Reforming Welfare by Promoting Work and Responsibility

On August 22, 1996, President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, fulfilling his longtime commitment to ‘end welfare as we know it.’ As the President said upon signing, “... this legislation provides an historic opportunity to end welfare as we know it and transform our broken welfare system by promoting the fundamental values of work, responsibility, and family.”

• Overhauling the Welfare System with the Personal Responsibility Act: In 1996, the President signed a bipartisan welfare plan that has dramatically changed the nation's welfare system into one that requires work in exchange for time-limited assistance. The law contains strong work requirements, performance bonuses to reward states for moving welfare recipients into jobs and reducing illegitimacy, state maintenance of effort requirements, comprehensive child support enforcement, and supports for families moving from welfare to work -- including increased funding for child care. State strategies are making a real difference in the success of welfare reform, specifically in job placement, child care and transportation. In April 1999, the President unveiled landmark welfare regulations to promote work and help those who have left the rolls to succeed in the workforce and stay off welfare. In May 1999, the Department of Health and Human Services released guidance on how states and local governments can use welfare block grant funds to help families move from welfare to work.
  
• Law Builds on the Administration’s Welfare Reform Strategy: Even before the Personal Responsibility Act became law, many states were well on their way to changing their welfare programs to jobs programs. By granting federal waivers, the Clinton Administration allowed 43 states -- more than all previous Administrations combined -- to require work, time-limit assistance, make work pay, improve child support enforcement, or encourage parental responsibility. The vast majority of states have chosen to build on their welfare demonstration projects approved by the Administration.
  

