13.1 Domestic Policy: Welfare Reform and Balanced Budget
3 min read•july 22, 2024
The 1990s saw major changes in welfare and economic policies under President . Welfare reform replaced AFDC with TANF, introducing time limits and work requirements. This aimed to reduce dependence but left some families struggling.
Clinton's economic policies focused on balancing the budget through tax increases, spending cuts, and economic growth. The "" and "" approach influenced these centrist policies, blending market solutions with government intervention to address social and economic issues.
Welfare Reform and the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA)
Provisions of PRWORA welfare reform
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Top images from around the web for Provisions of PRWORA welfare reform
Temporary Assistance for Needy Families - Wikipedia, the free encyclopedia View original
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The Welfare State | Boundless Political Science View original
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Effects of welfare reform in terms of costs and mortality: Data analysis - The Journalist's Resource View original
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The Welfare State | Boundless Political Science View original
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Replaced (AFDC) program with (TANF)
Provided block grants to states enabling more control over welfare programs (flexibility in design and implementation)
Introduced time limits on welfare benefits typically capping at five years to encourage self-sufficiency
Established work requirements for welfare recipients to promote employment
Required recipients to find employment within two years of receiving benefits to reduce long-term dependence
Mandated states to meet specific targets for moving welfare recipients into the workforce (participation rates)
Restricted benefits for certain groups to focus resources on U.S. citizens and long-term residents
Denied benefits to legal immigrants who had been in the country for less than five years
Placed stricter eligibility requirements on and Supplemental Security Income (SSI)
Significantly decreased the number of welfare recipients but increased poverty and hardship for some families
Increased employment among single mothers as more entered the workforce
Left some families unable to find stable employment facing greater financial difficulties
Economic Policies and the Balanced Budget
Factors for balanced federal budget
Combination of tax increases and spending cuts helped reduce budget deficits
raised income taxes on the wealthiest Americans (top marginal rate)
Reduced government spending in various areas including defense and domestic programs
Strong economic growth during the 1990s increased government revenues
Dot-com boom and low unemployment rates boosted tax revenues (capital gains, income taxes)
Reduced demand for government assistance programs (welfare, unemployment insurance)
Bipartisan cooperation on facilitated efforts
Clinton worked with Republican-controlled Congress to pass
Act aimed to balance federal budget by 2002 through spending cuts and tax changes
Clinton's economic policies and impacts
Policies aimed at promoting economic growth and job creation
Invested in education and job training programs to build human capital
Supported North American Free Trade Agreement (NAFTA) to increase trade and economic opportunities
Expanded (EITC) to support low-income working families
Provided tax relief for low-income working families (refundable credit)
Encouraged work and helped reduce poverty by supplementing wages
Raised federal minimum wage to improve living standards
Signed legislation raising federal minimum wage from 4.25to5.15 per hour
Aimed to boost incomes for low-wage workers and reduce income inequality
Uneven distribution of economic gains despite overall growth and low unemployment
Wealthy experienced greater benefits than middle and lower classes (widening income gap)
Critics argued policies favored high-income earners over working class
New Democrats and Third Way approach
New Democrats emerged as centrist faction within Democratic Party in late 1980s and early 1990s
Emphasized , free trade, and market-based solutions to social problems
Sought to distance party from perceived excesses of liberal policies (welfare state, high taxes)
Third Way approach sought to reconcile left-wing and right-wing politics
Advocated mix of market-based solutions and government intervention to address social and economic issues
Promoted policies balancing economic growth, social justice, and individual responsibility
New Democrats and Third Way influenced Clinton's domestic agenda
Welfare reform (PRWORA) reflected emphasis on personal responsibility and reducing government dependence
Balanced budget efforts used mix of tax increases and spending cuts in line with Third Way
Support for free trade agreements (NAFTA) aligned with New Democrats' pro-market stance