The history of welfare began after the United States was 156 years old. It started in the 1930s with the Great Depression. Three small programs were mixed into Franklin D. Roosevelt’s (FDR) New Deal programs. Still, welfare remained small until the Great Society Programs of Lyndon Johnson (LBJ) in the 1960s. Eight programs were up and running at the end of the Great Society. Over succeeding years, these programs generally expanded their reach and benefits, except for welfare reform performed in 1996. After that, five new programs were added to the welfare system in 1972 and one each in 1975, 1990, and 1997. In all, fourteen welfare programs make up the welfare system today.
All welfare programs target low-income individuals and families in need. However, their qualification rules are not consistent. More.
Benevolence and the Founding of the Nation
James Madison, the father of the Constitution, didn’t believe “objects of benevolence” were a proper use of “money from constituents.” It wasn’t provided for under the constitution. More. Indeed, as described by a constitutional scholar, “Our Constitution is generally seen as containing negative rights, not affirmative obligations.”
Benjamin Franklin felt the same way but relied more on his personal experience. He said, “In my youth, I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer.” More.
Charity in the 1800s
There was no federal government welfare in the 1800s. Instead, citizens took up the responsibility to help the poor. Some worried about the same problem Franklin identified. They called the problem pauperism and tried to find the balance of helping while not hurting. This same issue has been prevalent throughout the history of welfare. More.
The Great Depression
The attitudes toward federal welfare changed with the Great Depression. With unemployment high, FDR proposed his New Deal, which included public works programs and the creation of Social Security. It also included the expenditure of two billion dollars in “relief.” As FDR described it, the relief went to the destitute for want of food and clothing. But FDR was not a fan of relief. Instead, he favored employment programs. As a result, employment projects became a much larger part of the New Deal. In fact, in 1935, FDR proclaimed, “The Federal Government must and shall quit this business of relief.” More.
Welfare Seeds
Regardless of FDR’s opinion, relief or welfare had its seeds in the New Deal programs. The first was the Social Security Act of 1935, and the second was the Housing Act of 1937. The Social Security Act contained a three-page clause called Aid to Dependent Children. It proved to be the starting point for the history of welfare. The stated purpose was to provide financial assistance to needy children. It grew steadily in the 1930s and 1940s and was expanded in 1950 to add the caretaker of the child.
The second seed was The Housing Act of 1937. It created the United States Housing Authority to enact slum-clearance projects and construction of low-rent housing. Housing assistance expanded in 1949, 1954, and 1959. The expansions were to eradicate slums, promote community development, provide construction funds, and provide elderly housing.
President Truman signed the National School Lunch Act in 1946. The Act tasked the Department of Agriculture with providing cash assistance and food donations to help schools serve children nutritious lunches. By 1960, even with three programs up and running, the welfare effort by the federal government was still minimal by today’s standards. In that year, welfare expenditures totaled $2.4 billion. This equals $20 billion in today’s dollars – a far cry from the welfare expenditure of $1.215 trillion in 2022. More.
Great Society Programs of the 1960s
Welfare expanded dramatically in Lyndon Johnson’s Great Society Programs of the 1960s. In a speech in May 1964, Johnson said, “… we have the opportunity to move not only toward the rich society and the powerful society but upward to the Great Society. The Great Society rests on abundance and liberty for all. It demands an end to poverty and racial injustice, to which we are totally committed in our time.” More.
By the decade’s end, the Great Society had expanded or created eight programs. Expanded Programs were Housing Assistance, Child Nutrition, and Aid to Dependent Children (now TANF). Five new programs were created, sometimes just as test programs. They were Medicaid, SNAP, Pell Grants, Head Start, and Job Training. All of them grew over the next 50 years and are a part of the welfare landscape today.
The Invention of the Poverty Line
While LBJ was pushing change at the highest level, a lady in the Social Security Administration was trying to figure out the nuts and bolts. Her name was Mollie Orshanksy, and she needed a definition of poverty for her work. She developed one using food budgets and the cost of living prevailing at the time. It evolved into the poverty threshold, which is still used today to define the poverty line. In fact, her exact number has been used since 1963, merely adjusted by inflation each year. Ms. Orshansky ultimately became known as “Ms. Poverty” to her peers. She was a unique and intriguing player in the history of welfare. More.
New programs in 1970 – 1990
Richard Nixon signed SSI and WIC into law in 1972, and Ronald Reagan the EITC program in 1975. Surprisingly, these two republican presidents figure prominently in the history of welfare. While the programs started small, they are a material part of today’s welfare landscape.
LIHEAP was founded in 1980, the Child Care Program in 1990, and the Lifeline Program in 1997. Today, the welfare system includes 13 programs to cover living expenses and the Medicaid program for health care. More.
The Politics of Poverty and Welfare
Perhaps no issue in America is as contentious as poverty and welfare. The root cause is that America is split on the purpose of welfare. Is it to protect the poor while they are poor or move the poor to independent lives? More.
