TEXT ON SCREEN: June 14, 1994

ARCHIVAL (CBS, 6-14-94): REPORTER: How many years have you gone without a job? MOTHER: I cant think how long. Its been a long time.

NARRATION: By the mid-1990s, a drumbeat of media attention had convinced many Americans that people on welfare were either cheats

ARCHIVAL (CBS, 4-14-94): REPORTER: With wigs and disguises, she conned welfare workers into believing she was 12 different people.

NARRATION: or loafers.

ARCHIVAL (CBS, 11-30-93): MAN: Some people on welfare make more money than people that are working.

ARCHIVAL (ABC, 1-12-95): WOMAN: Why should we have to pay for you to sit at home, watch your soap operas?

NARRATION: The number of Americans receiving cash benefits had hit a record $14 million and Republicans wanted radical change.

ARCHIVAL (CBS, 11-16-94): REPRESENTATIVE NEWT GINGRICH: They create a culture of poverty and a culture of violence, which is destructive of this civilization.

NARRATION: So how did a Democrat become the one to do away with this once-sacred entitlement?


NARRATION: And 20 years later, how are the poor doing without it?


ARCHIVAL (STREAMLINE, PRESIDENT FRANKLIN D. ROOSEVELT SIGNING MEASURE, 8-14-35):ANNOUNCER: The President of the United States signed the measure, an act to safeguard children and to help working men and women forestall poverty and wont.

NARRATION: Created in the 1930s to help destitute widows with children, welfare had evolved into a $25-billion entitlement, serving a growing number of unwed mothers.

ARCHIVAL (ABC, 10-22-92): WOMAN: My mother had me when she was 16 and I had him when I was 16.

ARCHIVAL (ABC, 1-4-71): PRESIDENT RONALD REAGAN: Welfare has proliferated and grown into a leviathan of unsupportable dimensions.

NARRATION: Republicans had been trying to overhaul welfare for decades.

RON HASKINS (REPUBLICAN STAFF DIRECTOR, HOUSE WAYS AND MEANS COMMITTEE, 1995-2000): I think the Republican diagnosis was accurate, that there were way too many moms on welfare. If they would get jobs, it would be better for them, and better for their kids, and better for society.

NARRATION: But in a political twist, it was a Democrat in 1992 who grabbed onto the issue and made it his own.

ARCHIVAL (BILL CLINTON/AL GORE CAMPAIGN COMMERCIAL, 1992): Theyre a new generation of Democrats, Bill Clinton and Al Gore and they dont think the way the old Democratic Party did.

ARCHIVAL (C-SPAN, 10-23-91):PRESIDENT BILL CLINTON: Welfare should be a second chance not a way of life.

NARRATION: Bill Clinton proposed putting time limits on cash assistance and requiring recipients to go to work, an approach that appealed to conservative voters having doubts about the young governor from Arkansas.

PETER EDELMAN (ASSISTANT SECRETARY OF HEALTH, CLINTON ADMINISTRATION): During the New Hampshire primary, he was in trouble. He had maybe evaded the draft, a little bit. Maybe he had used marijuana, but maybe he didnt inhale. There was talk of womanizing, Jennifer Flowers. So yes, welfare was very important to his being nominated.

ARCHIVAL (WILLIAM J. CLINTON PRESIDENTIAL LIBRARY, STATE OF THE UNION SPEECH, 2-17-93): PRESIDENT BILL CLINTON: No one wants to change the welfare system as badly as those who are trapped in it.

NARRATION: Once in office, Clintons focus was on creating jobs for welfare mothers. But Republicans sought more punitive measures.

ARCHIVAL (CONUS LIBRARY ARCHIVE, 11-22-95): NEWT GINGRICH: Lets talk about what the welfare state has created. Lets talk about the moral decay.

NARRATION: To curb soaring out-of-wedlock births, they proposed cutting off welfare to unwed mothers who continued to have children.

ARCHIVAL (C-SPAN, 3-25-95):REPRESENTATIVE JOHN MICA: Dont feed the alligators.

NARRATION: In a bitter debate, a Republican congressman compared welfare recipients to animals living off handouts, while a Democrat invoked Nazi Germany.

ARCHIVAL (C-SPAN, 3-21-95):REPRESENTATIVE JOHN LEWIS: This Republican proposal certainly isnt the Holocaust, but Im concerned. Theyre coming for our children. Theyre coming for the poor.

