Economic Snapshot | Budget, Taxes, and Public Investment

Block Granting Social Safety Net Programs Would Erode Their Value and Deprive Low-income Families of Critical Aid

In his new plan, House Budget Committee Chairman Paul Ryan (R-Wis.) proposes consolidating 11 separate federal anti-poverty programs into one block grant. Each state would be given a fixed amount of funding for the year and great leeway to use it as they see fit. Though Rep. Ryan claims that this proposal is not a means to slash the budget, turning social safety net programs into block grants erodes their value over time, and, worse, renders them less responsive to economic downturns.

In 1996, President Clinton signed welfare reform into law, which replaced the Aid to Families with Dependent Children (AFDC) program—a federal benefit for low-income families—with the new Temporary Assistance for Needy Families (TANF) program—a block grant for states to administer their own anti-poverty measures. The figure below shows that this transition ushered in a cash-assistance program much less able to increase its caseloads in the aftermath of recessions—when the number of people living in poverty increases and when more Americans are in need of financial support.

Economic Snapshot

Since traditional cash-assistance welfare was block-granted, it has been unresponsive to economic downturns: Recipients of AFDC/TANF cash assistance and SNAP benefits vs. number of Americans under poverty line, FY1985–2012, in millions

Fiscal year SNAP recipients AFDC recipients TANF recipients (block grant program) Number in poverty
1985-01-01 19.899 10.849 33.22225
1986-01-01 19.429 10.99225 32.54325
1987-01-01 19.113 11.02975 32.2575
1988-01-01 18.645 10.943 31.86375
1989-01-01 18.80646342 10.97275 31.58225
1990-01-01 20.04897758 11.51925 33.07
1991-01-01 22.624627 12.62125 35.177
1992-01-01 25.40698542 13.56225 37.4375
1993-01-01 26.9867745 14.097 38.95225
1994-01-01 27.47369633 14.172 38.36125
1995-01-01 26.61877283 13.60375 36.83375
1996-01-01 25.54253117 12.59525 36.503
1997-01-01 22.8581365 10.86225 10.86225 35.81275
1998-01-01 19.7909845 8.85425 34.7505
1999-01-01 18.18253792 7.27975 33.21225
2000-01-01 17.19433433 6.33825 31.8835
2001-01-01 17.31845808 5.8235 32.5755
2002-01-01 19.09563667 5.636 34.15425
2003-01-01 21.24962583 5.51975 35.53825
2004-01-01 23.810742 5.379 36.74525
2005-01-01 25.62845608 5.1065 36.9725
2006-01-01 26.54883317 4.6935 36.5825
2007-01-01 26.31604458 4.20175 37.07125
2008-01-01 28.22263025 4.0225 39.1905
2009-01-01 33.4899745 4.2795 42.634
2010-01-01 40.301878 4.54125 45.65025
2011-01-01 44.70872608 4.56875 46.27125
2012-01-01 46.6090715 46.43375
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Note: Gray bars represent recessions. AFDC and TANF recipients are recipients of cash assistance within those programs.

Source: Author's analysis of data from Congressional Research Service, Census Bureau, U.S. Department of Agriculture, and the National Bureau of Economic Research

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Although the law required the federal government and states to maintain a significant portion of pre-1996 funding levels, inflation ate away more than 30 percent of the value of the program between 1997 and 2012. Further, the emergency contingency funds in the program—intended to bolster state TANF spending during economic downturns—barely moved the needle in terms of funding during the Great Recession, when a robust social safety net was needed most.

By contrast, the Supplemental Nutrition Assistance Program (SNAP, or food stamps) has not been block-granted and has been responsive to economic changes. During economic downturns, particularly the Great Recession (when SNAP was further strengthened by provisions in the Recovery Act), automatic increases in SNAP funding have aided millions of people. Conversely, since AFDC was turned into TANF, traditional cash-assistance welfare has been unresponsive to such changing conditions. Block-granting programs like SNAP would have a similar effect.

As history has shown, folding SNAP, housing assistance, aid for child care, and other programs into one block grant would squeeze the budgets of these essential programs over time and deprive low-income families of the help they need to get back on their feet when they need it most.

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