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Manhattan Institute

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Happy Birthday, Welfare Reform: 1996 Law Helped Millions of U.S. Families Rise Out of Poverty

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Happy Birthday, Welfare Reform: 1996 Law Helped Millions of U.S. Families Rise Out of Poverty

New York Daily News August 25, 2016
Urban PolicyWelfare
EconomicsIncome Inequality
OtherPoverty

Twenty years ago this week, President Bill Clinton signed into law a historic welfare reform bill that transformed anti-poverty policy. Rather than being entitled to receive cash benefits from the federal government every month, beneficiaries would be expected to eventually work, and time limits were imposed for receipt of benefits. States were given fixed pots of money to serve poor, mostly female-headed, families with children, along with broad discretion to run their programs as they wished.

Child poverty today is at an all-time low, and practically no households in the United States are managing on $2 a day per person. How is it that these facts have eluded welfare reform’s critics?

It has become an article of faith among liberals that the legislation failed and has left the children of single parents worse off.

“It turns out,” Sen. Bernie Sanders tweeted in April, “that the welfare reform bill has been an absolute disaster.” This belief is so widespread on the left that Hillary Clinton felt it necessary to distance herself from her past support for the legislation. An influential book last year by sociologists Kathryn Edin and Luke Shaefer claiming to show that welfare reform dramatically increased the number of families getting by on just $2 a day per person solidified liberal consensus.

But as I show in a new study, child poverty today is at an all-time low, and practically no households in the United States are managing on $2 a day per person. How is it that these facts have eluded welfare reform’s critics? One problem is that our official poverty statistics ignore the parts of the safety net that have expanded since 1996. While federal benefits taking the form of cash — like welfare and unemployment insurance — are counted as income in assessing whether a family is above or below the poverty line, noncash benefits, like food stamps, housing subsidies and Medicaid, are not.

A second problem: Official estimates rely on an annual adjustment in the poverty line that raises it faster than the cost-of-living increases. Nor does the official measure account for the savings cohabiting couples — no less than married couples— realize by living together and pooling expenses. Finally, because income...

Read the entire piece here in New York Daily News

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Scott Winship is the Walter B. Wriston fellow at the Manhattan Institute. Follow him on Twitter here.

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