• Caseloads Have Fallen to Historic New Lows. In May 2000, HHS released data (from September 1999) showing that since January 1993, the welfare rolls have fallen by 7.5 million, or more than half (53 percent) from 14.1 million to 6.6 million - resulting in the fewest number of people on welfare since 1968 (31 years ago). The percent of Americans on welfare is now at 2.4 percent, the lowest level since 1966 (33 years ago) under the Clinton-Gore Administration. In August, the Council of Economic Advisers reported that the single most important factor contributing to this historic decline is the implementation of welfare reform. Of the caseload reduction from 1996 to 1998, approximately one-third is due to federal and state policy changes resulting from welfare reform and about 10 percent is due to the strong economy.
• Bonuses for Welfare to Work Success. In December 1999, the President announced that 27 states were awarded the first high performance bonuses to reward superior results in moving people from welfare to work. The $200 million in bonuses, which the President fought hard to authorize in the 1996 welfare reform legislation, went to the top ten states with the best records in each of four categories related to moving parents on welfare into jobs and their success in the workforce. The states that ranked the highest in each category were Indiana (job placement), Minnesota (job success, measured by job retention and earnings), Washington (biggest improvement in job placement) and Florida (biggest improvement in job success, measured by job retention and earnings).
• New Actions to Help Working Families: The President also unveiled new incentives for states to encourage the formation of two parent families and help working families succeed, through a new regulation to award future high performance bonuses. The new regulation, proposed by the Department of Health and Human Services, will retain the current work measures, and add new categories for enrollment in Medicaid and the Children's Health Insurance Program (CHIP); enrollment in the Food Stamp program; and family formation. These new measures will ensure that welfare reform will continue to move millions of families from dependence to independence, by encouraging work, supporting working families to help them succeed and stay off welfare, and increasing the number of low-income children living with two married parents. A total of $60 million in bonus funds will be available for these new measures, and $140 million for the continuing work measures.
• Millions on Welfare are Going to Work. At the President’s insistence, the 1996 welfare reform legislation included both rewards and penalties to encourage states to place people in jobs. According to reports filed by the 46 states competing for the high performance bonus, more than 1.3 million welfare recipients nationwide went to work in just the one year period between October 1997 and September 1998. Retention rates were also promising: 80 percent of those who got jobs were still working three months later. States also reported an average earnings increase of 23 percent for former welfare recipients, from $2,088 in the first quarter of employment to $2,571 in the third quarter. The first full year of work data since welfare reform, released in August 1999, also show that all 50 states met the law's overall work requirement for 1998. Nationally, 35 percent of all welfare recipients were working or in work-related activities in 1998. The data also show that nationwide, the percentage of welfare recipients working has nearly quadrupled since the President took office, rising from 7 percent in 1992 to 27 percent in 1998, with the remainder fulfilling their participation requirements through job search, education and training.
• Independent Studies Confirm Record Numbers of People are Moving from Welfare to Work. Numerous independent studies also confirm that more people are moving from welfare to work. A national survey released by the Urban Institute found 69 percent of recipients had left welfare for work, and 18 percent had left because they had increased income, no longer needed welfare or had a change in family situation. A recent General Accounting Office report found that between 63 and 87 percent of adults have worked since leaving the welfare rolls - results similar to state studies funded by the Department of Health and Human Services. At the same time, the Census Bureau's Current Population Survey shows that between 1992 and 1999, the employment rate of previous year welfare recipients increased by 82 percent.
• Mobilizing the Business Community: At the President’s urging, The Welfare to Work Partnership was launched in May 1997 to lead the national business effort to hire people from the welfare rolls. The Partnership began with 105 participating businesses, and, has now grown to more than 15,000 businesses of all sizes and industries. Since 1997, these businesses have hired nearly 650,000 welfare recipients, surpassing the challenge the President set in May of 1998. The Partnership provides technical assistance and support to businesses around the country, including: its toll-free number 1-888-USA-JOB1, a web site, a quarterly newsletter, and a number of resource guides for businesses. The Partnership updated "The Road to Retention," a report of companies that have found higher retention rates for former welfare recipients than for other new hires, and strategies they used to achieve this success.
• Connecting Small Businesses with New Workers and Creating New Entrepreneurs: The Small Business Administration is addressing the unique and vital role of small businesses who employ over one-half of the private workforce, by helping small businesses throughout the country connect with job training organizations and job-ready welfare recipients. In addition, SBA provides training and assistance to welfare recipients who wish to start their own businesses. SBA provides assistance to businesses through its 1-800-U-ASK-SBA number, as well through its network of small business development and women's business centers, one-stop capital shops, Senior Corps of Retired Executives (SCORE) chapters, district offices, and its website.
• Mobilizing Civic, Religious and Non-profit Groups: In May 1997, Vice President Gore created the Welfare-to-Work Coalition to Sustain Success, a coalition of national civic, service, and faith-based groups committed to helping former welfare recipients succeed in the workforce. Working in partnership with public agencies and employers, Coalition members provide mentoring, job training, child care, transportation, and other support to help these new workers with the transition to self sufficiency. Charter members of the Coalition include: Alpha Kappa Alpha, the Boys and Girls Clubs of America, the Baptist Joint Committee, Goodwill, Salvation Army, the United Way, Women's Missionary Union, the YMCA, the YWCA, and other civic and faith-based groups.
• Doing Our Fair Share with the Federal Government’s Hiring Initiative: Under the Clinton/Gore Administration, the federal workforce is the smallest it has been in forty years. Yet, this Administration also believes that the federal government, as the nation's largest employer, must lead by example. In March 1997, the President challenged federal agencies to directly hire at least 10,000 welfare recipients in the next four years. In August 1999, Vice President Gore released the second annual report on this initiative and announced that the federal government had hired over 14,000 welfare recipients, exceeding the goal nearly two years ahead of schedule. To date, under the Vice President's leadership, federal agencies have hired nearly 29,000 welfare recipients. As a part of this effort, the White House pledged to hire six welfare recipients and has already exceeded this goal.

• Helping Low-income Fathers and Working Families Support their Children: The Administration’s budget proposes $255 million for the first year of a new "Fathers Work/Families Win" initiative to promote responsible fatherhood and support working families, critical next steps in reforming welfare and reducing child poverty. These new competitive grants will be awarded to business-led local and state workforce investment boards who work in partnership with community and faith-based organizations, and agencies administering child support, TANF, food stamps, and Medicaid, thereby connecting low-income fathers and working families to the life-long learning and employment services created under the Workforce Investment Act and delivered through one-stop career centers.

