Is the new welfare law really as cruel as they say?

You have a reasonably soft heart. You wouldn't feel comfortable seeing little kids begging in the streets, or stepping over the bodies of old folks gasping in the gutters. Maybe you read the Atlantic Monthly article by Peter Edelman, a former Clinton-administration official, who called the welfare-reform law signed last fall by his former boss "terrible legislation." Edelman says the result will be "more malnutrition and more crime, increased infant mortality, and increased drug and alcohol abuse." You don't defend the previous welfare system--who could?--but you wonder: Are the scaremongers right?

How worried should you be? Here's a quick review of what is--and isn't--likely to be truly troublesome as the great welfare-reform experiment begins.

1 States that are too "kind." Some folks' worries are the opposite of Edelman's. They fear that the welfare system won't change enough.

The new welfare law abolishes the current federal welfare-entitlement program, Aid to Families With Dependent Children, and replaces it with block grants to the states. States have to create replacement programs that set limits (five years) on how long most (four out of five) families can get welfare, and ensure that half the families still on the rolls in 2002 have at least one (part- or full-time) working member. States also have to contribute 75 percent of the money that they used to spend on AFDC to the new Temporary Assistance to Needy Families (TANF) program--the so-called Maintenance of Effort (MOE) requirement.

Beyond that (and a bunch of other eye-glazing rules and exceptions to exceptions that will keep federal regulation writers off the dole), states are basically free to offer whatever combination of cash and services they think is best.

So what are states likely to do? One option is--nothing much. If a state really wants to maintain the status quo, it can probably get away with it. Welfare law has long been loaded with requirements that states must cut fraud on the rolls, move recipients into jobs, provide necessary service, blah, blah, blah. The requirements go unmet. The governor makes a few calls to the White House or Capitol Hill. Eyes are averted.

Moreover, the new law, for all its seeming toughness, allows states plenty of leeway if they want to be generous. And welfare consultants are already showing the way. States are free, for example, to redirect the money that they used to spend on matching federal AFDC grants (about 45 percent of the total) to provide help for families who have lost their "temporary assistance" coverage. The new law also provides an incentive for states to use their own money to continue grants to families that exhaust their five-year eligibility.

Not so long ago, states like New York, Massachusetts, and California might have brazened it out. But times have changed. Most states have already toughened their welfare programs under waivers granted under the old pre-reform rules. Some of these waivers are for more generous programs, but others are just as tough as the new law.

2 States that are too mean. So how nasty might states get? Some were pretty mean already. People tend to forget that under the old rules, states got to set the key parameter--the benefit level. AFDC payments ranged from 11 percent of the official poverty line in Mississippi to about 65 percent in New York's Suffolk County. (This doesn't count food stamps, Medicaid, the Earned Income Tax Credit, and federal aid for housing, home heating, child care, and so forth, which will still be available.) At least in theory, Mississippi now could replace even its small cash contribution with the proverbial "bus ticket North." Not likely, perhaps, but worth watching out for.

3 A shortage of money. Under the old rules, the federal government would match the money states spent, according to a formula that took account of state need and benefit levels. The new rules cap federal welfare payments at the 1995 level (with some allowances for rising unemployment and other contingencies). For now that's a windfall for all but a couple of states, since welfare caseloads have dropped by almost 10 percent nationally since 1995. But what if times get tough and caps start to pinch? Well, the Food Stamp program has long been capped--supposedly--yet Congress has never failed to provide extra funds when governors needed them.