[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.

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   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.