The welfare reform passed this summer by Congress and signed by (a considerably less enthusiastic) President Clinton is that rarest of creatures in post-New Deal American government: a genuine victory for federalism. The law's key element is its plan to convert the federal entitlement under Aid to Families with Dependent Children into block grants to the states. Certain federal strings will remain—mainly a two-year work requirement and a five-year lifetime limit on cash benefits—but the reform gives the states unprecedented latitude in welfare policy. Some will use it well; others will muddle along under something much like the status quo.

Many states have been experimenting with welfare reform for years, even without special encouragement from Washington. The most ambitious of these efforts—in places like Wisconsin, Connecticut, and Virginia have made a splash on the nation's editorial pages, but they are hardly unique. Thirty four states now impose time limits on welfare; 36 require work of some kind in exchange for benefits; and 21 place a "family cap" on support, denying extra money to recipients who have more children. For these states, the new law will simply clear the way for further reform, abolishing federal conditions and regulations that have stymied them in the past.

For states less determined to “end welfare as we know it," the new law is unlikely to force radical change. Loopholes abound. Forty-three states can invoke existing waivers to override one or another provision of the reform (the District of Columbia, for instance, won a last-minute waiver from the Clinton administration that postpones the legislation's five-year cutoff for a decade). Even under the new law, states can exempt 20 percent of their welfare cases. Families in which welfare is going only to a child are also exempt (representing another 17 percent of cases nationwide), and mothers of children under six who cannot find child care can escape the work requirement. Nor does the law prevent states from using their own money to extend lost federal benefits.

Even the less reform-minded states, however, will face a potent new incentive to keep their caseloads down. Until now, the federal government has paid roughly half the cost of all AFDC recipients, subsidizing the swollen welfare rolls of states like New York and California. With the reform, states will have to make do with a fixed federal grant, spending their own money to expand coverage or benefits. Whatever states choose to do, the signal now coming from Washington is unambiguous: welfare is their responsibility, and voters, for the first time, can hold them accountable for it.


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