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The Truth About “Welfare Reform”: TANF Is Disappearing

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With President Trump and congressional Republicans planning to push next year, under the guise of “welfare reform,” for deep cuts to programs for some of the nation’s poorest and most vulnerable people, what we’ve learned about the impact of an earlier round of “welfare reform” is instructive. The 1996 welfare law replaced Aid to Families with Dependent Children (AFDC), an entitlement program for poor families with children, with Temporary Assistance for Needy Families (TANF), a block grant with fixed annual funding for states. Under TANF, as we show in our new paper, significantly fewer families are getting the help they need to afford the basics, including a roof over their heads. If Republican policymakers use TANF as a model for “welfare reform” next year, the results could be devastating for a very large number of vulnerable individuals and families.

TANF lets states impose certain restrictions on recipients. Its block grant structure — which gives states fixed federal funding to use for a broad set of services, along with virtually unfettered authority to set their own eligibility policies — has severely limited the reach of cash assistance. The “TANF-to-poverty ratio” (TPR), a measure of families receiving cash assistance for every 100 families in poverty, fell dramatically since TANF’s creation, dropping from 68 in 1996 (under the last year of AFDC) to 23 in 2016. (See first figure.)

The TPR varies widely among states but, in a growing number of them, TANF reaches almost no families. In 15 states, the ratio is 10 or less (see second figure) — that is, for every 100 families in poverty, no more than 10 receive cash assistance. In 1996, no state had a ratio that low under AFDC.

Declining access to TANF has left the poorest families without resources to meet their basic needs. TANF benefits aren’t sufficient to lift families out of poverty in any state. And TANF does far less than AFDC did to help families in “deep poverty” — that is, those with incomes below half of the federal poverty line. In 1995, only three states had more families living in deep poverty than those receiving AFDC. By 2016, the vast majority of states had more families living in deep poverty than receiving TANF.

Cash assistance and related benefits such as SNAP (formerly food stamps) and low-income housing assistance not only help people meet their short-term basic needs, but they can also improve children’s long-term health and academic and work outcomes, a growing body of evidence shows.

The Republican push for “welfare reform” next year is the second step in a two-step fiscal agenda. In the first, Republican leaders are pressing to finalize a tax bill that will give most of its benefits to the wealthiest households and profitable corporations while boosting budgets deficits by at least $1 trillion over the next decade under the most optimistic scenario. In the second, they plan to seek deep cuts and harmful changes to basic assistance and health care for low- and moderate-income families, which would threaten the futures of millions of children and would leave millions of elderly and disabled individuals without the help they need to make ends meet.

Ife Floyd

Director of TANF Research and Analysis