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Federal Government Cuts Off Recession Relief Money To States

First Posted: 12/16/10 11:49 PM ET Updated: 05/25/11 07:20 PM ET

Homeless

Despite soaring unemployment and the 19 million Americans currently living in "deep poverty," federal funds for the Temporary Assistance For Needy Families (TANF) program have entirely dried up for the first time since 1996, leaving states with an average of 15 percent less federal funding for the coming year to help an ever-increasing number of needy families.

TANF, the federal program that replaced welfare under the Clinton Administration, provides a lifeline for families and workers who have exhausted all of their unemployment benefits. According to a new report by the Center for Budget and Policy Priorities, "more homeless families will go without shelter, fewer low-wage workers will receive help with child care expenses, and fewer families involved with the child welfare system will receive preventive services" now that Congress has passed legislation that will end funding for the TANF Contingency Fund in 2011.

Congress also failed to reauthorize an emergency fund for a subsidized job program on September 30 that would have allowed states to provide emergency help to needy families and place low-income people in subsidized jobs.

In fiscal year 2011, every state except Wyoming will experience up to a 20 percent reduction in recession relief funds. The CBPP reports that many states have already drastically reduced their subsidized job programs after being cut off from federal funding, costing tens of thousands of people their jobs. Some states are also considering substantial cuts to programs for low-income families with children, including child care subsidies for working parents and programs that address substance abuse, caring for a disabled child, and other challenges.

"This is not what Congress intended when it reformed the welfare system in 1996," said Liz Schott, Senior Fellow at CBPP. "Helping welfare recipients find work in this economy requires more help from the federal government, not less."

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