Happy Birthday, Welfare Reform

Fifteen years ago today, Bill Clinton signed the law that created the program commonly known as welfare-to-work, fulfilling a campaign promise to "end welfare as we know it." Today, there is little doubt that the Personal Responsibility and Work Opportunity Reconciliation Act did just that, removing what had been a large cash-assistance program from the social safety net. The decline continues. With the law's federal authorization expiring September 30 and the numbers of impoverished Americans climbing ever higher, welfare is a dead letter in most states.

The effectiveness of a government aid program can best be judged by its performance during periods of economic turmoil. By almost any measure, Temporary Assistance for Needy Families (TANF), the program created by the 1996 law, has failed to cushion the neediest through recessions. While in 2009 the food-stamp program responded to the increased need for government assistance, growing by 57 percent, the number of TANF caseloads merely inched upward. (It was the first time rolls increased since the law was enacted.) Six states continued to shed recipients and the actual number of families in need of assistance rose rapidly. At the heart of the worst recession in 80 years, TANF funds only reached 4.5 million individuals, or 28 percent of those living in poverty. By contrast, in 1995, the old welfare system covered 13.5 million individuals, or 75 percent of those living in poverty.*

TANF was perhaps never designed to meet the need; reducing the number of families on welfare was the point of reform. The Clinton law achieved this by instituting strict requirements and radically altering the state-federal relationship. No family can receive more than five years of federal TANF funds in total (there had previously been no time limit). States are required to meet a 50 percent Work Participation Rate, which means that, for half the caseload, one or more adults are required to participate in a narrowly defined set of work activities for 30 hours every week. States that do not meet the Work Participation Rate can be subjected to a financial penalty. Many state and county agencies include their own hurdles to enrollment, including drug testing, finger printing, and mug shots. "In the process of trying to impose very stringent work requirements, we've lost the program's ability to provide a safety net for the people who are unable to find work," says LaDonna Pavetti, the Center on Budget and Policy Priorities' vice president for family income support.

The funding mechanism creates further complications. Federal money is distributed in a block grant that provides an annual lump sum of $16.6 billion, with no allotted increases for recession, population growth, or rises in the cost of living. Even in the best of times, this federal funding suffers the persistent grind of inflation (the real value of TANF has fallen by 28 percent since 1996). In the old system, funds increased in response to greater need.

In exchange for the block grant, states are given near-total autonomy over the design of their programs, except when it comes to the emphasis on work. Most eligibility requirements, benefit levels, time limits -- even the option of providing cash assistance at all -- are largely decided locally. "Programs vary tremendously across the country," says Sheila R. Zedlewski of the Urban Institute. "Some states are much more generous ... continuing TANF as a safety-net program. In other states, it is so minimal that it really isn't viable anymore."

Many states choose the minimalist route. In Georgia, before reform, for every 100 families in poverty, there were 98 families helped by welfare. Now only 8 families in every 100 receive TANF money, and the caseloads have continued to decline during the recession despite a poverty rate over 16 percent In 2010, Wyoming had a bare 306 families on its welfare rolls, or 1 percent of the state's population below the poverty line. Mississippi allows 12,804 families on the rolls but only gives a family of three $170 a month (which is an annual income that equals 11 percent of the poverty line, or $2,040 a year). Other states simply boot people off TANF long before the federal time limit is up. Arizona shortened its time limit from the typical 60 months to 24 months.

None of this is helped by the fact that even nominal TANF funds are lower today than they were in 1996. Welfare-to-work locked in the levels of welfare revenue states received in the last year before reform took hold. Realizing this would freeze dramatic disparities between states, Congress created a $19 billion supplementary fund to support poor states. A minuscule $5 billion contingency was created in case of recession. Neither of these revenue sources is available any longer; the original contingency fund was exhausted in December 2009, while additional funds provided in the stimulus bill were used up by December 2010. Congress failed to renew the supplement for 2011, leaving already struggling states with even less money.

The truth is, the old system's benefits never provided enough to lift families out of poverty, and the program offered little funding for work programs, leaving families to stagnate with few options besides cash assistance. The 1996 law tried to address those concerns but did so in the context of almost full employment. Lawmakers were confident that shrinking the welfare rolls would mean more people were going to work. If families were no longer receiving assistance, it meant they didn't need it because now they had jobs. At least at first, many did. Rebecca Blank, the acting secretary of commerce, estimated that more than half of adults leaving the welfare rolls initially found employment. Then, by 2001, the number of families living in poverty began climbing steadily upward, and the newly stringent state welfare rules prevented the needy from getting help.

"Between 2000 and the recession, welfare reform's achievements gradually dropped off," says Peter Edelman, who acted as one of Clinton's assistant secretaries of health and human services and quit in protest of welfare reform. "The fact that there were higher numbers of people with incomes lower than half the poverty line was clearly linked to the fact that cash assistance was simply not available in many states."

The country is clearly no longer operating with full employment, and the number of jobs that the program's stringent work requirements necessitate simply don't exist. TANF beneficiaries have also changed dramatically since 1996. When 14 million people were on the rolls, many could find a job with the right aid, training, and motivation. The caseload today is much smaller, and is therefore not so diverse. The families who have struggled through poverty the longest are often dealing with other problems -- like domestic violence, mental-health issues, serious medical conditions, extremely low education levels -- that limit their ability to find work even when the economy is booming. With the economy in decline, a system that counts on the neediest families finding gainful employment is one that leaves too many without anywhere to turn.

Reforming welfare in a progressive fashion is unlikely, however. A recent Harvard study shows that one of the central, driving passions of the Tea Party's animus is "'handouts' perceived as going to unworthy or freeloading people." Cash assistance has never been popular in America, and expanding such a program is even less likely in today's austerity-obsessed Congress and statehouses. In the current political moment, any reforms to TANF are likely to only further weaken the policy. In the meantime, we have abandoned welfare, and many families are suffering for it.

*This sentence previously listed the data as indicative of the number of families covered by TANF funds. Those numbers are actually accurate for the number of individuals. The sentence has been corrected.

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