To amend title IV of the Social Security Act to eliminate disincentives in the program of aid to families with dependent children that prevent recipients of such aid from working toward self-sufficiency.

Summary: Amends part A (Aid to Families with Dependent Children) (AFDC) of title IV of the Social Security Act (SSA) to:  (1) provide for continuation of Medicaid (SSA title XIX) benefits for 36 months for families who become ineligible for AFDC due to excessive income; (2) increase the limit on resources used in determining a family's eligibility for AFDC; (3) require that the State ensure that caseworkers are able to properly advise AFDC recipients of the use of microenterprises to attain self-sufficiency and encourage interested recipients to participate in a program designed to assist them in starting one; (4) provide for the inclusion of microenterprise training and activities in the JOBS program; (5) require that performance standards be adjusted to reflect the time required to establish microenterprises; (6) revise provisions concerning the earned income of children disregarded in determining the family's need for AFDC; (7) provide for suspension of AFDC where a child of a family on AFDC is not regularly attending required school; (8) reduce AFDC in cases where the family member claiming it is a high school dropout; (9) require States to guarantee child care to parents who are high school drop-outs during the period they are completing high school or the equivalent; and (10) make AFDC available to certain families with dependent children whose parents attend school or participate in the JOBS program. 
Requires the Secretary of Health and Human Services to identify administrative barriers to microenterprise development by AFDC recipients. 
Amends the Internal Revenue Code to provide for the collection of overdue child support through a levy on the wages of the individual owing it.

SECTION. 1. WORK INCENTIVES.

