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Welfare was first established as a federal program during the Great Depression. In 1935, Congress enacted Aid to Dependent Children (ADC), a relatively modest program focused primarily on widows, orphans, divorced or deserted mothers and their children. By 1939, ADC covered only about 700,000 people, and at least two-thirds of eligible children were not covered.
The program grew slowly but steadily over the next two decades, providing assistance to about 3 million people by 1960. Growth accelerated during the 1960s and 1970s, however, and enrollment in the renamed Aid to Families with Dependent Children (AFDC) in 1994 reached a peak of 14.2 million recipients, a figure comprising 5.0 million families and 9.6 million children.
In 1992, Bill Clinton was elected president promising to "end welfare as we know it," and in 1994 a Republican Congress was elected that was determined to change the existing system. On August 22, 1996, Clinton signed the Personal Responsibility and Work Opportunity Act, which ended the welfare entitlement and replaced it with a new block grant providing $16.5 billion per year to states to assist the needy.
The new program, called Temporary Assistance for Needy Families (TANF), differed from its predecessor in a number of important ways, including:
Eligibility for TANF assistance is limited to pregnant women and families with children. Within these constraints, however, TANF allows states broad discretion in how they spend their federal block grant money.
Since TANF was enacted, the number of people on welfare has declined dramatically. By 1999, there were only 7.2 million recipients, including 2.6 million families and 5.1 million children, roughly half the caseload of the 1994 peak. Analysts believe several factors have contributed to this decline, including an improved economy, tougher work requirements, and diversion strategies that have moved applicants directly to work programs. Not only have recipients left the program in higher numbers, but fewer have joined to replace them.
Supporters of the 1996 changes point to declining caseloads as evidence of the new law's success. Opponents argue that reducing poverty is more important than reducing welfare dependence, and that poverty has not dropped nearly as much as welfare enrollment, implying that people in need are being turned away.
TANF comes up for reauthorization by Congress in 2002.