Session 1
Overview and History of Welfare Reform
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
1
Overview of the Aid to Families with
Dependent Children Program (AFDC)
• Established in 1935 as part of the Social Security Act
• Shared cost program between federal government and states
• Originally intended primarily for widows, AFDC increasingly
served never-married mothers
• States had discretion primarily over setting income eligibility
limits and benefit levels
• Activity requirements were weak and generally focused on
education and training rather than work
• States were not allowed to time limit beneficiaries
• Beginning in early 1990s, states increasingly used waivers to
try new approaches to reducing welfare dependence
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
2
Poverty Rates for Children in the U.S. Have Been
Higher than Those for Other Age Groups
35
30
65 years and over
20
Under 18 years
16.2
15
18 to 64 years
10.2
10
9.4
5
00
20
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
19
74
19
72
19
70
19
68
19
66
0
19
Percent in Poverty
25
Year
Source: U.S. Census Bureau
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
3
Two Views of Poverty
• The poor are victims of their circumstances
and do not have opportunities to advance
• The poor are responsible for their
circumstances and do not take advantage of
available opportunities
• The emphasis of antipoverty policy in the
U.S. has shifted between these two views
• The Personal Responsibility and Work
Opportunity Reconciliation Act of 1996
emphasizes the second view
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
4
The Measurement of Poverty
•
The Census Bureau uses a set of money income thresholds that
vary by family size and composition to determine who is poor
•
The poverty thresholds do not vary geographically; they are
updated annually for inflation but they have not kept pace with
rising real incomes
•
In determining who’s poor the Census Bureau counts money
income before taxes and does not include non-cash benefits, the
EITC, or work-related expenses. The National Academy of
Sciences has recommended changes to deal with these and other
issues. The thresholds in 2000 were:
1-person under 65
$8,959
3-person family (adult and 2 children) 13,874
4-person family (adult and 3 children) 17,524
Source: U.S. Census Bureau
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
5
Countries that Spend More on Social Welfare
(as percent of GDP) Have Lower Child Poverty Rates
Cash and noncash social expenditures exclude health, education, and social services, but include all forms of cash benefits and near-cash
housing subsidies, active labor market program subsidies, and other contingent cash and near-cash benefits. Nonelderly benefits include
only those accruing to household heads under age 65.
Source: Institute for Research on Poverty (IRP), University of Wisconsin-Madison
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
6
Government Benefits Lift Children Out of Poverty
Work Pays Better than Welfare
$20,000
Annual Family Income (2000 dollars)
$18,000
2000 Poverty Threshold for a Single-Parent,
Two-Child Family
EITC
$16,000
Food Stamps
$14,000
EITC
$12,000
Food Stamps
$10,000
$8,000
Food Stamps
$6,000
$4,000
Net Earnings
Net Earnings
Full-time, minimum-wage job
Full-time job at $7.50 an hour
TANF
$2,000
$0
$0
Source: Sawhill/Thomas Brookings
(2002)
Annual Family Earnings (2000 dollars)
Source: Center on Budget and Policy Priorities; U.S. Census Bureau
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
7
Political Background to the 1996
Welfare Reform Legislation
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
8
Characteristics of the AFDC Caseload
• Majority are racial and ethnic minorities
• 4 percent of mothers in 1995 worked full-time,
and another 5 percent worked part-time
• Total expected duration of all Awelfare spells@
was 13 years; more than 76 percent were
expected to stay on for more than 5 years total
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
9
Efforts at Comprehensive
Welfare Reform Usually Failed
• Nixon’s Family Assistance Plan (1969-1972)-failed to pass Congress
• Carter’s Program for Better Jobs and Incomes
(1977)--failed to pass Congress
• Reagan’s 1981 Budget Act changes--moderate
cutbacks
• Reagan’s New Federalism (1982)--never
introduced in Congress
• Family Support Act (1988)--incremental reform
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
10
Why Did Welfare Reform Legislation
Pass in 1996 After Many Previous Failures
• Dramatic caseload increases after 1988 fostered perception
that program was “out of control”
• Public opinion
– Public opinion had not united around all of the
proposals in PRWORA: public had shifted to
overwhelming support for work requirements for
custodial parents, while remaining more divided on
“hard time limits” and family caps
– Republicans in Congress were not trusted more than
President Clinton on welfare reform issues in 1996
– The AFDC program was very unpopular because seen
as anti-work and anti-family. The public was willing to
accept almost any alternative to the status quo
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
11
Why Did Welfare Reform Legislation
Pass in 1996 After Many Previous Failures Cont.
