Wonkbook: How Paul Ryan’s new plan changes the anti-poverty debate

July 25

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Wonkbook’s Number of the Day: 284,000. That's the number of first-time jobless claims filed last week, the fewest in more than eight years.

Wonkbook’s Chart of the Day: The long-term unemployed may finally be getting jobs.

Wonkbook's Top 5 Stories: (1) Paul Ryan's anti-poverty plan; (2) migrant-crisis debate goes international; (3) positive labor news; (4) another execution gone awry; and (5) health-care politics.

1. Top story: Paul Ryan just lit a spark in the poverty debate

A change in tune on poverty? "The plan, which Mr. Ryan presented on Wednesday at the American Enterprise Institute, is still a fundamentally conservative document, full of attacks on the welfare state as it now exists. It uses the language of 'encouraging opportunity' and assails the notion that government handouts will help people pull themselves up by their bootstraps. But this plan pairs that tone and philosophy with at least a couple of policies intended to give poor Americans a hand as they try to pull themselves up." Neil Irwin in The New York Times.

How Paul Ryan's 'opportunity plan' would work. "A 24-year-old single mother of two...could go to a local social services provider for help. Instead of applying for food stamps, housing vouchers and welfare checks, she would meet with a case manager and draft an 'opportunity plan' to achieve her goals, targeting money where it is needed most....The catch: she would have to sign a contract and meet certain benchmarks for success....Failure would mean a cut in aid while exceeding expectations would earn her a bonus. There would be a time limit on assistance, and Ryan said the plan would need to show strong evidence of positive outcomes and poverty reduction, arguing such data is lacking in current programs." David Lawder in Reuters.

Primary sources:

An opportunity to cut poverty. Paul Ryan in USA Today.

The full text of Ryan's plan.

Potential problems with the opportunity plan. "What it does not address is the likely size of the bureaucracy such a proposal would create if it went nationwide — a network of case managers for every individual (or even every family) on public assistance would likely require tens of thousands of new government employees (or contractors) and not to mention facilities, information technology equipment, and the other essentials of any modern organization. Another concern is that, should a program like this eventually be rolled out to all 50 states, the ideological preferences of different state governments could create serious differences in the kind and quality of benefits." Rob Garver in The Fiscal Times.

Ryan gives shout-out to Obama with EITC expansion. "Ryan would greatly expand the Earned Income Tax Credit for childless workers, who currently receive very little benefit from the policy....Ryan's plan is less generous than Senate Budget Chair Patty Murray's plan to expand the EITC for childless workers, and unlike Murray's plan does nothing for two-earner households. But Ryan's proposal is almost identical to President Obama's, included in his current budget; the only difference is that Obama would also increase the maximum age one can claim the EITC from 65 to 67." Dylan Matthews in Vox.

3 ideas from Ryan's plan that liberals can love. Matt O'Brien in The Washington Post.

What Ryan still misses in his new, more-serious plan. "An incentive system like this assumes that end goals such as employment are entirely within the control of a poor people if they would just try hard enough. This notion fails to recognize that, while personal responsibility is important, so too are structural obstacles....We can hardly expect personal effort alone to overcome poverty without systemic investment on society's part on the fronts beyond a poor person's control. The idea of a contract with punitive benchmarks also ignores lessons that researchers have learned about the effects of poverty on cognition." Emily Badger in The Washington Post.

Is the GOP going populist? Ryan's not the only one talking about poverty. "On Friday, Sen. Rand Paul (R-Ky.) will do it at the National Urban League. On Wednesday, Sen. Marco Rubio (R-Fla.) spoke on the subject at the Catholic University of America....Rubio’s talk, though, was far more partisan than Ryan’s; he accused President Obama of trying to divide Americans. And though he has also argued for returning funding for anti-poverty programs to the states, and for increasing the child tax credit, Rubio pointed to a return to a more traditional understanding of family as the surest path out of poverty." Melinda Henneberger in The Washington Post.

Explainer: Here are the anti-poverty stances that potential 2016 GOP hopefuls are staking out. Damian Paletta in The Wall Street Journal.

SALAM:R yan's plan is thoughtful, paternalistic, compassionate. "Ryan understands that poverty in America is not one big thing. It’s not best understood as a dearth of government checks, or even as a dearth of compassion. There are as many different reasons for poverty as there are people living below the poverty line, and Ryan’s call for more narrowly tailored anti-poverty solutions is one modest step toward recognizing that fact. This isn’t to say that Ryan is right about everything. Remember, he’s just issued a 'discussion draft' — he’s not even sure that he’s right about everything. But he is asking the right questions, and that’s an excellent start." Reihan Salam in Slate.

E. KLEIN: Democrats should welcome Ryan's plan. "The constant thread in Ryan's career isn't his concern for budgets but his efforts to overhaul the safety net. But Ryan has a quality most reformers don't: he is exceptionally good at building consensus within the Republican Party. And that's what makes his poverty plan so important: Ryan is ratifying a shift in the GOP's focus away from the kind of policies contained in his budgets and towards the kind of policies contained in his poverty plan (and that have also been offered by Sen. Marco Rubio, Sen. Mike Lee, and others). This is a conversation that should, in theory, offer much more opportunity for common ground with Democrats." Ezra Klein in Vox.

