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.

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 recipients of AFDC of the option of microenterprise as a legitimate route towards self-sufficiency, and that caseworkers encourage recipients of AFDC who are interested in starting a microenterprise to participate in a program designed to assist them in such effort; (4) provide for the inclusion of microenterprise training and activities in the JOBS program; and (5) require that performance standards be adjusted to reflect the time required for establishment of microenterprises.

Requires the Secretary of Health and Human Services to conduct a study to identify administrative barriers to development of microenterprises by interested AFDC recipients.

Amends the AFDC program to: (1) revise provisions concerning the earned income of children disregarded in determining the family's need for AFDC; (2) provide for suspension of AFDC where a child of a family on AFDC is not regularly attending required school; (3) reduce AFDC in cases where the family member claiming AFDC is a high school drop-out; and (4) require States to guarantee child care to parents who are high school drop-outs during the period they are back in school.

Amends the Internal Revenue Code to provide for the collection of overdue child support through a levy on the wages of the individual owing such support.

Amends the AFDC program to make AFDC available to certain families with dependent children whose parents are in school or in the JOBS program.