• Fathers Work. To ensure that low-income fathers who are not living with their children provide the financial and emotional support their children deserve, the Administration's budget will include $125 million for new “Fathers Work” grants. These grants will help approximately 40,000 low-income non-custodial parents (mainly fathers) work, pay child support, and reconnect with their children. This initiative builds on over $350 million in responsible fatherhood initiatives funded through the Labor Department's Welfare-to-Work program. As part of this effort, states will need to put procedures in place allowing them to require more parents who owe child support to pay or go to work, including parents of children not on welfare.
• Families Win. To reward work and responsibility and ensure that all families benefit from the booming economy, the Administration's budget will include $130 million in new grants to help hard-pressed working families get the supports and skills they need to succeed on the job and avoid welfare. These funds will leverage existing resources to help families retain jobs and upgrade skills, and get connected to critical work supports, such as child care, child support, health care, food stamps, housing, and transportation. Families Win grants will serve approximately 40,000 low-income families, including mothers and fathers, former welfare recipients, and people with disabilities. Within these funds, $10 million will be set aside for applicants from Native American workforce agencies.

• New Initiatives to Collect more Child Support: Since the President took office, child support collections have doubled from $8 billion in 1992 to nearly $16 billion in 1999. Today, parents who owe child support have their wages garnished, their bank accounts seized, their federal loans denied, and their tax refunds withheld. Not only are collections up, but the number of families that are actually receiving child support has also increased. In 1998, the number of child support cases with collections rose to 4.5 million, an increase of 59 percent from 2.8 million in 1992. A new collection system, proposed by the President in 1994 and enacted as part of the 1996 welfare reform law, has already located over 3.5 million delinquent parents. Over $1.3 billion was collected from federal income tax refunds for tax year 1998, double the amount since 1992. In addition, a new program established in 1999 that matches records of parents who owe child support with multi-state financial institutions, has already identified nearly 900,000 delinquent parents with accounts valued at $3 billion. In June 1998, the President signed the Deadbeat Parents Punishment Act, enacting tougher penalties for parents who repeatedly fail to support children living in another state or who flee across state lines. The number of fathers taking responsibility for their children by establishing paternity rose to a record 1.5 million in 1998, triple the 1992 figure of 516,000.

To build on this success, the budget contains several new initiatives to further crackdown on parents who can afford to pay child support and to ensure more child support goes directly to families. In total, these initiatives will bring in nearly $2 billion more for families.

• More enforcement tools. Parents who owe child support will have their gambling winnings intercepted. If they refuse to pay, they will have their vehicles booted, they will have a harder time obtaining or renewing a passport, and they will be prohibited from enrolling as a Medicare provider. In addition, states will be required to review support orders for families on welfare every three years, and adjust them accordingly - bringing more support to children who need it.
• More reliable child support income for families. Current child support distribution rules are complicated, and often result in government, not families, keeping child support. The Administration's proposals will ensure that families can rely on child support as a stable source of income, and create a clearer connection between what a father pays and what his family gets, giving parents more reason to cooperate with the child support system. The proposals will enable states to simplify distribution rules and provide incentives to states that pass through more child support payments directly to families. In states that adopt the new options, families leaving welfare will keep all the child support paid by the noncustodial parent; families still working their way off welfare will be able to keep up to $100 a month.

• Extending Welfare-to-Work Grants: Because of the President’s leadership, the 1997 Balanced Budget Act included $3 billion in FY 1998 and FY 1999 for Welfare-to-Work grants to help states and local communities move long-term welfare recipients and certain non-custodial parents, into lasting, unsubsidized jobs. Funds can be used for job creation, job placement and job retention efforts, including wage subsidies to private employers and other critical post-employment support services. The Department of Labor provides oversight, but most of the dollars are placed through local business-led boards, in the hands of the localities who are on the front lines of the welfare reform effort. Federally-recognized tribes also receive up to $30 million of the Welfare-to-Work funds. In addition, 25 percent of the funds are awarded by the Department of Labor on a competitive basis. For FY 1998 and 1999, the Clinton-Gore Administration awarded 190 competitive grants that support innovative local strategies to help noncustodial parents and individuals with limited English proficiency, disabilities, substance abuse problems, or a history of domestic violence get and keep employment.

