Recent scandals in Minnesota have spotlighted billions of dollars lost to welfare fraud across multiple food, health, and childcare programs. Yet even when not being actively ripped off, those programs can still unintentionally yield negative outcomes, such as when they discourage work and keep families trapped in government programs for too long. That’s the message of a new Senate bill introduced this week by Sen. John Husted (R-OH) and matching House legislation offered by Rep. Blake Moore (R-UT). Their “Upward Mobility Act” encourages states to test reforms addressing benefit cliffs and other impediments to recipients’ working and earning more.

We argued in favor of Congressional action to address benefit cliffs in a December 2025 report with several co-authors, titled “Stranded by the Safety Net: How to Fix the Benefit Cliff Problem.” Published by the American Enterprise Institute and the Alliance for Opportunity, the report describes how and why benefit cliffs arise, and more importantly, identifies fiscally responsible ways to fix them. The Husted/Moore bill is consistent with many of our views.

Benefit cliffs stem from a fundamental, and necessary, feature of welfare programs: assistance declines as work and earnings rise. However, problems occur when program rules, such as benefit amounts and phase out rates, do not align. As a result, getting a raise, accepting a promotion, or working more hours can trigger an abrupt reduction or complete loss of benefits – that is, falling off a benefit cliff. In some instances, the loss in benefits can exceed the additional earnings, leaving the household financially worse off than before.

This is how many of our safety net programs operate today because of multiple misalignments. And while not every benefit recipient faces a cliff at all times, because of the enormous scale of welfare programs, millions are at risk of hitting them, especially when individuals collect multiple benefits and begin working. For some families, the stakes can be enormous. In Illinois, a 2022 study from the University of Chicago and Atlanta Fed showed a mere $1,000 annual wage increase, from $54,000 to $55,000, would result in a family losing over $25,000 in childcare benefits. What rational parent would forgo almost half of their earnings in lost childcare benefits in order to work a little more?

As we argued in our report, the fragmented and poorly coordinated federal safety net is the crux of the problem. Program rules—including benefit levels and phase out rates—fail to align across programs, discouraging individuals from earning more. We recommended that as an immediate first step, the federal government give states greater latitude to test solutions, such as better aligning program rules and ensuring that benefits phase out predictably and appropriately.

The Husted/Moore bill reflects a similar approach, offering states increased flexibility across federal welfare programs to test ways to help more families work and earn their way off benefits. Ultimately, the solution to benefit cliffs will require changes to federal law, but the bill takes the essential first step of allowing states to test ways to address the problem. These efforts can inform future comprehensive reforms, improving the broader federal response in all states later.

This approach has a strong track record. First, such “waiver” approaches have worked before, namely when states used waivers to test multiple work requirement, time limit, and other changes to fix a broken cash welfare system in the 1990s, culminating in the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 – also known as “welfare reform.” (Similar “superwaiver” proposals were introduced, but not enacted, after those reforms.) Second, it’s fiscally responsible, with a bill summary suggesting the approach is “deficit neutral” as funding is “capped at the prior year’s spending levels” across the programs in question.

Other proposals to address benefit cliffs typically expand eligibility higher up the income scale to allow for a more gradual phase out of benefits. But these proposals ignore the problem that occurs when households receive multiple benefits, and requires substantial new investments. With Washington already operating $2 trillion annual deficits including $1 trillion in interest payments alone, it is essential to consider budget neutral solutions. Scandals in Minnesota have renewed interest in reforming welfare to prevent runaway fraud. That’s critical, but also insufficient. The Husted/Moore bill reminds that safety net programs are essential, but reforms are needed to increase their effectiveness. This includes ensuring these programs help low-income Americans navigate their way up the economic ladder, by reducing current work disincentives to the contrary.