The only welfare queen I know is named Elizabeth.
The issue here is not that Reagan based his bigoted denunciation of welfare recipients on an actual person, but that anyone would take this person as a representative sample of anyone but herself. It's the equivalent of using an actual murderer as evidence that all black people are murderers. What difference really if bigoted stereotypes are based on a real person or persons or are invented out of thin air? The hostile intent is the same.
The idea that anyone on welfare is living the life or royalty is absurd. In most places people on welfare are not given enough to survive at even the most basic level. Most will have to borrow money from friends and family, go heavily into debt, or find some means, legal or otherwise, to earn money off the books to supplement their inadequate benefits.
Far from being layabouts and losers who don't want to work, the single moms on welfare I met while working with the tenant movement in NY are in fact some of the toughest, most resourceful people I have ever met. These are women with the strength to endure unbelievable stress and privation and do whatever it takes to feed and protect their families. They are survivors, not helpless victims or losers.
I used to call these women "Iron Ladies," a name they earned far more than Reagan's soul sister Maggie Thatcher. The only thing iron about her was her heart, her brain, and that bulletproof bouffant she wore.
Many people on welfare that I met work off the books to make ends meet and while this is technically welfare fraud, by any civilized standard this is morally justifiable, because they must do this to survive. When I was in the Army, they used to say that "the first law of the jungle is survival." This isn't an invitation to discard morality as a first principle, but to recognize that all other considerations are meaningless if you don't stay alive, so survival considerations must come first.