Social Programs in The United States - History - Welfare Reform (1990s)

Welfare Reform (1990s)

Before the Welfare Reform Act of 1996, welfare assistance was "once considered an open-ended right," but welfare reform converted it "into a finite program built to provide short-term cash assistance and steer people quickly into jobs." Prior to reform, states were given "limitless" money by the federal government, increasing per family on welfare, under the 60-year-old Aid to Families with Dependent Children (AFDC) program. This gave states no incentive to direct welfare funds to the neediest recipients or to encourage individuals to go off welfare benefits (the state lost federal money when someone left the system). Nationwide, one child in seven received AFDC funds, which mostly went to single mothers.

In 1996, under the Bill Clinton administration, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act, which gave more control of the welfare system to the states though there are basic requirements the states need to meet with regards to welfare services. Still, most states offer basic assistance, such as health care, food stamps, child care assistance, unemployment, cash aid, and housing assistance. After reforms, which President Clinton said would "end welfare as we know it," amounts from the federal government were given out in a flat rate per state based on population.

Each state must meet certain criteria to ensure recipients are being encouraged to work themselves out of welfare. The new program is called Temporary Assistance for Needy Families (TANF). It encourages states to require some sort of employment search in exchange for providing funds to individuals, and imposes a five-year lifetime limit on cash assistance. The bill restricts welfare from most legal immigrants and increased financial assistance for child care. The federal government also maintains an emergency $2 billion TANF fund to assist states that may have rising unemployment.

Following these changes, millions of people left the welfare rolls (a 60% drop overall), employment rose, and the child poverty rate was reduced. A 2007 Congressional Budget Office study found that incomes in affected families rose by 35%. The reforms were "widely applauded" after "bitter protest." The Times called the reform "one of the few undisputed triumphs of American government in the past 20 years."

Critics of the reforms sometimes point out that the massive decrease of people on the welfare rolls during the 1990s wasn't due to a rise in actual gainful employment in this population, but rather, was due almost exclusively to their offloading into workfare, giving them a different classification than classic welfare recipient. The late 1990s were also considered an unusually strong economic time, and critics voiced their concern about what would happen in an economic downturn.

National Review editorialized that the Economic Stimulus Act of 2009 will reverse the welfare-to-work provisions that Bill Clinton signed in the 1990s, and will again base federal grants to states on the number of people signed up for welfare rather than at a flat rate. One of the experts who worked on the 1996 bill said that the provisions would lead to the largest one-year increase in welfare spending in American history. The House bill provides $4 billion to pay 80% of states' welfare caseloads. Although each state received $16.5 billion annually from the federal government as welfare rolls dropped, they spent the rest of the block grant on other types of assistance rather than saving it for worse economic times.