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by Causes | 8.22.19

On August 22, 1996, President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act into law, reforming America’s welfare system through a bipartisan compromise with a Republican-controlled Congress. Among the legislation’s main reforms were a new requirement that welfare recipients work to continue receiving benefits and a five-year cap for families receiving federal welfare dollars.

The deal accomplished bipartisan goals. It fulfilled Clinton’s campaign pledge to “end welfare as we have come to know it,” while also enacting a key portion of the Republican party’s Contract With America. But the legislation remains controversial to this day. Proponents point to decreased welfare enrollment and higher employment rates as signs of its success, while detractors say it hasn’t done enough to help those still in poverty.

Why was reform needed?

Beginning in 1935, the primary welfare program in the U.S. was known as the Aid to Families with Dependent Children (AFDC) program. By 1969, the number of families enrolled grew more than 10-fold, from 162,000 to 1,875,000. This led to concerns that people who were capable of working might choose not to because they feared losing their benefits, or that “welfare queens” might exploit the system. The value of benefits paid out to families through AFDC was also declining, as the amount of money paid to a family of three dropped by 47% between 1970 and 1996 after adjusting for inflation.

Due to those problems with the existing welfare system, a political consensus that something needed to be done had emerged in the 1990s — though the parties were divided as ever on the specifics. Democrats lost control of both chambers in Congress in the 1994 midterm elections to Republicans touting their “Contract With America” under the guidance of new House Speaker Newt Gingrich, meaning that Clinton would have to forge a bipartisan compromise to fulfill his campaign promise.

Republicans used their newfound majority to pass two welfare reform packages, which were promptly vetoed by President Clinton when they arrived on his desk. But, given his campaign pledge and the negative political implications of vetoing a third welfare reform bill going into a presidential election, Clinton worked with Gingrich and other Republicans to craft a compromise bill that was eventually introduced by then-Rep. John Kasich (R-OH). The bill finally passed both the House and Senate with strong bipartisan support, and Clinton praised the legislation at the ceremony where he signed it into law:

“It gives us a chance we haven’t had before to break the cycle of dependency that has existed for millions and millions of our fellow citizens, exiling them from the world of work. It gives structure, meaning and dignity to most of our lives.”

What did it do?

With the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act, welfare was no longer an entitlement program, meaning that the poor had to apply and be approved to receive benefits — they weren’t just given out. It eliminated the old AFDC system and replaced it with a new welfare program known as Temporary Assistance for Needy Families (TANF).

TANF was designed to provide cash benefits to needy families through block grants for states to use in creating their own welfare programs, which may require recipients to meet additional criteria to get their benefits.

Welfare recipients were required to begin working after they’d received benefits for two years, and a lifetime limit of five years of federal benefits was put in place. This was a significant departure from the previous welfare system which didn’t impose any work requirement on recipients. Under current law, half of a state’s TANF enrollees must be in compliance with federal work requirements.

Additionally, the legislation tightened up other aspects of the welfare system. It increased state enforcement of child support payments in order to give more single-parent households a chance to get off of welfare. It also prevented immigrants to the U.S. from receiving federal welfare benefits until they have been in the country for five years — although states are able to use their own welfare funds to cover recent immigrants.

What impact has it had?

The Personal Responsibility and Work Opportunity Reconciliation Act succeeded in reducing the number of families receiving welfare from over 12 million in 1996 to about 3 million in 2015. As Clinton noted in a 2006 op-ed defending welfare reform a decade after he signed it into law, millions of former welfare recipients got jobs, and child support collections doubled following the bill’s enactment.

That said, welfare reform’s detractors point to poverty rates that haven’t fallen at the same rate as welfare enrollment. In 1996, the poverty rate was at about 14% and by 2015, the rate was essentially unchanged. Critics say this is because welfare reform moved people who had been receiving benefits into low-paying jobs that ultimately didn’t provide enough income to lift them completely out of poverty.

The law’s controversy has carried over into recent political debates as well. In July 2012, a decision by the Obama administration’s Dept. of Health and Human Services (HHS) allowed states to apply for a waiver to TANF’s work requirements if they could show a credible plan to increase the employment of welfare recipients by 20%. Several states requested waivers to reduce the volume of paperwork and reporting they were required to do. HHS’ decision drew the ire of Obama’s rival for the presidency, Mitt Romney, who accused the president of trying to gut welfare reform, a claim later given a ruling of “Pants on Fire!” by Politifact.

Welfare reform also became a point of contention between Hillary Clinton and Sen. Bernie Sanders (I-VT) in the 2016 Democratic presidential primary. Sanders claimed that the compromise between President Clinton and Republicans was an attempt to “go after some of the weakest and most vulnerable people in this country.” He also alleged that those who supported welfare reform — namely the Clintons — were guilty of “scapegoating people who were helpless.”

Bill Clinton responded by saying that “there’s no question that it did far more good than harm,” while also conceding that changes to the law are needed to help the poorest Americans.

— Eric Revell

(Photo Credit: Social Security Administration / Public Domain)

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