Financial Resource

emphasizing social programs. . Although President Nixon expressed dislike for much of the War on Poverty, his administration responded to public pressure by maintaining most programs and by expanding the welfare state through the liberalization of the Food Stamp program, the indexing of Social Security to inflation, and the passage of the Supplemental Security Income (SSI) program for disabled Americans (Rank, 2004). The Nixon administration also endorsed a “New Federalism” in which the federal government shifted more authority over social welfare enterprises to state and local governments. His plan to implement the ‘Family Assistance Plan’ (FAP) consisted of various income provisions, work provisions, and training provisions for those below the poverty line (Rank, 2004). It failed to pass the Senate much like the ‘Programs for Better Jobs and Income’ initiated by President Carter in later years.                                       Welfare reform continued as a focus of federal policy debates even after the legislative defeat of FAP. Even though a cash ‘Negative income Tax’ (NIT) for all poor persons never passed, the Food Stamp program provided a national benefit in food coupons that varied by family size, regardless of state of residence or living arrangements or marital status. The number of AFDC recipients increased from about 6 million to 11 million and the number of food stamp recipients, from about 1 million to 19 million during the Nixon administration (Danziger, 1999, p. 8). Danziger (1999) also argues that as higher cash and in-kind benefits became available to a larger percentage of poor people, the work disincentives and high budgetary costs of welfare programs were increasingly challenged. The public and policy makers came to view increased welfare recipients as evidence that the programs were subsidizing dependency and encouraging idleness.

                        Despite the failure to enact a guaranteed income program, both the number of recipients and the amount of money spent on welfare programs increased substantially during the 1970’s (Rank, 2004). Rank (2004) has given an overview of Reagan’s policies and noted that Reagan emphasized individual action unhampered by government interference, rejected the social engineering of the 1960’s and also supported federalism, that is, returning power to the states rather than centralizing them within the federal government. Reagan tried to address the problem and set the tone for welfare reform that occurred in 1990 during his successor’s administration. The Reagan administration thought eligibility for welfare benefits had increased so much, that many persons who were not “truly needy” were receiving benefits. The Reagan Administration opposed simultaneous receipt of wages and welfare benefits. Rather, it proposed that welfare become a safety net, providing cash assistance only for those unable to secure jobs.

                    The Earned Income Tax Credit (EITC), enacted in 1975, provides families of the working poor with a refundable income tax credit (i.e., the family receives a payment from the Internal Revenue Service if the credit due exceeds the income tax owed). Thus the EITC raises the effective wage of low-income families, is available to both one- and two-parent families, and does not require them to apply for welfare. The maximum EITC for a poor family was 0 in 1975 and rose to 0 by 1986 (Danziger, 1999, p. 14). The 1986 Tax Reform Act increased the EITC so that by 1990 a low-income working parent received a maximum credit of 3 (Danziger, 1999, p. 14). The number of families receiving credits increased from between 5 and 7.5 million families a year between 1975 and 1986 to more than 11 million by 1988 (Danziger, 1999, p. 14). Danziger, 1999 argues that as the expanded EITC supplements low earnings, it became easier for policy makers to emphasize welfare reform policies that could place recipients into any job, rather than training them for “good jobs.” Thus he argues that if a nonworking recipient took a low-wage job, a substantial EITC could make work pay as much as a higher-wage job would have paid in the absence of an EITC.

                         The Family Support Act (FSA) of 1988 expanded the scope of the AFDC program for two-parent families, instituted transitional child care and Medicaid for recipients leaving welfare for work, and added funds and required states to establish programs to move greater numbers of welfare recipients into employment. When the welfare rolls jumped in the late-1980s and early-1990s, from about 11 to about 14 million recipients, dissatisfaction with welfare again increased ( Danziger, 1999).    

