Welfare Reform Turns 20: What Trump & Clinton Can Learn from Its Success

Logan Pike and Justin Haskins The Heartland Institute
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Hillary Clinton and Donald Trump recently laid out their economic visions for the United States, but strangely absent from both candidates’ plans was any mention of serious entitlement reform. Whether Americans elect Clinton, a candidate who pledges to raise taxes to pay for a slew of new government-run economic projects, or Trump, a candidate who wants to cut taxes for many and reduce regulations, the federal government is going to need to cut spending if it’s going to ever get the nation’s runaway national debt, which now sits at $19.4 trillion, under control.

Twenty years ago on Monday, Democratic President Bill Clinton and a Republican-led Congress worked together to move the country closer to fiscal sanity when it passed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). PRWORA was a much-needed and relatively radical reform of the country’s then-failing welfare system.

Prior to welfare reform being implemented in 1996, there were 12.6 million Americans enrolled in the nation’s welfare program. Since then, welfare rolls have declined by 77 percent—down to about 2.8 million people.

PRWORA was fundamentally transformed welfare in the United States by creating a five-year maximum lifetime limit recipients can be enrolled in welfare and by block-granting to the states federal funds so that local legislatures could decide how best to manage poverty.

States, both red and blue, have since created serious and significant reforms to their programs that have helped to move countless people off of welfare rolls and into self-sufficiency, saving billions of dollars in the process. The states that have been most successful at reducing their welfare rolls are those that lowered lifetime limits, required recipients to work, integrated welfare services with other social programs, instituted sanctions for recipients who violate welfare rules, and created cash diversion programs, which allow case workers to provide people going through temporary hardships to receive lump-sum cash payments to cover emergency costs, such as fixing a broken-down car.

These reforms have led many states—such as Connecticut, Florida, and Idaho, among many others—to reduce their welfare rolls by greater than 80 percent since 1996.

These significant, almost impossible-to-believe results should serve as a model for the next president who enters the White House in 2017, but neither Clinton nor Trump have devoted much time to tackling entitlements, and when they have, neither has indicated meaningful cuts to government spending are on the agenda in the foreseeable future.

In an interview with public radio station WNYC in New York, Clinton said, “Now we have to take a hard look at [welfare reform] again, especially after the Great Recession,” later adding she supports calling for a change to the five-year lifetime limit for welfare recipients and would like to roll back many welfare requirements to make it easier for people to receive government aid longer, even while going to college.

Trump has said in the past he likes what welfare reform has accomplished, but he’s not interested in enacting significant entitlement reform to failing program such as Social Security and Medicaid. “I’m not going to cut Social Security like every other Republican and I’m not going to cut Medicare or Medicaid,” Trump told The Daily Signal in May.

To some extent, each candidate’s unwillingness to push for difficult reform is understandable. In a time when the world is gripped by radical Islamic terrorism and the economy remains in the midst of its worst recovery since the Great Depression, entitlement reform isn’t seen by many as being a prominent campaign topic.

But, interestingly, each candidate believes tackling poverty is. At their recent events announcing some of their comprehensive economic plans, both Clinton and Trump acknowledged poverty remains a major problem for millions of people. In fact, more than 45 million people are living in poverty today, and the number of people enrolled in the Supplemental Nutrition Assistance Program, commonly called “food stamps,” has risen by about 12 million since President Barack Obama took office.

If Clinton and Trump are serious about solving poverty and reducing the national debt, which is itself a tremendous risk to the nation’s economic stability, they must fight to reform America’s costly and important entitlement programs, and they should use the success the free-market, pro-liberty reforms made to welfare in 1996 as a model for future legislation. If they do, we could be writing about even more success stories 20 years from now.

Justin Haskins (Jhaskins@heartland.org) is executive editor at The Heartland Institute. Logan Pike (Lpike@heartland.org) is a state government relations manager at The Heartland Institute and co-author of Heartland’s 2015 Welfare Reform Report Card.