    [Budget of the U.S. Government]
    [V. Creating Opportunity, Demanding Responsibility, and Strengthening Community]
    [7. Implementing Welfare Reform]
    [From the U.S. Government Publishing Office, www.gpo.gov]

                         7.  IMPLEMENTING WELFARE REFORM

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      . . . [W]e have an historic opportunity to make welfare what it was meant to be--a second chance, not a way of
    life. And even though the bill has serious flaws that are unrelated to welfare reform, I believe we have a duty
    to seize the opportunity it gives us to end welfare as we know it.

                                          President Clinton
                                          July 31, 1996

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       Not long ago, America's welfare system was broken. It did not serve
    the taxpayers or those trapped in it. And it undermined the values of
    work and family.
       The President made welfare reform a key goal of his first term--
    reform that would promote the basic goals of work, family, and
    responsibility. When Congress twice sent him welfare legislation that
    did not meet those goals, he was forced to veto the bills. When,
    however, Congress finally produced a bill that did meet the basic goals,
    the President signed it into law on August 22, 1996 as the Personal
    Responsibility and Work Opportunity Reconciliation Act.
      During the many months that Congress worked to devise a good bill, the
    President acted on his own. He helped States advance the goals of
    welfare reform by letting them test innovative ways to move people from
    welfare to work and to protect children. The Administration's actions,
    combined with the falling unemployment rate that a strong economy has
    generated, are having an impact. Since the President took office,
    welfare caseloads have fallen by 2.1 million persons--the biggest such
    drop in history (see Chart 7-1).

       The Administration is determined to help States make the most of this
    historic welfare reform revolution, and to hold them accountable for
    results. The new law gives States and individuals unprecedented
    opportunities to build a new system that rewards work, invests in
    people, and demands responsibility. Unfortunately, the law also included
    overly deep budget cuts--primarily affecting nutrition programs, legal
    immigrants, and children--that are unrelated to reforming welfare. With
    this budget, the President provides $18 billion over five years to
    address these problems. In the meantime, the essential long-term task of
    building the new work-based system is underway in every State.
       The new welfare law has laid the groundwork for moving those who can
    work to independence by focusing on tough, but realistic, work
    requirements. The law repealed Aid to Families with Dependent Children
    (AFDC), a 60-year-old, joint Federal-State program, and created the
    time-limited, work-oriented Temporary Assistance for Needy Families
    (TANF) program. States must now implement the new law by tailoring a
    reform plan that works for their communities. The plans must require and
    reward work, impose time limits, increase child care payments, and
    demand personal responsibility. By mid-December 1996, the Federal
    Government already had certified 21 State plans as complete.
       To better enable welfare recipients to move off, and stay off,
    welfare, the new law provides additional resources for child care and
    Medicaid--the health insurance program for low-income Americans. It
    ensures that low-income people do not lose Medicaid as a result of
    changes to AFDC and extends the transitional Medicaid program that
    provides health insurance coverage for those leaving welfare for work.
       Finally, the law gives States vast flexibility to design welfare
    programs suitable to their own needs and circumstances, but it also
    holds States accountable for making welfare reform a success. The law
    requires a sustained State financial contribution, but also recog-

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    nizes
    that State welfare systems need an incentive to focus on the central
    goal of moving people from welfare to work. Consequently, the law
    provides $800 million in performance bonuses by the year 2002 to reward
    States that best achieve that goal.

    Moving From Welfare to Work

       To help welfare recipients move from welfare to work, and to help
    communities help them do so, the President proposes two new initiatives:
      a performance-based Welfare-To-Work Jobs Challenge to help
              States and cities create job opportunities for the hardest-to-
              employ welfare recipients; and
      a greatly-enhanced and targeted Work Opportunity Tax Credit
              (WOTC) to provide powerful new, private-sector financial
              incentives to create jobs for long-term welfare recipients.

       Welfare-to-Work Jobs Challenge: The Jobs Challenge is designed to
    help States and cities move a million of the hardest-to-employ welfare
    recipients into lasting jobs by the year 2000. It provides $3 billion in
    mandatory funding for job placement and job creation. States and cities
    can use these funds to provide subsidies and other incentives to private
    business. The Federal Government also will encourage States and cities
    to use voucher-like arrangements to empower individuals with the tools
    and choices to help them get jobs and keep them.
       Work Opportunity Tax Credit: For States and cities, TANF and the Jobs
    Challenge provide new resources to create jobs and prepare individuals
    for them. For employers, the budget proposes incentives to create new
    job opportunities for long-term welfare recipients. The budget would
    first create a much-enhanced credit that focuses on those who most need
    help--long-term welfare recipients. The new credit would let employers
    claim a 50-percent credit on the first $10,000 a year of wages,

