BTC BRIEF: TANF: A Cautionary Tale

By Brian Kennedy, BTC State Policy Fellow

March 2017

Just over 20 years ago, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, also known as “welfare reform,” was signed into law. With a promise to “end welfare as we know it,” Welfare Reform significantly restructured the nation’s anti-poverty programs, the only thing keeping struggling families out of extreme poverty. Policymakers dissolved Aid to Families with Dependent Children (AFDC), a program which provided cash assistance to needy families with children in order to protect families from the harshest effects of poverty and stabilize the family and community.
Under AFDC’s entitlement structure, every family who qualified for help received it. In its place, Congress and then President Clinton created the Temporary Assistance for Needy Families (TANF) block grant. The TANF block grant set a fixed amount of federal funding and gave states the ability to determine how they could use the funds. In addition to changing the funding structure from a program that guaranteed assistance to all those who qualified to one that set a fixed amount of dollars and allowed states to serve who they could, the new law imposed a five-year lifetime time limit on benefits. Proponents of TANF argued that increased state flexibility, eligibility limits and work requirements would allow states to shift cash assistance spending into programs that promote and support work. Opponents argued that work supports and low-wage job opportunities would not be enough to help families subsist.
More than two decades later, we now know that TANF has failed to deliver on either one of these promises. TANF, in fact, has had the opposite effect. The cash assistance program that existed under AFDC has nearly disappeared and struggling families are finding it harder to find work that pays a living wage. Research has found that over this period the number of people living in deep poverty has grown significantly. Between 1995 and 2010, the number of children TANF lifted out of deep poverty shrank from 2.2 million to only 600,000.
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