The Department of Labor also joined forces with the Department of Commerce to train welfare recipients as enumerators in the Year 2000 Census. In September 1999, Goodwill Industries received $20 million in Welfare-to-Work competitive grant funds to move up to 10,000 welfare recipients into jobs, while helping the 2000 Census get a more accurate count of individuals in high poverty areas around the country.

To help more long-term welfare recipients and low-income fathers go to work and support their families, the Administration's FY 2001 budget will give state, local, tribal, and community- and faith-based grantees an additional two years to spend Welfare-to-Work funds, ensuring that roughly $2 billion in existing resources continues to help those most in need. This will give grantees an opportunity to fully implement the Welfare-to-Work initiative, as well as the program eligibility improvements enacted last year with the Administration’s support.

• Tax Credits for Employers: The Welfare-to-Work and Work Opportunity Tax Credits encourage more employers to hire welfare recipients and other disadvantaged individuals. The Welfare-to-Work Tax Credit, enacted in the Taxpayer Relief Act of 1997, offers a credit equal to 35 percent of the first $10,000 in wages in the first year of employment, and 50 percent of the first $10,000 in wages in the second year - for a total credit of up to $8,500. This credit complements the Work Opportunity Tax Credit, which offers a credit of up to $2,400 for the first year of wages for eight groups of job seekers. From 1997 to 1999, employers were eligible to claim these tax credits for nearly 900,000 newly employed welfare recipients and other disadvantaged individuals. Both credits are currently available through December 2001.
• Housing Vouchers for Hard-Pressed Working Families: The Clinton-Gore budget will include $690 million for 120,000 new housing vouchers to help America's hard-pressed working families. These housing vouchers subsidize the rents of low-income Americans, enabling them to move closer to job opportunities - many of which are being created far from where these families live. Of the 120,000 new housing vouchers, 32,000 will be targeted to families moving from welfare to work, 18,000 to homeless individuals and families, and 10,000 to low-income families moving to new housing constructed through the Low Income Housing Tax Credit, with the remaining 60,000 vouchers allocated to local areas to help address the large unmet need for affordable housing. These new vouchers build on the 110,000 new housing vouchers secured through the President's leadership in the past two years.

In 1999, the President proposed and Congress approved $283 million for 50,000 new welfare-to-work housing vouchers for welfare recipients who need housing assistance to get or keep a job. Nearly all of these vouchers were awarded on a competitive basis to 35 states and two tribes, to communities that created cooperative efforts among their housing, welfare and employment agencies. The FY 2000 budget included $347 million for 60,000 new housing vouchers for hard-pressed working families.

• Helping Low-Income Working Families Get to Work: Transportation to work is a barrier for many low-income families. Existing public transit often doesn't link to suburban job opportunities, cover evening and weekend hours, or serve many rural communities. The Administration proposes a package of initiatives to help low-income families get to work by making it easier for them to purchase a car and improving public transit solutions.
  • Make it easier for working families to own vehicles and receive food stamps. Some families need a car to get to work; however, owning a car can often be the one item that makes a household ineligible for food stamps. Current law limits food stamp eligibility to most families owning a car worth less than $4,650. This limit has increased only three percent since it was set in 1977, while the cost of cars has nearly tripled. The President's budget will make it easier for working families to own a reliable vehicle and receive food stamps by allowing states to conform their food stamp vehicle policy with a more generous TANF vehicle policy.
  • Allow working families to use Individual Development Accounts to save for a car that will allow them to get or keep a job.
  • Double Access to Jobs transportation funding to $150 million to expand grants to communities to develop innovative transportation solutions that help more low-income workers and welfare recipients get to work. The Department of Transportation will set aside $5 million for Indian tribes, allowing tribes to apply directly to the Federal Transit Administration for these grants. To support the Administration's Delta Initiative, $5 million will also be set aside for applicants from the Mississippi Delta region. The Transportation Equity Act for the 21st Century authorized $750 million over five years for the President's Job Access initiative and reverse commute grants. In May 1999, Vice President Gore awarded $71 million of these funds to 179 communities in 42 states around the country. The FY 2000 budget included $75 million for this program.

