When he was running for president, Bill Clinton promised to “end welfare as we know it.” And in 1996, he signed a bill into law that did just that. By replacing the New Deal-era welfare program that was in place at the time with Temporary Assistance for Needy Families — or TANF — Clinton’s welfare reform imposed new restrictions on eligibility for government assistance, including work requirements and lifetime limits. It also gave states the freedom to spend welfare grants in almost any way they please, like college scholarships, foster care, or Child Protective Services, in lieu of direct cash assistance.
The law was so flexible, in fact, that states didn’t actually have to spend the money they received at all — and the last two and a half decades have made it clear that many aren’t, even when need arises. In 1997 — TANF’s first year — states collectively spent $14 billion, or 71 percent of the allocated funds from the program. By 2020, states were spending $7.1 billion, a measly 22 percent of the allocated federal dollars.
That decline in spending at the state level cannot be attributed to success in combating poverty. To the contrary, poverty spiked during the Great Recession, and the poverty rate in 2020 was just about what it was at the start of the millennium. All the while, as a ProPublica report recently highlighted, states have been hoarding more and more money, with many state governments opting to sit on massive TANF reserves while rejecting the vast majority of applicants to the program. In fact, TANF acceptance rates have declined so much that they have started to resemble admissions stats of Ivy League schools. Texas, for example, approved only 7 percent of applications in 2020 despite reaching just 4 percent of families living in poverty, compared with 47 percent in 1996.
Today, there is over $5 billion that has accumulated from unused TANF funds. And with poverty persisting and hopes of passing the Build Back Better bill fading, the need for another round of welfare reform — this time to build a more robust safety net and make sure the money Congress allocates to fight poverty is actually spent — is clear. Though the dearth of welfare spending is especially prevalent in more conservative Southern and Midwestern states, it’s a problem that can be found across the country. Maine, for example, is one of the worst offenders, having more unspent cash per person living at or below the poverty line than almost any other state. That’s why reform has to take place at both the state and federal levels.
With Congress seemingly unable to take on any major legislative lifts at the moment, states should act first. And while not every state has a problem with spending its TANF funds — Massachusetts, for example, is one of six states that have no money left unspent — all of them would benefit from streamlining the cumbersome, often confusing application processes that discourages people from trying to receive benefits. Indeed, the number of applications for TANF has significantly declined in the last decade, and not because families are no longer in need.
One of the most effective ways for states to put their TANF reserves to use is to increase the amount of supplemental income that goes out to those who are eligible — low-income families with at least one child under the age of 18. That’s especially relevant today, as high inflation rates reduce the purchasing power of Americans and disproportionately burden the poor. And the reality is that TANF cash benefits have not kept up with inflation over the years. “There are states that haven’t increased their grants since 1996,” LaDonna Pavetti, the vice president for family income support policy at the Center on Budget and Policy Priorities, told the Globe editorial board. “We know that the way to solve poverty is to increase family income. That is a first step in really being able to use TANF to alleviate poverty,” Pavetti said.
One of the reasons TANF came into existence was to create a welfare-to-work pipeline, providing temporary assistance to families that have fallen on hard times before they get back on their feet. But the problem is that many states have underinvested in work training programs, essentially penalizing people for not having a job instead of actively helping them to get a stable one that pays enough to make ends meet. A study found that in Maryland, for example, just 22 percent of welfare recipients had stable employment five years after leaving TANF, while the rest could only find temporary gigs or jobs with poverty wages. That’s why states ought to use some of their TANF funds on more robust and individualized work training programs that can actually help people find gainful employment.
Eventually, the federal government will have to get involved and elevate the standards that states are held by. That means forcing states to peg their cash payments to inflation so that poor families are less burdened by rising costs, and requiring the states to spend most of their TANF funds on direct cash assistance. Congress should also reconsider the 1996 law’s five-year federal cap on TANF in a given recipient’s lifetime and require that states be more flexible with their time limits on the program. Though the original law allowed states to grant extensions to families who face especially difficult circumstances like disabilities that prevent them from working, some states, like Maine, made extensions near impossible, leaving families that are most in need of assistance behind.
Congress can’t sit this out. Studies show that states where Black children are likelier to live tend to be the ones that underinvest TANF funds in direct cash assistance. And research also shows that meaningful supplemental income for poor families has positive long-term outcomes for children, leading to better education, health, and employment. So it’s time for the United States to end welfare as we now know it — except this time, expand the social safety net instead of leaving it hanging by a thread.
Editorials represent the views of the Boston Globe Editorial Board. Follow us @GlobeOpinion.