Improving TANF’s countercyclicality through increased basic assistance and subsidized jobs

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The Problem

The Temporary Assistance for Needy Families program (TANF) suffers from widely recognized and profound structural flaws—most notably, its inability to expand and contract with need. In addition, excessive flexibility allowed for types of state TANF spending has led states to use TANF funds in ways that are not well-targeted to support the basic living standards of families with the greatest need.

The Proposal

Indivar Dutta-Gupta proposes that policymakers immediately establish a TANF Community and Family Stabilization Program to meet families’ basic needs while also acting as an automatic economic stabilizer. As an intermediate step to broader TANF reform, this program would offer a generous and open-ended match to state provision of two specific types of support.

  1. Basic assistance: Cash and vouchers, including emergency assistance, to meet the basic needs of families during recessions. This assistance will stimulate the economy, reduce immediate hardship, and likely lead to longer-term benefits for affected children.
  2. Subsidized jobs with wraparound support services: Programs, administered throughout the business cycle, that offset the cost of employers hiring workers who likely would have not been otherwise hired (for positions that likely would not have otherwise existed). These programs would also partially match state spending on related job preparation and training as well as on wraparound support services.