• Preventing Teen Pregnancy: Significant components of the President's comprehensive effort to reduce teen pregnancy became law when the President signed the 1996 Personal Responsibility Act. The law requires unmarried minor parents to stay in school and live at home or in a supervised setting; encourages "second chance homes" to provide teen parents with the skills and support they need; and, provides $50 million a year in new funding for state abstinence education activities. Since 1993, the Administration has supported innovative and promising teen pregnancy prevention strategies, including working with boys and young men on pregnancy prevention. The National Campaign to Prevent Teen Pregnancy, a private nonprofit organization, was formed in response to the President's 1995 State of the Union. In 1997, the President announced the National Strategy to Prevent Teen Pregnancy. HHS' second annual report on this Strategy reported that HHS-supported programs reach at least 34 percent or 1,616 communities in the United States. In April 1999, the Vice President announced new data showing that we continue to make real progress in encouraging more young people to delay parenthood and led a roundtable discussion highlighting promising local teen pregnancy prevention. Teen birth rates have declined nationwide by 18 percent from 1991 to 1998, and have fallen in every state and across ethnic and racial groups. For girls ages 15 to 17, the 1998 birth rate is at its lowest in four decades. In addition, teen pregnancy rates are at the lowest rate since we first began collecting these data in 1976.

To build on this progress in breaking the cycle of dependency, the Administration's FY 2001 budget includes $25 million to support adult-supervised and supportive living arrangements, often called second chance homes, for unmarried teen parents and their children who cannot live with their parents other relatives. States will be able to use these Social Services Block Grant (SSBG) funds, as they can other funds, to support services provided by faith-based and community-based organizations. Overall, the budget increases SSBG by $75 million to support a wide range of programs, including child protection, child care, and services for the elderly and disabled.

• Reducing Out-of-Wedlock Births: In September 1999, Secretary Shalala awarded bonuses of $20 million to each of four states (Alabama, California, Massachusetts and Michigan) and the District of Columbia for achieving the nation's largest decreases in out-of-wedlock births between 1994 and 1997. These were the first bonuses awarded under the welfare reform law which provided $100 million annually for up to five states with the largest reduction in the proportion of births out-of-wedlock that also show a decrease in their abortion rate. Nationwide, the birthrate for unmarried women has declined by 2 percent between 1991 and 1998.

• Expanding the Earned Income Tax Credit: Expansions in the EITC included in the President's 1993 Economic Plan are making work pay for 15 million working families, including former welfare recipients. A study conducted by the Council of Economic Advisers reported that in 1998, the EITC lifted 4.3 million Americans out of poverty -- more than double the number in 1993. The findings also suggest that the increase in labor force participation among single mothers who received welfare is strongly linked to the EITC expansion. The FY 2001 budget proposes a nearly $24 billion plan to expand the Earned Income Tax Credit (EITC), providing as much as $1,200 in additional tax relief to an estimated 6.8 million hard-pressed working families.
• Improving Access to Affordable and Quality Child Care: Under this Administration, federal funding for child care has more than doubled, helping parents pay for the care of about 1.5 million children in 1998. The 1996 welfare reform law increased child care funding by $4 billion over six years to provide child care assistance to families moving from welfare to work and other low-income families. The Clinton-Gore FY 2001 budget includes a comprehensive child care initiative to address the struggles our nation's working parents face in finding child care they can afford, trust and rely on. The Administration proposes to expand Head Start funding by $1 billion to provide slots to approximately 950,000 children, and requests $3 billion over five years for the Early Learning Fund to help improve child care quality and early childhood education for children under five years old. In addition, the President's budget includes subsidies and tax relief to help working families pay for child care.

