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Hillary Clinton lobbied Congress to pass welfare reform. Now she barely tries to defend it.

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Hillary Clinton applauds welfare reform guest at 1998 State of the Union
First Lady Hillary Clinton (right) applauds Elaine Kinslow (second from left) at the 1998 State of the Union; Kinslow, of Indianapolis, Indiana, was recognized as one of over two million Americans who have left the welfare rolls in the past year.
Luke Frazza/AFP/Getty Images
Dylan Matthews is a senior correspondent and head writer for Vox's Future Perfect section and has worked at Vox since 2014. He is particularly interested in global health and pandemic prevention, anti-poverty efforts, economic policy and theory, and conflicts about the right way to do philanthropy.

Hillary Clinton didn't used to be shy about defending welfare reform. In her 2003 memoir Living History, she admitted the 1996 welfare reform bill her husband signed into law had flaws, but overall she praised it as "a historic opportunity to change a system oriented toward dependence to one that encouraged independence." In 2000 she bragged, "Since we first asked mothers to move from welfare to work, millions of families have made the transition from dependency to dignity."

All of which makes the resigned, defeated tone in which she speaks about the law in her interview with Vox’s Ezra Klein rather revealing:

I know there’s a big debate — and it’s an important debate — about welfare reform. Because when welfare reform was passed, there was an expectation — certainly on my part, and I think on the part of many who had supported it — that there would be an expectation, in fact a requirement, that states would have to be contributing to the broadest possible safety net, particularly in economic downturns.

…after 2001, there were a lot of decisions made that basically did not carry on what had been not just the spirit, but the requirements in the law, because we set the base payment at the highest possible rate and expected states to do that.

Clinton is not conceding defeat here. She is not apologizing for her support for the law, or suggesting that the law itself led to bad outcomes. But she’s conceding that the way the law was implemented in the states led to a disappointing result.

She’s right: Even many supporters of the law now concede that the technical implementation was botched, and enabled states to use money that used to be earmarked for poor households as a kind of slush fund to finance everything from child protection services to higher education to crisis pregnancy centers.

But apart from the substance of that dispute, the fact that she feels the need to distance herself from welfare reform marks a major political shift, from a time when it was seen as one of Bill Clinton’s signature domestic accomplishments to the current moment, when it’s viewed as a mixed bag at best and a total catastrophe at worst.

Welfare reform created a slush fund for states. But that’s kind of the feds’ fault too.

Welfare reform, Clinton, 1996 Paul J. Richards/AFP/Getty Images

The big thing the 1996 Personal Responsibility and Work Opportunity Act did was abolish one program, Aid to Families With Dependent Children (AFDC), and replace it with another, Temporary Assistance to Needy Families (TANF). AFDC was a guaranteed benefit: Any person who met the requirements (typically nonworking single mothers) was entitled to get a regular cash payment from the government.

TANF, by contrast, is a block grant. States get a set pool of money and are supposed to use it both to provide temporary, time-limited cash assistance to poor single parent families and to provide work training, child care, and other services to get those single parents into the workforce.

That increased flexibility followed a long period in which the federal government granted waivers to states to experiment with AFDC, letting them use money on various approaches trying to transition families from welfare to work.

At the time, a number of those experiments appeared to work, resulting in big increases in earnings and employment. Later research suggested that the most successful programs, like one in Riverside, California, were aberrations caused by a good local economy, and that the effects faded away with time. But as welfare reform was being written, the waiver experience made it seem like giving states flexibility to experiment with different approaches was the way forward.

In practice, however, block-granting made the system ripe for gaming by states. There’s little in the 1996 law requiring states to use the federal money on core welfare reform activities — paying out cash, child care, job programs, etc. — and so states have taken to using it to pay for totally unrelated stuff.

In 2014, just 26 percent of TANF spending went to "basic assistance" — cash welfare — and another 24 percent went to work programs and child care, according to a Center on Budget and Policy Priorities analysis. A third went to activities well outside the intended function of welfare reform.

For example, Michigan has used the money for college scholarships, and Louisiana has used it to fund anti-abortion crisis pregnancy centers. It’s common for states to use the money for worthwhile child-related programs, like protection services and foster care, that nonetheless are not the intended purpose of the block grant.

