipient, in this example, can work, earning $553.00 forgoing $283.00 of their cash grant, leaving $141.00 in aid, for a total income of $694.00.
What is missing from the forgoing discussion is rational calculus on the part of the theoretical recipient, in terms of the marginal utility of her time versus each additional dollar earned. As shown in the table below, the choices described by FIA are three: cash grant only, work only, or work at 25 hours/week for the minimum wage plus a reduced grant. These options produce $424.00, $553.00, and $694.00 in monthly income, respectively. Given that $200.00 in income is disregarded in determining the amount of a cash grant, there exists a fourth possibility: earning $200.00 per month and collecting a full $424.00 grant for a total income of $624.00.
|Reduced Grant + $553||$694|
|Cash Grant + $200||$624|
It is clear that the reduced grant added to earned income from working 25 hours a week generates the highest income. Is it worth it, however, to a single parent juggling child care arrangements to forgo leisure for work to earn $70.00 per month, which is the difference between working 25 hours per week and working 9 hours per week (which equals $199.30 per month)? Even though such an individual would probably qualify for the Earned Income Tax Credit (EITC), the benefits derived from it are on a sliding scale, which reduces the value of the EITC as income rises. Further, the figures given above are for gross income; while this theoretical wage-earned likely pays no income tax, Social Security taxes must be subtracted from the calculus determining how much take-home pay each work option generates. Thus, the $70.00 gross bay differential is actually somewhat less. Even without considering gross versus net pay, $70.00 for an additional 16 hours a week of work figures out to $1.02 per hour – hardly enough to motivate someone to seek work!
The paradox here is that income disregards encourage work to a given point, and no further. Policy may mandate (and does in Michigan) higher levels of work participation, but compliance with these requirements is counter-productive, or at least unrewarding in the short run, to recipients striving to meet them. Thus, the effort necessary to achieve sufficient income to close a cash welfare case, let alone achieve financial independence, is discouraged by the existence of income disregards.
CHAPTER FOUR – POLICY RECOMMENDATIONS
Based on the literature reviewed, it is reasonable to conclude that welfare reform, as embodied in TANF, has enjoyed a measure of success. As Department of Health and Human Services Secretary Tommy Thompson (2002) reported in Congressional testimony,
Since August 1996, welfare dependence has plummeted. As of September 2001, the
number of families receiving assistance, which represents the welfare caseload, was
2,103,000 and the number of individuals receiving assistance was 5,343,000. This means
the welfare caseload and the number of individuals receiving cash assistance declined
52 percent and 56 percent, respectively, since the enactment of TANF.
The culture of welfare – an “entitlement mentality,” legitimized by Goldberg v. Kelly social service agencies emphasizing eligibility determination, recipients locked into indefinite dependence on welfare, either by choice or because the opportunity costs of leaving made doing so impractical for the unskilled, an entitlement mentality, and policy adjustments frequently consisting of a succession of ineffective training programs – has been replaced with a sense of time limits, the obligation to seek work, agency staffs focused on job search and acquisition, and an end to entitlement thinking by most of those that they serve. Positive results are clearly seen in the historic declines in welfare rolls nationwide, which even though they occurred during a time of unprecedented prosperity, defied trends dating back at least as far as the Great Society, as in the face of previous economic expansions, welfare rolls had not shrunk, but typically increased.
What is not being seen is what should be among the items addressed by TANF reauthorization. The first iteration of welfare reform led states to pursue policies designed to close cases due to earned in come in excess of what would make the individual in question eligible for case assistance. (This is explicitly the goal of Michigan’s Work First program, as expressed in policy.) Many former cash recipients are still receiving assistance, however. Closing a cash grant does not equal self-sufficiency; many recipients collect Social Security disability payments (SSI), WIC, Food Assistance (formerly Food Stamps) or receive subsidized child daycare, or Medicaid. Welfare bureaucracies often encourage, as policy, clients to seek other forms of government assistance for which they may be eligible. Thus, while cash assistance cases are declining, the total number of people receiving support from government sources has not shown the same level of declension at all.
Income disregards should be discarded, as they tend to prolong a recipient’s stay on welfare, due to the disincentive they provide to work more than a certain number of hours. This can be seen in the modest “exit effect” found by Berlin, et al. (1998) in measuring the impact of such a program in Canada. The “exit effect” is also evident in the calculations derived from the Michigan FIA Budget Worksheet, a copy of which is included as Appendix B. While the Canadian study conducted showed only moderate attraction (“entry effects” and “exit effects”), any increase in welfare utilization traceable to policy ought to be avoided in a program explicitly intended to reduce welfare dependency.
