February 7, 2006 | WebMemo on Welfare and Welfare Spending

Congress Re-Starts Welfare Reform

After years of languishing in a limbo of bureaucratic inertia, the original momentum of the tremendously successful 1996 welfare reform has now been revived. With last week's passage of the budget reconciliation act, states will once again be held responsible for reducing welfare dependency and moving able-bodied recipients toward self-sufficiency through work-related activity. Even more importantly, the legislation includes a crucial first step to address poverty and dependency at its root by promoting healthy marriage. This continues the revolution in welfare policy that began in 1996.


Welfare reform has been one of the key legislative triumphs of the last quarter century. The 1996 law replaced the failed Aid to Families with Dependent Children (AFDC) program with a new program called Temporary Assistance to Needy Families (TANF). The new TANF program changed the moral foundations of welfare; able-bodied recipients would no longer receive handouts but would be required to work or prepare for work in exchange for aid.


At the core of reform were federal work rules that required the state welfare bureaucracies charged with spending federal TANF funds to move welfare recipients into work activities. Because vigorous work programs cause welfare caseloads to drop, states were also given credit for any future caseload decline. Overall, states were required to engage some 45 percent of their TANF caseload in work activities, to reduce caseload by a similar percentage, or to achieve some combination of the two.


The 1996 TANF reform proved more successful than even its strongest proponents expected. Welfare caseloads (which had not significantly declined, even briefly, for almost a half century) dropped by 60 percent throughout the nation in a few years. States with the strongest work programs experienced caseload declines of up to 80 percent. Although welfare advocates had predicted that such reforms would result in disaster, employment rates of single mothers surged, and the poverty rates of black children and children of single mothers (which had remained unchanged for a quarter century) plummeted. By 2001, the black child poverty rate reached its lowest level in U.S. history.


In one sense, the TANF reform was too successful. Welfare caseloads dropped far more rapidly than expected. By the late 1990s, most states had fully met the federal goals for caseload reduction. As a consequence, they were no longer required to reduce welfare dependency or to place recipients in work activities. In the absence of federal pressure, most welfare bureaucracies drifted back toward their old habit of simply mailing welfare checks. Efforts to reduce dependence and increase employment came to a standstill, and the rapid drop in TANF caseloads reached an end. For the last four years, the national TANF caseload has remained virtually unchanged.


Since 2002, Congress has attempted to reauthorize TANF and reactivate the federal work standards, but liberals in Congress (most of whom had also opposed the original welfare reform) blocked these efforts, year after year. Last week, however, Congress finally passed a renewal of welfare reform as part of the budget reconciliation act.


Though far from perfect, this new welfare law is a substantial step forward. It essentially restarts the 1996 reform over again. States are once again required to place 45 percent of their TANF recipients into work activities or to reduce future caseloads by an equivalent amount, although the base against which future caseload reduction will be measured will now be the low caseload levels of 2005 (as opposed to the high 1995 levels under the original law). For the first time in many years, state welfare bureaucracies will be pushed to engage recipients in work and to reduce dependence.


Even more important, for the first time, the new law will promote healthy marriage. Tragically, over one-third of children are now born out of wedlock; among blacks, the figure is 68 percent. Children born and raised outside marriage are seven times more likely to live in poverty than are children raised by married couples. Growing up without a father in the home has other harmful long-term effects on children. Compared with similar children from intact families, children raised in single-parent homes are more likely to become involved in crime, to have emotional and behavioral problems, to fail in school, to abuse drugs, and to end up on welfare as adults


Despite the fact that single parenthood is the principal cause of child poverty and welfare dependence, the welfare system, for decades, has undermined marriage in low-income communities, treating fathers as irrelevant and creating disincentives to marry. Although the original welfare reform law set symbolic goals for increasing marriage and reducing out-of-wedlock childbearing, most state welfare bureaucracies ignored these objectives.


The new law will change that. For the first time, the Department of Health and Human Services will reallocate a small portion of TANF funds, $100 million per year, directly to local groups working to strengthen marriages. While this funding amounts to only one penny to strengthen marriage for every fifteen dollars government spends subsidizing single parenthood, the new marriage program is still a bold departure from old-style welfare policy. Through this initiative, government finally acknowledges that children are better off if they are raised by two parents united in a stable marriage. This constitutes a real revolution in welfare policy, one which bodes well for the future. While restoring and strengthening marriages in low-income communities, where family dissolution has taken its greatest toll, will be a long and difficult task, the vital first step has now been taken.


Robert Rector is Senior Research Fellow in Domestic Policy Studies at The Heritage Foundation.

About the Author

Robert Rector
DeVos Center for Religion and Civil Society