Welfare reforms are changes in the operation of a given welfare system, with the goals of reducing the number of individuals dependent on government assistance, keeping the welfare systems affordable, and assisting recipients to become self-sufficient. Classical liberals and conservatives generally argue that welfare and other tax-funded services reduce incentives to work, exacerbate the free-rider problem, and intensify poverty. On the other hand, socialists generally criticize welfare reform because it usually minimizes the public safety net and strengthens the capitalist economic system. Welfare reform is constantly debated because of the varying opinions on the government's determined balance of providing guaranteed welfare benefits and promoting self-sufficiency.
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Within the last two decades, welfare systems have been under extreme scrutiny around the world. Demographic changes like the post-war "baby boom" followed by the subsequent "baby bust", coupled with economic shifts such as the 1970 oil shocks, led to aging populations and a dwindling working force. In turn, there became an increased dependency on social welfare systems, which inevitably brought up the issue of welfare reform. U.S systems primarily focused on reducing poor single-parents need for welfare, through employment incentives. The U.K focused primarily on reducing general unemployment through the New Deal. The Netherlands emphasized reforming disability programs, and Latin America focused primarily on pension reforms.
German Chancellor Otto von Bismarck was one political leader who attempted to put an end to socialism by proposing government healthcare. He approved the 1883 Health Insurance Act which was the first to introduce compulsory government-monitored health insurance. The German legislation ensured contributory retirement and disability benefits. Participation became mandatory. Many historians trace the beginnings of contemporary welfare in Europe and America to Bismarck's Health Insurance law. However, this welfare program intended for the working class was practiced by the Roman Empire, China's Song Dynasty, and the 7th Century Islamic System. In the United States, the Great Depression and 1929 crash of the stock market contributed significantly to the formation of the concept of welfare as many Americans struggled economically during those times.
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President Lyndon B. Johnson declared his administration's War on Poverty in 1964 as the poverty rate increased by 19%. He funded welfare programs like Social Security, Food Stamps, Job Corps, and Head Start. The War on Poverty included programs such as Medicare and Medicaid. It provided the first direct federal assistance for school districts, milestone environmental law, urban renewal, civil rights, subsidy for bilingual education, and national donations for arts and humanities.
President Richard Nixon's administration proposed the 1969 Family Assistance Plan, which would require all welfare recipients, excluding mothers with children under the age of three, to work. This program stopped in 1972 and liberals criticized the plan for providing too little support, and requiring too strict of work regulations. Instead of welfare reforms, the government ended up providing major expansions to welfare programs during this presidency.
In 1981, President Ronald Reagan cut Aid to Families with Dependent Children (AFDC) spending and gave states the option of requiring welfare recipients to participate in workfare programs. Charles Murray's book Losing Ground: American Social Policy, 1950–1980 (1984) argued that the Welfare state actually harms the poor, especially single-parent families, by making them increasingly dependent on the government, and discouraging them from working. Murray proposed that current welfare programs be replaced by short-term local programs.
On August 22, 1996, President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). Clinton's reform aligned closely with Charles Murray. In his 1992 campaign Clinton promised to “end welfare as we have come to know it.” Staying true to his promise, he instated one of the most well-known welfare reforms in US History. PRWORA instituted the Temporary Assistance for Needy Families program (TANF) to replace the AFDC, the former welfare program providing cash to poor families since 1935. TANF instated work restrictions in order for recipients to qualify for aid. TANF also shifted welfare to the state governments, where each state was given an allocation of money to be used for this program, as long as there existed work requirements, and a five-year limit for families on welfare. The general premise behind this reform was that aid should not be a one-way handout.
State governments have established and currently administer welfare programs for the welfare of the impoverished but operating in accordance with guidelines of the federal government. Funds for these programs are remitted to states in the form of block grants giving them more flexibility in making decisions on how money will be allocated among different welfare programs.
In recent years reform of the welfare system in Britain began with the introduction of the New Deal programme  introduced by the Labour government in 1997. The aim of this programme was to increase employment through requiring that recipients make serious efforts to seek employment. The Labour Party also introduced a system of tax credits for low-income workers.
Welfare Reform Act 2007
The Welfare Reform Act 2007 provides for "an employment and support allowance, a contributory allowance, [and] an income-based allowance.". The objectives of the Welfare Reform Act of 2007 were to increase the employment rate to 80% from 75%, to assist 300,000 single parents find employment, to increase the number of workers over 50 by 1 million, and to reduce the number of people claiming incapacity benefits by 2 million
Welfare Reform Act 2009
This welfare reform proposed an increase of personal responsibility within the welfare system. The reform eliminated Income support, and allocated funds over to the Jobseeker's allowance, to encourage employment. It also encouraged increased parental responsibility by amending child support laws, and requiring births be registered jointly by both parents.
Welfare Reform Act 2012
This welfare reform proposed changes to the Housing Benefit, which reduced the benefit paid to recipients depending on the size of their living space. This act got the nickname of the “Bedroom Tax.” from the media. It was stated that similarly to other welfare reforms, this act would reduce welfare dependency.
Beginning in the mid-1970s, a deficit in the social insurance program began to appear. The deficit saw peaks at 27.75% of the social insurance budget in 1992. This led to a major push by the government to cut back spending in the welfare program. By the end of the 1990s the deficit had been almost completely eradicated. The often large deficits that the program has endured has led to a tremendous amount of opposition to the program as it stands.
During the 2015–2018 Brazilian economic crisis, there has been both economic and political turmoil. President Dilma Rousseff, who was later impeached and replaced by President Michel Temer, strived to expand the social welfare program Bolsa Família instated by her predecessor Luiz Inácio Lula da Silva. As a social-democrat, Rousseff pledged that "Brazil will continue to grow, with social inclusion and mobility." When Michel Temer took office, to cope with the severe economic recession, he proposed social welfare reforms to change labor rules and the social security pension system. Temer's plan included limiting pension benefits and raising the retirement age in order to save money and fix the economy. Additionally, under his reform, companies have greater power to require longer work days and use part-time workers. In response to this reform, labor unions, rural workers, and government employees held protests all over Brazil. The vote to approve the pension reform was first suspended until February 2018, and now has been further postponed as a campaign issue in this year's election. Temer's critics believe that the reason for the postponed reform is its vast public disapproval.
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