Discourage Divorce and Out-Of-Wedlock Births
Child support judgments are encouraged by current welfare legislation, and are so injurious to low-income non-custodial men that the likelihood of these man being able to support themselves while servicing heavy debt loads is vanishingly small in many cases. Unlike an intact family suffering economic reversals, child support recipients do not have to simply tighten their belts if the absent father cannot pay due to layoff, illness, or injury. The court must lower the payments, usually at the petition of the father, and until it does so, the old rate remains in effect, which often creates arrearages for those unable to pay. As noted earlier, Sachs (2002) cited Sorensen’s finding that only 5% of fathers seeking child support reductions due to illness, injury or joblessness were successful. Thus, unrealistic child support orders, either issued in the first place or not adjusted to reflect reduced earnings power, leave many fathers in debt, with the real possibility of debtors’ prison beckoning if they do not make good or make suitable arrangements to pay.
Appendix D contains calculations, derived through the use of the Michigan Child Support Formula Manual program for Windows, which support the forgoing contention as to the hardship imposed by child support judgments on low-income fathers. As an example, a non-custodial parent with an income of $31,2000.00 per year ($600.00 per week) and two children covered by a support order has support calculated based on their income plus that of the custodial parent, also earning $31,200.00 in this example, with there being no other children aside from the two covered by the support order. The combined “household” income, minus children supported that are not the product of this relationship (none, in this example), minus other qualifying expenses (union dues, life insurance premiums, where the beneficiary(s) are the minor children in question, et cetera), is then divided by parent, to determine each parent’s “share” of the children’s upkeep. Based on the calculated share, support is then assessed.
Several factors can affect this seemingly simple calculation. Extra jobs and overtime, which cannot be relied on as steady income in many cases, are part of the calculus, and in cases where the Friend of the Court believes the non-custodial parent is understating their earnings or making less income that they potentially could, “imputed income,” based on subjective criteria (estimated earning potential, based on education, experience, and prevailing wages) can be added to the calculus. Thus, a non-custodial parent may find himself paying a rate even higher than the formula dictates for his actual, regular income. (Policy regarding equitability in child support awards should be restricted to divorce cases; the existence of an effective, even punitive child support collection system, if tied to strict DNA verification of fatherhood, should work to discourage illegitimacy, a stated TANF goal.)
The calculations shown in Appendix D indicate a recommended support order of $158.31 per week, including $19.56 for childcare expenses. That is before-tax money; the custodial parent can expect to have two deductions and “Head of Household” status; the father will pay at the higher, single rate. Without factoring tax status or marital property and asset distribution into the equation, the custodial parent now has $40,432.12 in income, while the non-custodial parent has a nominal income of $23,967.88. Nominally low-income (child support is often excluded from eligibility determination) single parent families may qualify for the Earned Income Tax Credit, housing assistance, WIC food supplements, reduced-price school lunches, and other benefits, both cash and in-kind, which further broaden the distance between the standard of living of the two parties.
To make having children out of wedlock, a universally admitted disaster for children to be born into, and to make family breakup financially unattractive, changes to law and policy beyond the scope of a reauthorized TANF program are in order. What Congress can do, however, is encourage states and tribal units to make divorces harder to obtain, so as to stanch the flow of broken families flooding into the nation’s courts. Hand-in-hand with this should be legislation to make marriages harder to contract, so as to prevent frivolous formation and breakup of family units with children. Offering financial incentives tied to state or tribal performance in reducing their divorce rates. Incentive triggers for state performance in caseload management in the original TANF law can serve as a guide for these new ones.
Prohibit Immigrants from Receiving Welfare Prior to Obtain Citizenship
The attraction of welfare, as a magnet to immigrants, is an ongoing concern, even with post-TANF restrictions. McGrath (2002) described how Lewiston, ME, a city of 36,000 has become a magnet for Somali refugees, numbering over 2,000, who have deliberately sought out the best “welfare deal” possible in choosing a residence. Originally settling in suburban Atlanta, they emigrated to Maine upon learning that more-generous public housing and welfare benefits were to be had there.
The above is an example of what open borders and relatively generous welfare benefits combine to create – people who in the past would have been called “public charges,” immigrants without good prospects of staying off the dole, now make the eminently rational decision to engage in rent-seeking behavior, which for them means American welfare.
