The reforms of the booming 1990s now offer little help to the poorest of the poor.
Tamika Shelby and her son, Dejon, 3, at their home in Phoenix, March 22, 2012. Because of welfare limits, Shelby lost her $176 stipend and her job at a food bank. In Arizona and other states, some recipients of the Clinton-era Temporary Assistance for Needy Families take desperate measures to make ends meet.
PHOENIX - Perhaps no law in the past generation has drawn more praise than the drive to "end welfare as we know it."
But the distress of the past four years has added a cautionary postscript: Much as critics of the restrictions once warned, a program that built its reputation when times were good offered little help when jobs disappeared. Despite the worst economy in decades, the cash welfare rolls have barely budged.
Faced with flat federal financing and rising need, Arizona is one of 16 states that have cut their welfare caseloads further since the start of the recession -- in its case, by half. Even as it turned away the needy, Arizona spent most of its federal welfare dollars on other programs, using permissive rules to plug state budget gaps. Nationally, only 30 percent of the welfare money is spent on cash benefits.
The poor people dropped from cash assistance, mostly single mothers, talk with surprising openness about the desperate, and sometimes illegal, ways they make ends meet. They have sold food stamps, sold blood, skipped meals, shoplifted, doubled up with friends, scavenged trash bins for bottles and cans and returned to relationships with violent partners -- all with children in tow.
Critics of the stringent system say stories like these vindicate warnings they made in 1996: The revamped law encourages states to withhold aid, especially when the economy turns bad.
'Even worse than I thought'
The old program, Aid to Families with Dependent Children, gave states unlimited matching funds and offered poor families extensive rights, with few requirements and no time limits. The new program, Temporary Assistance for Needy Families, created time limits and work rules, limited federal spending and allowed states to turn poor families away.
"My take on it was the states would push people off and not let them back on, and that's just what they did," said Peter B. Edelman, a law professor at Georgetown University who resigned from the Clinton administration to protest the law. "It's been even worse than I thought it would be."
But supporters of the system often say lower caseloads are evidence of decreased dependency. Many leading Republicans are pushing for similar changes to much larger programs, such as Medicaid and food stamps.
While figures on the very poor are limited and subject to challenge, recent studies have found that as many as one in every four low-income single mothers is jobless and without cash aid -- about 4 million women and children.
Poor families can turn to other programs, such as food stamps or Medicaid, or rely on family and charity. But the absence of a steady source of cash can bring new instability to troubled lives.
One prominent supporter of the tough welfare law is worried that it may have increased destitution among the most disadvantaged families. "This is the biggest problem with welfare reform, and we ought to be paying attention to it," said Ron Haskins of the Brookings Institution, who helped draft the 1996 law as an aide to House Republicans and who argues that it has worked well for most recipients.
The recession that began in 2007 posed a new test to claims that the changes worked. Even with $5 billion in new federal funds, caseloads rose just 15 percent from the lowest level in two generations. Compared with the 1990s peak, the national welfare rolls are still down by 68 percent. Just one in five poor children now receives cash aid, the lowest level in nearly 50 years.
States keep cutting rolls
As the downturn wreaked havoc on budgets, some states took new steps to keep the needy away. They shortened time limits, tightened eligibility rules and reduced benefits (to an average of about $350 a month for a family of three).
Since 2007, 11 states have cut the rolls by 10 percent or more. They include Georgia, Indiana, Rhode Island and Michigan. Arizona cut benefits by 20 percent and shortened time limits twice -- to two years, from five.
Since the states get fixed federal grants, any growth in cases comes at their own expense. By contrast, the federal government pays the food stamp bill no matter how many people enroll; states encourage applications, and the rolls have reached record highs.
Clarence H. Carter, Arizona's director of economic security, says finances forced officials to cut the rolls.
Meanwhile the number of very poor families appears to be growing. Pamela Loprest and Austin Nichols, researchers at the Urban Institute, found one in four low-income single mothers nationwide -- about 1.5 million -- is jobless and without cash aid. That is twice the rate they found under the old law.
But the Census Bureau uses different measure of distress, "deep poverty," which it defines as living on less than half of what is defined as the poverty line (for a family of three, that means living on less than $9,000 a year). About 10 percent of households headed by women report incomes that low, a bit less than the peak under the old law but still the highest level in 18 years.
Some researchers say such studies exaggerate poverty by inadequately accounting for undisclosed income. They note that asking poor people about their consumption, rather than their income, shows the deterioration at the bottom to be modest.
Haskins agrees that poverty at the bottom "is not as bad as it seems," but adds, "It's still pretty darn bad."