Revisiting Welfare Reform

A potential update to welfare reform is no substitute for poverty reduction.

In an effort to jumpstart a fresh debate on welfare reform, Republican members of the House Ways and Means Committee recently released a “discussion draft” of a bill overhauling the nation’s current welfare program, Temporary Assistance for Needy Families (TANF).

Billed as the “biggest redesign of TANF in its history,” the draft legislation includes a variety of provisions aimed at tightening the law’s current work requirements and holding states more accountable for moving recipients into work.

“Work is the only way for people to really escape poverty and achieve the American Dream, and we are eager to help more families succeed at doing just that,” said House Human Resources Subcommittee Chairman Charles Boustany (R-LA) at a hearing in July.

Unlike some past conservative efforts at welfare reform, the current discussion draft contains several elements intended to court bipartisan support. While the focus on work is a must for conservatives – as well as for many moderates – the proposal also expands the kinds of activities that count as “work” and maintains funding at current levels. According to National Journal, both Republican and Democratic staffers were involved in the drafting of this bill.

Given that Congress hasn’t passed a comprehensive update of welfare reform legislation since it was first enacted in 1996, the passage of bipartisan welfare legislation would indeed be a welcome achievement. In particular, the bill could solve some current problems with the way in which states are currently spending federal TANF dollars. For example, the Congressional Research Service reports that states spent just 6 percent of federal welfare dollars on work-related programs in fiscal 2013 – while spending 7 percent on administration.

Nevertheless, welfare reform is no substitute for poverty reduction, and Congress shouldn’t treat it as such. Rather, TANF reform is only one aspect of a broader agenda Congress should tackle to move families into work and self-sufficiency.

The size and reach of the federal welfare program has always been much smaller than popular perceptions to the contrary. Today, post-reform, the program reaches even fewer people than it once did, which makes it a relatively puny lever for tackling the very large problem of persistent poverty.

In 1994, when welfare was still an entitlement under the Aid to Families with Dependent Children (AFDC) program, enrollment hit its historic peak of 5.1 million families nationwide. Yet federal spending for AFDC, food stamps and Social Security disability combined made up just 3 percent of the federal budget in 1995. By comparison, the federal government spent 14 percent of its budget that year on interest payments for the national debt.

After the 1996 reforms – which limited benefits to five years and imposed work requirements on recipients – enrollment plummeted dramatically. As of April, the monthly average number of families receiving benefits in 2015 has been slightly less than 1.4 million (or about 3.2 million individuals). Even during the recession, when caseloads did tick up, enrollment never approached even half of pre-reform levels.

The number of families receiving welfare today in fact represents just a fraction of the total number of families currently living in poverty. In 2013, 9.1 million families were living in poverty – versus 1.4 million families on welfare. In 2010, according to the Center on Budget and Policy Priorities, TANF reached just 27 out of every 100 families who are poor.

What made the 1996 reforms historic wasn’t just the shift it ushered in from the acceptance of dependency to the expectation of work. What gave it impact was its context within a larger framework for fighting poverty that reached many more Americans than just those on welfare. If the goal today is to match that impact – with new reforms that move the needle on persistent poverty – the model of the 1990s is what Congress should follow.

As former President Bill Clinton noted in a New York Times op-ed on welfare reform’s tenth anniversary:

The success of welfare reform was bolstered by other anti-poverty initiatives, including the doubling of the earned-income tax credit in 1993 for lower-income workers; the 1997 Balanced Budget Act, which included $3 billion to move long-term welfare recipients and low-income, noncustodial fathers into jobs; the Access to Jobs initiative, which helped communities create innovative transportation services to enable former welfare recipients and other low-income workers to get to their new jobs; and the welfare-to-work tax credit, which provided tax incentives to encourage businesses to hire long-term welfare recipients.

In addition, Clinton doubled child support collections, raised the minimum wage, and roughly doubled federal investments in childcare and Head Start.

The current proposal to overhaul TANF may indeed be the “biggest redesign in history,” but without a renewed commitment to rebuilding the other resources that families in poverty need, its impact may fall far short.

Anne Kim

Anne Kim is Senior Writer at the Washington Monthly.