• Helping Low-Income Families Afford Child Care. The Administration’s budget expands the Child Care and Development Block Grant to help working families struggling to afford child care. The President's budget increases funding for child care subsidies by $817 million in FY 2001, which combined with the child care funds provided in welfare reform, will enable the program to serve over 2.2 million children in 2001, an increase of nearly one million since 1997. Today, millions of families eligible for child care assistance do not receive any help; in 1998, only about 10 percent of the 15 million low-income children eligible for assistance under federal law received subsidies.
• Helping Over 8 Million Families Pay Child Care Expenses. The Child and Dependent Care Tax Credit (CDCTC) provides tax relief to those who, in order to work, pay for the care of a child under 13 or for a disabled dependent or spouse. The Administration requests $30 billion over 10 years to broaden this tax relief and help over 8 million families pay their child care expenses by 1) making the Child and Dependent Care Tax Credit refundable for the first time -- so that almost 2 million low-income families with no tax liability can receive up to $2,400 to help offset child care expenses; 2) increasing the level of the credit from 30 percent to 50 percent for over 4 million families earning up to $60,000 annually; and 3) extending the credit to almost 2 million parents who stay at home. The budget also includes tax incentives to encourage businesses to provide child care for employees.

• Providing Health Care to Low-Income Working Families. The President has insisted on maintaining the Medicaid guarantee and has successfully fought to increase low-income families' access to health care. Under the Clinton-Gore Administration, states have expanded Medicaid coverage to working families who cannot afford health insurance, allowing Medicaid to be a freestanding health insurance program for low-income families. With bipartisan support from the Congress, the President created the Children's Health Insurance Program (CHIP) in 1997, allocating $24 billion dollars over the next five years to extend health care coverage to uninsured children through state-designed programs. In August 1998, the President eliminated a vestige of the old welfare system by allowing all states to provide Medicaid coverage to more than 130,000 working, two-parent families who meet state income eligibility requirements, eliminating disincentives to marriage and work.

The President and Vice President strongly believe we should continue to expand access to affordable health care. The budget proposes a 10-year, $110 billion initiative that would expand coverage to at least 5 million uninsured Americans and expand access to millions more. It addresses the nation's coverage challenges by building on and complementing current private and public programs. Specifically, the initiative: (1) provides a new, affordable health insurance option for families called "FamilyCare," which builds on the State Children's Health Insurance Program to provide higher Federal matching payments to parents of children eligible for or enrolled in Medicaid or S-CHIP; (2) extends transitional Medicaid for up to a year for those losing it due to increased earnings; (3) accelerates enrollment of uninsured children eligible for Medicaid and S-CHIP; (4) expands state options for people ages 19 and 20 and legal immigrants; (5) helps small businesses afford insurance; and, (6) strengthens programs that provide health care directly to the uninsured. If enacted, this would be the largest investment in coverage since Medicare was created in 1965.

• Ensuring that Eligible Families get Food Stamps and Medicaid: Medicaid and Food Stamps are essential supports for working families. As these parents leave welfare for work, continued access to health insurance and nutritional assistance is a critical piece in making the transition to self-sufficiency. The Administration has taken a number of actions to ensure that states comply with the law, reach out to low-income working families who may be eligible for Food Stamps and Medicaid, provide guidance to states on what their responsibilities are and how to improve practices, and use bonuses and sanctions to hold states accountable. As parents leave welfare for work, it is important for them to know that health insurance and nutritional assistance benefits are still available. It's also important that states reach out to low-income working families who may be eligible for these programs since Food Stamps and Medicaid could keep them off of welfare in the first place.
  • In April 2000, HHS sent guidance to states asking them to review their computer systems and eligibility processes, review their own records to be sure that no one who was entitled to keep Medicaid after leaving cash assistance lost out, and reinstate anyone who was improperly terminated from Medicaid.
  • HCFA also released guidance in January 2000 advising states of the continued availability of federal funds set aside in the 1996 welfare law to help states cover the costs of adapting their Medicaid policies and systems to welfare reform changes. At the end of last year, the Administration worked successfully with Congress to extend the life of this fund; most states have a considerable amount of funds to use for these purposes.
  • In December 1999, the President unveiled $200 million a year in new incentives for states that succeed in moving people from welfare to work, enrolling children and families in Medicaid, Children's Health Insurance Program and Food Stamps, and encouraging family formation.
  • In July 1999, the President took executive actions to help ensure working families who need Food Stamps have access, including: a public education campaign with informational materials and an enhanced toll-free information line, guidance making it easier for working families to own a car and still receive food stamps, and regulations making it easier for states to serve working families.
  • In March 1999, all state Medicaid and TANF administrators received guidance on how states can improve their Medicaid and welfare systems, and a June 1999 letter explaining actions to ensure that all those eligible for Medicaid receive it. The Administration also launched a 50-state review process to make sure that all those who should receive Medicaid do.
  • In January 1999, USDA sent states a notice outlining the law's requirements, including that states should ensure that applicants are fully aware of their right to file an application for Food Stamps when applying for cash assistance and should not automatically terminate Food Stamp benefits as people move to work.

