That provision was designed to shoo people off the rolls, said Mitch Roob, who implemented the changes as head of Indiana's social-services agency.
"It was so unpleasant," Roob said in an interview, "that people would think, 'I'm just going to get a job instead.'"
Daniels tightened in other areas, too. Parents now have to prove they are seeking child support before getting welfare. If the other parent fails to pay $2,000 in child support for more than three months, his or her drivers license is suspended.
CASH AID DRIES UP
Since Indiana began revamping its system, the share of poor Indianans getting cash welfare has plummeted, even as the number of households in poverty grew by more than half.
In 1999, an average of 38,000 families per month received basic cash assistance from the TANF program, according to Indiana's Family and Social Services Administration. By 2011, just 22,400 did - a 41 percent decrease. The average monthly amount each family gets also dropped, from $253 to $205.
Overall federal and state spending on TANF in Indiana has actually increased 10 percent since 1998, according to figures from the U.S. Department of Health and Human Services. But only a fraction now goes to cash assistance - $72 million out of $292 million. That is down 50 percent from 1998. The rest goes toward intangible programs like job training or education about marriage and pregnancy-prevention.
It's a national trend: America has slashed the number of people on cash welfare by two-thirds since 1996, to 1.4 percent of the populace.
Housing aid also hasn't kept up with the growth in poverty. From 1999 to 2011, the number of Hoosier households in poverty grew by more than half. But in 2011, the number receiving either public housing or federal rent subsidies was just 5 percent higher than a decade earlier. Today, just 16 percent of poor households get federal housing help.
The number of American adults on the most expensive program for the poor, Medicaid, has tripled since 1990. The average amount spent per working-age adult has fallen 12 percent, even as medical costs have soared. States have a say over who is eligible. In Indiana, working parents have to earn less than 24 percent of the federal poverty level to qualify - currently, no more than $5,532 a year for a family of four. That's the strictest level in the country, along with Alabama. Indiana is one of 41 states that don't cover childless adults.
The food-stamp program also has expanded dramatically, both nationally and in Indiana. In 1999, only half of poor Indiana households got food stamps. By 2011, just under 90 percent of a much-bigger number of impoverished households were covered. Each on average received $300 a month, an amount unchanged since 1999 when adjusted for inflation.
Another growing program is the Earned Income Tax Credit, which increased nearly sixfold amid the welfare-to-work overhauls. But it's a payment that comes just once a year. And it's meant to top up the incomes of people with jobs, who make up to twice the poverty level. People without earned income don't qualify.
As lean as the times are, Americans are conflicted about expanding poverty assistance - even poor Americans.
On a recent Thursday afternoon, Tanya Jones was among a hundred men, women and children waiting for free groceries at a cavernous former printing plant in Indianapolis that's now one of the largest food pantries in the Midwest. Asked what she would change about public assistance, she said the government should stop benefits from going to those who don't deserve them.
"You got all these people who can work, who won't," said Jones, a 28-year-old mother of two, whose $12.75-an-hour job as a caterer isn't enough to feed herself, her two children and her mother. "I feel the help should be there for the people who need it, not the people who don't want to work."
That ambivalence about helping the poor is widespread. A Reuters/Ipsos poll of Americans in October and November found that 52 percent of respondents said the government isn't doing enough to help the poor. Yet 40 percent said that most people who receive aid don't deserve it, a follow-up survey found.
Respondents overwhelmingly opposed aiding non-disabled adults. Sixty-six percent of respondents felt the elderly deserve cash assistance, and 40 percent said children do. Just 14 percent supported cash help for able-bodied poor adults without dependent kids. (Because these polls are collected online, accuracy is measured using a credibility interval. For these questions, the interval was 1 percent to 1.5 percent.)
Those values are reflected in poverty policy. In a 2011 paper, economists Yonatan Ben-Shalom, Robert Moffitt and John Karl Scholz found that families in which no one is continuously working and which have no elderly or disabled members are the "most underserved" by U.S. antipoverty programs of any group.
Their poverty rate, the authors calculated, was 67 percent after factoring in government aid. For the elderly, it was 9 percent.
That's because the elderly enjoy the two largest federal entitlement programs, Social Security pensions and Medicare health insurance. These are aimed at all seniors, not just poor ones. The two spent a combined $1.2 trillion last year - more than the entire federal budget aimed specifically at the poor.
Suspicion of the able-bodied poor runs deep. Policy makers for centuries have gone through phases in which they view welfare through the concept of the "deserving and undeserving poor." Sheila Suess Kennedy, a professor of law and public policy at Indiana University, said the concept harkens back to 15th-century England, where statutes banned charity for people who appeared able to work. They were called "sturdy beggars."