Center on Budget and Policy Priorities

The availability of the money as a kind of slush fund for states — only if they don't use it on actual welfare — additionally creates an incentive for states to discourage potential beneficiaries from applying. In Georgia, applicants received flyers with slogans like "TANF is not good enough for any family" and "We believe welfare is not the best option for your family." Applicants were rejected for missing appointments or for filing fewer than 24 job applications in a week.

Rae McCormack, who is profiled in sociologists Kathryn Edin and Luke Shaefer’s book $2 a Day, reported being told by a caseworker, "We don't have enough to go around for everyone. Come back next year" — even though caseloads in Ohio are very low.

"You set up a system that incentivizes welfare for states, not people," Shaefer told me. "States can keep their caseloads low and redirect the money to what they would've spent on otherwise."

This has prompted a backlash among even many conservatives. Peter Germanis, a veteran of the welfare reform battles from his time at the Heritage Foundation and the Reagan White House, has become an outspoken critic of TANF because of the perverse incentives created by the block grant.

"When it comes to the TANF legislation," he writes, "Congress got virtually every technical detail wrong. … Congress gave states too much flexibility and they have used it to create a giant slush fund."

Other conservatives have told me they agree. Lawrence Mead, a political scientist at NYU and one of the intellectual godfathers of welfare reform, still considers TANF a success but finds the Germanis critique compelling.

"There are clear-cut abuses and problems in TANF regarding its implementation," he told me in May. "The problems are clear, and the three that stand out are the failure to allow people to apply for aid; the atrophy of the work programs; and the diversion of funds to other programs. Those were not intended in TANF, and they should be stopped. We should go back to a program that does provide aid to the needy, even if it does require work."

Of course, states deserve blame for the system ending up like this. They were the ones who chose to use the block grant money for unrelated purposes. But the 1996 law also deserves blame for not putting in place tougher regulations to ensure that the money wasn’t diverted like this.

The Obama administration has a proposal in its latest budget requiring that at least 55 percent of state and federal TANF funds go to work activities, child care, and cash assistance. If that requirement had been included in the original legislation, this problem wouldn’t be nearly as bad.

What Clinton is, and is not, conceding

Vox / Carlos Waters

Clinton’s attempt to blame states for welfare reform’s failures is not entirely successful, but the fact that she’s acknowledging failures at all is still startling. She used to champion welfare reform as a major social policy success story. Her husband was even more effusive, declaring in a 2006 New York Times op-ed, "Welfare reform has proved a great success."

But the 2016 primary showed that the tone within the Democratic Party on the topic has shifted dramatically. Welfare reform became a significant liability for Clinton, with Bernie Sanders claiming (accurately) that it led to an increase in extreme poverty and civil rights attorney Michelle Alexander citing it as a major shortcoming in her record in her piece in the Nation, "Why Hillary Clinton Does Not Deserve the Black Vote."

A recent dispute between Sanders-sympathetic Demos researcher Matt Bruenig and Clinton ally and Center for American Progress head Neera Tanden, which ended with Bruenig getting dismissed from his position, centered on his allegations that Tanden supported welfare reform. Tellingly, Tanden did not defend welfare reform. She denied ever supporting it.

Clinton’s more measured tone on the matter is a response to this shift in Democratic sentiment. At the same time, though, Clinton is not endorsing the kind of major policy changes that many on the left think would be necessary to make up for the shortcomings of the law.

For instance, many poverty researchers support a child allowance, a policy common in Europe that gives parents a set amount of cash, no strings attached, to help them pay for their children’s needs. The Center for American Progress endorses a version of this through its proposal to make the $1,000 child tax credit fully refundable and add a $125-a-month ($1,500-a-year) young child tax credit, also fully refundable. Rep. Rosa DeLauro (D-CT), along with Nancy Pelosi and Democrats’ ranking member on Ways and Means, Sander Levin, has introduced legislation creating the latter.

Clinton has not endorsed this plan. She also hasn’t endorsed a plan for more extensive subsidized jobs, which some poverty experts think could reduce poverty without attracting political opposition for paying people not to work — the charge that doomed welfare the first time around and could hurt the odds of a child allowance.

The shift against welfare reform has been significant, but the case of Clinton suggests it hasn’t been enough to create political will for major changes that could fix welfare reform’s shortcomings.