Federal Welfare System Not Helping The New Poor In Economic Crisis

By Susie Madrak

In addition to being severely underfunded during this crisis, the welfare programs simply aren't set up to help the formerly-middle class people who are trying to get into the system. For instance, here in Pennsylvania, someone I know was turned down because his bank statement showed transfers from Paypal into his checking account, and they counted that as monthly income. He tried to explain that he'd sold everything he had left on eBay, and there was nothing left to sell, but the caseworker wouldn't listen.

Contrary to popular myth, (a repugican shrieking point by the by) it's quite difficult for anyone with any assets at all to get onto welfare:

The nation's welfare system of cash assistance, for decades the core of help for mothers and children in financial distress, has become a shrunken piece of the U.S. social safety net.
The welfare rolls have absorbed relatively few of the Americans who have tumbled lately into poverty or unemployment.
The number of families getting welfare checks, federal figures show, increased by about 185,000 between the start of the recession in late 2007 and this spring. During roughly the same period, the number of families living in poverty rose by more than 400,000 to record levels, according to the Census Bureau, which reported this week that, in Washington, three out of 10 children were poor last year.

State by state, welfare programs are a patchwork, with little connection between the condition of a state's economy and the number of people who have gone onto welfare.
Taken together, this new portrait of welfare answers a central question that hovered over the impassioned debate of the mid-1990s, when Congress and the Clinton administration transformed welfare from a federal entitlement into a state-run program of temporary assistance that emphasized work. How would the reshaped welfare system respond, policymakers and advocates wondered then, if the economy plunged into long, serious trouble?
Nearly three years after the start of a grave economic downturn, it now is clear that "despite extremely high levels of employment, that has not translated into welfare increases as much as many people expected," said Douglas J. Besharov, a University of Maryland professor who has studied welfare for years.

Welfare's role will be further diminished after Thursday, when emergency funds Congress began providing early last year to help states cope with hard economic times run out. Despite urging from the Obama administration and welfare directors around the country, lawmakers decided not to extend the emergency welfare money, which gave states more than $4 million, in part to subsidize wages to help people go to work.
Congress also was scheduled this year to renew the entire welfare program, known officially as Temporary Assistance for Needy Families, but deferred the task until at least next year.