Welfare reform was the crown jewel of the Republican-dominated 104th Congress. The 1996 welfare reform act was a positive, though small, first step in the long struggle toward controlling welfare costs, combating dependence on government, and reducing illegitimacy. Now, even that first step is in jeopardy.

One year after this historic victory, Congress is on the verge of overturning major features of the 1996 reform and instituting in their place liberal welfare policies unilaterally

designed by the White House. In many respects, these are the same policies Congress rejected a year ago after overcoming two vetoes by President Clinton.

Both the Senate and House recently passed their own versions of welfare legislation to be reconciled in negotiations over the 1998 budget. The Senate bill represents the most decisive liberal victory in welfare policy in 30 years. It effectively overturns all the conservative gains on the issue of workfare since 1981 and recreates the liberal status quo that prevailed during the Carter presidency. Among other things, it would increase welfare spending, outlaw Reagan-style workfare and eliminate nearly all work requirements for welfare recipients.

The Senate Finance Committee gave the Clinton administration carte blanche to design a new expensive welfare program -- deceptively dubbed "Welfare to Work" (WTW) -- that would override much of last year's welfare reform. With guaranteed funding of up to $1 billion per year, this program will fund primarily public-sector "job creation," that is, it will create expensive "make-work" jobs for welfare recipients similar to those created under President Jimmy Carter's old, unsuccessful Comprehensive Employment and Training Act (CETA). This program will control most funding for reform activities and will dominate and direct state welfare reform policies for the next five years. As drafted, the WTW program will deliberately exclude conservative reforms.

The House has now enacted legislation that, while not outlawing workfare, in most other respects mimics the potentially disastrous Senate bill, including a new WTW program virtually identical to the Senate version.

The attack on conservative "workfare" or community service program is critical. The Clinton administration recently issued regulations prohibiting the states from operating conservative community service programs whereby recipients of Aid to Families with Dependent Children (AFDC) would be required to perform work in exchange for welfare benefits. Such a program has enjoyed tremendous success in Wisconsin.

Under the Clinton Administration's regulations, however, a state wishing to make AFDC recipients work would be required to hire the recipient in a formal public-sector job. This job would then be subject to union or government wage scale, Davis-Bacon rules, union work rules, complex government personnel rules concerning hiring/firing and disciplinary action, retirement benefits, unemployment insurance, and the earned income tax credit.

By refusing to overrule the administration's regulations, the Senate bill effectively outlaws conservative workfare and provides that, if welfare recipients are required to work, then they must be placed in public sector jobs. This will kill all efforts to reduce dependence at the state level.

A major triumph in last year's reform was the elimination of a large number of severe obstacles to efforts requiring welfare recipients to work. Astonishingly, the Senate bill recreates most of these obstacles, including very liberal worker displacement rules and a sweeping grievance procedure for recipients. These bureaucratic provisions alone will cripple workfare at the state level.

The 1996 welfare reform law also contained performance standards requiring states to reduce their AFDC caseloads or, if they failed to do so, at least to require a certain percentage of their recipients to work. The Senate bill deliberately destroys these national work requirements by redefining "work" so that it includes going to school or training. In effect, under the Senate Finance Committee's version, no welfare recipient would be required to work through the end of this century.

In light of the strong public support for serious welfare reform, Congress's retreat from sound and effective policy is mind-boggling. Wisconsin, for example, has cut its AFDC caseload dramatically -- by nearly 60 percent. But instead of publicizing and celebrating this stunning public policy miracle, Republicans in Congress have allowed themselves to be trapped in an incredible debate over whether Wisconsin's policies should be outlawed totally or merely partially. Similarly, the 1996 welfare reform law's no-nonsense performance standards for caseload reduction and work are having a big effect at the local level by pushing welfare offices to reduce dependence on government. The response in Congress? Eliminate the standards.

It is difficult for Members of Congress to govern effectively when they lack a clear idea of what they are trying to accomplish. If they want to put welfare reform back on track, they should end the Clinton Administration's prohibition on community service workfare by clarifying that community service shall not be deemed formal employment. They should eliminate the proposed worker displacement and grievance provisions, which would make it extremely difficult to require recipients to work. They should strengthen, not weaken, the work requirements embodied in last year's reform legislation. And they should expand the range of activities permitted under the proposed Welfare to Work program to include conservative work initiatives. For example, it should include initiatives like Self-Sufficiency First and Pay for Performance workfare, which have cut Wisconsin's AFDC caseload in half.

If conservatives fail, when the dust from the budget reconciliation conference settles, Congress will have created a new welfare system that will be larger, more expensive, and more liberal than the disastrous system they inherited when they took control of Congress in 1994.

Liberals in Congress may want to continue expanding the welfare state, but America's taxpayers do not. Hardworking Americans neither want -- nor can they afford -- to reverse the dramatic and positive course of welfare reform over the past year by subsidizing the latest reincarnation of one of government's epic failures.

America's taxpayers deserve better.

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Note: Robert E. Rector is senior policy analyst for welfare and family issues at The Heritage Foundation, a Washington-based public policy research institute.