NewtAid at 16: The Failure of TANF and Conservative Social Policy

Sixteen years ago on Wednesday, President Bill Clinton surrendered to House Speaker Newt Gingrich and signed NewtAid, legislation that replaced the Social Security Act's Aid to Families with Dependent Children (AFDC) with a right-wing block grant scheme called Temporary Assistance for Needy Families (TANF). NewtAid/TANF was prematurely lauded as a success before it had even been fully implemented.

It is now clear TANF is a failed program that needs to be overhauled. NewtAid's failure can be seen most simply by comparing the number of children living below federal poverty line in 1992 and 2010. (These years are compared because 2010 is the most recent year we have child poverty numbers for, and 1992 is, like 2010, the first calender year after the end of a recession.)

Number of Children Living in Families with Incomes Below the Federal Poverty Line

1992: 15.3 million

2010: 16.4 million

In sum, just over 1 million more children lived below the poverty line in 2010, more than a decade after TANF's implemetation, than before TANF's implementation in 1992. If AFDC had remained in place and reformed along progressive lines, the number of children living in poverty would be much lower today than it was before NewtAid.

AFDC was far from a perfect program--especially after Reagan-era budget cuts limited the support it provided for working parents--but it was one of the dependable pillars of our system of social insurance (although nowhere near as strong a pillar as Social Security). Instead of strengthening AFDC, NewtAid tore it down and replaced it with a radical conservative scheme that has:

• Given states incentives to spend billions of dollars in public funds--funds that had previously been used to promote economic security and opportunity for low-income parents--in an unaccountable and often irresponsible manner. In fact, the bulk of public funds available to states under TANF today are not spent on child care, employment services, or helping families meet basic needs. Instead, states have diverted the bulk of funds to "other services." In the most notorious cases, states have diverted TANF funds to finance unaffordable tax cuts.
• Failed to provide adequate information on how states use TANF funds. As GAO has found, we know very little about how states are using 70 percent of the funds provided by the $16.5 billion block grant, including not just "results" but things as basic as how many families are being helped with these funds.
• Deeply cut the actual amount of resources available through AFDC/TANF to help struggling, working-class families. Because block grant funding has remained frozen at its 1997 level, its actual value (adjusted for inflation) has fallen by nearly 30 percent.

The main consequence is that millions of struggling working-class parents who would have been helped finding a job, going to school, or meeting basic expenses if AFDC were still in place are not getting any of this help under TANF. Of particular note, only about one-quarter of families with income below the federal poverty currently receive help from TANF to meet basic expenses. Before implementation of the 1996 law, over two-thirds of such families received help from AFDC.

About the only things that TANF has provided increased funding for are "marriage promotion" and abstinence-only education. The results are not encouraging. According to a recent random assignment evaluation of a TANF-funded marriage-promotion program, the program had had no effect on the couples' relationship quality or on the likelihood that they would remain romantically involved or get married 15 months after they enrolled in the program. Similarly, an evaluation of abstinence education programs found that "[y]outh in the [abstinence-only] program group were no more likely than those in the control group to have abstained from sex and, among those who reported having had sex, they had similar numbers of sexual partners."

In July 2012, the Obama Administration issued guidance that gives states the option to adopt modernized employment outcome measures in their TANF programs. Under this guidance states will be able to use modern performance standards, on a temporary and demonstration basis, in place of TANF's outmoded and byzantine participation rates. If this new option is taken by most states, it could lead to modest improvements in TANF's dismal record of helping struggling families become economically secure. However, the new guidance does nothing to eliminate the lamentable fiscal incentives that states have under TANF to help as few economically insecure families as possible.

It's time to repeal NewtAid. In its place we need a new approach that promotes economic security and opportunity for struggling working-class parents and their children, and also for vulnerable young people who are not parents. Two successful demonstration projects--New Hope and the Minnesota Family Investment Program--provide the best starting point for progressive reform. And federal standards like the ones that exist in other successful programs, including the Earned Income Tax Credit, Social Security, Supplemental Security Income, the Supplemental Nutritional Assistance Program, and the minimum wage, are necessary to ensure that future reform puts families first and does't provide harmful fiscal incentives to states.