For decades, Republican welfare policy focused on tying benefits to work. The 1996 welfare reform made work central to cash assistance, and the 2025 One Big Beautiful Bill Act extended similar rules to Medicaid and tightened them for food stamps. The premise was that if Washington sends people checks, attaching a work requirement limits the damage unconditional transfers can do to employment, marriage, and child outcomes.

On September 5, the New York Times reported that the Trump administration is preparing to extend federal childcare subsidies to stay-at-home parents. The proposal turns staying home to provide childcare into a subsidized activity.

Adding stay-at-home parents to the eligibility list for federal child care subsidies would not require additional funding. It would simply reshuffle who receives subsidies. If every state implemented the administration’s plan and prioritized the newly eligible parents, our simulation estimates that roughly 195,000 children’s subsidies would move from single-parent households that qualify through work to households that qualify because one member is not working. 

This scenario is politically and legally unlikely. But it illustrates how the proposal treats federal welfare as a tool for winning the culture war without regard for the broader economic damage caused by the policy change. 

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Thirty years ago last month, Congress replaced the open-ended Aid to Families with Dependent Children (AFDC) entitlement, the largest state-run, federally funded cash welfare program, with the Temporary Assistance for Needy Families (TANF) block grant.

This imposed stricter fiscal discipline on states running TANF, but Congress failed to extend similar restraints to other programs. Consequently, many states circumvented TANF’s budget constraints by shifting spending and enrollment to other, still open-ended entitlements.

Following the 1996 welfare reforms, states moved some recipients off TANF and onto the Supplemental Security Income (SSI) program. Today, state legislators are shifting costs onto federal taxpayers by exploiting eligibility loopholes in the Supplemental Nutrition Assistance Program (SNAP) and exploiting Medicaid’s waiver system to finance initiatives that are at best tangential to the delivery of health care services.

To reverse this trend, Congress should expand the 1996 TANF reforms to other welfare programs, block-grant Medicaid and SNAP to align policy choices with their associated costs, and limit federal taxpayer exposure.

According to the 2026 Social Security Trustees Report, the Social Security Trust Fund is projected to hit zero by the end of 2032. Under current law, that means a 22 percent benefit cut for all existing and future beneficiaries. 

It sounds horrific. Yet this outcome might be the most realistic option available.

Social Security collects taxes from the working-age population and pays benefits to the “retired” population. The taxes flow into, and the benefits out of, a trust fund. Thus, the system’s financial condition depends, under existing law, on the status of this trust fund.

Medicaid is one of the largest and fastest-growing items in the federal budget and is highly vulnerable to waste, fraud, and abuse.

We took that problem to Capitol Hill, hosting a panel featuring Michael F. Cannon of the Cato Institute, Chris Pope of the Manhattan Institute, and Brian Blase of the Paragon Health Institute to discuss Medicaid’s structural weaknesses and how to address them.

Every government benefit has a recipient, but it also has a payer. Politics tends to encourage us to focus on the first and forget the second.

Many hardships are visible, immediate, and emotionally compelling. They provide a rationale for Congress to pass a law, for an agency to distribute money, and for elected officials to congratulate themselves on their compassion. But almost no one asks the question that the pioneering American sociologist and political economist William Graham Sumner believed mattered most: Who provided the assistance and at what cost?

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Congress is vastly overspending, and federal debt is rising by $2 trillion a year. Without major spending reforms, the government is headed toward a financial crisis. But it is also true that even if the federal budget were balanced, many spending programs would continue undermining the economy because their costs outweigh their benefits. 

Such negative-value spending is the focus of my recent “Leaky Bucket” study with Ryan Bourne. We argue that the federal budget is riddled with wasteful “leaks.” The government scoops up trillions of dollars into its budget bucket, but many of them spill out due to inefficiencies and policy mistakes. The Trump administration has focused on reducing fraud, but that is only one type of leak from the federal budget bucket.

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