Unreforming Welfare
Part of Obama's new "stimulus" request would spell the end of welfare reform as we know it.


The devil, they say, is in the details. That certainly applies to presidential budgets.

Consider President Obama’s 2011 budget. It includes a little-noticed request to extend and expand a program that would, effectively, reverse welfare reform.

The $5 billion TANF Emergency Fund, originally created in the infamous “stimulus” package, was supposed to be a short-term infusion of money to states whose welfare caseloads were increasing. The president is now seeking an additional $2.5 billion to expand and extend the emergency fund for another year. Congress is looking for ways to make this happen, either as part of a jobs package or in another legislative vehicle destined for the president’s desk.

The TANF Emergency Fund reverses exactly what made welfare reform successful. The 1996 reform changed the nation’s largest cash entitlement program, known as Aid to Families with Dependent Children (AFDC), to a fixed block grant to states known as Temporary Assistance for Needy Families (TANF). Instead of Washington paying states on a per capita basis for every person who entered the welfare rolls, the states now received a fixed amount of money annually that didn’t change according to the size of their caseload. If a state shrunk its caseload by moving people off the rolls and into jobs, it was rewarded by being allowed to keep the money saved.

The 1996 welfare-reform law produced tremendous results. More than 2.7 million families left the welfare rolls for jobs and self-sufficiency. Caseloads dropped from 4.4 million families in 1996 to 1.7 million families in 2007. The poverty rate for black children fell, and the number of single mothers working dramatically increased.

Obama’s TANF Emergency Fund, by contrast, in effect pays states bonus money for increasing the size of their caseloads. Further, this fund is much more generous than the old AFDC system, matching states 80 cents on the dollar for each new case. The 2011 budget request would make this even more generous by reimbursing states 100 percent for cases in the “subsidized employment” category.


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