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July 2012, Volume 18, Number 3

TANF, SNAP, EITC

The Temporary Assistance for Needy Families program enacted in 1996 gave states a block grant to care for the poor. TANF established a maximum five-year limit on cash aid for adults, and penalized states with fewer funds if they did not have enough adult TANF recipients working. Since the federal block grant is fixed, states can and do reject applicants for aid when they run out of money.

The typical TANF "case" is a young mother with two children receiving $350 a month. During the late 1990s, as the unemployment rate fell below four percent, caseloads fell by over 50 percent in most states as women who had been receiving cash aid found jobs.

The 2008-09 recession doubled the unemployment rate and tested whether welfare reform "worked." The New York Times reported on April 8, 2012 that only 20 percent of children in households that have incomes below the poverty line receive cash aid. Reduced cash aid has been accompanied by more in-kind aid, especially Food Stamps, which are paid entirely by the federal government, and Medicaid, a shared federal-state health-insurance program.

Many states have used the federal welfare block grant for benefits other than cash aid to poor families, including foster care for children without caregivers. Across the US, only a third of the federal welfare block grant is used by states for cash aid. A fourth of low-income single mothers across the US, about 1.5 million, do not have jobs and do not receive cash aid for a year or more.

SNAP. Some 45 million Americans received Food Stamps in FY11, up from 28 million in FY08. Food Stamps, formally known as the Supplemental Nutrition Assistance Program (SNAP), are one of the easiest benefits for low-income residents to access, since access requires only proof of income and legal status.

The Farm Bill approved by the Senate in June 2012 would spend $770 billion on Food Stamps over 10 years, so that almost 80 percent of farm bill spending would be for food assistance.

EITC. The largest federal anti-poverty program is the earned income tax credit, which provides payments to 28 million low-income taxpayers with children each year, a fifth of those filing tax returns. Half of American families with children received the EITC at least once between 1989 and 2006.

Low earners with children can claim earned income tax credits, meaning they can receive checks from the IRS, using Social Security Numbers or ITINs. Some two million ITIN filers received EITC payments worth $4.2 billion for 4.5 million children in 2010, when total EITC payments were $28 billion.

In 2011, a married worker filing jointly who earned $7,000 with three qualifying children and no other income could receive an earned income tax credit of $3,160, that is, 45 percent of earnings (www.irs.gov/eitc). The maximum EITC payment in 2011 was $5,751 for those with three or more qualifying children who live in the US at least half the year.


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