• Social Science knowledge and evaluation studies
– increased policymaker concern about intergenerational
transmission of welfare receipt and length of welfare
spells
– gave support to “work first” approaches
• Budgetary considerations: Republicans needed to find
budget savings (especially from cuts in Food Stamps and
benefits to legal immigrants) in order to finance tax cut and
budget balancing promises in the Contract with America
• State experiments under waivers increased confidence in
innovative capacity of states
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
12
Why Did Welfare Reform Legislation
Pass in 1996 After Many Previous Failures Cont.
• Critical role for political bargaining:
– Bill Clinton promised to “end welfare as we know it”
– Republicans in Congress committed to welfare reform
by Contract with America
– Moderate Democrats in Congress followed President
Clinton to the right in order to avoid being seen as more
liberal than President Clinton on welfare issues
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
13
Session 2
A Primer on the Major Programs
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
14
Overview of the 1996 Welfare Reform Law
• Temporary Assistance for Needy Families
• Non-marital Births
• Supplemental Security Income for Children
• Child Support Enforcement
• Welfare for Non-citizens
• Child Care
• Food Stamps
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
15
Five Components of TANF
1.
End Cash Entitlement
2.
Block Grant Funding
3.
Work Requirements
4.
Sanctions
5.
5-Year Time Limit
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
16
Purposes of TANF
1.
Provide assistance to needy families with
children
2.
End welfare dependency by promoting job
preparation, work and marriage
3.
Prevent non-marital pregnancies
4.
Encourage formation and maintenance of
two-parent families
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
17
Provisions in Welfare Reform
Law Designed to Reduce Non-marital Births
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Congressional findings on the negative effects of non-marital births
Three of four TANF purposes address family formation
Performance bonuses tied to purposes of law
Illegitimacy reduction bonus
Require teens to attend school
Require teens to live at home or other supervised setting
Abstinence education
Child support enforcement
Paternity establishment
National goals to prevent teen pregnancy
States establish numerical goals for reducing non-marital births
Annual ranking of states on non-marital pregnancy ratios by HHS
Allow family cap
Allow reduction in cash benefits for non-marital births
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
18
Elements of the Work Support System
• Earned Income Tax Credit (EITC)
• Food Stamps and Child Nutrition
• Medicaid and SCHIP
• Child Care
• Housing
• Child Tax Credit
• Child Support Enforcement
• Workforce Development & Job Advancement
Services
• State Income Supplements
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
19
Support for Working Families
Increases Dramatically, 1984-1999
51.7
Billions of 1999 Dollars
50
Child Care
SCHIP
40
30
Child Tax Credit
Medicaid
EITC
20
10
5.6
0
Spending in 1999 under:
1984 Law
1999 Law
Source: Congressional Budget Office
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
20
Session 3
How States Have Responded
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
21
Under TANF States Have Discretion To:
• Set eligibility limits and benefit levels for cash
benefits (as before)
• Define who receives various benefits and services
• Set income supplements for working families
• Offer other “carrots”
• Set stricter “sticks” than those in federal law
• Spend funds on a variety of services other than
cash benefits
• Save block grant funds for economic downturns
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
22
States Have Very Different Resources Under
the TANF Block Grant
Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002
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