Paul Ryan’s magical poverty tour

Despite billions of dollars spent fighting it, the poverty rate in the United States is almost as high now as it was 50 years ago when President Lyndon B. Johnson launched the War on Poverty. What can we do to end this embarrassing conflict that the richest country on earth cannot seem to win?

Rep. Paul Ryan, R-Wis., claims to have an answer: retreat from the battle and concede defeat. After all, didn’t Jesus say that the poor would always be with us?

In a Congress not known for deep thinking, Ryan is touted as a man of ideas. A fiscal hawk, compassionate Catholic and devoted family man, he professes he has struggled with reconciling the burdensome costs of poverty programs against the needs of deserving recipients. On Aug. 19, he will begin a tour to launch his book, “The Way Forward.” In it he lays out his complaints about progressive social programs and the disservice he claims they do to low-income workers.

Ryan’s take on poverty has been on display since earlier this year. In March he rolled out his theory that poverty is caused by faulty work ethics and bad family values. Although short on policy recommendations, he claimed he wanted to start a conversation about the cultural causes of long-term poverty. However, his use of “ghetto” examples injected race into the conversation and dampened it considerably. His most recent attempt at an anti-poverty plan, Expanding Opportunity in America (PDF), has, since its release last month, garnered mixed reviews. But make no mistake: The policies he proposes are a prescription for dismantling the federal anti-poverty effort and replacing it with state-determined programs that rely on a steadily declining funding base.

First, the good parts: Possibly to counter earlier charges of racism, his new plan proposes sentencing reforms for nonviolent drug crimes and more treatment and rehab for returning offenders. He calls for loosening restrictions on occupational licenses for felons who have served their sentences. These ideas are welcome but won’t have much impact on the larger problem; the barriers facing ex-offenders affect a small minority of low-income residents, and Ryan’s reforms would do little to remove these hurdles. His proposal to greatly expand the earned income tax credit for childless workers is popular and could have more substantial impact. However, this provision will require much additional funding, as will meaningful programs to aid ex-convicts’ re-entry into society. Ryan’s proposed budget achieves two-thirds of its planned cuts by slashing programs that aid the poor. He claims that resources for his new initiatives will come from “eliminating ineffective programs” (suggesting likely additional cuts to existing services). The numbers do not add up. Large contradictions between budget constraints and program promises are a key source of criticism from both right and left.

The essence of the Ryan poverty plan is program consolidation and outsourcing to the states, topped off with a generous dose of deregulation. He would combine 11 major poverty programs, including food stamps (the Supplemental Nutrition Assistance Program), into a single block grant that states could receive to address poverty-related problems. Bringing together these programs, he claims, will streamline enrollment and case management. State-level flexibility would encourage innovation but would demand strict accountability for results. States would have to show progress in order to continue receiving money. At the heart of the proposal are individualized plans for escaping poverty. Recipients would, with guidance from mentors, develop personalized plans for success, and they too would have to demonstrate progress in order to maintain the flow of benefits. According to Ryan, proper incentives, best practices and effective measurement of results will transform the poor, one at a time, into self-sufficient and contributing members of society. Or that is how it is supposed to work.

But a model of coordinated delivery and state-level innovation already exists — in the Temporary Assistance for Needy Families (TANF) program. The 1996 Personal Responsibility and Work Opportunity Act that spawned TANF contained features similar to Ryan’s new plan and created state-level frameworks for coordinating services. This reform of welfare has also operated by way of block grants to states, with considerable discretion regarding the types and size of provided benefits. In spite of severe recession, increased poverty and prolonged unemployment in a record number of families, far fewer eligible parents and children are receiving welfare benefits today than in 1996: The enrolled rate of eligible recipients was 68 percent in 1996 and has fallen to just north of 25 percent today. While the unemployment rate for high poverty neighborhoods has remained high and housing costs have skyrocketed, TANF funding has remained flat over the 18 years since it was passed. Why? Unlike entitlements (including food stamps) that expand with rising need, block-grant programs are not indexed to the cost of living and do not increase with growth in eligible demand.

In addition, stingy state policies have greatly reduced the assistance available to needy families. Through TANF, states are able to exercise quite a bit of discretion. They are not obliged to provide any cash assistance, and where available, it is limited to families earning below a pitiable 50 percent of the official poverty line (about $10,000 in annual income for a family of four). States vary greatly. In Texas fewer than 10 percent of poor families receive benefits, compared with 75 percent in California. Less than a third of TANF funding is disbursed as cash transfers; 63 percent is spent on services. Marriage promotion is a big emphasis, consuming as much as $100 million per year in classes and workshops that have proved of little value. The programs did not make it more likely that couples would stay together or be more financially stable. Some programs even did harm. In Florida participating couples fared worse than the control group.

In other words, the effects of welfare block grants for the very poor are already known. It has shrunk benefits and erected higher hurdles to participation. In effect, with TANF, we ended welfare as we knew it — and we are likely to see the same fate befall the social safety net if we allow it to be taken over by the states. Ryan’s idea that each poor person will be guided to prosperity by skilled and patient mentors is bizarrely paternalistic for a supposedly freedom-loving conservative. The math does not work, unless he is willing to bust budgets to hire millions of caseworkers to provide the personalized guidance he envisions, and even then, there are not enough jobs for all the able-bodied seeking work. Even if there were, 91 percent of current social benefits funded by the government go to the elderly, the disabled or working households. The only way Ryan’s plan works, especially if he keeps his promise to slash the federal budget, is through magical thinking.