It's all about incentives, and buried in the stimulus bill is a huge inducement for states to explode the numbers of people receiving welfare. The editors of National Review spotted the fatal provision:

Under the provisions in the stimulus bill, states will once again be paid a bounty for expanding their welfare rolls. As reported by Robert Rector of the Heritage Foundation, the federal government will now pay states 80 percent of the cost for each new family they sign up for welfare. That means that states will get $4 for every $1 they spend. This will leave the main welfare program, Temporary Assistance to Needy Families (TANF), with a funding mechanism similar to the one that supports Medicaid. As Brian Blase argues here, Medicaid's funding ratio, which gives states $1 to $3 for every dollar they spend, has caused state Medicaid spending to skyrocket. If Medicaid's dollar-for-dollar model has proved ruinous, Obama's new $4-to-$1 ratio for welfare will prove, in all likelihood, four times so.