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Anniversary of US Welfare Reform Bill - 2001-08-22


Five-years ago this week Wednesday, former President Bill Clinton signed controversial legislation reforming the U.S. welfare system.

The 1996 welfare reform bill was the culmination of years of fierce debate in the United States. A sharp rise in teenage pregnancies in the 1980s and increasing public concern about children growing up in single-parent, welfare-supported homes lent a sense of urgency to the issue and spurred politicians to take action.

The reform legislation limits federally-funded welfare payments to five years and requires able adults to find work by the end of 24 months.

Baruch College economics professor June O'Neill headed the Congressional Budget Office in the mid-1990s. She is the co-author of a new study showing that the reform legislation accomplished its primary goals of reducing welfare and increasing work participation. "What we found was that with respect to welfare participation and work, the program was clearly successful," she said. "There has been a dramatic change in welfare caseloads since the welfare-reform legislation was signed. The number of people on welfare fell by half. The participation rate of single mothers on welfare declined sharply."

Professor O'Neill says the study also found an increase in the number of welfare recipients who are working. "Our study looked at the percentage of single women, single mothers, who were on welfare and the percentage who worked," said professor O'Neill. "And there were also considerable increases in the percentage of single mothers who worked.

While few people sought to keep the old welfare system intact, many opposed the particulars of the reform legislation. They questioned whether or not the government had provided a sufficient safety net of food, housing, and health care for the women and children who are the chief beneficiaries of welfare.

Irwin Garfinkle is a professor of economics and social work at Columbia University. He says welfare reform supporters are taking credit for too much. "That is, the drop in welfare rolls is the big thing that everybody points to and says \'that is an achievement of the 1996 reform,'" he said. "At the same time, poverty has not gone up." The problem is other things were changing. Other things like the great economy we have, increases in the earned income tax credit, and increases in the strength of child support enforcement all of those things contributed both to the reduction in welfare caseloads and to the increased well-being of single parents inside and outside welfare."

Professor Garfinkle also attributes a rise in marriage rates and in two-parent homes to the strong U.S. economy, not welfare reform. But June O'Neill, who served on the President's Council of Economic Advisors during the Nixon and Ford administrations, says the changes stem from government policy, not the economy. "A lot of our statistical analysis was related to separating those two things," he said. "We found that, in fact, after 1996, declining unemployment could account for maybe as much as 20 percent of these changes, but half of the changes were accounted for by welfare reform."

Irwin Garfinkle believes the reform legislation has made improvements in the lives of poor people. But he remains concerned about what will happen if the U.S. economy slows or goes into recession. "The thing that I was most critical of in the 1996 welfare reform is that when we face a recession and unemployment starts going up, we are not well-equipped in dealing with that because during recessions, states are required by law to balance their budgets," said professor Garfinckle. "So they start cutting back on what they provide, and localities as well. It is exactly at that time that we need more money for welfare."

In the case of an economic downturn, supporters say former welfare recipients who lose their new jobs will be able to turn to unemployment insurance and other government programs that provide housing and food subsidies.

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