House Bill Would Give States $2.5 Billion to Increase Welfare Rolls

Kiki Bradley / May 26, 2010

Speaker Nancy Pelosi (D-CA) is attempting this week to schedule a vote in the U.S. House of Representatives on a measure that would extend expiring tax breaks. But the “American Jobs and Closing Tax Loopholes Act of 2010” (H.R. 4213) would shut the door on the important success of welfare reform. That’s because the legislation includes is a one-year extension of the so-called “TANF Emergency Contingency Fund” with an additional $2.5 billion in spending. This fund was originally created as part of the 2009 Stimulus package and directly undermines the historic 1996 welfare reform by paying states “bonus” money for increasing the size of their welfare caseloads.

The 1996 welfare reform fundamentally changed how the old welfare system, known as Aid to Families with Dependent Children (AFDC), financed the welfare caseload. AFDC essentially increased the amount of federal money that flowed to states based on the size of their caseloads – the bigger the caseload, the more money they got. Not surprisingly, the size of caseloads ballooned over years costing taxpayers billions more year to year and trapping millions of families into generational poverty. (more…)