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By the end of this section, you will be able to:
  • Identify the antipoverty government programs that compose the safety net
  • Explain the primary goals of the safety net programs and how these programs have changed over time
  • Discuss the complexities of these safety net programs and why they can be controversial

The U.S. government has implemented a number of programs to assist those below the poverty line and those who have incomes just above the poverty line, who are referred to as the near-poor    . Such programs are called the safety net    , in recognition of the fact that they offer some protection for those who find themselves without jobs or income.

Temporary assistance for needy families

From the Great Depression of the 1930s until 1996, the United States’ most visible antipoverty program was Aid to Families with Dependent Children (AFDC) , which provided cash payments to mothers with children who were below the poverty line. This program was often just called “welfare.” In 1996, Congress passed and President Bill Clinton signed into law the Personal Responsibility and Work Opportunity Reconciliation Act, more commonly called the “welfare reform act.” The new law replaced AFDC with Temporary Assistance for Needy Families (TANF) .

Visit this website to watch a video of President Bill Clinton’s Welfare Reform speech.

TANF brought several dramatic changes in how welfare operated. Under the old AFDC program, states set the level of welfare benefits that they would pay to the poor, and the federal government guaranteed it would chip in some of the money as well. The federal government’s welfare spending would rise or fall depending on the number of poor people, and on how each state set its own welfare contribution.

Under TANF, however, the federal government gives a fixed amount of money to each state. The state can then use the money for almost any program with an antipoverty component: for example, the state might use the money to give cash to poor families, or to reduce teenage pregnancy, or even to raise the high school graduation rate. However, the federal government imposed two key requirements. First, if states are to keep receiving the TANF grants, they must impose work requirements so that most of those receiving TANF benefits are working (or attending school). Second, no one can receive TANF benefits with federal money for more than a total of five years over his or her lifetime. The old AFDC program had no such work requirements or time limits.

TANF attempts to avoid the poverty trap by requiring that welfare recipients work and by limiting the length of time they can receive benefits. In its first few years, the program was quite successful. The number of families receiving payments in 1995, the last year of AFDC, was 4.8 million. By 2012, according to the Congressional Research Service, the average number of families receiving payments under TANF was 1.8 million—a decline of more than half.

TANF benefits to poor families vary considerably across states. For example, again according to the Congressional Research Service, in 2011 the highest monthly payment in Alaska to a single mother with two children was $923, while in Mississippi the highest monthly payment to that family was $170. These payments reflect differences in states’ cost of living. Total spending on TANF was approximately $16.6 billion in 1997. As of 2012, spending was at $12 billion, an almost 28% decrease, split about evenly between the federal and state governments. When you take into account the effects of inflation, the decline is even greater. Moreover, there seemed little evidence that poor families were suffering a reduced standard of living as a result of TANF—although, on the other side, there was not much evidence that poor families had greatly improved their total levels of income, either.

Questions & Answers

what is demand
ALALE Reply
what's the difference between elastic and inelastic
ALALE
what is equilibrium of a consumer
Kennedy Reply
is when marginal utility is equal to zero or entering negative.
Richard
what is international trade
joshua Reply
is the exchange of goods and services between two or more countries.
Richard
What is ceteris peribus
Kelvin Reply
Simply put, All things being equal
Mary
What is the important of Economic
Parnda Reply
what is demand
Coded Reply
Demand is the various quantities of goods and services that consumers are willing and able to buy at a particular time over a given period of time
Kennedy
what is the rationality assumption?
Sadeya
what is a clearing house
barry Reply
so can we conclude that mircoeconomics is a under marcoeconomics
Florence Reply
l don't understand that part please teach me
gideon
microeconomics and Marco economic are not the same.one have to do with part of the economy and the other have to do with the entire economy
jackie
so how can we conclude microeconomics and macroeconomic in our stadies
Noah
please explain
Mathias
Am confuse can you please explain
Belinda
Pls Explain more
Parnda
what is monopoly
Pop Reply
is market situation in which an individual or group of person acting as a unit control supply of a good which has no close substitute
gideon
what is the role that the government can play
Caroline Reply
what is a subsidy
Caroline
subsidy is government help to producers that reduces cost of production .
Pop
subsidy is government help to producers that reduces cost pf production
Pop
money is anything money can buy discuss
Patrick Reply
what is equilibrium price
Bismark Reply
when demand price and supply price are equal
Asit
what is equilibrium
Ashiq
When supply and demand are equal in one point is equilibrium
learn
equilibrium of price is that price at which the quantity of goods demanded is equal to the quantity supplied
Samuel
what is a portable
Eeme Reply
able to be carried or easily moved......just movie okay
Amadou
2) One of the major assumption of the classical school is A) Lack of aggregate demand causes involuntarily unemployment B) Governments fiscal operations can reduce unemployment C) Unemployment and inflation can exist together D) Economy will be in full employment equilibrium in the long run
Ajay Reply
explain the scope of economics
Bhimshi Reply

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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