                        President Nixon identified the two main economic problems, inflation and unemployment, that justify the need for economic recovery to the American worker. Reagan has emphasized despair caused by unemployment combined with high inflation. Reagan’s rhetorical construction of welfare recipients and the welfare system was aimed at reducing anxiety among Americans caused by increasing taxes, inflation and the continuous fear of losing jobs. To end this victimization, Reagan proposed a plan for economic recovery (Rank, 2004). Apart from cutting government spending, specifically spending on social programs, Reagan also proposed to have State governments assume control of Aid to Families with Dependent Children (AFDC) and the food stamps program in exchange for the Federal Government control of Medicaid. Although this proposal failed to reach the Congressional floor, his presentation of the proposal to exchange AFDC and food stamp program with Medicaid made poverty a local concern (Mark Robert Rank, 2004).  

                       Liberals and conservatives still disagreed on other goals of welfare-to-work programs. Liberals thought welfare reform should expand opportunities for welfare mothers to receive training and work experiences that would help them raise their families’ living standards by working more and at higher wages. Conservatives emphasized work requirements, obligations welfare mothers owed in return for government support whether or not their families’ incomes increased (Mead, 1992). 

                       In later years President Clinton’s approach also emphasized empowerment as a way of helping welfare recipients and to accumulate more savings without being penalized and expanding the earned income tax credit (Blank, 2007). By the mid-1990s, the focus of policy concern shifted from fighting poverty to reducing welfare dependence. President Clinton’s signing of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (the PRWORA) ended the entitlement to cash assistance and dramatically changed the nature of the social safety net. The Act created the Temporary Assistance to Needy Families Program (TANF). TANF began on July 1, 1997, provides cash assistance to indigent American families with dependent children through the United States Department of Health and Human Services (The Center for American Progress Task Force on Poverty, 2007).  Danziger, 1999 argues that each state can now decide which families to assist, subject only to a requirement that they receive “fair and equitable treatment.”  In instituting a block grant program, the PRWORA granted states the ability to design their own systems, as long as states met a set of basic federal requirements. The bill’s emphasis on ending welfare as an entitlement program, places a lifetime limit of five years on benefits paid by federal funds, and also aims to encourage two-parent families and discourages out-of-wedlock births. In granting states wider latitude for designing their own programs, some states have decided to place additional requirements on recipients. Although the law placed a time limit for benefits supported by federal funds of no more than 2 consecutive years and no more than 5 years over a lifetime, some states have enacted more stringent limits. All states, however, have allowed exceptions with the intent of not punishing children because their parents have gone over the time limit. Federal requirements have ensured some measure of uniformity across states, but the block grant approach has led individual states to distribute federal money in different ways. Certain states more actively encourage education, others use the money to help fund private enterprises helping job seekers. The PRWORA offers no opportunity to work in exchange for welfare benefits when a recipient reaches her lifetime limit of 60 months of federally-supported cash assistance. But the reform has certain limits. States may not use federal block grant funds to provide more than a cumulative lifetime total of 60 months of cash assistance to any welfare recipient, no matter how willing she might be to work for her benefits, and they have the option to set shorter time limits. States can grant exceptions to the lifetime limit and continue to use federal funds for up to 20 percent of the caseload. The extent of work expectations has also been increased. Single-parent recipients with no children under age one will be expected to work at least 30 hours per week by FY 2002 in order to maintain eligibility for cash assistance (Danziger, 1999, p 20). States can require participation in work or work-related activities regardless of the age of the youngest child. Thus PRWORA emerged from research that sought both to reduce poverty and welfare dependency (Danziger, 1999).  In the 1990s, following Clinton’s call to “end welfare as we know it,” policy makers escalated

Pages: 1 2 3 4 5

Tags: "indirect causes of poverty", action, AFDC, american economy, amount, annum, Anti, anti poverty policy in usa, Assistance, basic necessities, benefit, capital, conservatives, control, credit, dependency, FAP, Federalism, Focus, food clothing, gas prices, government, has welfare programs in the us alleviated poverty, health emergencies, indexing, job, liberals, mark rank poverty, misery, norms, nutritious food, passage, persistence, policy formulation, poor broke persistence, poor households, poverty, poverty financial resource, poverty in america, poverty line, power, racial factors, Reform, Senate, several factors, shell climate, shell climate change usa, shell oil future, shell process jobs, shell recruitment, shell supply jobs, spending, state governments, status, successor, Supplemental, unemployment, wage gaps, welfare, work