    (a) Medicaid Benefits Continued for 36 Months for Families Becoming 
Ineligible for AFDC Due to Excessive Income.--Section 402(a) of the 
Social Security Act (42 U.S.C. 602(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (44);
            (2) by striking the period at the end of paragraph (45) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (45) the following:
            ``(46) if a family becomes ineligible for aid under the 
        State plan under this part due to excessive income, the family 
        shall remain eligible for medical assistance under the State 
        plan under title XIX for the 36-month period beginning with 
        most recent month in which the family becomes so ineligible.''.
    (b) Increase in Resource Limit.--Section 402(a)(7)(B) of such Act 
(42 U.S.C. 602(a)(7)(B)) is amended by striking ``$1,000 or such lower 
amount as the State may determine'' and inserting ``$10,000''.
    (c) Encouragement of Microenterprises.--
            (1) State plan requirement.--Section 402(a) of the Social 
        Security Act (42 U.S.C. 602(a)), as amended by subsection (a) 
        of this section, is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (45);
                    (B) by striking the period at the end of paragraph 
                (46) and inserting ``; and''; and
                    (C) by inserting after paragraph (46) the 
                following:
            ``(47) must ensure that caseworkers are able to properly 
        advise recipients of aid under the State plan of the option of 
        microenterprise as a legitimate route towards self-sufficiency, 
        and that caseworkers encourage recipients of such aid who are 
        interested in starting a microenterprise to participate in a 
        program designed to assist them in such effort.''.
            (2) Definitions.--Section 406 of such Act (42 U.S.C. 606) 
        is amended by adding at the end the following:
    ``(i)(1) The term `microenterprise' means a commercial enterprise 
which has 5 or fewer employees, 1 or more of whom owns the enterprise.
    ``(2) The term `net profits' means, with respect to a 
microenterprise, the gross receipts of the business, minus--
            ``(A) amounts paid as principal or interest on a loan to 
        the microenterprise;
            ``(B) transportation expenses;
            ``(C) inventory costs;
            ``(D) amounts expended to purchase capital equipment;
            ``(E) cash retained by the microenterprise for future use 
        by the business;
            ``(F) taxes paid by reason of the business;
            ``(G) if the business is covered under a policy of 
        insurance against loss--
                    ``(i) the premiums paid for such insurance; and
                    ``(ii) the losses incurred by the business that are 
                not reimbursed by the insurer solely by reason of the 
                existence of a deductible with respect to the insurance 
                policy;
            ``(H) the reasonable costs of obtaining 1 motor vehicle 
        necessary for the conduct of the business; and
            ``(I) the other expenses of the business.''.
            (3) Inclusion of microenterprise training and activities in 
        the jobs program.--
                    (A) In general.--Section 482(d)(1) of such Act (42 
                U.S.C. 682(d)(1)) is amended adding at the end the 
                following:
    ``(C) The services and activities referred to in subparagraph (A)--
            ``(i) in the case that at least 3 percent of the adult 
        recipients of aid under the State plan approved under part A 
        (as of the close of the immediately preceding fiscal year) 
        elect to participate in microenterprise activities, shall 
        include programs described in paragraph (4); or
            ``(ii) in the case that not more than 3 percent of the 
        adult recipients of such aid elect to participate in 
        microenterprise activities, may include programs described in 
        paragraph (4).''.
                    (B) Microenterprise programs.--Section 482(d) of 
                such Act (42 U.S.C. 682(d)) is amended by adding at the 
                end the following:
    ``(4) The programs described in this paragraph are programs of 
public and private organizations, agencies, and other entities 
(including nonprofit and for-profit entities) to enable such entities 
to facilitate economic development by--
            ``(A) providing technical assistance, advice, and business 
        support services (including assistance, advice, and support 
        relating to business planning, financing, marketing, and other 
        microenterprise development activities) to owners of 
        microenterprises and persons developing microenterprises; and
            ``(B) providing general support (such as peer support and 
        self-esteem programs) to owners of microenterprises and persons 
        developing microenterprises.''.
            (4) Adjustment of performance standards for 
        microenterprises to take account of time required for their 
        establishment.--Section 487(a)(2) of such Act (42 U.S.C. 
        687(a)(2)) is amended by inserting ``shall be adjusted with 
        respect to microenterprises to reflect the time required to 
        establish, and develop a stable income from, such an enterprise 
        as part of a plan to move toward economic self-sufficiency,'' 
        after ``dependency,''.
            (5) Study to identify administrative barriers to 
        development of microenterprises among interested afdc 
        recipients.--The Secretary of Health and Human Services shall 
        conduct a study to identify the administrative and bureaucratic 
        barriers that impede the development of microenterprises by 
        recipients of aid to families with dependent children under the 
        State plans approved under part A of title IV of the Social 
        Security Act who desire to move toward self-sufficiency, and, 
        not later than 1 year after the date of the enactment of this 
        section, shall report the results of the study to the Committee 
        on Ways and Means of the House of Representatives and the 
        Committee on Finance of the Senate.
    (d) Earned Income Disregard.--
            (1) In general.--Section 402(a)(8) of such Act (42 U.S.C. 
        602(a)(8)) is amended--
                    (A) in subparagraph (A)(iv)--
                            (i) by inserting ``for each of the first 36 
                        months beginning on or after the effective date 
                        of this clause for which such aid is so 
                        received,'' after ``determination,''; and
                            (ii) by striking all that follows ``plus'' 
                        and inserting ``(II) for the first 12 months of 
                        such 36-month period, 60 percent of the 
                        remainder thereof, for the second 12 months of 
                        such 36-month period, 50 percent of the 
                        remainder thereof, and for the third 12 months 
                        of such 36-month period, 40 percent of the 
                        remainder thereof;''; and
                    (B) in subparagraph (B), by striking clause (ii).
            (2) Conforming amendments.--
                    (A) Section 402(a)(37) of such Act (42 U.S.C. 
                602(a)(37)) is amended by striking ``paragraph 
                (8)(B)(ii)(II)'' and inserting ``the inapplicability of 
                paragraph (8)(A)(iv)''.
                    (B) Section 402(g)(1)(A)(ii) of such Act (42 U.S.C. 
                602(g)(1)(a)(II)) is amended by striking ``subsection 
                (a)(8)(B)(ii)(II)'' and inserting ``the inapplicability 
                of subsection (a)(8)(A)(iv)''.
                    (C) Section 482(e)(2)(G)(ii) of such Act (42 U.S.C. 
                682(e)(2)(G)(ii)) is amended by striking ``the 
                provisions of subparagraph (A)(iv)'' and all that 
                follows and inserting ``section 402(a)(8)(A)(iv) 
                without regard to the time limitation of such 
                section''.
                    (D) Section 1925(a)(1) of such Act (42 U.S.C. 
                1396r-6(a)(1)) is amended by striking ``section 
                402(a)(8)(B)(ii)(II)'' and inserting ``the 
                inapplicability of section 402(a)(8)(A)(iv)''.

SEC. 2. EDUCATION.