NARRATION: Clinton vetoed two Republican bills as too harsh. But up for re-election in 1996, he signed a third. Welfare recipients would have to find work, or else.

ARCHIVAL (ABC, 1-12-95): REPORTER: After two consecutive years on welfare or five years over a lifetime, benefits can be cut off, whether or not the recipient has a job.

NARRATION: Ron Haskins, who helped draft the Republican bill, says it was a revolution in policy. Americans, no matter how poor, would no longer be guaranteed cash help from the government.

RON HASKINS: Think of a Democratic president that would sign a welfare reform bill like that. President Gore wouldnt have done it. Kennedys would never have done it. There are many Republicans who wouldnt have done a bill as tough as the one that was passed in 1996.

ARCHIVAL (CBS, 8-22-96): DEBBIE WEINSTEIN (CHILDRENS DEFENSE FUND): Theres going to be a million children thrust into poverty by this bill.

NARRATION: Peter Edelman and other Clinton administration officials resigned in protest.

PETER EDELMAN: Nobody has any legal right to get assistance, so therefore youre free to turn people away. I was always clear that that spelled big, big, big trouble.

NARRATION: The new law was an experiment, giving individual states vast new powers to decide how to spend welfare funds, and who could receive them. What happened next shocked nearly everyone.

ARCHIVAL (NBC, 12-4-99): JOHN SEIGENTHALER: The White House announced today that federal efforts to reform welfare have worked even better than expected.

NARRATION: With a booming economy and plentiful jobs, welfare recipients left the rolls in droves, as many as 200,000 a month.

RON HASKINS:A lot of mothers went to work. 60% of them, roughly, got jobs. They earned about eight or nine bucks an hour. Child poverty declined to its lowest level ever, for kids in female-headed families. I mean, thats an astounding change.

ARCHIVAL (NBC, 12-4-99): REPORTER: Waxler took part in a welfare-to-work training program after being on public assistance for nearly two years. Now she supports herself.

NARRATION: The media generally portrayed the new program, called Temporary Assistance for Needy Families, or TANF, as a success. By 2000, welfare caseloads had sunk to their lowest level in 30 years.

ARCHIVAL (ABC, 9-4-97): GOVERNOR TOMMY THOMPSON: Any time you allow the states to have the opportunity to set up programs that are actually going to work in their states, youre going to be much better off.

NARRATION: But that narrative was about to change.

ARCHIVAL (CBS, 10-15-03): JIM AXELROD: Welfare reform was conceived and implemented in the mid to late 90s when the economy was booming. But that was then. This? This is a very different now.

NARRATION: With the new millennium came an economic downturn and, in 2008, the Great Recession.

ARCHIVAL (NBC, 12-5-08): LESTER HOLT: American workers were laid off the job last month in numbers not seen in over three decades.

NARRATION: To make matters worse, state budgets were in free fall, and the hunt was on for new revenues. Jodi Liggett worked in the Arizona state government when TANF began.

JODI LIGGETT (SENIOR POLICY ADVISOR, ARIZONA GOVERNORS OFFICE, 1997-3003): In a state like Arizona, were not going to raise taxes on folks if at all possible. And there is this big fat bag of money with TANF written on the outside of it. The temptation is just too great.

NARRATION: Using their new authority under the welfare law, states siphoned off billions in TANF money to pay for everything from pre-K programs to college scholarships.

ARCHIVAL (KNXV-TV, 9-14-15): REPORTER: The numbers are staggering.

NARRATION: In Arizona, it was foster care.

ARCHIVAL (KNXV-TV, 9-14-15): REPORTER: Nearly 18,000 kids are in the state system.

NARRATION: Arizona moved 75% of its welfare money into child protection and other services, leaving little for job training, child care and cash assistance for the poor, the core purposes of TANF.

JODY LIGGETT: The flexibility in TANF and the things that states did were absolutely perfectly legal. But if youre spending less than 20 percent of the poverty program on poverty, that really says something about your values.

CLARENCE CARTER (FORMER DIRECTOR, ARIZONA DEPARTMENT OF ECONOMIC SECURITY): Its not as if those dollars were removed to build roads and bridges. They were used to support another important function of the safety netand thats strengthening families. So the monies were not hijacked.

NARRATION: But having spent the money elsewhere, states came up short when demand for welfare spiked during the economic crash. So they changed the rules.

