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"Welfare queens" and welfare fraud became national obsessions during the 1970s. This hysteria eroded public support for efforts to redress the racism and gender bias inherent in state programs and delegitimated the welfare state itself. This article chronicles the story of the first "welfare queen," Chicago's Linda Taylor, and the context surrounding Illinois legislators' efforts to crack down on welfare fraud. In an attempt to curb welfare costs, legislators stiffened criminal penalties for fraud, accelerated random home visits, established an anonymous tip line for people to report their acquaintances, and considered plans to fingerprint all welfare recipients. This article juxtaposes legislators' fiscal and political motivations for these policies with the experiences of recipients struggling to make ends meet when neither welfare nor wage work provided sufficient income. It also examines the role of the thousands of informants who reported recipients for earning wages, sexual impropriety, or owning "inappropriate" consumer goods. The article argues that the spectacle of surveillance and prosecutions convinced many citizens that all welfare recipients were deceitful, undeserving, and linked to criminality. These punitive policies served to obscure poor families' material conditions while helping to construct a highly stigmatized social category outside of full citizenship.