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In 1996, after seeing federal welfare policy fail to help the poor for 60 years, our leaders in Washington decided it was time to try something new. They boldly passed a welfare reform law that ended the legal entitlement to cash handouts, required many to work in order to receive money, and gave states the flexibility to design their own programs.
Today, welfare rolls have shrunk by almost 60 percent and 3.5 million fewer people live in poverty. More single mothers are working, helping to cut their poverty rate by a third, to its lowest level in history. Under the old system, despite billions of dollars in handouts, black child poverty actually increased between 1971 and 1995. Now, even with the current recession, black child poverty continues to fall, and has never been lower.
Unfortunately, this successful social policy change has run into the wall of partisan wrangling on its way to re-approval in Congress. The reforms of 1996 should be preserved and built upon to help more Americans find their way out of poverty.
One of the key ingredients in the 1996 reforms was the decision to reduce federal involvement by giving block grants to states and letting them both create their own plans and decide who is eligible for help. Besides shifting control to those closer to those in need, this also created 51 policy laboratories experimenting with different versions of reform.
What these experiments have shown state legislatures is that different policies lead to considerably different results. A study by Michael New of the Cato Institute finds that “states with the strongest sanctions and lowest benefit levels had the most success in reducing their caseloads.” In other words, tougher rules and less money led to fewer people seeking welfare. Hardly surprising to anyone with the slightest grasp on human nature. One of the problems with welfare has always been that it discourages people from fending for themselves.
But as long as handouts exist, they will encourage some to make uneconomic decisions, like having children out of wedlock. An overwhelming body of research has emerged since Charles Murray first made the argument in Losing Ground, that as welfare benefits have increased, so has single motherhood, one of the surest routes to poverty. Single mothers make up one-third of those on welfare and account for most long-term dependency.
Reducing out-of-wedlock births was a core goal of the 1996 reform, but is one area where reform hasn’t been as successful as initially hoped. This may be because states continue to provide money to single teenage mothers, a group accounting for an increasing percentage of teen pregnancies, and the most at-risk for long-term welfare dependency. Cutting off state funding in, say, nine months and one day, would remove the economic incentive to bring a child into a life of poverty. It would also push those who continue to make such bad decisions into the arms of family and community as they turn for help—and hopefully advice.
Such a policy change addresses the causes of poverty, rather than the symptoms, as should all good welfare policy should. While it is good news that fewer people are collecting welfare, it is just as important to prevent anyone new from entering the trap of government funded poverty to begin with.
Those who continue to need help should increasingly be encouraged to turn to non-government options in their local communities, like family, church, and charity. These non-government options have a much longer and more successful history of helping those in need. Aside from that, such local relationships improve the important ties of community life, and create a link between giver and receiver, which is lacking in checks sent from Washington.
There is much compassion in helping those in need, but no compassion in spending other peoples money, which is what welfare is. Non-government help relies on the virtue and morality of the giver while government aid comes through the force of the tax system.
This should be kept in mind by leaders in Congress as they re-approve the successful 1996 welfare reform bill. They would do the poor a lot of good increasing the amount of non-government help available by making it easier to give to and set up private charities. Setting up a charity should be as easy as setting up a need-a-penny take-a-penny cup at the pharmacy.
Of course, there’s no better cure for poverty than widespread prosperity and increased economic growth, which can be enabled by lower taxes, less burdensome regulations, and better education through school choice. All cans of worms I’ll gladly open another day.