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Two decades ago, on August 22, 1996, President Bill Clinton signed the Personal Responsibility and Work Opportunity Act, popularly known as welfare reform, into law. At the time, liberals proclaimed that the bill would slash the incomes of one in five families with children and push 2.6 million people into poverty. Senator Daniel Patrick Moynihan famously predicted that the bill would leave children scavenging in the streets, “sleeping on grates, picked up in the morning frozen.”
In fact, reform cut welfare caseloads by over 50 percent, employment of the least-skilled single mothers surged, and the poverty rates of black children and single-parent families dropped rapidly to historic lows. Doomsday prophets were utterly discredited. Reform was very popular with the public.
Remarkably, 20 years later, Moynihan’s alarm about “children sleeping on grates” has been revived. The left now contends that welfare reform has thrown 3.5 million children into “extreme poverty” of the kind seen in the developing world, living in destitution on less than $2.00 per day. For example, Bloomberg News reports that millions of Americans now have incomes lower than the “disabled beggars of Addis Ababa in Ethiopia.”
These claims of extreme poverty in the U.S. are based on radically defective data. In reality, poverty among single parents, the main group affected by welfare reform, has fallen substantially over the past two decades while it remained constant or rose among groups unaffected by reform.
The 1996 reform law replaced the old Aid to Families with Dependent Children (AFDC) welfare program with a new program called Temporary Assistance for Needy Families (TANF). For the first time, a portion of recipients were required to work or prepare for work as a condition of receiving aid.
Reform was based on the premise that prolonged welfare dependence was harmful to recipients and society. Reformers believed that imposing work requirements on benefits would cause families to rely less on traditional welfare and more on formal employment, informal employment, and support from relatives.