Smarter strategy for fighting poverty in Ryan plan

After some 50 years, the so-called “War on Poverty” has to be the longest and most disappointing struggle America has ever waged. Unlike other examples from history, however, those prosecuting this war still have an opportunity to redeploy their forces and rethink their strategy. With his “Expanding Opportunity in America” discussion draft, Rep. Paul Ryan (R-Wis.) has marshaled evidence that should rally Americans from across the ideological spectrum: despite spending roughly $800 billion a year on anti-poverty initiatives, our federal government isn’t doing an adequate job in helping the poor achieve upward economic mobility.

The plan offers a variety of thoughtful approaches to reducing poverty. And unlike his budget proposals, Ryan crafted this plan to be budget-neutral; nonetheless several of the provisions should garner support from fiscal conservatives.

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For instance, the creation of a pilot program called “Opportunity Grants” should be particularly appealing to proponents of federalism. By consolidating 11 means-tested programs into a single, optional block grant for the states, Ryan’s proposal would provide an opportunity for state governments to devise new, innovative approaches to combating poverty. This is the type of common-sense efficiency that conservatives should cheer.

Ryan also wisely recommends reforms to the Earned Income Tax Credit, a near-40 year-old program that is designed to incentivize work by providing tax benefits (both refundable and non-refundable) to low-income workers.

While some limited government proponents may bristle at the notion of expanding the EITC, this is a program with some economic merit, which is why President Ronald Reagan once called it “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.” More recently, a study by the Congressional Budget Office showed that the EITC increased employment and income among single mothers. Numerous economists have found similar results for low-income families with children.

Ryan’s plan would attempt to bring these same effects to childless workers – a population that currently receives only minimal benefits from the EITC.  Still, there is a long way to go before EITC is properly tuned. After all, the refundable portion of the credit represents a direct cost to current and future taxpayers.  It’s imperative that any changes to EITC help the program reduce its unacceptable rate of improper payments, which cost American taxpayers over $13 billion last year. Ryan’s plan   hopes to address that very serious problem, but is scant on details.

On education, Ryan recognizes the sad truth that while federal spending has soared in recent decades, student achievement results have not. Well-intentioned programs like Head Start, for instance, have simply not delivered sufficient educational improvements to justify their considerable costs. Ryan’s solution is to maintain current funding levels, but provide these resources to states in the form of flexible block grants. As with the Opportunity Grants program, this would encourage innovation and experimentation and permit states to create educational ventures that best reflect the needs of their own populations. Another important – and often overlooked – area of focus in the plan is increasing the supply of education. Ryan would reform the accreditation process of institutions of higher learning, thus potentially removing an obstacle to providing more educational opportunities for students of all income levels.

Another component of the proposal would focus increased attention on the regulatory system’s effect on low-income households. Oftentimes, the costs of regulations are borne disproportionately by the less affluent, who among other things struggle to cope with the higher price of gas, groceries, and housing. Under Ryan’s plan, regulatory agencies would have to analyze the regressive nature of any proposed rules and seek approval from Congress when they would adversely affect poorer Americans.

While the plan contains many meritorious components, Ryan might be making a mistake by not simultaneously addressing the dire financial situation facing our federal government. The budgets he has offered in the past have not simply reformed programs, but have also made real efforts to rein in runaway spending. Here he takes a different tack – aiming to initiate an important dialogue about one of our nation’s most troubling public policy issues. However, with a national debt of $17.6 trillion, it will be very difficult to separate that conversation from a serious discussion of our overall fiscal conundrum.  

The War on Poverty will be difficult to win, but defining victory requires a new lexicon as well as a new arsenal of ideas.

Arnold is vice president of the National Taxpayers Union, a conservative advocacy organization.