When the Los Angeles Times can report that California welfare recipients withdrew $1.8 million over seven months at—wait for it—casino ATMs, you know the great welfare reform legislation of 1996 has faded to a distant memory.
The 1990s welfare reform achievement was a state-initiated movement. Then-Gov. Tommy Thompson of Wisconsin led the charge, followed closely by a group in Oregon operating under the American Institute for Full Employment.
The basic philosophy was that welfare recipients had to work if they wanted a check. Requiring welfare recipients—some of whom were second and third generation—to work as a condition of receiving benefits helped them take control of their lives and regain their dignity. And it got the able-bodied people just looking for a handout out of the welfare office.
A Republican Congress and a Democratic president, Bill Clinton, decided to implement a national version of welfare reform in 1996 that ended the Lyndon Johnson Era-War on Poverty program known as Aid to Families with Dependent Children (AFDC) and replaced it with the work-based Temporary Assistance for Needy Families (TANF).
AFDC paid people not to work; and worse, paid them more when they had more babies out of wedlock. Talk about perverse economic incentives!
The reform legislation changing the cash-grants program was one of the great post-war policy achievements—although it did little to change the 70 other means-tested welfare programs.
The Heritage Foundation reports, “Between 1996 and 2009 over 2.8 million families left the welfare rolls. In addition, the child poverty rate dropped and in particular the black child poverty rate hit historic lows.”
Then President Obama arrived in Washington. His stimulus bill returned to the old AFDC approach that gives states bonuses for expanding welfare rolls. And Heritage says, “President Obama’s FY 2011 budget request would increase total welfare spending to $953 billion, a 42 percent increase over welfare spending in FY 2008.”
Yes, the economic downturn has swollen the number of people applying for welfare. But economic incentives still matter, and Obama is embracing the wrong ones.
If Republicans take over Congress in November they will have a lot of priorities. Getting the country back on track with welfare reform should be one of them.