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Updated May 2011  

What are the latest issues concerning welfare?

Welfare participation, particularly AFDC/TANF participation, continues to be low as a result of 1990's federal legislation. The recession has had an uneven effect on TANF participation. The majority of states have seen an increase in recipients but there continues to be a decrease in others. Public concern about the issue has decreased although the public is quite concerned about the related matters of health care and social security. Medicaid accounts for over one half of all welfare spending and its costs have increased at about the same pace as health care costs in general. This is partly because in the absence of national health insurance, Congress has regularly expanded the coverage of Medicaid.

 What is welfare?

Welfare really has two meanings. In one sense, it refers to all government programs providing benefits to impoverished Americans. The major programs are Medicaid, Food Stamps (now known as Supplementary Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI) and HUD housing programs. When the public and politicians speak of welfare, they are generally referring to what was Aid to Families With Dependent Children (AFDC) and is now Temporary Assistance to Needy Families (TANF). This cash assistance program is primarily provided to single parents. The TANF program has always been a relatively small part of the overall welfare scheme.  (Click to see chart)  To qualify for these programs, individuals must apply and meet income and resource limitations. The HUD and Food Stamp programs are federally funded; the others involve both federal and state funds.

What is Medicaid and why does it absorb the most welfare dollars?

Medicaid was created in 1965 as the medical program available to SSI and TANF recipients. Medicaid is now also available to some additional low income families who experience substantial medical expenses. Due to legislative changes in the past decade, an additional group of middle class persons have used Medicaid to pay for nursing home care. For most recipients, Medicaid is a fee for service payment system similar to Medicare which allows the recipient to chose among available health care providers. Therefore, the high cost of American per capita health care  (Click to see chart) applies to the welfare health care system. Before Medicaid, health care for the poor was provided by a system of local public hospitals and clinics which provided very limited benefits at a significantly lower cost.

Why was AFDC considered a problem?

Despite the phenomenal growth in the national economy from 1970 through 1996, reliance on all welfare programs increased dramatically. Although total welfare spending was but a small part of total government spending , the total monies spent and the percentage of participants have substantially increased. This has been particularly true of AFDC. Until recently, the number of AFDC/TANF recipients as a percentage of the total population increased even during periods of relatively low unemployment.  (Click to see chart)    To some observers, this pattern has reflected an economy which has provided unequal opportunities. Others believed that reliance on AFDC had become a disincentive to work. Studies showed that in many states, the AFDC package of benefits has had a value substantially greater than the minimum wage.   (Click to see map)   For certain recipients, welfare indeed became a way of life even though most AFDC recipients had used the program only temporarily.   In a society that has traditionally valued independence and hard work, AFDC recipients became regular targets of political scorn.

What did welfare reform do?

The AFDC program underwent a significant change under Republican-sponsored legislation in 1996 which was signed by President Clinton. States were given far greater latitude in designing their family welfare programs. As the new name implies, TANF can no longer be a lifelong program. All states are required to limit benefits after the expiration of a specified period of time. Under most state plans, all benefits will be terminated after five years.   Each program requires virtually all adult participants to participate in work programs. If not working within two years, recipients must perform community service as a condition of receiving benefits.

What has been the effect of welfare reform?

In the beginning, the reduction in the number of TANF and Food Stamp recipients surpassed all projections. The reduction in TANF has continued and has only slightly increased during the recession. In contrast Food Stamp Program participation has sharply increased.    The degree of TANF reduction has significantly varied from state to state. Generally, the greater reductions have come in the states which enacted shorter time limits.   There has been a dramatic corresponding increase in the percentage of single women with children who are in the labor force.    To a certain extent the decline in the TANF participation rate is the result of the expiration of time limits for long-term recipients. There is as of yet no detailed studies as to what the effect of time limits have been on these individuals and their children.

What further reform is being proposed?

The Bush Administration has proposed to significantly expand welfare reform by:

  • Increasing the required level of work for poor parents from 30 hours to 40 hours a week.
  • Increasing the percentage of welfare recipients that hold jobs from 50 percent to 70 percent by 2008.
  • No longer permiting recipients would to count education as a "work activity".
  • Offering new money for marriage strengthening programs.
  • Freezing federal funding for cash assistance at 1996 levels.

