WELFARE MISUNDERSTOOD - TANIF

President Trump said, "We have a lot of positive things happening, you're going to see it bursting out. You're going to be seeing it very soon," he told Republican congressional leaders at a Philadelphia GOP retreat. "We want to get our people off of welfare and back to work. So important. It's out of control. It's out of control. (bolding and underlining mine)*

Unfortunately, President Trump is badly misinformed.   One wonders where President Trump was in the 1990s.He's 20 yrs out of date.  The welfare program in effect now is called TANIF (Temporary Assistance For Needy Families) that began in 1997 after which welfare recipients dropped markedly (See figure below).   TANIF was reauthorized in 2002 with some changes. Few understand that federal welfare benefits have a 5-yr lifetime limit beginning with 1997, except in some special cases as by the states (up to one-fifth the total number on welfare in the state).**

In 1992, as a presidential candidate, Bill Clinton pledged to "end welfare as we know it" by requiring families receiving welfare to work after two years. As president, Clinton was attracted to welfare expert and Harvard University Professor David Ellwood’s proposal on welfare reform and thus Clinton eventually appointed Ellwood to co-chair his welfare task force. Ellwood supported converting welfare into a transitional system. He advocated providing assistance to families for a limited time, after which recipients would be required to earn wages from a regular job or a work opportunity program.^[8] Low wages would be supplemented by expanded tax credits, access to subsidized children care and health insurance, and guaranteed child support.***

In 1994, Clinton introduced a welfare reform proposal that would provide job training coupled with time limits and subsidized jobs for those having difficulty finding work, but it was defeated.^[9] Later that year, when Republicans attained a Congressional majority in November 1994, the focus shifted toward the Republican proposal to end entitlements to assistance, repeal AFDC and instead provide state with blocks grants.^[11] The debates in Congress about welfare reform centered around five themes:^[11]***
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Before 1997, the federal government designed the overall program requirements and guidelines, while states administered the program and determined eligibility for benefits. Since 1997, states have been given block grants and both design and administer their own programs. Access to welfare and amount of assistance varied quite a bit by state and locality under AFDC, both because of the differences in state standards of need and considerable subjectivity in caseworker evaluation of qualifying "suitable homes".^[14] However, welfare recipients under TANF are actually in completely different programs depending on their state of residence, with different social services available to them and different requirements for maintaining aid.^[15]***

 (Click on Figure to enlarge)
Figure from: http://www.cbpp.org/research/family-income-support/chart-book-tanf-at-20

There are quite a few states that don't even allow the five years lifetime:
Facing a $1 billion budget deficit, Arizona's Republican-led Legislature has reduced the lifetime limit for welfare recipients to the shortest window in the nation.
Low-income families on welfare will now have their benefits cut off after just 12 months.
As a result, the Arizona Department of Economic Security will drop at least 1,600 families — including more than 2,700 children — from the state's federally funded welfare program on July 1, 2016.****
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Most states impose a five-year limit on welfare benefits. Thirteen states limit it to two years or less, and Texas has a tiered time limit that can be as little as 12 months but allows children to continue to receive funding even after the parents have been cut, welfare policy analyst Liz Schott said.****

* http://www.cnbc.com/2017/01/26/heres-how-president-trump-has-it-wrong-on-welfare.html
** https://thesocietypages.org/ssn/2013/05/13/what-happens-to-poor-families/
*** https://en.wikipedia.org/wiki/Temporary_Assistance_for_Needy_Families
**** http://www.azcentral.com/story/news/arizona/politics/2015/05/19/arizona-sharply-limits-welfare/27602007/
http://mashable.com/2015/07/27/welfare-myths-debunked/#aHcYOEcaRZqy

WELFARE FOR THE WEALTHY

A recent Wall Street Journal had a major article titled The Estate Tax (Monday, September 20, 2010). In writing for "Get Rid Of It", Ed McCaffery in "It's Unfair, and There's a Better Way" curiously says "It is a simple moral case..." In a country that prides itself on the Judeo-Christian work ethic, it would seem to me that the moral case is that there should be no inheritance, that every generation should start from scratch. Even in this case, the children of the wealthy would have an advantage because of better education and health care. Besides, inheritance, at least a large inheritance, promotes sloth just as welfare for the poor is thought to promote sloth. Inheritance is just promoting sloth for the wealthy. In this regard, I agree with Michael J. Graetz who authored the "Keep It" article "It's Fair, and We Need The Revenue" and who wrote, "On the other hand, large tax-free inheritances do encourage their recipients not to work. People who receive large inheritances are about four times more likely to drop out of the labor force than those who inherit only small amounts."

Still, I realize that deep in people's hearts is a desire to leave something to their children and maybe other heirs, besides debts, even though most families cannot do so. Under the previous inheritance law, the first $3.5 million in inheritance was exempt from taxation (up from $1 million before that), and the tax on the balance was 45% (down from 55% before that). It seems to me that this is very generous. After all, an income of 5% from a $1 million inheritance, a percentage easy to attain, is $50,000/year, a sum actually somewhat above the median FAMILY income of 2009 ($49,777).* It seems to me that the previous law on inheritance tax was more than generous concerning inheritance, and would hardly encourage the wealthy to "spend it all" during their lifetimes and die broke as Ed McCaffrey suggests.


*http://en.wikipedia.org/wiki/Median_household_income