Republican Senate candidate Tommy Thompson, former U.S. Secretary of Health and Human Services under George W. Bush (and later health care lobbyist and failed Presidential candidate), presided over the destruction of Wisconsin’s social services program as governor of the state. His efforts are often termed a “success” by right-wing think tanks like the Heritage Foundation and even the mainstream media simply because welfare rolls were cut dramatically. But what really happened to those families that were cut off from the social safety net? Was welfare reform really a success, and for who?
In 2005, in one of the final courses for my B.A., I wrote a paper about the GOP proposed PRWORA (The Personal Responsibility and Work Opportunity Reconciliation Act) passed by President Clinton in 1996 and how the reforms were implemented in Wisconsin. What I found about what was going on behind closed doors was as stunning as it was heartbreaking. As many already know, families were not leaving poverty for gainful employment, nor were states actually saving much money by kicking those families off the rolls. But a few were making a whole lot of money- millions of dollars, in fact.
The PRWORA not only changed AFDC as America knew it (into today’s TANF), it severely limited qualification requirements and placed a federal lifetime benefits limit of 5 years, which individual states could make even shorter at their discretion (Arizona’s lifetime TANF limit is 24 months). PRWORA was also unprecedented in that it handed federal public aid money over to the states. Theoretically, at best, this would allow states to use the money in ways that would suit the unique needs of their own populace. But in reality, of course, it also allowed a whole lot of mismanagement and prejudice to thrive.
AFDC and federal welfare programs had their fair share of mismanagement, for sure. Public aid programs have a long history of grievous practices - for instance, the rusted but unused household appliances Alex Kotlowitz wrote about in There are No Children Here rotting in the basement of the Henry Horner complex in Chicago, where families were living without working appliances, is a perfect example. But under PRWORA, it wasn’t simply bureaucratic oversight or even employee laziness but an agenda of privatization, pioneered by Republicans like Tommy Thompson, which was powering the negligence.
In Wisconsin, Thompson gave control of the new Wisconsin Works (W-2) program over to a company called Maximus, which began managing government programs as early as 1988 when they took over Los Angeles County’s public aid program. Some interesting tidbits about Maximus from Applied Research Center’s report Prospecting Among the Poor: Welfare Privatization:
• “If there is any doubt that welfare “reform” has become a fruitful business, consider these numbers – Maximus grew from a $50 million operation in 1995 to $105 million in 1996, and to $319.5 million in 1999, a 36.8% sales growth over 1998.”
• Maximus was kicked out of El Paso County, Colorado after receiving over 3,000 complaints over case management and client treatment.
• “The Sentinel also cites a July 2000 report by the Legislative Audit Bureau that
‘found nearly $800,000 in questionable spending by Maximus.’ This included
‘thousands in W-2 funds spent on soliciting contracts in other states, concerts for
W-2 clients by Broadway singer Melba Moore and a holiday party for Maximus employees.’”
• “While the Wisconsin situation was unfolding, Maximus was also under siege in New York. In March 2000, according to the Mason City Iowa Globe-Gazette, New York City comptroller Alan Hevesi refused to certify $104 million in welfare-to-work contracts with Maximus, charging that the award by Mayor Rudolph Giuliani’s administration raised the appearance of ‘corruption, favoritism and cronyism.’”
• “The public has not been served well by privatization,” said Linda Garcia, an organizer with 9to5, a national nonprofit grassroots organization working to empower women through securing economic justice. “The standards of accountability and monitoring have been practically non-existent. We’re not seeing decent services provided to the community or a decrease in poverty or homelessness.”
In 2000, the United States Equal Employment Opportunity Commission found that Maximus “violated federal law by paying lower wages to women than to men placed in the same jobs in a Milwaukee warehouse”. The New York Times also reported that “state auditors in Wisconsin recently found that the company had billed the state for $466,000 in improper or questionable expenses.” That included lunches for the director and company logo fanny packs, paid for by money that was taken out of the mouths of hungry children.
Yet Maximus got a $21million contract from Wisconsin’s Department of Children and Families that runs until 2016. The quarter it won that bid, “Maximus' revenue rose 11 percent to $227.1 million.” They won this bid despite the fact that Wisconsin lawmakers have been asking for a termination of Maximus' contracts since 2000.
In 2007 The Washington Post reported Maximus "settled a Medicaid fraud lawsuit with the federal government for $30.5 million."- one instance where the company was actually taken to task for stealing tax dollars by submitting fake claims.
Privatization is dangerous precisely because it diverts taxpayer dollars into private companies instead of back into our communities. In 2001, Karyn Rotker wrote about this for Dollars and Sense:
“In September 1997, Wisconsin began operating W-2, and the privatization process began. AFDC rules had required state or local government agencies to be involved in running the program. Under W-2, those rules were gone. Counties did get to bid first on W-2 contracts—but only if they'd already pushed a sufficient number of families off AFDC. Milwaukee County—Wisconsin's largest—had not thrown people off the rolls fast enough. The state handed Milwaukee's W-2 program over to five private contractors.In 1999 (while Thompson was governor) The Wisconsin Council on Children and Families issued a report on the state's practice of supplanting TANF funds, quoting the National Campaign for Jobs and Income: "Wisconsin is one of six states that have ‘gamed the system’ to divert TANF funds to pay for tax cuts and/or programs that do not benefit poor families.”
During the first year of W-2's operation, DWD and its W-2 contractors spent about $145 million—more than 30% of total W-2 expenditures—on three line items: state administration, W-2 office costs, and W-2 start-up funding. That same year, the state paid out just $78 million in W-2 benefits to poor families—or a little more than half of what it spent to operate the program.”
And all of this merely scratches the surface of former Gov. Tommy Thompson and Maximus’ practices in Wisconsin- and all the other states (and countries) where Maximus does business with GOP assistance. (Maximus is far from the only player in the game either. I urge you to read the ARC’s report and the Dollars and Sense article in their entirety.)
The underlying issue that allows this level of corruption to go unchecked by the American public is that Republicans like Thompson have been grooming us to accept privatization of government services for the past couple of decades by undermining government employee competence and framing public services in terms of race and sex and "personal responsibility".
Jason DeParle wrote about the effects of Wisconsin welfare reform in his book American Dream: Three Women, Ten Kids, and a Nation's Drive to End Welfare, which profiles three women and their children in Milwaukee. Recently, the situation has become even more critical, as many states are slashing already meager TANF benefits even further (you can read about that here). Many families have found that when they need a helping hand, the programs they turn to have to turn them away .
Whether or not you care about these families or think that public aid should be totally abolished, at the very least you should be outraged by the funneling of government funds (financed by your tax dollars) into corporate pockets rather than to families in need.