The primary criticism of the Bush proposal is that it does not include sufficient child care funding to accomplish the work participation goals. The House has passed legislation which incorporates the Bush proposal and the matter is now pending with the Senate.

Is SSI different from Social Security?

Yes, although it is similar in some ways. SSI is a federal/state welfare program which provides financial assistance to the elderly and disabled. Social Security is available to disabled and elderly people who have worked. Both programs are run by the Social Security Administration which is why the two programs are often confused. Like AFDC, there had been a significant increase in SSI participation from 1970 though 1995 but unlike AFDC/TANF, the increase has not stopped.    The benefit level for SSI is greater than a comparable TANF grant but much less than the typical Social Security payment. The rise in numbers has primarily been the result of increasing number of disabled persons, particularly children   and those with mental disabilities.    In the past decade, Congress has removed addiction disorders and some learning disabilities as qualifying conditions in order to address this increase. An additional rise has been due to the increasing number of elderly non-citizen immigrant recipients.   Many of these individuals immigrated as retired persons sponsored by their immigrant children and qualified when the sponsorship period ended. As a part of welfare reform, new immigrants do not qualify for SSI without a significant work history.

How do other major countries deal with welfare?

Most European countries have an entirely different approach to welfare. These countries offer all residents a comprehensive package of social benefits. The equivalent of TANF is called a family allowance and all families with children qualify. Unlike the United States system, a family does not have to apply and meet income limitations. The benefit amounts are generally comparable to those in the United States. In Canada, a similar benefit is issued through a tax credit. This "negative income tax" approach to welfare has been proposed in the past but has been rejected as too expensive. This is because because many families would qualify for TANF or Food Stamps but choose not to apply.  These systems have a much higher cost than the United States system and are part of the reason that government spending as a percentage of GDP is higher in Europe and Canada. Despite the higher cost, welfare is not nearly the volatile issue there as it is in the United States.

How do the two parties stand on welfare reform?

The 1996 welfare reform legislation produced a division within the Democratic party. Those who supported the reform, including President Clinton and the past two Democratic Presidential candidates, also have advocated strengthening the objectives of welfare reform through increases in the minimum wage and providing low income workers with access to medical care. Democrats opposed the reform measures have been fearful of the long term effects of welfare reform and believe that it will lead to substantial social unrest once term limits occur, particularly if there is a recession. The Democratic vote in both the House and the Senate was almost equally divided on the issue.    Republicans are quick to take credit for the decrease in welfare participation associated with welfare reform.

Welfare Links

 Wikipedia - Welfare Reform

 Wikipedia - Welfare Reform Act

 Wikipedia - Medicaid

 Wikipedia - Temporary Assistance to Needy Families

 Wikipedia - Supplementary Nutrition Assistance Program (Food Stamps)

 Wikipedia - Supplemental Security Income

 Yahoo Directory of Links

Overview from Public Agenda

The Clearinghouse on International Developments in Child, Youth and Family Policies

USA Today Magazine Article on European Welfare Systems

Overview of General Assistance Programs - Urban Institute

Welfare Reform - Child Welfare.com

Urban Institute - Comparison of State Plans

Cato Institute: The Work Versus Welfare Trade-Off




Welfare Charts
(click to enlarge)

Changes in TANF Caseloads in the Recession, 12/07 to 12/09

Distribution of Federal Benefit Programs in 2007

Medical Costs as Percentage of GDP in Developed Countries 1990 - 2004

AFDC/TANF Rate and Unemployment Rate

Welfare Spending as a Percentage of Government Spending

Wage Equivalent of 1995 AFDC Package

AFDC Snapshots 1996

Time Limit for TANF By State

TANF/AFDC and Food Stamp Recipients 1975-2010

Percentage Change in Families on TANF (1996-2010)

Participation in Labor Force of Unmarried Women With Children under 18, 1975-2003

SSI Recipients 1974-2009

SSI Children as a Percentage of All Recipients

Mental Disorders as a Percentage of New Awards

Immigrant Receipt of SSI 1982-1999

TANF and Food Stamp Recipients as Percentage of Potentially Eligible Recipients

Congress Vote on Welfare Reform, July 1996