    (a) AFDC Suspended for so Long as Dependent Child is not Regularly 
Attending Required School.--Section 402(a) of the Social Security Act 
(42 U.S.C. 602(a)) is amended by inserting after paragraph (28) the 
following:
            ``(29) provide that payments of aid that would otherwise be 
        payable under the plan to the family in respect of a child 
        required by State law to attend school shall be suspended for 
        so long as the child is not enrolled in, and in regular 
        attendance at, a school;''.
    (b) AFDC Reduced for High School Dropouts.--Section 402(a) of such 
Act (42 U.S.C. 602(a)) is amended by inserting after paragraph (34) the 
following:
            ``(35) provide that the amount of aid that would otherwise 
        be payable under the plan to a family in which the relative 
        claiming such aid has not completed high school or been awarded 
        a certificate of high school equivalency, shall be reduced by 
        $50 for so long as the relative is not enrolled in, and in 
        regular attendance at, a school;''.
    (c) Child Care Guaranteed to Parents While Completing High School 
or the Equivalent.--Section 402(g)(1)(A)(i) of such Act (42 U.S.C. 
602(g)(1)(A)(i)) is amended--
            (1) by striking ``and'' at the end of subclause (I);
            (2) by striking the period at the end of subclause (II) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(III) for each recipient of aid under the State plan 
        under this part who has not completed high school or been 
        awarded a certificate of high school equivalency, and who has a 
        dependent child requiring such care, but only for such months 
        or parts thereof during which the recipient is enrolled in, and 
        in regular attendance at, a school.''.

SEC. 3. FAMILY UNITY AND PATERNAL RESPONSIBILITY.

    (a) Authority To Collect Overdue Child Support Through Levy by 
Internal Revenue Service on Wages.--
            (1) In general.--Subchapter D of chapter 64 of the Internal 
        Revenue Code of 1986 (relating to seizure of property for 
        collection of taxes) is amended by redesignating section 6344 
        as section 6345 and by inserting after section 6343 the 
        following new section:

``SEC. 6344. COLLECTION OF OVERDUE CHILD SUPPORT THROUGH LEVY ON WAGES.

    ``(a) In General.--If the Secretary is notified by a State under 
section 464 of the Social Security Act that any person owes overdue 
support (as defined in section 466(e) of such Act) the payment of which 
is at least 2 months delinquent--
            ``(1) the amount of such overdue support shall be treated 
        as unpaid tax for purposes of permitting the Secretary (subject 
        to section 6334(a)(9)) to levy upon the wages and salary 
        payable to or received by such person to collect such amount, 
        and
            ``(2) the collection of such amount shall be treated as in 
        jeopardy.
    ``(b) Remittance to State.--The Secretary shall remit any amount 
collected under subsection (a) to the State collecting such support.
    ``(c) Limitation on Review.--No court of the United States shall 
have jurisdiction to hear any action, whether legal or equitable, 
brought to restrain or review a levy (and any collection thereunder) 
authorized by subsection (a). No such levy (or collection) shall be 
subject to review by the Secretary in an administrative proceeding. No 
action brought against the United States to recover the amount of any 
such collection shall be considered to be a suit for refund of tax. 
This subsection does not preclude any legal, equitable, or 
administrative action against the Department of Health and Human 
Services.''
            (2) Clerical amendment.--The table of sections for such 
        subchapter D is amended by striking the last item and inserting 
        the following new items:

                              ``Sec. 6344. Collection of overdue child 
                                        support through levy on wages.
                              ``Sec. 6345. Cross references.''
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on the date of the enactment of this Act.
    (b) AFDC Available for Certain Families That Include Married 
Couples.--Part A of title IV of the Social Security Act (42 U.S.C. 601-
617) is amended by inserting after section 410 the following:

``SEC. 411. BENEFITS AVAILABLE FOR NEEDY FAMILIES WITH DEPENDENT 
              CHILDREN WHOSE PARENTS ARE IN SCHOOL OR IN THE JOBS 
              PROGRAM.

    ``(a) Notwithstanding section 406(a), the term `dependent child' 
includes a needy child--
            ``(1) who meets the requirements of section 406(a)(2);
            ``(2) who is living with both parents of the child in a 
        place of residence maintained as their home; and
            ``(3) both of whose parents are--
                    ``(A) enrolled in, and in regular attendance at, a 
                school; or
                    ``(B) participating in the program of the State 
                under section 402(a)(19) and part F.
    ``(b) Notwithstanding section 402(a)(7)(A), in determining need 
with respect to a child who meets the requirements of subsection (a) of 
this section, the income of the parent whose income is less than the 
income of the other parent shall be disregarded.''.

SEC. 4. EFFECTIVE DATE.

    The amendments made by this Act shall take effect at the end of the 
calendar month in which this Act is enacted, and shall apply to 
payments under part A of title IV of the Social Security Act for 
calendar quarters ending with or after such calendar month.