Presidents over the years have grappled with this same issue. Since the Great Depression, welfare has grown as the country prospered and wanted to help its less fortunate citizens. But underlying all of it was a desire to move people to lives of independence and not to trap them in welfare. FDR, LBJ, Kennedy, Johnson, and even Reagan had similar views on the subject. Here are five presidents in a single voice.
But no matter what the presidents did, the poverty level didn’t change much. This is the main reason for the controversy surrounding welfare. On the one hand, people believe a country as prosperous as America should not have people in poverty. On the other hand, the programs developed have not lowered it. This leads to concerns of dependency and design problems. But to other people, the idea that poverty is so stubborn proves why the programs are necessary. More.
The History of Welfare in One Graph
A full description of the graph and what it represents is here.
Individual Welfare Program Histories
A summary of the histories of the 14 welfare programs is shown below. More information is included on the specific individual program pages as linked in the sections below. Included there are citations to the source material. The history of welfare is really the history of the 14 programs.
History of Medicaid
Congress established Medicaid as Title 19 of the Social Security Act and signed into law by President Johnson on July 30, 1965. Medicare (health care for retired Americans) was created simultaneously, and both became vital elements of the Great Society programs. States had the option of adopting Medicaid, and it took 18 years before all states implemented the program. Arizona was the last state which came into the program in 1982.
In 1977, the Health Care Financing Administration (HCFA) was established to administer the Medicare and Medicaid programs under the Health and Human Services Administration (HHS). In 2001, the HCFA was renamed the Centers for Medicare and Medicaid Services (CMS), which administers the programs today.
President Obama signed The Patient Protection and Affordable Care Act (ACA) in 2010, which expanded Medicaid coverage to adults below 138% of the poverty threshold. The federal match rate for those newly eligible for the program was raised to 100% of the cost of care for three years and phased down through 2020 to 90%. In 2012, the Supreme Court ruled that states had the right to accept or decline the Medicaid expansion. As of October 2023, 39 states have adopted the Medicaid expansion.
Housing Assistance
The Housing Assistance Program started in the New Deal and expanded with the Housing and Urban Development Act of 1965. The Act established HUD as a cabinet-level agency and created the Section 23 Leased Housing Program by amending the U.S. Housing Act. This subsidy program became the predecessor to the modern program.
In the 1970s, when studies showed that the worst housing problem afflicting low-income people was no longer substandard housing but the high percentage of income spent on housing, Congress passed the Housing and Community Development Act of 1974. The Act further amended the U.S. Housing Act of 1937 to create the Section 8 Program. In the Section 8 Program, tenants pay 30 percent of their income for rent, with the balance paid by federal money.
The Housing and Community Act of 1977 established Urban Development Grants and continued assistance for the elderly and handicapped. The Stewart B. McKinney Homeless Assistance Act of 1987 helped communities to deal with homelessness.
Child Nutrition
Child Nutrition began with The National School Lunch Act in 1946, but the program was small until its expansion under the Great Society. The Child Nutrition Act of 1966 included a two-year pilot project called the School Breakfast Program. Legislation passed in 1968 extended the Breakfast Program and authorized funds for food service for some summer programs. President Richard Nixon expanded the program again in 1969, establishing free and reduced-price lunches for needy children.
TANF and Aid to Families with Dependent Children
The Aid to Dependent Children Program was formed as a part of the Social Security Act of 1935. It was expanded in 1961. The program was controversial because it focused on only one caretaker and not a married couple and births to unmarried mothers had risen from 14% in 1950 to 22% in 1960. The controversy over the unintended consequences of welfare has been with us ever since. The debate led to the program’s expansion to include two parents, and the name was changed to AFDC – Aid to Families with Dependent Children.
Over the next 30 years, AFDC underwent numerous changes to eligibility, benefit amounts, rules, and state coordination. During this time frame, states generally provided cash assistance to families with children, and the federal government paid half or more of all program costs.
AFDC came under more and more scrutiny as the number of welfare caseloads increased, as did the number of non-marital births. In 1992, as a presidential candidate, Bill Clinton pledged to “end welfare as we know it” by requiring families receiving welfare to work after two years. After much negotiation with Newt Gingrich and the Republican-led Congress, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 was passed and became law. It replaced AFDC with TANF (Temporary Assistance to Needy Families) and dramatically changed how the federal government and states determine eligibility and provide aid. States received block grants and had broad latitude to form their programs under federal guidelines. The guidelines included work requirements for most participants.
Welfare Reform Results
Between 1996 and 2000, welfare recipients plunged by 6.5 million, or 53%. Furthermore, the number of caseloads was lower in 2000 than at any time since 1969. Supporters of reform argued that the work requirement dropped caseloads, put people to work, decreased the number of people in poverty, and saved the government billions. More. Critics argue that reform hurt the poor because individuals could not find jobs, were forced out of the program, and sought help elsewhere, including other federal programs. AFDC and TANF have a long and storied past. However, it is a small part of today’s welfare landscape, representing less than 5% of the welfare system. More.