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    for up to two years, for workers they hire who were long-term welfare
    recipients. In addition, the budget expands the existing WOTC tax credit
    by including able-bodied childless adults aged 18 to 50 who, under the
    Administration's Food Stamp proposal, would face a more rigorous work
    requirement in order to continue receiving Food Stamps. These changes to
    the credit would cost $552 million from 1998 to 2002.
      Additional Support: The budget also proposes additional support to
    help move people from welfare to work.
      Transportation: The budget proposes to expand programs that
              will transport thousands of welfare recipients to jobs and
              training. It provides $100 million for a new Access to Jobs
              and Training initiative in the Transportation Department. The
              Administration also will propose legislation to offer grants
              to States and local entities for new or modified
              transportation services that ensure access to work for low-
              income individuals, especially current welfare recipients.
       Housing: The budget proposes $10 million to expand the
              Department of Housing and Urban Development's (HUD) Bridges-
              to-Work demonstration project, which links low-income people
              in central cities to job opportunities in surrounding suburbs.
              In addition, HUD will award new portable rental assistance to
              localities that link their housing assistance with their
              efforts to move welfare recipients to work.
       Adult Education: The budget proposes to increase funding by
              more than 50 percent over the 1996 level for basic skill, high
              school equivalency, and English classes for disadvantaged
              adults--helping to meet demands for literacy training
              stimulated by last year's welfare and immigration reforms.
       Community Development: The budget also proposes to expand the
              Community Development Financial Institutions Fund, thereby
              expanding the availability of credit, investment capital,
              financial services, and other development services in
              distressed urban and rural communities. (For more information
              about the Fund, see Chapter 6.)

     Helping To Make Work Pay

       Earned Income Tax Credit (EITC): As an important component of helping
    people move from welfare to work, the Federal Government can help ensure
    that those who work can support their children. The EITC, a 20-year-old
    Federal program, supplements earnings to meet this goal. In 1993, the
    President proposed, and Congress enacted, legislation to substantially
    expand the EITC, helping 40 million Americans in 15 million lower-income
    working families (see Chart 7-2). The welfare law maintains these gains
    for hard-working, low-income families.

      Minimum Wage: President Clinton consistently supported an increase in
    the minimum wage for all low-wage earners. Before he took office, the
    last increase came in 1991. Due to inflation, the minimum wage shrank in
    value by 13 percent from 1991 to 1996. As a result, Congress responded
    to the President's request last year by raising the minimum wage from
    $4.25 to $5.15 an hour over two years--in two steps. The first step of
    50 cents went into effect in October 1996; the second step of 40 cents
    will occur in October 1997.
       This 90-cent rise means over $1,800 a year in higher earnings for
    full-time, full-year minimum wage workers, who previously earned less
    than $9,000 a year. By October 1997, nearly 10 million working Americans
    will have received an immediate pay raise. Millions of other low-wage
    workers making slightly more than the new minimum also may benefit if
    employers raise their paychecks in step with the minimum wage increase--
    as employers have done in the past.

     Protecting the Most Vulnerable

       Several provisions in last year's Personal Responsibility and Work
    Opportunity Act have nothing to do with the goals of welfare reform--
    moving people from welfare to work. Rather, they were misguided cuts in
    Federal support to vulnerable populations, including the elderly,
    children, and people with disabilities. To address them, the President
    proposes to better protect children, people with disabil-

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    ities, legal immigrants, and those who try to find work but cannot.

      Nutrition Safety Net: Throughout its negotiations with Congress over
    welfare reform, the Administration insisted on maintaining the
    nutritional safety net because it provides an essential tool to enable
    lower-income families and individuals to buy food and obtain nutritious
    meals for their school-age children. Due to the Administration's
    efforts, Food Stamps remains the most extensive Federal safety net
    program for low-income individuals and families.
       Throughout their history, the Agriculture Department's Food Stamp and
    Child Nutrition programs have produced significant, measurable benefits
    in the nutrition of children and families. Food Stamps reach almost one
    in 10 Americans every month--including over 12 million children and two
    million elderly. In addition, about 26 million children receive
    subsidized nutritious lunches each school day. Another 2.5 million
    children a day receive nutritious subsidized meals in child care
    settings.
       As the President stated clearly last summer, Congress cut Food Stamps
    too deeply. Many of these cuts have nothing to do with moving people
    from welfare to work--they affect working families with children, the
    elderly, and people with disabilities.
       The deep cuts disproportionately affect those with high housing
    costs, especially families with children. With these cuts, families will
    see their real benefits erode over time as living costs rise, forcing
    them to choose between paying the rent and eating. The President
    proposes to ameliorate these cuts by restoring the link between benefits
    for such families and housing costs. He also proposes to raise the
    vehicle asset limit for Food Stamp program participants so that benefits
    do not fall when working families and others secure a means to get to
    work.

