Trump’s ‘welfare reform’ will destroy the program

Welfare fails to help families in poverty. Trump would make it much worse.

President Donald Trump with Rep. Paul Ryan (R-WI) and Republican House members after they passed the AHCA. CREDIT: AP Photo/Evan Vucci
President Donald Trump with Rep. Paul Ryan (R-WI) and Republican House members after they passed the AHCA. CREDIT: AP Photo/Evan Vucci

President Trump released his full budget outline on Tuesday, and one large piece of it involves dramatically changing social safety net programs. The budget, according to White House documents, “strives to replace dependency with the dignity of work through welfare reform efforts.”

As part of those efforts, the budget calls to dramatically cut the country’s only cash welfare program, Temporary Assistance for Needy Families (TANF), despite the fact that it has already been severely underfunded and hobbled over the last two decades. All told, Trump would cut TANF by $21 billion over a decade, including a $15.6 billion reduction in the amount of money the federal government gives to states to deliver benefits.

When welfare reform was implemented in 1996, it fundamentally changed the design of the program. The federal government used to share the burden of any increased need and costs with the states, which meant funding rose automatically. But after the program was converted into a block grant, states started getting a fixed amount of money no matter how many people might qualify for the benefit. That amount of money hasn’t been increased since then, which means it’s lost 36 percent of its value to inflation.

Without increased funding to keep up with inflation, not to mention a growing population, states have cut back on benefits severely. The actual benefits are today worth less to a recipient than they were in 1996; in 35 states and D.C., their value has fallen by at least 20 percent. Benefits in every state leave families below the poverty line.

And that’s for the few who are actually able to enroll in the program. The lack of funding, coupled with the fact that states have wide leeway in administering their programs and can generally put unused TANF money toward other purposes, means that the number of recipients has fallen sharply, dropping by nearly two-thirds in the decades since the 90s. Three-quarters of qualifying poor families with children used to be enrolled in welfare; these days it’s less than a quarter. In 14 states, benefits reach 10 percent of such families or less. Mississippi, for example, barely enrolls any families in its welfare program.

Reducing the TANF block grant by as much as Trump’s budget calls for will only exacerbate these trends. Since 1996, the share of children living in deep poverty, or in families living on $2 a day, has tripled, and about 20 percent of all low-income mothers have neither income from work nor welfare benefits. That intense hardship will grow under Trump’s budget.

The remaining $6 billion in cuts to TANF in Trump’s budget would come from eliminating the program’s contingency fund. The fund was created when welfare changed to a block grant as a way for states to access extra money if a bad economy meant more demand on the program, given that the structure offers no other wiggle room. More than a third of states drew upon the fund during the recent recession, although due to a lack of adequate funding it was depleted by the end of 2010. Congress created an Emergency Contingency Fund in 2009 and 2010, something that every state but Wyoming tapped into.

Even with some contingency funding, the failure of TANF to keep up with rising need during the recession was clear: It took seven months after the recession started for the caseload to grow at all, and it only rose 16 percent despite the number of unemployed people skyrocketing by 88 percent. TANF’s rolls peaked by the end of 2010 and then started falling in 2011 even though unemployment remained at or above 8.5 percent.

Without any such fund, however, an economic downturn will mean states are left without any extra help to deal with increased hardship and need. That would mean just as families were facing a greater prospect of living in poverty, they wouldn’t be able to get cash welfare benefits to help see them through the rough patch.

In light of TANF’s inability to give families adequate help or even reach those who are eligible, many have had to rely more heavily on food stamps. The number of families receiving food stamps rose 45 percent during the worst of the recession, in contrast with TANF’s paltry increase. Eighty-five percent of families that are on TANF also get food stamps.

But Trump’s budget doesn’t spare those either. It would cut the Supplemental Nutrition Assistance Program, or food stamps, by nearly $193 billion over a decade. About $190 billion of the savings would be from the imposition of work requirements on recipients, even though states that have put such requirements in place for food stamps have found that many people who are kicked off remain unemployed. The work requirements imposed on TANF by the 1996 reform haven’t led to a boost in employment, but have increased hardship.