September 20, 2002

September 20, 2002 | News Releases on Welfare and Welfare Spending

Critics of Welfare Reform Invent Phony Child-Care Crisis, Study Says

WASHINGTON, SEPT. 20, 2002-Some critics of the 1996 federal welfare-reform law, which is now up for renewal, charge that its success has led to a crisis in child care, with newly employed parents unable to get the financial assistance they need. But a new paper from The Heritage Foundation shows this isn't the case.

 

In fact, government spending on child care has more than tripled since 1996, as funds freed by falling welfare caseloads have been redirected to child-care subsidies, says budget expert Brian Riedl. Most states have child-care assistance programs that aid families with incomes well above the poverty level, and virtually all needy families who seek this assistance receive it.

 

According to Riedl, the Grover M. Hermann fellow in federal budgetary affairs at Heritage, opponents of the 1996 reforms base their claims on outdated, misleading or simply erroneous statements about child care.

 

For instance, one widely quoted government study claims that just 12 percent of the families that need child-care assistance get it, implying that 88 percent of impoverished families have nowhere to turn. But, Riedl says, the study inflates the number of "needy" families by counting middle-class families, children with stay-at-home parents and children who participate in after-school programs. "Once you exclude these groups-and add in those taking part in other child-care programs-you find that between 80 percent and 90 percent of needy families are getting aid," he says.

 

Opponents also say government spending on child care hasn't increased despite the strengthening of welfare requirements. But, Riedl notes, federal spending skyrocketed from $3.2 billion in 1996 to $11 billion in 2002-a 244 percent jump.

 

In addition, reform critics argue that states have created excessively strict eligibility standards for child-care assistance. But, Riedl observes, the average state covers working families with incomes up to 196 percent of the poverty level. In Connecticut, for example, a family earning $48,000 per year is eligible.

 

Another myth, according to Riedl, is that child-care subsidies are too small. Yet the typical subsidized family at the poverty level pays just $11 per week for a child's care, he says, an amount that most families on welfare consider a small financial burden.

 

Reform critics also claim that, because moving more welfare recipients into jobs will boost the demand for child care, Congress will have to increase funding. But, Riedl says, moving welfare recipients into jobs actually saves states money that no longer must be spent on welfare payments. These welfare savings can simply be shifted into new child-care subsidies for each working family, he says-noting that, since 1996, 75 percent of new child-care spending has come from money shifted from welfare payments.

 

"As employment among single mothers has soared, government has more than done its part with regard to child care," says Riedl. "Yet much of the public debate remains misleading. A look at the facts as they are now shows that pretty clearly."

 

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#49-02: McNICOLL

NOTE: All Heritage Foundation research and publications are available on the Internet at http://www.heritage.org. For background, talking points and policy recommendations on today's most critical issues-from homeland security to welfare reform-go to the on-line edition of "Issues 2002" at http://www.heritage.org/research/features/issues/

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