Forgetting what we learned about welfare

On August 22, 1996, President Bill Clinton signed legislation enacting welfare reform after campaigning on the promise to “end welfare as we know it.”

“All Americans, without regard to party, know that our welfare system is broken,” President Clinton told governors on the eve of the reform. The system, he said, “hurts those it was meant to help.” A Republican majority in Congress had also pledged reform, and a bipartisan consensus had emerged that federal welfare was not providing what its architects—including Presidents John F. Kennedy and Lyndon B. Johnson—had intended: a hand up, not merely a handout, for those in need.

The 1996 welfare law transformed the largest federal cash assistance program, Aid to Families with Dependent Children, into Temporary Assistance to Needy Families. The key word was temporary. To overcome long-term poverty and dependence, the restructured program engaged recipients in work or preparation for work.

The revamped program worked. The Temporary Assistance to Needy Families program enrollment fell by half, as more recipients could support themselves outside the cash payment system. Employment among single mothers increased. Child poverty fell to a historic low. Those gains are at risk today, as President Biden and many others seem to have forgotten why reform was successful and are undermining its foundations.

Welfare reform worked because it recognized that decades of unconditional cash grants to address poverty had ill-served those in need. By the 1990s, researchers identified worklessness and unwed childbearing as the key contributors to long-term poverty. Human need cannot be reduced to the merely material. Human flourishing is bound up with the reality that we are made in the image of God for purposeful activity and designed to thrive in relationship.

The welfare reform of the 1990s also gave the states leeway to innovate and improve their family assistance programs. It structured federal payments to the states in a way that gave state leaders more reason to engage recipients in work, moving away from open-ended entitlements. In addition, the reform’s work requirement was actually imposed on state welfare agencies rather than recipients themselves. State agencies were required to engage half their work-capable enrollees in finding or training for work. The states had to take responsibility.

Yet, too many assumed that the 1996 legislation actually had ended welfare as we knew it and that the work of policymakers was done. In reality, the reformed family assistance programs were only one of the dozens of federal programs that provide cash, food, housing, medical and social services to poor and low-income Americans. All these programs require reform as well.

Welfare that will really offer a “hand up” to those in need will feature the same work-based policies that succeeded in previous reform. Astoundingly, some of these programs actually impose marriage penalties on recipients. These penalties can make it more financially advantageous for single mothers on welfare to be unmarried and to stay unmarried.

Other programs designed to help low-income recipients gain skills for employment and life require reform so that providers are paid according to participants’ successful outcomes, not just for delivering a program.

Clearly, much more about the welfare system needs changing than could be accomplished by previous reform. But now, even what it did achieve is at risk. Despite having voted for the 1996 legislation as a senator, President Biden has marked its 25th anniversary by introducing policies that undermine successful welfare reform.

In March 2021, the president’s announced American Rescue Plan included a monthly “child allowance,” totaling $3,600 per year for children under six and $3,000 for older children—packaged as a response to the pandemic. Now the budget reconciliation package looming in Congress would extend the policy to 2025, in what is widely known to be a bid to make it permanent. The government “child allowance” significantly expands the existing Child Tax Credit and delinks it from work. The majority of new benefits are cash grants to families who owe no income tax in the first place.

The result is new unconditional cash payments to non-working households, taking us back a generation to “welfare as we knew it”—before the reforms that rewarded work. Similarly, the administration has unilaterally increased benefits under the Supplemental Nutrition Assistance Program by 25 percent—an unprecedented increase through an unprecedented sidestep of congressional authority over the program. The proposed food allowance would actually exceed what the government itself estimates to be food costs for a family.

The welfare reform of the 1990s was only the beginning of a policy transformation needed to help more Americans actually overcome long-term poverty and dependence. But most Americans simply fail to understand how these programs work. If we really mean to love our neighbors, that needs to change.