Buried within the stimulus bill rammed through Congress by President Obama and the Democratic leadership are measures that dismantle the momentous 1996 welfare reforms and create a massive new infrastructure of dependency. According to Heritage Foundation scholar Robert Rector, who played a critical role in crafting the landmark legislation passed 12 years ago, the stimulus bill would increase welfare spending by close to $800 billion over 10 years, about $22,500 for every poor person in the United States and more than $10,000 for every family paying income taxes. Worst of all, it contains a new mechanism that virtually insures welfare spending and caseloads will rise in the future.
In 1996, a Republican-led Congress passed and President Clinton signed into law welfare-reform legislation replacing the old Aid to Families with Dependent Children (AFDC) program with a new program, Temporary Assistance to Needy Families (TANF). Under AFDC, states received more funding whenever their welfare caseloads grew and lost funding whenever they fell - thereby creating a perverse incentive to swell welfare rolls in order to get more taxpayer largesse. The 1996 welfare-reform instead gave each state a funding level that remained constant regardless of whether a state’s case load increased or decreased. That (and the resulting declines in welfare rolls) effectively ended with the passage of the stimulus bill, which Rector characterizes as a “Trojan horse” to conceal the destruction of welfare reform.
Indeed, the new welfare system created by the stimulus bill is actually worse than the old AFDC program because it rewards states with more money when they increase welfare caseloads: The federal government will pay 80 percent of the cost of each new family a state enrolls in welfare - far higher than under AFDC. Federal welfare spending in the first year “will explode upward by more than 20 percent, rising from $491 billion in FY 2008 to $601 billion in FY 2009. This one-year explosion in welfare spending would be, by far, the largest in U.S. history,” Rector and Heritage Foundation Research Fellow Katherine Bradley write. And this sets the stage for much greater increases in welfare spending in years to come.
Proponents of the bill argue that spending increases are necessary to help families cope with rising unemployment. The argument is disingenuous: Under existing TANF law, the federal government maintains a “contingency fund” with money that can go to states with rising unemployment. If supporters of the stimulus bills merely wanted to provide states with more TANF money to weather the current recession, they could have just provided more money for TANF. Instead, they overturned the policy foundation of welfare reform by allocating more money to states that increase welfare roles. Supporters say it is only a “temporary” measure that will expire in two years. Don’t bet on it. Congress and the White House have laid the foundation for a veritable explosion in welfare dependency and spending - and with it additional debt for our children and grandchildren to pay off.