The Agenda

Here’s What’s in Paul Ryan’s Anti-Poverty Plan

Representative Paul Ryan, chairman of the House Budget Committee, is releasing a major document this morning laying out a conservative approach to reforming federal anti-poverty programs (he’s speaking on it this morning at the American Enterprise Institute). Not all of his proposals are specific legislation and some endorse existing legislation. Roughly speaking, here’s what in it:

Offer states the option of a big block grant to replace existing federal welfare programs

Ryan proposes a pilot program called the “Opportunity Grant,” which offers states the ability to use the funds they currently get for a range of programs to run individually focused programs specifically intended to help needy individuals achieve upward mobility and stay out of poverty long term. (If states want, they can stick with running the existing federal welfare programs, which offer very little flexibility in the way of implementation.)

The Opportunity Grant would consolidate several existing aid programs into one funding stream to states, which states would then be required to offer to recipients of means-tested welfare benefits as part of a consolidated recovery and mobility plan. Disadvantaged Americans would each be pared with an individual case worker, with whom they would agree on personalized short and long-term goals (e.g., apply for child support or begin drug counseling) set out in “contracts.” Most important, Ryan is building on the success of the 1990s welfare-reform laws here: A key element of the contracts would be encouraging work, which, currently, only cash welfare requires. Food stamps, federal housing aid, utilities assistance, and more don’t have work requirements — this would essentially mandate that states opting for the Opportunity Grant implement work requirements.

States would have flexibility to choose whether private contractors or state agencies provide case management: however, the providers and approaches states choose would be subject to third-party review, based on success measures agreed upon by state and federal government. A portion of OG funding would be earmarked for exploring new programs, providers, and approaches to replace ones shown to be ineffective.

Expand the EITC and make it work better

Ryan, citing evidence that the Earned Income Tax Credit is a proven way to reduce poverty and encourage work, wants to make the EITC more accessible to families, and expand it for childless adults, who aren’t currently eligible. For one, this means simplifying the EITC application, which currently includes 39 pages of instructions and up to 12 separate forms. He also suggests that the Treasury Department should look into ways of including the tax credit in each paycheck, rather than offering it as a one-time grant in one’s tax refund.

Ryan’s plan would double the size of the EITC for childless adults (see below) and reduce the age for that group from 25 to 21.

To finance this expansion, Ryan proposes eliminating other programs shown to be ineffective and reduce corporate welfare such as subsidies for energy and agriculture.  

These reforms would expand the credit in ways which better incentivize work and attract young adults to the workforce than the status quo or other some other popular proposals. Workers are likely to benefit more from EITC reform than from a minimum-wage increase, Ryan argues. President Obama’s 2015 budget also proposed expanding the EITC for childless adults, and Ryan notes that there are other proposals to do so in Congress — but he doesn’t want to fund it with tax increases.

Fix federal education funding, partly with block grants

As shown below, America is spending more than ever on education, but outcomes have largely been at a standstill since the 1970s.  

To improve outcomes, Ryan wants to adjust the way the federal government spends the billions of dollars it does every year on supporting education at all levels:

‐ Begin with Head Start: Ryan’s plan would convert Head Start funding into a block grant to states, so each state can experiment with different models for early education while spending the bulk of funding to implement the means-tested programs that best fit their state’s needs; states and providers will be held accountable for outcomes. The existing federal Child Care Development Fund program, which finances child care for low income families, would be incorporated into the OG program so case managers could work with parents to seek out quality care options that best coordinate with their schedules.

‐ To improve primary and secondary education, Ryan proposes converting Title 1-A funding into a block grant that is connected to each child to encourage parents to move their children into schools that offer the programs that best fit their needs. All other programs funded by the Elementary and Secondary Education Act — which run to dozens of different federal programs, all with their own rules and mandates — would be consolidated, and the funds would be sent to states in the form of a flexible block grant.

‐ Ryan wants to fix federal higher-ed financing: simplify the federal application for financial aid (“FAFSA”) and expedite the process of finding out how much they’re getting in aid — way ahead of time, in fact, as early as the eighth grade. He also wants to reform the Pell Grant program to increase financial flexibility, and cap the size of federal loans available to grad students (which make up a huge share of the federal student-loan program).

‐ Break the accreditation cartel: Americans would have more options for earning degrees under Ryan’s plan. His proposal would reform the accreditation process to allow accreditation not for just institutions but for specific courses, including Massive Open Online Courses, and base accreditation decisions more heavily on student outcomes. Accreditation is important because students can only receive federal aid if they institution they attend is accredited. The cost of gaining accreditation, which is prohibitively high for some new institutions, would also be lower, further expanding educational opportunities for Americans.

‐ Consolidate federal jobs programs: As has been a matter of bipartisan consensus for a while, Ryan wants to consolidate the dozens of federal jobs-training programs and coordinate better with what employers want, but also open up more financing options for technical education:

This streamlined approach would give workers more options and taxpayers more accountability . . . States could also expand access to technical education, like Career Academies, which educate high school students and have shown to increase earnings for participants…#Coupled with accreditation reform, this reform would allow states to develop training programs that could receive national certification. In short, we could help close the skills gap by expanding the range of options.

Acknowledge that mass incarceration is a huge impediment to mobility and progress, and start addressing it

Noting that prison sentences have negative long-term economic consequences not only for inmates, but also for their families, Ryan proposes two major measures:

‐ He supports an effort in Congress, sponsored in the Senate by Senators Mike Lee and Dick Durbin, to give federal judges more discretion in sentencing non-violent offenders, who can be subject to substantial mandatory minimum sentences.

‐ And he wants to make rehabilitation easier for inmates currently in federal prison: Programs intended to reduce recidivism exist, but most inmates don’t enroll in them — in fact, enrollment in some has dropped over the years: 


These programs would be more effective, Ryan argues, if judges and prison administrators could target them toward individuals at the highest risk for committing another crime and heading back to prison. He endorses a bill in Congress now that proposes to do that, sponsored by Representatives Jason Chaffetz (R., Utah) and Bobby Scott (D., Va.).

(The document also endorses and promises cooperation with a number of reforms like this on the state and local levels — which have been especially popular in red states.)

Get rid of regressive regulations

Ryan proposes a three-part congressional review and approval process for regulations that would place special consideration on a rule’s negative impacts on low-wage jobs and low-income families. The general justification for a regulation’s being in the public interest would have to be both immediate and compelling to get a regressive regulation improved.

The plan also points out that expensive occupational licensing requirements — a state and local issue, not a federal one – are particularly detrimental to low-income individuals, and suggests that state, local, and federal governments work to eliminate needless licensing regulations.

Emphasize evidence-based policy-making

Throughout Ryan’s plan, there’s a premium placed on ending programs that we have no evidence to suggest they work (or evidence that they don’t work, in fact), while expanding programs that do work and are proven to have important spillover effects (the EITC, for instance). But many federal programs are just never assessed, period, or the assessment information isn’t disseminated, so Ryan proposes creating a Commission on Evidence Based Policy Making, which would look into the possibility of creating a National Clearinghouse for Program and Survey Data — in theory, such an institution should be able to consolidate data on federal programs and assess their effectiveness in a useful way that protects privacy.

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