LADONNA PAVETTI (CENTER ON BUDGET AND POLICY PRIORITIES): We saw states creating more barriers at the front end to make it harder for families to actually get on assistance. We saw states cutting time limits during a time when there was no work available. Not because people didnt need assistance, but because they couldnt get the money back that they had put into other things.

NARRATION: Some states also reduced benefits. Last year, Starsha West, a 26-year old single mother from Phoenix, applied for TANF for the second time in her young life. Her monthly payment: $237.

STARSHA WEST: At the time, I needed it. Like, me and my kids father had split, so at the time I did need it. I wasnt working. I needed to take care of my children.

NARRATION: West also applied for food stamps and began looking for work. She and her children found housing through a local homeless shelter.

STARSHA WEST: Im grateful for me and my children to have a roof over our head. I see a lot of homeless people, a lot of homeless women with children, so its kinda hard.

NARRATION: Shes lucky to have gotten help. Despite having the third highest poverty rate in the nation, Arizona has moved 27,000 people off welfare since the recession, whether they had a job or not.

CLARENCE CARTER: There is an overarching mindset that public assistance should be temporary, that it should be reserved for the most needy and that we should be about helping people get on their way.

NARRATION: The effect of that mindset, nationally, is that welfare is now a shadow of its former self.

20 years ago, 68 out of every 100 poor families in the U.S. received cash assistance. Today, that number is 23. But in conservative states like Arizona and Indiana, its 8, in Texas 5, Louisiana 4.

PETER EDELMAN: Cash assistance is dead, really dead, in more than half of the states in the country. So the consequence is big increases in extreme poverty, deep poverty, incomes that are below half the poverty line.

NARRATION: Today, 46 million Americans live in poverty, nearly half in deep poverty, meaning incomes of around $10,000 a year or less. With cash assistance waning, other government entitlements like food stamps and disability pensions have seen record enrollments. Now, theyre under attack as the new welfare.

ARCHIVAL (FOX, 3-29-14): ANCHOR: The United States of America or the United States of Entitlement?

ARCHIVAL (FOX, 3-14-14): ANCHOR: Taxpayer dollars to buy stuff at an adult store called Kiss My Lingerie.

NARRATION: 20 years ago, Bill Clinton had high hopes for welfare reform.

ARCHIVAL(C-SPAN, 8-22-96):PRESIDENT BILL CLINTON: After I sign my name to this bill, welfare will no longer be a political issue.

NARRATION: What does he think now?

ARCHIVAL (C-SPAN 4-30-14):PRESIDENT BILL CLINTON: I did not foresee that. I didnt foresee this Tea Party wave that would believe one more time that poor people were the problem in America.

NARRATION: The former president and his wife, candidate Hillary Clinton say his landmark law could use improvement, and admit that too many who need assistance arent getting it.

ARCHIVAL (C-SPAN, 4-30-14):PRESIDENT BILL CLINTON: It did far more good than harm, but now given the changed climate and the aftermath of the crash, the poorest welfare families, about 15% of the total, are worse off. And we should do something for them. And we oughta all of us who supported it should admit that.

NARRATION: But many conservatives still celebrate welfare reform for ending dependency and cutting rolls from 14 million to four. Now they want to do to food stamps what was done to welfare, hand over the reins to the states. Ron Haskins says welfare reform brought needed change, but is cautious about giving states too much control of other entitlements.

RON HASKINS: I have to say that what is happening with welfare reform, has caused me to reevaluate my confidence that the states will do the right thing. Because we have states that are very conservative, and theyre going to spend the money where they think it should be spent, and not where you think it should be spent.

LADONNA PAVETTI: I would characterize TANF 20 years in as a bold experiment that failed. Its this expectation that states will do a better job. But a better job doesnt mean increasing the number of people who are in deep poverty, which is what we saw. I mean, thats what states did.

NARRATION: As for Starsha West, she is now off welfare and food stamps but, like many former welfare recipients, she has joined the ranks of the working poor. Her job at a daycare center pays $9 an hour, leaving her family still below the poverty line.

STARSHA WEST: Im happy. But if push come to shove, and I had to result in, you know, turning back, then thats just something that I have to do.

NARRATION: But she may not be able to turn back to welfare. In July, Arizona will impose a new time limit on benefits of one year, the shortest in the nation. That means roughly 1,600 families could lose cash assistance, including 2,700 children.