The Invisible Safety Net: Protecting the Nation's Poor Children and Families

In 1994, welfare caseloads reached a historic high of 5.1 million families, about 15 percent of all American households. Since then, the welfare rolls have been cut in half, partly as a result of the strong economy of the late 1990s, and partly as a result of radical welfare reform, which began in 1996, when the Clinton administration fulfilled a pledge to "end welfare as we know it." The administration eliminated Aid to Families with Dependent Children (AFDC), the main cash welfare program for poor women and children in the United States, which had given cash payments directly to eligible women to support them and their families, and replaced it with the Temporary Assistance for Needy Families (TANF) program--its very name underlining the transitory nature of the assistance. TANF limited women to a lifetime total of five years of support, toughened work requirements, and strengthened sanctions on women who did not comply. Under TANF, the poor are no longer "entitled" to state and federal cash assistance, and the federal government's commitment to match state spending on welfare case-loads ended.
TANF brought with it dire warnings of catastrophe. A widely cited report from the Urban Institute, a Washington policy think tank, predicted that welfare reform would push 1.1 million children into poverty.1 Two high-ranking Clinton appointees, officials at the Department of Health and Human Services, resigned in protest when President Clinton signed the bill.2 Marian Wright Edelman of the Children's Defense Fund wrote an open letter to President Clinton protesting, "It would be a great moral and practical wrong for you to sign any welfare 'reform' bill that will push millions of already poor children and families deeper into poverty."3 Senator Daniel Patrick Moynihan argued in the Senate that [this] "is not 'welfare reform,' it is 'welfare repeal.' It is the first step in dismantling the social contract that has been in place in the United States since at least the 1930s."4
The anticipated disaster never materialized, but commentators continued to warn that we had staved off disaster only because of the buoyant economy. The picture, they contended, would be considerably less rosy when the inevitable downturn occurred. Yet even during the recession and "jobless recovery" of the past few years, the number of children in poverty has not dramatically increased.
One reason we avoided disaster is that, even before the reforms of the mid-1990s, cash welfare had been a decreasing part of the welfare system for many years. In 1996, many families receiving AFDC also received "in-kind" assistance--food assistance, housing assistance, free medical care, and subsidized child care--programs providing specific goods, often targeted directly to needy children. Discussions of "welfare" often ignore these non-cash programs, even though they account for the bulk of spending on low-income families. Other safety net programs, most notably the Earned Income Tax Credit (EITC), provide cash. The EITC underwent a dramatic expansion during the 1990s and now provides more cash to low-income families than does TANF.
These programs, which came into their own with the rise of TANF and the end of cash welfare, form a largely invisible but tremendously important social safety net, providing basic necessities to poor families. As Douglas Besharov, a conservative commentator at the Heritage Foundation, noted, "Only the expanded aid now available to low-income, working families . . . makes it worthwhile for them to leave welfare."5 In his book about welfare reform, American Dream, Jason DeParle put it more colorfully, describing cash welfare as one leg of a three legged stool that welfare mothers relied on for support. Since cash welfare was only one leg, it could be replaced by work or by contributions from friends or relatives.6 My argument is essentially, that there is a fourth leg to the stool--support from the EITC and non-cash programs. By 2002 only a small fraction of aid to families, less than 10 percent, took the form of cash welfare payments--only 5 million people were on TANF. In contrast, even allowing for considerable overlap in the rolls of individuals who participate in these programs, more than 30 million people participated in other safety net programs including the EITC, Medicaid, food and nutrition programs, housing assistance, and subsidized child care. (A complete listing of expenditures and caseloads for the programs discussed in this book is shown in appendix table 1.) These programs are the focus of this book, which assesses and analyzes the importance and effectiveness of individual programs in supporting low-income families (especially children) and discusses how both to ensure their continued existence and improve their performance.