Senate Passes Debt Ceiling Bill, Approves New Work Requirements for Benefits

The U.S. Senate voted 63 to 36 to approve the debt ceiling bill late Thursday night, just one day after the House passed the deal worked out between President Joe Biden and Republican House Speaker Kevin McCarthy to avoid a first-ever default on the nation’s debt.

The passage of the bill was a relief to mayors who worried that a default would be "catastrophic"—delaying street repairs and other essential projects, and potentially leading to massive layoffs in their communities. But the bill has also angered many progressives, who were vocal in their opposition to a provision requiring older, childless adults between 50 and 54 years old to work 20 hours a week or lose their eligibility for food stamps.

Getting less attention are changes the bill makes to work requirements under the Temporary Assistance for Needy Families program, which provides cash assistance to households with children. Under the provisions in the bill, states will likely have to require more parents on TANF to work or be in job training.

While Republicans argue that requiring more people receiving social services benefits to work will help them get out of poverty, others are concerned it will actually hamper states’ ability to get them the help they need to return to work, such as receiving drug treatment or earning a GED.

The way the current law works is that states have to make sure that at least half of all single-parent families on TANF are meeting requirements. However, to reward states for reducing caseloads, the percentage of recipients in a state who have to meet the requirements is lowered based on how much a state’s caseload has dropped since 2005. In other words, if a state’s caseload has dropped by 25%, then only 25% of recipients have to meet the work requirements, said Ladonna Pavetti, senior fellow at the progressive Center on Budget and Policy Priorities.

For two-parent households, work requirements are even more stringent. Not counting the reduction in the caseload, 90% of two-parent households have to meet the work requirement.

According to Pavetti, federal work requirements are “extremely rigid. If somebody needs a GED, that is not an allowable activity,” she said. “The same with substance abuse treatment.” So requiring fewer recipients to meet those requirements, she said, gives states the flexibility to help people in ways “that are more appropriate to their circumstances.”

The number of people on welfare has dropped sharply since 2005. As a result, 34 states in 2022 were not required to make any recipients follow work requirements, said Leslie Ford, an adjunct fellow at the conservative American Enterprise Institute. But under the debt ceiling bill passed by the House, and that is expected to pass the Senate as early as Friday, that will likely change and many states will now have less flexibility.

The new work requirement will be based on how much states have reduced caseloads since 2015, not 2005. Because caseloads have generally dropped by less during that shorter amount of time, the requirement on states will not go down as much, meaning a greater percentage of recipients will have to work or attend job training.

Babette Roberts, director of the Washington State Department of Social and Health Services’ Community Services Division and chair of the National Association of State TANF Directors, is unhappy with the concession, noting that “in most states, you have to be very, very low income to get TANF. We're also talking about families that are coming to us in crisis. Maybe they have some mental health or chemical dependency issues. They might have some physical issues. Being pushed to make more people meet the federal work requirements may mean having to push a family directly into vocational education, which many may not have the basic education to complete successfully.”

The requirement “doesn't leave a lot of time to be parents,” she added. “We want them to be able to be parents. We want them to be able to solve the crisis that has brought them in our doors in the first place. And then we want to work with them to figure out what's going to keep them out of poverty. That means they won't come back.”

The impact of the change will vary state to state, depending on how much their caseload has dropped. (In 8 states, it is the counties, not the state, that administer both TANF and food stamps.)

In Washington, for example, the state is one of the 34 states that have seen their work requirement drop to zero. Even though that will now rise, Roberts said about a third of their recipients already meet work requirements and believes the state should be able to meet the new target without making major changes to their policies. Less certain, she said, is whether the state will meet the 90%  requirement for two-parent families. 

As states absorb these new work requirements, Roberts says it is possible that some states may decide to provide TANF to more people using their own funds, allowing them to escape the work requirements. But others, she said, may decide to further tighten work requirements, such as giving them less time to find jobs or attend job training before reducing or taking assistance away. 

Another aspect of the deal could potentially cost states more money, according to Ford of the American Enterprise Institute. She says that some states don’t currently take all the federal TANF dollars allocated to them, but that might change as states look to provide more job training. The way the bill is structured is that the program is a matching fund, which means the more states take for training, the more state dollars they have to spend.

Like the new TANF rules, work requirements under the Supplemental Nutrition Assistance Program have also been strengthened. 

During the pandemic, work requirements for food stamp recipients had been waived, but now they are returning with the end of the Covid public health emergency. Able-bodied adults between the ages of 18 and 49, who do not have dependents, can again only receive food stamps for up to three months during any three-year period, unless they work or participate in job training for 20 hours a week.

The debt ceiling compromise will raise the requirements 90 days after the bill is signed into law for those up to 50 years old. The age will rise to 52 at the beginning of the 2024 fiscal year on Oct.1 and then to 54 the following fiscal year.

Sharon Parrott, president of the Center on Budget and Policy Priorities, wrote in a blog post that almost half of older Americans with low incomes have health problems that might make it harder for them to work. The change would put nearly 750,000 older people at risk of losing their SNAP benefits, including 118,000 in California, according to a state-by-state analysis released by the group on Thursday.

“What kind of mentality does it take? How much money do they think that they're going to save by making these people go and find a job at 60 to 63 years old? And believe me, it's going to be mostly women of color, who are out there trying to find work. It is so obscene to make this happen in this rich country,” said Rep. Jan Schakowsky, an Illinois Democrat, after voting against the measure. 

Linda Schroeder, chair of the American Association of SNAP Directors and administrator of the Arizona Department of Economic Seecurity’s benefits support team, declined to comment on the new requirements through a spokesperson on Monday. 

The bill also weakens the ability of states to waive work requirements. States can now waive the requirement for 12% of their SNAP recipients, but the proposal would reduce it to 8%, not counting the homeless, veterans and young people who had been in foster care. In addition, states would no longer be able to carry over exemptions it didn’t use to subsequent years. That’s significant, said Ford, because states haven’t had to use the 12% exemption during the pandemic, which allowed the percentage of people not subject to work requirements to grow potentially to 36%.

As part of the compromise, McCarthy agreed to exempt people who are homeless, a veteran or those 24 and younger who had been in foster care. The move angered conservatives because an analysis by the Congressional Budget Office showed that exempting those people would actually increase federal spending on SNAP even with more older people at risk of losing their benefits.

Rep. Cori Bush, a progressive Missouri Democrat, told reporters after voting against the deal Wednesday night that excusing some from the work requirements didn't make up for putting older people at risk of losing their food stamps.

“There’s absolutely no way that we could say yes to pitting vulnerable communities against vulnerable communities,” she said.

Editor’s Note, June 1, 2023: This story was updated to reflect the Senate’s vote to approve the bill.