Congressman Ryan Unveils His Safety Net Reform Plan

July 28, 2014

Congressman Paul Ryan took up the cause of anti-poverty policy reform not long after his bid to become Vice President failed. He visited local programs, accompanied (and probably selected) by the ultra-conservative founder and president of the Center for Neighborhood Enterprise.

He issued a big — and hardly objective — review of federal programs attributed to the War on Poverty. He held five hearings purportedly designed to help lay the groundwork for a new and better approach.

And last Thursday, he finally announced some proposals at an event hosted by the right-leaning — but not radically right-wing — American Enterprise Institute.

The big headliner should come as no surprise to anyone who’s even casually familiar with his persistent celebrations of the Temporary Assistance for Needy Families program and/or his annual budget plans.

He wants to create a block grant. It’s not “a garden variety block grant,” he says, because states would have to meet certain requirements. But if it walks like a duck and quacks like a duck ….

And if our experience with eminently-flexible block grants tells us anything, it portends trouble for low-income people.

The proposed Opportunity Grant would initially be a pilot. States could submit plans to consolidate 11 diverse safety net programs, e.g., SNAP (the food stamp program), several forms of housing assistance, TANF, the block grants for child care and community development.

States would get the same total amount of funding they’re entitled to now. If another recession or a natural disaster put more people at risk of hunger, they could, if they chose, put more money into SNAP, but only by reducing other types of assistance.

Ryan’s formal proposal says that some counter-cyclical component might be added to boost assistance during recessions. It might not be more funding, however, but instead a requirement that states set aside some of the money they receive in a sort of rainy day fund.

But if food, housing, home energy and other costs rise, as they surely will, the participating states will get squeezed, just as they’ve been squeezed by the flat-funded TANF block grant — and, like as not, with similar results.

States would have to spend the funds on “people in need.” Aid would have to go first, but not exclusively to people living below the poverty line.

States would not, however, have to sustain their own spending levels on safety net programs. As Bob Greenstein, President of the Center on Budget and Policy Priorities, warns, they would have “tantalizing opportunities” to use their block grant funds instead — as in fact, they have with their federal TANF funds.

States would have to see to it that everyone who can work does — or engages in preparation for work. This will require significant expenditures because states currently don’t have job training programs big enough to enroll everyone whose benefits would hinge on their participation.

They would also have to commit funds to expanding their networks of service providers. And they would have to give folks their choice of providers.

Whatever their choice, they’d get a single caseworker to help them develop an “opportunity plan,” oversee compliance and dole out sanctions. Bonuses too perhaps. The caseworker would apparently also dole out benefits, based on some sort of needs assessment.

This could mean a smaller (or no) SNAP benefit in exchange for, say, a low-cost car loan. Or it could mean a whole battery of benefits and services for some people in need and nothing — or much less — for others. “Fundamental math,” as CBPP’s top-level TANF expert says.

And where are the states going to get all those additional caseworkers? Here again we see less money available for programs that help meet people’s basic needs, she says elsewhere. Less perhaps for job training and other services as well.

Lastly, states would have to engage an independent entity to evaluate success according to outcomes identified in their plans. Success here is moving “people out of poverty and into independence.”

But a key measure for providers would be how many people “they help move off welfare.” This, as TANF has taught us, leads to a “work first” approach, i.e., one that requires participants to take any job they can get as soon as they can get it. Legal Momentum reports the dismal results.

In short, the OG pilot is for all the world like TANF on steroids, though with some accommodation for elderly and disabled people.

And to what end? The integrated, innovative, localized approaches Ryan says will be gained by getting “the federal bureaucracy” out of the way are already possible, as the state-level initiative that CLASP and partners are supporting shows. Likewise the Catholic Charities programs he praises.

The pilot is only one of the proposals Ryan tees up to “make federal aid both more effective and more accountable.” Some have — and could gain further — bipartisan support. Some, one hopes, not.

For example, Ryan proposes other block grants — one for Head Start, which he still insists in an utter failure, and two for the various federal funding streams that flow to public elementary and secondary education programs.

I felt as if I were suddenly transported back to the early days of the Reagan administration.

Well, Ryan claims that he’s just trying to start a conversation, as he also did when he launched his hearings. My own sense is that we should begin by talking about how these various proposals for “expanding opportunity in America,” as he styles them, comport with his budget plans.

The latest, for example, would cut SNAP spending by $137 billion over the next 10 years. And, as the Coalition on Human Needs notes, other programs that could be rolled into the “super-block grant” are in the part of the budget that Ryan’s plan would cut by about twice as much as sequestration requires.

“My work on poverty is a separate thing,” he’s said. Tell that to the families that are running out of food because their SNAP benefits were cut — or the parents of the more than 5.6 million preschoolers who are eligible for federally-subsidized child care, but can’t get it.

 


Millions of People Living Always on the Margin

June 12, 2014

Nearly 50 years ago, Molly Orshansky, who invented our official poverty measure, noted that when the number of people below the applicable poverty threshold rose, the number just above dropped. And then the reverse happened.

