House Budget Committee and its chairman, Rep. Paul Ryan (R-WI), issued a new report which claims to assess the value, impact and pitfalls of the nation’s War on Poverty and current safety net programs. The 200+ page report identifies over 90 federal programs that target assistance to low-income families though, and one-by-one reviews their history, current funding levels and empirical evidence of their impact.
For those who have followed Rep. Ryan’s work on this front won’t be surprised to learn that he thinks little of the country’s current patchwork of anti-poverty programs. Benefit cliffs create poverty traps, and the complexity of current programs produces costly, bureaucratic inefficiencies. And few programs address the root causes of poverty: family structure, skill deficiencies, and attachment to the labor force.
Though the size of the report itself is meant to suggest the authors’ command of these issues and the research around these programs, as has been pointed out here and here, the report misleads readers in several ways.
First, and perhaps most importantly, the report continues to make the same mistake of pointing to little progress in reduce our country’s poverty rate and equating that with the ineffectiveness of our anti-poverty programs. Again, the Census’s official poverty measure ignores most of these programs in how it calculates poverty and household income. The new Supplemental Poverty Measure which does account for these programs and better accounts for the true costs that families face demonstrates that these safety net programs cut our country’s poverty rate by ten percentage points over the last 50 years and in half in 2012. These programs have moved tens of millions of Americans out of poverty, yet these statistics are included only passingly at the very end of the Chairman’s report.
Second, the poverty trap of high marginal tax rates (wherein an additional dollar of income leads to a nearly equivalent loss of benefits, disincentivizing additional work) is not, in fact, that much of a trap. Few families actually face steep benefit cliffs and much of the social science research does not support the claim that workers respond to this issue by reducing their work hours or employment.
The report ultimately favors, as the Chairman has said elsewhere, that programs should be reformed to better address labor force participation and emulate the benefits and simplicity of the EITC. Rep. Ryan has said that he favors the UK’s Universal Credit, a means-tested cash assistance program consolidated from six means-tested programs. Reducing complexity has its strengths, but advocates for working families are rightly skeptical of the Chairman’s calls for a major overhaul given his previous budget proposals, in which two-thirds of all savings came from gutting safety net programs. Similarly, WOW has detailed its hesitation with universal basic income schemes before.
And finally, much of the report’s introduction trumpets the strengths of welfare reform in 1996. Our partners should be well familiar with our issues of claiming this change was a success. For now, we point you to a new piece from ThinkProgress documenting, yet again, why we shouldn’t remember welfare reform as model policy.
In short, the Chairman’s report’s weak grasp of the facts around safety net programs suggests a misunderstanding of the issue of poverty itself, and in turn, a misunderstanding of its sources and proper solutions.