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Your Welfare Dollars Feed State Budgets, Not Needy Families

Published: March 8, 2017
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Submitted By Tax Revolution Institute

Instituted by President Bill Clinton in 1996, the Temporary Assistance for Needy Families (TANF) Act is one of the largest federal assistance programs in the United States. A cash benefit usually referred to as “welfare,” it provides temporary financial assistance with the goal of getting people off of that assistance, mainly through employment.  

Under the new act, TANF recipients are required to find a job within 24 months of receiving aid. In enforcing the 60-month time limit, some states place limits on the adult portion of the assistance only, while still aiding the otherwise eligible children in the household.

Prior to the TANF Act, families in need received cash assistance through the Aid to Families with Dependent Children (AFDC) program, where federal funds matched half or more of every dollar of cash assistance that a state provided to a needy family.

The AFDC funding method didn’t provide states with enough flexibility for the use of federal funds, thus the implementation of the TANF Act. Proponents argued that states could shift the funds freed up when families left welfare to work or child-care programs, where the need would likely increase.

But that didn’t happen.

Instead, states redirected a substantial portion of their state and federal TANF funds to fill state budget holes or to substitute for existing state spending. Even when need increased during the Great Recession, states were often unable to bring the funds back to core welfare reform services and instead made cuts in basic assistance and work programs.

According to a report by the Center on Budget and Policy Priorities, when the TANF Act was first introduced, 70 percent of combined federal TANF and state funds were spent on basic assistance for poor families.

By 2014, only 26 percent of funding went to basic assistance. Seriously. Only 26 percent.

If the core mission of the TANF Act is to provide for needy Americans (and their children), then why is our government only spending a quarter of its funding on assistance for families? What happened to the rest of that money?

The report notes that states spend relatively little on “administration and systems,” or the resources necessary to run their department. However, the almost $2 billion it takes to run that bureaucracy is incredibly wasteful when the states reported spending about $15 billion of nonfederal money on services intended to meet TANF’s goals.

But what does that wastefulness look like in terms of the overall federal assistance budget?

A report from the Congressional Research Service, as requested by the Senate Budget Committee, found 83 overlapping federal welfare programs that were, collectively, the single largest budget item in 2011.

The total amount? Roughly $1.03 trillion for that fiscal year.

These cash assistance processes need to be improved by allowing nonprofits and private companies to step in and fill the void that is made by irresponsible government spending.

Nonprofits and private companies are held accountable by the donors and board members who give them their time and treasure. If these organizations are not fulfilling their mission statement or are being unethical with their donations, then why would individuals support them?

There are vast differences between the aid provided by federal assistance programs and private charities.

For example, the American Red Cross partners with local nonprofits to provide cash assistance to natural disaster survivors along with utility bill assistance. Since the implementation of their voucher program, more than $9 million in cash assistance was given to meet the needs of more than 4,600 Hurricane Katrina and 9/11 victims. The Salvation Army helped more than 3 million Americans with financial assistance in 2015 for everything from groceries to paying for utility bills.

If taxpayers had the option to give a portion of their tax dollars to charities that did the work our government can’t, and often isn’t held accountable for, then the citizens of our nation would be much better off.

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