“This reciprocal trend,” she wrote, “suggests that there may be a sizable group in the population living always on the margin — wavering between dire poverty and a level only slightly higher but never really free from the threat of deprivation.”

A recent report from the Census Bureau confirms this insight. Or so it seems.

What we know for sure is that, in 2011-12, virtually the same number of people who were near-poor at the beginning fell into poverty as rose above the Bureau’s near-poverty cut-off, i.e., 125% of the applicable poverty threshold.

Fewer than either remained in the near-poverty group for even this brief period. So many people are indeed on the margin — 14.7 million in 2012. And if past is prologue, almost as many will plunge (or plunge back) into dire poverty as will gain more than brief freedom from the threat of deprivation.

This is only one of the interesting things the report tells us. The other big eye-opener, for me, is that the near-poverty rate doesn’t behave like the poverty rate.

The latter is always considerably higher — 15%, as compared in 4.7% in 2012. But the poverty rate swings up and down as recessions set in and end. The near-poverty rate barely registers the downturns and upturns in our economy.

Here’s another difference. The poverty rate for seniors, according to the official measure, is much lower than the rate for children — 9.1%, as compared to 21.8% in 2012. But the near-poverty rates were statistically the same.

In other ways, the near-poverty rates resemble differences in poverty rates among groups the Census Bureau reports on, but only in a very general way.

For example, in 2012, the near-poverty rate for blacks was higher than the rate for whites — 6.3%, as compared to 4.5%. But the poverty rate gap was more than twice as great — 27.2%, as compared to 12.7%.

Similarly, the near-poverty rate for single-mother families was higher than the rate for married couples — 7.3%, as compared to 2.8%. But again the gap was far wider for their respective poverty rates — 30.9%, as compared to 6.3%.

What this means, of course, is that fewer blacks and single mothers were living on the margin because more were officially poor, which is very poor indeed.

This is also the case for working-age people not in the labor force, including those with severe disabilities. The poverty rate for those neither working nor actively looking for work was 28.4%, while their near-poverty rate was 6.7%.

These are only a few examples of comparative rates, based on the latest published Census figures. The near-poverty rate report also compares rates for 2012 with those for 1966, when Orshansky published her paper.

Overall, the near-poverty rate dropped, though only by 1.6%. And it dropped enough to be statistically significant for virtually every group the report breaks out.

The exceptions related to changes in our labor market. Specifically, the near-poverty rate for adults over 25 with less than a high school diploma or the equivalent was 1.8% higher in 2012.

Rates were also higher for adults in this age group at every education level below a four-year college degree or more. For those with the degree(s), the very low near-poverty rate was effectively the same — 1.2%.

And what about our safety net? Census can’t backtrack to 1966, but it does provide figures for the number of near-poor people who benefited from six major programs — or types of programs — in 1981.

We see significant changes in the number and percent of near-poor people served between the baseline year and 2012 for only four. And only one of them represents a decrease.

In 2012, 9.9% fewer near-poor people received public assistance, i.e., cash benefits from the Temporary Assistance for Needy Families program* and/or one of the dwindling state general assistance programs.

Near-poor participation in SNAP (the food stamp program) increased by the same percent. But the increase for the Earned Income Tax Credit was larger — 12.5%. And it’s the only safety net program Census reports on that benefited more near-poor than poor people.

The program with the greatest reach of all was the free and reduced-price part of the school lunch program. In 2012, it served 84.6% of near-poor children and a barely higher 88.5% of children in poverty. For the near-poor, this represents a 16.6% increase over 1981.

By and large, I think these changes, as well as the raw participation figures tend to confirm studies indicating that safety net spending has shifted toward people who, for one reason or another, are viewed as deserving — adults who work and those who can’t be expected to.

More conclusively, the report confirms the fragile hold on even a modicum of income security that Professor Mark Rank, among others, has sought to demonstrate — and that Orshansky flagged so long ago.

* TANF hadn’t replaced welfare as we knew it in 1981. So the comparison is to its predecessor.


Welfare Spending Up? Not So, Another Expert Says.

June 2, 2014

The welfare spending study I recently wrote about makes two main points. Spending on “social safety net” programs has increased. And it’s shifted from the neediest toward more “deserving” working families.

Policy analyst Shawn Fremstad says the first point is “overstated.” He also argues that it’s too narrow because it ignores the erosion of core unemployment programs that aren’t means-tested, i.e., limited to people below a certain income level.

He demonstrates the former by measuring spending on what he calls income security programs as a percent of GDP, i.e. the value of all the goods and services our economy produces, rather than on a per-person basis, as the study’s author, Professor Robert Moffitt, did.

Looked at this way, spending on what are what are mostly means-tested programs has risen and fallen between the mid-1970s and 2007, in synch with recessions and labor market recoveries.

Spending during recessions has trended down. And spending in 2007 — our latest relatively low-unemployment year — is a small fraction of a percent higher than it was in 1979.

