Federal Block Grants Are Not Budget Neutral

Although President Trump has not yet proposed any specific policy plans regarding American safety net programs, he will need to build a collaborative, if not intentional, relationship with leading Republican officials such as House Speaker Paul Ryan in this policy area. Speaker Ryan’s signature interest focuses on safety net spending reform, and his 2014 Poverty Plan and his 2016 Better Way plan call for the creation of block grants: a strategy of welfare reform that we have significant experience with dating back to the 1960s. This history tells us that block grants are not budget neutral; people of color and those with low to moderate incomes are likely to be disproportionately negatively affected by block grants, and within these groups, those most affected will be single women-headed households with children.

Under a block grants system, each state would essentially receive a lump of federal money from which they can determine the distribution of funds among the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance to Needy Families (TANF), child care, housing assistance, and many other programs, thus ensuring that states control programmatic outcomes.

Federal block grants were first used by democrats in the 1960s and later extended by Republicans in the 1970s and 1980s. The Nixon administration used this tactic to consolidate hundreds of War on Poverty programs into a few block grant programs.

Many of the programs that were consolidated targeted low-income communities and people of color living in impoverished areas. During the War on Poverty, these communities were for the first time empowered to participate in the creation and dissemination of federal program resources,  participation that was rolled-back with the introduction of block grants.

 The Nixon rhetoric is uncannily similar to President Elect Donald Trump’s campaign theme  ‘Make Our Country Safe Again’. The Nixon administration proclaimed that the “War on Poverty” was over and that the era of “law and order” had arrived, which meant a shift in tactics to policing the poor, rather than empowering them. Through the transition to block grants, Nixon was able to defund many of the war on poverty programs.

The Nixon administration consolidated a large amount of federal funding into a pool for states to control and in the process evaded the politics of citizen participation, which was so essential to the war on poverty programs.

This dismantling forced many local officials, residents, and state employees to face their ideological opponents and “duke it out” over resources, programmatic visions, and outcomes that local residents –those most impacted– had once defined and implemented. In some cases, these state-level disputes resulted in denial of funds to local governments, forcing some, like Hennepin County Minnesota, to drain its own resources to keep open clinics like Pilot City now known as the NorthPoint Health and Wellness Center that were formerly funded by the federal government. In the 1980s, the Reagan administration went even further and consolidated the remaining programs into another set of block grants, which provided even less funds for once robust programs.

Block grants aim to reduce federal control over local government and provide fewer federal restrictions and less monitoring and oversight than the previous federal urban renewal programs. The previous federal programs had deemed monitoring essential to ensure equity in access to resources following histories of denial of federal entitlements to some groups. Ultimately, the block grant approach asked states to provide the same services with less funds and forced cities to rely more heavily on private funds, bonds, and other creative growth models for their urban regeneration efforts.

Today, as localities aim to reverse trends of unemployment and disinvestment in central cities caused by developers expanding their focus on the suburbs, the new metropolis is too often compelled to place its fiscal fruition above the needs of its most vulnerable populations. Cities have moved away from asking those most affected what they need and instead are focused on narrow fiscal concerns, spurred by tight budgets.

Like block grants of the past, House Speaker Paul Ryan’s plans will exacerbate this trend by not only providing less funds for entitlement programs and providing fewer services, but will also continue this tradition of denying those most affected by poverty their right to participate in how these resources are distributed and what outcomes are most important.

As co-curator of the Economic Security page, I am interested in interrogating how the 115th Congress’ economic policy agenda will impact the country’s most vulnerable populations and their access to the services they need to survive or move into fiscal stability. I am also interested in the ideological frameworks that our local and national leaders use to justify “access” and who “deserves” economic resources and how these may be code for worth, value, and the right to participate in your own economic fruition. Block grants are just one of many potential policy proposals we will be following on this page.

– Dr. Brittany Lewis, Research Associate, Center for Urban and Regional Affairs, University of Minnesota

Photo from the Jack Rottier Collection