Policy should be reformulated to eliminate all welfare eligibility for non-citizens, unless granted Permanent Resident status. As Berlin, et. al., (1998) found, entry effects are only modest for programs with benefits delayed 12 months; if the waiting period was five or more years (as is usually the case with obtaining citizenship) would still further decrease the attractiveness of emigrating to America with the intent of collecting welfare in any form, including SSI (although SSI reform technically falls outside the purview of TANF reauthorization).
CHAPTER FIVE –
RECOMMENDATIONS FOR FURTHER RESEARCH
The author noted similarities between the progress of welfare programs historically from noble intent to relieve the suffering of the “deserving poor” to mass exploitation of the program, both by those filling their bellies at the public trough and by those buying their support for their tenure in office in arenas closely linked with the idea of public charity. Specifically, Dearing (1956), in writing the definitive history of the Civil War veterans’ lobby, known as “The Grand Army of the Republic” or G.A.R., described the incremental way in which pensions were first proposed for the obviously deserving – soldiers crippled in battle and the widows and orphans of those who died beneath the colors.
Over time, especially as the power of the G.A.R. crested in the 1890s, pensions were extended to those wounded, but not crippled, in combat, then to all combat veterans (whose claimed numbers undoubtedly swelled well beyond those who actually heard shot and shell), and then to all surviving veterans of the War Between the States (on the Union side, as Confederate soldiers were barred from G.A.R. membership). Mark Twain, writing in 1907, made similar observations concerning the steady creep away from granting, “deserved pensions, righteously and with a clean and honorable motive, to the disabled soldiers of the Civil War.” Later, this honorable appropriation morphed into a Pension List including many with tenuous claims upon the public treasury, with Twain fingering electoral politics as the motive.
The pension program, begun in 1861, evolved with each successive innovation in eligibility requirements into, “the most costly and liberal pension scheme in the world,” Theodore Roosevelt’s Executive Order No. 78, lambasted by Twain repeatedly in his writings, made old age a qualifying disability under the 1890 legislation updating the pension system, and transformed a de jure disability compensation plan into a de facto age-based welfare scheme. Richman (2001, p. 71) noted that by 1910, 28% of all American men, plus 300,000 widows and orphans, were receiving Civil War pensions, 45 years after Appomattox.
The application of Public Choice Theory (Buchannan and Tullock, 1962) to welfare explains how majoritarian rule results in ever-increasing demands upon the public treasury, in turn resulting in spiraling exactions on those without electoral power proportionate to their ability to pay.
A concept emerging from the Public Choice School is “rent seeking,” wherein the profit motive is applied to understand political behavior in the same way as it is in examining motives for economic behavior. Rent seeking equates with seeking any type of recurring payment from the government. Buchannan (2003) described it thus:
In essence, it extends the idea of the profit motive from the economic sphere to the
sphere of collective action. It presupposes that if there is value to be gained through politics,
persons will invest resources in efforts to capture this value. It also demonstrates how this
investment is wasteful in an aggregate-value sense.
Thus, it may be a valid tool for seeking to understand how limited efforts to assist the needy morph into programs designed to reward groups able to exert enough pressure to obtain them, even at the expense of a general majority that does not appear to benefit. “Log rolling,” or trading support (and votes) with other factions helps each faction to create temporary majorities needed to enact their particular subsidy.
The connection to welfare policy is that it would be profitable to understand how, over the course of time, programs expand and veer from their original, intended mission to serve the interests of groups able to raise the loudest hue and cry for increased benefits. This understanding, perhaps linked to theories undergirding Organizational Development, might allow for setting policy so as to maintain a dynamic tension between the forces seeking change and those supporting the status quo that policymakers wish to lock in. If TANF represents an unfreezing of old, static welfare policy, then the period following its inception would be fluid, as were the forerunner demonstration projects allowed since the late 1980s under AFDC. Reauthorization represents a window of opportunity to refreeze desired program outcomes, through policy, with the intent of avoiding the mission creep that has brought earlier welfare efforts full-circle from reform back to subsidizing indolence and dependency.
In closing, the author believes that, as it took decades to arrive at the point where reform of a failed system became a bipartisan imperative, so will it take decades to undo the damage of failed policy, as evidenced in broken families and shattered lives. To this end, the author sees TANF as a way-station on the road to policy devolution that ends with the federal role in welfare being entirely phased out. If state-run welfare began, in the English-speaking world, with the ruin of the mediaeval Church and the resulting Poor Laws, perhaps a full-circle return to private alms would be an appropriate endpoint toward which TANF reauthorization ought to aim, incrementally, to bring American society. In this regard, the policy might be called, “Fabian Communitarianism,” for lack of a better term.
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