Cash Assistance Programs in the United States
Forms of Welfare in the United States: Cash Assistance Programs
Introduction to Cash Assistance Programs
In the decades following the passage of the Social Security Act, the scope of the United States’s social welfare safety net grew, modestly at first and then more rapidly beginning in the 1960s. By the beginning of the 1990s, there were about 75 means-tested welfare programs. This collection of programs came to be symbolized, however, by the one known as Aid to Families with Dependent Children (AFDC), which provided cash assistance to parents and children in need of economic support due to the death, continued absence, or incapacity of the family’s primary wage earner (typically the father).
For a quarter-century AFDC remained a relatively small, obscure program. In 1960 fewer than 4 percent of children received AFDC benefits in a typical month, even though about 25 percent would have been considered poor by today’s standards. In 1996, 7.9 million children, almost 13 percent of all children, and about 3.9 million adults received help from AFDC in any given month. As the program grew, it became increasingly unpopular. Critics argued that AFDC discouraged work, encouraged births outside of marriage, and failed to take low-income families with children out of poverty.
In 1996 AFDC cost about $22 billion per year, about 55 percent of that cost covered by the federal government and the rest by state and local governments. This expenditure was a minor part of the U.S. annual budget. Remarkably, although AFDC caseloads rose, the overall costs of the program remained the same from the early 1970s, even after considering inflation. This was possible only because typical benefits fell in value, by about half, after 1970. The average monthly benefit in 1995 was $377, about 60 percent below poverty-level income for most families. Moreover, the size of the typical AFDC family fell from about four members in the late 1960s to less than three in 1994. Larger families received higher benefits than smaller ones, but only marginally so. Some critics of AFDC claimed, however, that this could have been an incentive for parents on welfare to have more children.
In the first half of the 1990s, a national debate raged about how to reform welfare, and particularly AFDC. Finally, in August 1996, President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which replaced AFDC with the Temporary Assistance to Needy Families (TANF) program. Among other things, TANF ended the guarantee of cash benefits to eligible families, established a fixed federal contribution to the program, imposed time limits and strict work requirements, and transferred most program decisions to the states. (For more information on these reforms, see the Welfare Reform section of this article.)
Low-income families with children are not the only group eligible for cash assistance. Adults who are not able to work because of age, blindness, or disability, as well as some disabled children, can receive cash assistance through Supplemental Security Income (SSI). SSI provides more generous assistance than TANF. In 2003 individuals received $552 monthly, roughly 25 percent below poverty-level income, and couples received $829 monthly, or about 18 percent below poverty level. The number of people receiving SSI payments had grown to about 6.5 million by 1995; participation has since remained stable. The federal government spent $33.3 billion on the program in 2001.” (1)
Resources
Notes and References
- Information about Cash Assistance Programs in the Encarta Online Encyclopedia