Strengthening the Social Safety Net: Building on What Works—and Avoiding Bad Ideas

Today, U.S. House Speaker Paul Ryan (R-WI) acknowledged the effects of poverty on too many Americans yet offered the wrong solutions. Instead of building on what works—such as the Earned Income Tax Credit (EITC), expanded Head Start and child care subsidies, and nutritional assistance—the policy paper released this morning by Speaker Ryan offered the same tired answers of consolidations, cuts, waivers, and participation requirements that have been shown to undermine the effectiveness of key income and work support programs.

Building on what works

The safety net works to reduce poverty, improve families’ wellbeing, and—according to strong emerging evidence—improve the long-term life chances of children who benefit from key programs. In 2014, the U.S. Census Bureau’s Supplemental Poverty Measure (SPM) shows that refundable credits, such as the Earned Income Tax Credit and Child Tax Credit, reduced overall poverty (as measured by the SPM) by 3.1 percentage points and child poverty by a remarkable 7.1 percentage points. Similarly, Supplemental Nutrition Assistance Program (SNAP) benefits reduced overall poverty by 1.5 percentage points and child poverty by 2.8 percent. Researchers at Columbia University who used similar methods to analyze the effect of these key programs found that in 2012, the most recent year with available data, government tax and transfer policies reduced the share of people who are poor by almost half, from 29 percent to 16 percent. By contrast, in 1967, tax and transfer programs reduced poverty by just 1 percentage point, from 27 percent to 26 percent.

Recent rigorous studies of both SNAP and public health insurance have demonstrated the positive effects of access as a child to these safety net programs on life outcomes into adulthood. Having access to SNAP in early childhood improves adult outcomes including health and economic self-sufficiency. Expanding health insurance coverage for low-income children has large effects on high school completion, college attendance, and college completion.

At a Center for American Progress event this morning, U.S. Senator Sherrod Brown (D-OH) called for an expansion of the EITC for adults without minor children and recommended that recipients be able to access a portion of their benefits in advance (rather than waiting on an annual income tax refund), in order to meet urgent needs and avoid high-cost payday loans. Working childless adults are the only group taxed into poverty. Young adults ages 18 to 24—who have the highest joblessness rate in the country—are completely ineligible for the EITC if they don’t have children; those young adults who are working have higher poverty rates than the overall population and would significantly benefit from an expansion of refundable tax credits. Mr. Ryan has previously supported an EITC expansion to bolster the earnings of these low-income workers, but there is no mention of such an expansion in today’s proposal.

Avoiding what doesn’t work

The proposal explicitly uses the Temporary Assistance for Needy Families (TANF) block grant as a model to be replicated to other public assistance programs operating at the federal level—even though the history of TANF shows vividly why block grant programs don’t work. The value of the TANF block grant has fallen by 33 percent over the last 20 years, leaving fewer than 1 in 5 poor children with any help at all from the program (and fewer than 1 in 10 in 17 states). And unlike the core safety net programs like Medicaid and SNAP that provided more help to states, families, and communities when revenues shrank and need rose during the Great Recession, TANF barely responded at all because of its capped resources —failing states and families when they needed help the most. The block grant has also given states so much flexibility in the use of federal and state expenditures that basic monthly assistance accounts for only 27 percent of spending under TANF (and work programs for only 8 percent); instead program funds have been used to plug holes in state budgets or to support other social programs that may vaguely meet one of the core statutory purposes of TANF.

The proposal also doubles down on work mandates—for example, in housing assistance programs—even though work requirements without strong public investment in jobs and training typically serve only to cut poor individuals off from help they need, rather than helping them get jobs. These so-called requirements also ignore the evidence that most poor families are already working—what they need most is stability in their lives (including a stable place to live, health care, and child care) and the opportunity to move up at work. Far from being an example of success, the provisions governing work in TANF fly in the face of research evidence about what helps families succeed at work. For example, TANF’s work participation rate requirement limits the type of countable work-related activities, making it challenging for those participants with severe barriers to employment—such as a physical or mental disability, very low educational attainment, or persons with criminal records—to fully engage in activities mandated by the work requirement. States are rewarded for cutting such families off of assistance, which has led to an increase in deep poverty. By contrast, the Workforce Innovation and Opportunity Act (WIOA) of 2014, which Congress passed in a nearly unanimous bipartisan vote, emphasizes effective skills training leading to postsecondary credentials that employers recognize as having value in the labor market, which research has found to be “the most important determinant of differences in workers’ lifetime earnings and incomes.”

Another example of the bad ideas in this proposal is one that builds on ill-advised provisions of the House child nutrition reauthorization bill, which would shrink coverage of the very successful community eligibility provision and inappropriately increase verification paperwork for families, creating additional barriers for low-income children who need access to free or reduced price meals in order to succeed at school. The House bill also includes a three-state block grant proposal that would immediately cut the funding to operate the school nutrition programs in those states, and cap funding thereafter. With each year, the programs’ ability to serve low-income children will erode even further and states will be unable to respond to any increase in need arising from a recession or population growth.

And the paper’s claim that anti-poverty programs can be dramatically improved—including the elimination of “cliff effects” resulting from the loss of benefits as earnings increase—with no additional spending, while appealing, is just not true. The reality is that many key elements of economic security—child care, housing, transportation, and education—are unaffordable for low-wage workers even when they are able to find steady employment. No amount of state flexibility or coordination will substitute for adequate funding for these essentials.

Bold new ideas

But reducing poverty requires more than just avoiding bad ideas. As CLASP Executive Director Olivia Golden testified before the House Ways and Means Committee two weeks ago:

“Congress should avoid bad ideas that demonstrably don’t work—such as block grants, misguided requirements, and cuts in key programs—and should seize opportunities that build on research and experience. These include expanded access to child care for all low-income parents, investment in effective workforce development programs and career opportunities, financial access to postsecondary education and completion for today’s low-income students, crucial fixes to the work support system for adults and families, and basic standards for fairness at work, including raising the minimum wage. Many of these solutions would also benefit middle-income Americans who struggle with some of the same problems that hold back parents, workers, and students living in poverty—such as the high cost of child care and of postsecondary education, the need to develop new skills, and the lack of paid leave and fair, predictable work schedules.”

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Additional CLASP resources on related topics are linked below: