The timing was appropriate for the release of House Speaker Paul Ryan’s anti-poverty agenda earlier this month.
That’s because August will mark 20 years since President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act into law, promising to “end welfare as we know it.”
The welfare system the law relegated to the history books needed a replacement. But the problems with the one chosen in 1996 by a Republican Congress and a Democratic president have become abundantly clear two decades later.
Through its anti-poverty policy paper, the House GOP caucus had a chance to identify those problems and a fix for them that would move the nation toward a welfare system that’s actually effective in helping people escape poverty.
But Ryan’s task force had the wrong diagnosis. “Our approach is to take what we spend now and give more authority to states and communities so they can invest in what’s working on the front lines,” it wrote.
That’s exactly the approach the U.S. took 20 years ago in creating Temporary Assistance for Needy Families, or TANF, the cash assistance and work support program that replaced Aid to Families with Dependent Children.
The 1996 welfare reform law froze the amount of money the federal government issues to states each year to pay for cash assistance and other help for low-income families, and the federal government began to issue it to states in a way that provided them with maximum spending flexibility.
Today, states receive $16.5 billion per year in federal welfare funds, the same amount they received 20 years ago, only now it’s worth 30 percent less because of inflation. The maximum monthly benefit for a family receiving TANF amounts to a fraction of a poverty-level income. In Maine, the maximum for a three-member family, $485 per month, is less than 29 percent of a poverty-level income, and it hasn’t risen since 2001.
In broad terms, the 1996 reform has resulted in a welfare system that’s substantially less far-reaching and ill-equipped to respond in times of increased need. Indeed, millions fewer people today receive cash assistance. But the numbers have dropped largely as a result of policy choices — such as limits on how long recipients can receive benefits — not necessarily because of a diminishing need for it. Researchers have highlighted a sharp rise in the number of Americans living in extreme poverty since 1996.
While the reform law instituted work requirements for those receiving benefits, it also has offered states a strong incentive to simply shrink their welfare caseloads rather than engage participants in training and job searches. Under the law, the smaller their welfare caseloads, the easier it is for states to meet federally required work participation rates.
Whether a welfare recipient finds a job and climbs out of poverty or is simply cut off, it’s all the same to states. They’re under no obligation to show that their assistance programs are actually helping people escape poverty.
Since states have so much flexibility in how they spend their annual TANF block grant, and since their TANF caseloads have dropped so steeply over the last two decades, many states have come to treat their annual grant — Maine receives $78.1 million each year — as a revenue source for multiple state needs rather than as a funding stream dedicated to alleviating poverty and its negative effects on children.
In Oklahoma, a portion of what the state counts as welfare spending pays for marriage classes to help couples of all income levels strengthen their relationships. In other states, TANF has paid for college scholarships, pre-kindergarten and crisis pregnancy centers.
While the 1996 law was a clear attempt to encourage work among low-income Americans, the Center on Budget and Policy Priorities found that, nationwide, states spend just half of welfare dollars on assistance and activities meant to support work, such as transportation and child care.
The House GOP’s anti-poverty policy paper speaks in broad terms about holding states accountable and measuring results of the federal government’s various anti-poverty efforts. But with a flawed underlying premise, the House GOP looks to be setting the stage for a disappointing history to repeat itself.