What may seem like a technical debate on how to measure safety net spending really isn’t. Because Fremstad aims in part to show that our so-called welfare state has become “less generous.”

Not only that. Spending on a broader range of employment-related programs, i.e., education, training, employment and social services, is lower, as a percent of GDP, than it was in the mid-1970s. “[T]he story is more about retrenchment than expansion,” Fremstad says.

And not only that. The skewing upward is actually much more pronounced than Moffitt’s analysis finds because we have a whole lot of spending through the individual income tax code. And most of the costliest deductions, exclusions and the like disproportionately benefit the top fifth on the income scale.

Even the Earned Income Tax Credit and the Child Tax Credit, Fremstad suggests, aren’t straightforward benefits for lower-income workers because they “subsidize poorly compensated employment.”

In other words, they enable employers to get away with paying less than they could if the tax credits didn’t supplement their workers’ incomes. The EITC may actually drive wages down, according to research by a prominent labor economist.

Underlying all this is a point Fremstad doesn’t specifically state in his post, but indicated in one of his tweets as @inclusionist: Wages and benefits for working families with children hardly show we view them as deserving.

Though these are beyond the scope of a federal spending analysis, they’re federal policy issues nonetheless.

Not much hope on the horizon for improvements. We seemingly can’t even get a renewal of federal unemployment benefits, let alone a minimum wage increase or any sort of paid leave mandate.

But we blog on.


Welfare Shifts to the “Deserving” Poor … and Not-So-Poor

May 27, 2014

The U.S. is spending considerably more on safety net programs than it did in the mid-1970s, but the poorest families — most of them headed by single mothers — are receiving less.

This is a key finding in the latest of several studies conducted by Professor Robert Moffitt at Johns Hopkins University. He looked at spending the 15 largest “social safety net” programs between 1975 and 2007.

He traced payments from social insurance programs like Social Security for retirees and unemployment compensation and from means-tested programs, i.e. those that limit eligibility to people below a set income level.

Overall safety net spending in real dollars was 74% higher at the end of the period, but families in deep poverty, i.e., below half the federal poverty line, received 35% less than they did the year before Congress replaced welfare as we knew it with Temporary Assistance for Needy Families.

Well, we knew that TANF is a poor excuse for a safety net program — and in various ways, as the Center on Budget and Policy Priorities’ chart book shows.

Moffitt’s findings, however, do far more than confirm this. Basically, as he says, they show that long-standing distinctions between the deserving and undeserving poor “have grown sharper over the last 20 or 30 years.”

“The deserving are those who work, who are married or at least widowed, who have children and who are native born.”

The undeserving are the obverse, Moffitt contends, though I personally think the bans on safety net benefits for recent immigrants have other roots.

Quibble aside, what his data show isn’t merely declining support for the “undeserving” poor. We also see increasing support for famiies who aren’t poor — or even near-poor.

The shift reportedly means that a family of four earning $11,925 a year is probably getting less aid than the same-sized family earning $47,700 — 200% of the federal poverty line.

This is partly because the real-dollar value of TANF cash benefits has dropped so significantly, along with the percent of poor families served — about 43% fewer than in 1996.

At the same time, most of the fastest growing programs serve “specialized populations,” Moffitt says. These include Supplemental Security Income, which helps only lower-income people who are elderly, blind or severely disabled, i.e., those who qualify as deserving because we don’t expect them to work.

Otherwise, most of the fastest growing programs benefit families with at least one worker — the Earned Income Tax Credit and the Child Tax Credit. Childless workers obviously don’t qualify for the latter at all. And their EITC benefit is piddling.

By contrast, a married couple with two children qualifies for a maximum $5,460 credit — and for phased-down credits until their adjusted gross income reaches $49,146.

The one exception, Moffitt notes, is SNAP (the food stamp program), which isn’t restricted to any “specialized population.” But it provides only about $5 per person per day, he says — a generous rounding up, according to CBPP data.

By and large, we see “rising support for those who work and declining support for those who do not, Moffitt says. “If you’re trying and not succeeding, the welfare system today gives you basically nothing.”

We’ve cut support to families without a breadwinner — and to single-mother families in particular — because of a “presumption that they have not taken personal responsibility for their situation,” he explains.

By these lights, earning is a mark of deserving — as is marrying (someone of the opposite sex) and staying married, no matter what.

Poverty betokens some character flaw — at the very least, a failure to try hard enough, as a majority of Republicans (and not they only) apparently believe.

Moffitt understandably believes it would be futile — perhaps counterproductive — to attack the work bias in our safety net programs. He mentions doing more for those who face the largest obstacles to work, e.g., lack of marketable skills and/or affordable child care.

But he also hopes “we could find ways to assist those families who are making an effort, but not succeeding.” Effort then becomes a market of deserving.

And who will decide who’s really trying?

 

 

 


Follow

Get every new post delivered to your Inbox.

Join 158 other followers