The FY 2001 budget includes $10 million for USDA to enhance nutrition security for low-income Americans through a multi-faceted education and outreach campaign. The new Families Win initiative also includes $5 million to improve access to these critical work supports for low-income working families through the one-stop career centers.

• Helping to Invest for the Future: In 1992, the President proposed to establish Individual Development Accounts (IDAs) to empower low-income families to save for a first home, post-secondary education, or to start a new business. The 1996 welfare reform law authorized the use of welfare block grants to create IDAs. And in 1998, the President signed legislation creating a five-year $125 million demonstration program. Households that are either eligible for Temporary Assistance for Needy Families or qualify for the Earned Income Tax Credit and have a net worth below $10,000 are eligible to participate in the demonstration. In FY 1999, the Department of Health and Human Services awarded nearly $10 million to 40 grantees that will establish over 10,000 savings accounts for low-income workers. The FY 2001 budget provides $25 million for IDAs in FY 2001 to create over 20,000 new accounts. The Administration will also propose to allow low-income working families to use IDAs to save for a car that will allow them to get or keep a job.

Upon signing the welfare reform law, the President made a commitment to reversing unnecessary cuts in benefits to legal immigrants that had nothing to do with the law's goal of moving people from welfare to work. In 1997, the President fought for and ultimately was successful in ensuring that the Balanced Budget Act protects the most vulnerable. In 1998, the President continued his proposals to reverse unfair cuts in benefits to legal immigrants. The Administration's FY 2001 budget continues to fight for restoring important disability, health, and nutrition benefits to additional categories of legal immigrants, at a cost of $2.5 billion over five years.

• Disability and Health: The Balanced Budget Act of 1997 and the Noncitizen Benefit Clarification and Other Technical Amendments Act of 1998 invested $11.5 billion to restore disability and health benefits to 380,000 legal immigrants who were in this country before welfare reform became law (August 22, 1996). The President's FY 2001 budget proposes to restore eligibility for SSI and Medicaid to legal immigrants who enter the country after that date if they have been in the United States for five years and become disabled after entering the United States. This proposal will cost approximately $1.2 billion and assist an estimated 53,000 legal immigrants by 2005, about half of whom would be elderly.
• Nutritional Assistance: The Agricultural Research Act of 1998 provided Food Stamps for 225,000 legal immigrant children, senior citizens, and people with disabilities who entered the United States by August 22, 1996. The President's FY 2001 budget restores eligibility to legal immigrants in the United States before August 22, 1996 who either subsequently reach age 65 or who live in a household with Food Stamp eligible children. This proposal will restore benefits to about 165,000 legal immigrants by 2005 at a cost of $565 million.

• Health Care for Children and Pregnant Women: Under current law, states have the option to provide health coverage to legal immigrant children and pregnant women who entered the country before August 22, 1996. The President's FY 2001 budget gives states the option to extend Medicaid or State Children's Health Insurance Program (SCHIP) coverage to low-income legal immigrant children and Medicaid to pregnant women regardless of their date of entry to the United States, including those who entered after August 22, 1996. The proposal would cost $695 million and provide critical health insurance to approximately 144,000 children and 33,000 women by FY 2005. This proposal would help reduce the number of high-risk pregnancies, and ensure healthier children. The budget's Medicaid/SCHIP FamilyCare initiative also covers legal immigrant parents of children who are covered by Medicaid or SCHIP.

Last Updated June 2000

The Clinton-Gore Economic Record

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