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Wrong Remedy: Why Welfare Reform Didn't End Poverty

David Callahan

It's now been twelve years since Bill Clinton signed into law the historic welfare reform act of 1996. So much time has passed that it's easy to forget a core claim of the law's proponents: That the old welfare system was keeping people poor and if we could get rid of that system, and all the dependency it spawned, we'd dramatically reduce poverty.

Things didn't quite work out that way.

Yes, poverty fell for a few years after welfare reform, along with the number of families receiving cash payments under TANF. But that was due to the strong economy of the late 1990s. Poverty rose once more as a result of the 2001-2002 downturn, dipped again when growth recovered, and then soared in the wake of the financial collapse and Great Recession. The poverty rate now stands at the highest level in 20 years.

Of course, this history is not very surprising to mainstream experts who never bought into the claim that welfare was the cause of poverty. Back in the 1980s and early 1990s, scholars like Rebecca Blank systematically debunked the argument that most welfare recipients were trapped in a multi-generational cycle of poverty. Instead they showed that the typical welfare recipient (who was white, by the way) received assistance for a short period and the causes of poverty were complex. To be sure, there was a segment of the poor who were part of a culture of dependency, but that was a relatively small part of a very large problem.

Eliminating the old AFDC system, and instituting work requirements, did help integrate some welfare recipients into the labor force. But unfortunately work is not much of an antidote to poverty nowadays. Even when our economy is booming, plenty of people can work and still be poor -- millions, in fact -- given the low pay of many jobs. And in a bad economy, of course, the picture gets even bleaker.

Not only did welfare reform not reduce poverty, but the law actually has the opposite effect in some ways: creating more intense economic hardship. Under the old system, welfare use would increase when the economy soured -- with vital cash assistance under AFDC keeping the unemployed from hitting absolute rock bottom. The new system is not responsive like that. As Sasha Abramsky points out in a recent special report on poverty in The American Prospect, TANF rolls have remained relatively flat even as unemployment has surged. So much for the safety net.

The bottom line is that welfare reform has produced a harsher, less humane America without delivering on the promise of smashing hardcore poverty.

Despite this, conservative critics of entitlement spending haven't changed their tune one bit. In the past few years, the same arguments used against AFDC have been applied to food stamps and unemployment benefits. Both these programs are said to be keeping people down by undermining their will to work and better themselves -- never mind near-record unemployment.

It's discouraging the way that bad theories live on, even in the face years of contrary evidence. But maybe not surprising in this case, given the power of the American Dream ideology. Many Americans are powerfully invested in the idea that individual volition determines success. The dark side of that belief is that if you're not making it, it's your own damn fault and you must lack enough volition -- perhaps because the social safety net has turned into a "hammock," in the favorite new metaphor of the right.