    [[Page 109]]

       To achieve savings, the new law also limited Food Stamps for able-
    bodied childless adults to three months of assistance in a 36-month
    period. This time limit does not reflect the reality that most Food
    Stamp recipients face--that finding work takes time. Nearly 60 percent
    of all new participants in the Food Stamp program leave within six
    months. Only 13 percent of the childless adults entering the program
    still receive benefits after 18 months. Once they leave, most childless
    adults do not return. The President proposes to limit Food Stamps to six
    months out of 12, a policy that would encourage work while giving those
    out of work the transitory help they need to get back on their feet.
       The time limit also punishes those who want to work, but who cannot
    find a job at all. The budget proposes to restore Food Stamps for those
    who are looking for work but cannot find it and for whom the State does
    not provide workfare or a training opportunity. The President proposes
    to make Food Stamp work requirements real by giving States new funding
    to support nearly 400,000 more work slots from 1998 to 2002, and by
    adding tough new sanctions for those who are offered jobs by the State
    but refuse to accept them. In addition, the budget would allow States,
    at their option, to provide funds with which employers would supplement
    the wages of childless adult recipients.

       Equity in Benefits for Legal Immigrants: By specifically cutting
    benefits to low-income legal immigrants as a source of savings, the new
    law affected legal immigrants--many of them children, elderly, and
    people with disabilities--more adversely than any other group. The law
    denies most legal immigrants access to fundamental safety net programs
    unless they become citizens--even though they are in the United States
    legally and are making every effort to become productive members of
    society. Many legal immigrants may face unforeseen problems before they
    can naturalize. Nevertheless, the bill punishes those who have worked,
    but who no longer can through no fault of their own. It makes short-
    sighted cuts by barring cash and medical assistance to immigrant
    children with disabilities. Finally, it places significant new
    administrative burdens on State and local service providers.
       The President believes that legal immigrants should have the same
    opportunity, and bear the same responsibility, as other members of
    society. Thus, the budget proposes to revise the law so that legal
    immigrants who become disabled after entering our country can get the
    basic assistance offered by Supplemental Security Income (SSI)--as well
    as by Medicaid. The Nation should protect legal immigrants and their
    families--people admitted as permanent members of the American
    community--when they suffer accidents or crippling illnesses that
    prevent them from earning a living. Similarly, the Nation should provide
    Medicaid to legal immigrant children if their family is impoverished.
    The Administration also proposes to delay the ban on Food Stamps for
    legal immigrants until the end of September 1997 in order to give
    immigrants more time to naturalize.
       Finally, the budget would lengthen, from five to seven years, the
    exemption to the ban against refugees and asylees receiving Federal
    benefits. The Nation admits refugees and asylees on a humanitarian
    basis, and we should be sensitive to their special needs. Many refugees
    and asylees may need more time to naturalize than the law allows.

       Supplemental Security Income: The SSI program provides critical
    financial support to the needy who are elderly, are blind, or who have
    disabilities. The new law was designed to target disability benefits to
    needy children with the most severe limitations by changing the general
    definition of childhood disability. The Administration and Congress
    agree that most children now receiving disability benefits deserve them.
    In implementing the law through regulation, the Social Security
    Administration will closely monitor its impact to ensure that children
    with the most severe disabilities retain eligibility. In addition, the
    President will propose legislation to allow disabled children now
    receiving Medicaid to retain their coverage if they lose their SSI
    eligibility due to changes in the definition of childhood disability.
      The Ongoing Challenge of Improving Welfare: The Administration is
    committed to working with Congress and the States to implement welfare
    reform effectively. Implementation will be both challenging and
    exciting.

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    If the Administration discovers significant impediments to
    successful welfare reform, such as inadequate funding for States during
    recessions, we will work with Congress to address them.

     Promoting Security and Stability for Children

       The Administration proposes a new initiative to move children more
    quickly from foster care to safe, permanent homes--with the goal of
    doubling, by the year 2002, the number of children adopted or
    permanently placed. It would provide incentives to States for increasing
    adoption while stressing permanent placement and the safety of children.