HHS News Release

HHS Secretary Donna E. Shalala today called President Clinton's welfare reform proposal "a straight-forward and radical end to the status quo," and said it would fundamentally change the welfare system into a short-term transitional program leading to work.

"Time limits will ensure that anyone who can work must work -- in the private sector if possible, in a temporary, subsidized job if necessary," Shalala said in testimony before the Senate Finance Committee. Under the President's plan, if the two-year time limit is reached, "welfare ends and people are expected to work."

Shalala said the proposal would move almost 1 million persons to work situations or completely off welfare in the year 2000.

The two-year limit would initially be targeted at younger women born after 1971, the Secretary said. Under this provision, the new time limit would be phased in, affecting about a third of recipients initially, half by the year 2000, and two-thirds by the year 2004.

The phase-in allows states time to build effective new work programs, Shalala said. The number of persons in subsidized jobs would grow from 15,000 today to at least 394,000 by the year 2000.

In addition, she noted, states are free to move more quickly in implementing the two-year limit. "States will have the option to define the phased-in group more broadly, allowing them to apply time limits and other new rules to a larger percentage of the caseload if they wish," Shalala said in prepared testimony.

Higher federal matching rates would help states build their expanded work programs, and the higher match would also be available to any state which opted to expand the number of recipients subject to time-limited welfare.

The Secretary spoke at the first Congressional committee hearing to examine the administration's Work and Responsibility Act of 1994.

She told the committee that "from day one, the new system will focus on making young mothers self-sufficient." Each recipient will design an employability plan -- a work and training agreement -- designed to prepare and move her into employment as quickly as possible. Many AFDC recipients would move off welfare well before two years, she noted.

"If there is one thing that stands out the most from our nationwide hearings on this issue, it is that our current system doesn't work, and nobody likes it -- least of all the people who depend most on it for help, welfare recipients themselves," Shalala said.

"The Work and Responsibility Act of 1994 will fundamentally change this country's approach to helping young parents move from dependence to independence."

Another key element of the President's plan is preventing teen pregnancy and out-of-wedlock births, she said.

Shalala said the first step in welfare reform had been accomplished with passage last year of the Earned Income Tax Credit, which helps "make work pay," making it more worthwhile for welfare recipients to take lower-paying jobs.

A second crucial step, she said, would be passage of health care reform providing for health coverage for all Americans. Some 7 to 15 percent of those currently on welfare remain there primarily to qualify for health coverage under Medicaid, studies suggest.

"When Congress passes health care reform, our hope is that this perverse incentive to stay on welfare will end," she said.

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Contact: HHS Press Office (202) 690-6343