SNAP
The Food Stamp Act of 1964 was passed and became the precursor to the SNAP Program. The goal was to effectively use agricultural overproduction, improve nutrition among low-income individuals, and strengthen the agricultural economy.
Significant revisions were made to the program in the Food Stamp Act of 1977, including eliminating the requirement that participants purchase the stamps and establishing uniform national eligibility standards.
The Food Stamps Program experienced severe budget cuts under President Reagan in 1981. Funding was partially restored in 1988 and 1990. An additional program expansion occurred in the early 2000s and with the 2008 Farm Bill. Eventually, the stamps were replaced with EBT cards. The cards, modeled after credit or debit cards, transfer government benefits from a federal account to the SNAP retailer.
Refundable Tax Credits
Refundable Tax Credits include the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).
EITC began in 1975 under the Reagan Administration. The idea was to support low-income families that had “earned income” from working. It acted as a subsidy for low-paying jobs for families with children. It started very small and was expanded by tax legislation in 1978, 1984, 1986, 1990, 1993, 2001, and 2009. The expansion over the years has included the amount of credit per child and the overage of more children per family.
The Child Tax Credit began in 1997 with the Taxpayer Relief Act. The goal was to help families with children. Expansion occurred in 2001, 2009, 2010, 2013, and 2017. The program has received much attention, particularly during the Coronavirus economic shutdown. The Credit became a central part of the stimulus bill to distribute aid to American families. The provisions have now expired, but the program receives much attention in discussions of welfare expansion.
Pell Grants
The Higher Education Act of 1965 established the first federal college grant program. The Act was part of LBJ’s “Great Society” Program. The act began the Educational Opportunity Grant program, the precursor to the Pell Grant program. The grants provided up to $1,000 for needy students to attend college.
SSI
In 1972, President Nixon signed into law the Supplemental Security Income (SSI) program. The program pays cash assistance to the elderly and individuals with disabilities and enables states to link SSI and Medicaid eligibility for the elderly and individuals with disabilities. The definition of blind and elderly still generally exists today, although the definition of disabled has changed over the years.
SSI Disabled Definition
SSI describes the disabled as “any person unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or that has lasted or can be expected to last for a continuous period of at least 12 months.”
In 1994, the definition of disabled was amended for cases where drug addiction or alcoholism (DA&A) was a contributing factor material to the finding of disability. Such cases were limited to 36 benefit months, and treatment requirements were implemented. This was changed in 1996, whereby an individual is not considered disabled if DA&A is a contributing factor material to a finding of disability.
Head Start
The Office of Economic Opportunity’s Community Action Program launched Project Head Start summer school as an eight-week summer program in 1965. It was initially conceived as a catch-up program to teach low-income children what they needed to know to start kindergarten in a few weeks. Experience showed that six weeks of preschool couldn’t compensate for five years of poverty. The following year, Congress authorized it as a year-round program.
In 1969, Head Start was transferred to HHS by the Nixon Administration. The Head Start Act of 1981 expanded the program. In 1994, the Early Head Start program was established to serve children from birth to three years of age, reflecting evidence that these years are critical to children’s development.
WIC
The WIC Program began in 1972 with an amendment to the Child Nutrition Act of 1966. The legislation established a Special Supplemental Food Program for Women, Infants, and Children (WIC) as a 2-year pilot program. The program included children up to age four; non-breastfeeding postpartum women were excluded. WIC became a permanent program in 1975. In 1978 and again in 1981, the program was further refined to its present form.
Child Care
The Child Care Program began in 1990 under the Child Care and Development Block Grant Act. Three other federal childcare programs joined the block grant program in 1996.
Job Training
The forerunner of today’s employment and training legislation was the 1933 Wagner-Peyser Act which created a nationwide system of employment offices to match workers to jobs. The Economic Opportunity Act of 1964 created various new employment and job training programs, including the Job Corps. The programs expanded in 1971 and 1973 and shrunk in the 1980s under the Reagan Administration.
LIHEAP
Congress created the predecessor program to LIHEAP (Low Income Home Energy Assistance Program) in 1980 as a block grant program for the states. The goal was to help low-income homeowners pay for heating costs. The program was eventually expanded to include both the heating and cooling of a residential home.
Lifeline (Obama Phone)
The Lifeline Program began in 1985 but took its present form in 1997 under the Telecommunications Act of 1996. The act created the Universal Service Fund to support cell phone coverage and access. The creation of the Lifeline program was included in the act, which required Telecommunications Companies to provide low-income households with a monthly cell phone credit of $9.25. In 2016, the FCC expanded the Lifeline Program to include broadband internet services.
The History of Welfare – One Program After Another
The welfare system of the United States was created one program at a time starting in the 1930s. All the programs focus on low-income individuals and families, but qualification rules are unique per program. The system comprises 14 programs run by eight different federal agencies. The history of welfare includes very little coordination between programs and little thought about how the overall system interacts. Perhaps that is because what is missing in the history of welfare is a Department of Welfare.