Global Investor

resident Bill Clinton signed the Personal Responsibility and work Opportunity Act of 1996, better known as welfare reform, on Aug.22, 1996. A decade later, it stands as a rarity: a Washington success story. It did not succeed in the utopian sense of eliminating all poverty or family breakdown. It succeeded in a more practical way. It improved life modestly for millions of people and showed that government could orchestrate constructive change. There are small and large lessons in this. The small lessons involve poverty; the large lessons involve politics.
One little-known fact is that we have made gains against poverty in recent decades-and welfare reform deserves some credit. The poverty rate among blacks has fallen sharply, though it’s still discouragingly high. From 1968 to 1994 it barely budget, averaging 32.4 percent. By 2000 it was 22.5 percent. (The poverty rate is the share of people living below the government’s poverty line, about $19,500 for a family of four in 2004). Similarly, there have been big drops in child poverty. Since 1989 the number of children in poverty has fallen 12 percent for non-Hispanic whites and 14 percent for blacks.
The economic boom of the 1990s explains much of this improvement. But it is not the whole explanation, because even after the 2001 recession, many poverty rates stayed well below previous levels. For all blacks, it was 24,7 percent in 2004.
The 1996 law replaced Aid to Families With Dependent Children (AFDC)-traditional welfare-with Temporary Assistance for Needy Families (TANF). Congress created AFDC in 1935 as part of the landmark Social Security Act, which also included unemployed insurance and old-age assistance. In an era when few women worked. AFDC was intended to provide modest income support for widows and their children. By the 1980s, it had evolved into something else: guaranteed payments for single, often never-married mothers. Critics argued that the programs bred dependence, weakened self-reliance and rewarded out-of-wedlock births.