Poverty Experts Skeptical That Paul Ryan’s Plan Can Actually Reduce Poverty

By Igor Volsky

Rep. Paul Ryan (R-WI) offered several new initiatives to combat poverty in the United States during a speech at the American Enterprise Institute Thursday morning, following months of Congressional hearings and personal visits to low income communities.

Some of the proposals — expanding the Earned Income Tax Credit and reforming mandatory minimum sentencing guidelines — could well find bipartisan support in Congress, while others resemble the more conservative aspects of Ryan’s controversial budgets. Under one such measure, the government would establish a pilot “Opportunity Grant” that would consolidate what Ryan sees as duplicative or overlapping federal programs — from food stamps to housing vouchers — into a single grant offered to the states. States would then administer services in partnership with community organizations. Medicaid, the health program for the poor that Ryan had proposed to block grant in previous proposals, would not be included in the initiative.

“It would consolidate up to 11 federal programs into one stream of funding to participating states,” Ryan explained during his remarks. “Each state that wanted to participate would submit a plan to the federal government” and if approved, could then experiment with how best to deliver benefits to its residents.

The Opportunity Grant would maintain safety-net spending at the same level as current law without contributing to the deficit, Ryan promised, adding that the consolidation “does not make judgments about the optimal levels of spending” and is not a budget cutting exercise. But Democrats remained skeptical, pointing out that Ryan’s previous proposals would dramatically slash the government safety net programs he is now bundling.

“It will be interesting to see how Congressman Ryan will propose a deficit neutral anti-poverty plan when his Republican passed budget gets roughly two-thirds of its $5 trillion in cuts from lower and middle income families while reducing tax rates for millionaires by a third. Is he walking away from his own budget plan?” Rep. Chris Van Hollen (D-MD) asked. The Center on Budget and Policy Priorities has estimated that nearly two-thirds of the cuts in Ryan’s budgets come from programs that help low- and moderate-income families.

Some experts who spoke to ThinkProgress also raised concerns that the universal credit would offer beneficiaries a fixed amount of money that would not be responsive to economic conditions. In his report, Ryan points to the nation’s experience with the Temporary Assistance For Needy Families (TANF) program — a Clinton-era reform of welfare — as a model of success, though advocates argue that it has failed to meet the needs of low income families during recessions.

In 1996, Congress transformed the cash assistance program from cost-sharing model, where the federal government’s contribution to state welfare programs increased as need increased, to a block grant, in which the government provides states a fixed amount of money. States also received wider discretion over how to design their programs.

Though the number of poor families initially declined as the economy boomed, once it soured, poverty rates skyrocketed. But because the program’s block grant has remained unchained since its inception — at $16.6 billion per year — TANF has had very limited reach. While the initiative helped more than 80 percent of poor families with children in 1996, just about one-third receive assistance today. “All of a sudden, conservatives stop talking about TANF after 2001, when a recession hit and the story ends,” Melissa Boteach, Vice President of Half in Ten and the Poverty and Prosperity Program at the Center for American Progress, pointed out. “If we did that with other programs, I don’t think we’d find that to be completely intellectually honest.”

Ryan’s opportunity grant “would benefit from increasing assistance during recessions,” though it was not immediately clear that it would match economic need or perform much better than TANF.

“If you combine [various programs] and then housing goes up, the amount [towards housing] doesn’t necessarily go up,” Elizabeth Lower-Basch of the Center on Law and Social Policy (CLASP) said. “The amount is no longer linked to what things cost.”

Other experts contacted by ThinkProgress wondered how different state entities would be held accountable to ensure that people receive adequate services in a timely manner and questioned the wisdom of bundling very different benefits — with very different funding structures — into a single credit.

“What does it mean to consolidate food benefits with housing benefits if you don’t have enough housing benefits to go around?” LaDonna Pavetti, the Vice President for Family Income Support Policy at the Center on Budget and Policy Priorities asked, pointing out that while the food benefit responds automatically to changing economic conditions, the housing benefit is a capped appropriation. “Do you give everybody a little bit of housing? The issues of when it’s not an entitlement system are really, really hard issues.”

In 2011, SNAP, the food benefit program, served 44.7 million people, while housing assistance reached just 4.8 million households.

The Opportunity Grant would allow counselors to provide families with greater amounts of certain types of aid, depending on their need and have them form close relationships with their clients. In one hypothetical example, Ryan explained that Andrea a 24-year-old single mother with two kids who is living with her parents, would develop an “opportunity plan” with her case manager, sign a contract requiring her to meet “specific benchmarks for success…consequences for missing them and rewards for exceeding them.” The counselor could encourage Andrea to take a temporary low-wage job to help pay the bills and provide her with greater transportation aid to help her take classes at night to become a teacher.

“The point is, with someone involved to help coordinate her aid, Andrea would not just find a job,” Ryan concluded.

But poverty experts remained skeptical, noting that since many families who need help are already working — in 2013, close to three quarters of single mothers were in the labor force — “the core challenge is not motivating them to work – rather helping them to stabilize their lives, raise their children, and move up while they are working often long hours for low wages.” Under Ryan’s scenario, should the program be poorly implemented, families would have to miss work in order to stand in line for hours waiting for a caseworker.

In many respects though, Ryan’s approach “may be a solution in search of a problem,” Boteach argued. Across the country, six states are already experimenting with streamlining existing programs within the context of federal law as part of an existing pilot project. Colorado, Idaho, Illinois, North Carolina, Rhode Island, and South Carolina are taking the lead in integrating social benefit programs like state Medicaid/Children’s Health Insurance Program (CHIP), SNAP, and child care subsidies with the goal of ensuring that families receive their full package of work support benefits, while states simplify and reduce their administrative burdens.

Though the final evaluation will not be complete until 2016, states have already found that decisions by state agencies — rather than the federal government — are often the biggest obstacles to reform. Several states in the initiative have simplified their verification processes by eliminating unnecessary verifications not required by federal law. South Carolina implemented an “express lane” for services to more easily provide children with Medicaid coverage if it they were already eligible for SNAP, or the food stamp program. Other reforms allow families to give their paystubs “to just one worker to process, and the information on file can support eligibility determination for several key programs, there is less burden on families and on workers and less chance of errors.”

“If someone was designing a system for scratch it’s hard to imagine someone would come up with our current very complicated system,” Lower-Basch said. “But in order to simplify you either need a whole lot more money or there will be people losing benefits. In theory things that can be done more logically, but a lot of times people use simplification to actually try to cut benefits.” 

Source URL: https://thinkprogress.org/economy/2014/07/24/3463128/paul-ryan-credit/