VINIK: Ryan's best idea yet? "In a rational policy world, Democrats and Republicans would probably be able to find common ground here. Murray’s plan, which is the most generous, would cost around $15 billion per year. That’s not small, but it’s not gigantic either. Obama's would cost just $6 billion per year. Ryan’s support for an EITC expansion is particularly important, given his previous commitment to cuts to federal antipoverty programs. That doesn’t mean that policymakers will make this a priority anytime soon. But it gives hope that even as Congress fails to address the multiple crises ongoing in the U.S., there’s a chance it could pass legislation to improve the lives of low-income Americans." Danny Vinik in The New Republic.

BERNSTEIN: Ryan plan attacks wrong problem, ends up with wrong solution. "The main problem faced by the American poor is not that there’s something fundamentally wrong with the safety net. It’s that they lack the employment and earnings opportunities necessary to work their way out of poverty. Rep. Paul Ryan, in an interesting anti-poverty plan he outlines Thursday, one with a notable improvement over all his earlier work in this area, fails to understand this basic fact, and thus his plan widely misses the mark. In doing so, it creates deep and unnecessary risks, not to mention a huge new anti-poverty bureaucracy." Jared Bernstein in The Washington Post.

PETHOKOUKIS: Ryan's pro-work, anti-poverty plan — Aquinas 1, Rand 0. "If you want America to become Scandinavia, then you won’t like Paul Ryan’s new anti-poverty plan. The House Budget chairman didn’t call for a universal basic income or universal preschool. And if you want Republicans to hush up and just accept the Obama minimum-wage agenda, you won’t like the Ryan plan....But there is good reason why Brookings poverty scholar Ron Haskins calls the Ryan plan 'sweeping, bipartisan, reasonable.' See, Ryan wants to raise the ceiling, not lower the floor. The goal: encourage work, self-sufficiency and upward mobility." James Pethokoukis in AEIdeas.

Another idea: Why not a guaranteed income for everyone? "Eliminating poverty seems like an impossibly utopian goal, but it's actually pretty easy: we can just give people enough money that they're above the poverty line. That idea, known as a basic income, has been around forever, but it's made a comeback in recent years. And it's a sign of how far it's come that opponents of the idea are beginning to feel the need to make arguments against it....The experiments raise valid worries, but they hardly herald doom, and still suggest that a negative income tax could eliminate poverty at a manageable cost." Dylan Matthews in Vox.

Other economic policy reads:

Obama's policies have helped reduce the income gap.  Zachary A. Goldfarb in The Washington Post.

Actually, by other measures, inequality has increased under Obama. Timothy Noah in MSNBC.

Why aren't voters angrier about economic inequality? Eduardo Porter in The New York Times.

Top opinion

PHELPS: Corporatism, not capitalism, to blame for inequality. "Materialism has also led to short-termism. It tempts chief executives to pump up share prices, and fund managers to demand that managers hit their quarterly earnings targets. This stifles innovation and buoys wealth inequality. Since the weakening in productivity growth that was recorded in the US from 1965 to 1975, profits as a share of the gross domestic product have climbed to record highs. The egalitarians are profoundly wrong, however, about the sources of wealth inequality. It is the corporatist maladies deep in western societies, more than 'capitalism' or tax laws, that have brought abnormal wealth inequality since 1970." Edmund Phelps in The Financial Times.

KRUGMAN: Left Coast rising. "Kansas went all-in on supply-side economics, slashing taxes on the affluent in the belief that this would spark a huge boom; the boom didn’t happen, but the budget deficit exploded, offering an object lesson to those willing to learn from experience. And there’s an even bigger if less drastic experiment under way in the opposite direction....Gov. Jerry Brown was able to push through a modestly liberal agenda of higher taxes, spending increases and a rise in the minimum wage. California also moved enthusiastically to implement Obamacare. Needless to say, conservatives predicted doom....There is, I’m sorry to say, no sign of the promised catastrophe." Paul Krugman in The New York Times.

BAIR: The Fed's risky reverse repurchase scheme. "Four years after the passage of Dodd-Frank, we are still discussing whether the law has made the financial system more stable. These discussions are important, yet too little attention is being paid to a Federal Reserve program called the Overnight Reverse Repurchase Facility, also referred to as ON RRP. This program, while well-intentioned, could be a new source of financial instability. It needs a closer look." Sheila Bair in The Wall Street Journal.

P. KLEIN: Don't leave behind unmarried women. "No doubt, reforms should attack distortions in the tax code and government programs that create barriers or disincentives to family formation. Yet unmarried Americans shouldn’t be made to feel neglected....Married couples who are assuming the burdens of having and raising children are making an important contribution to the nation’s future. Their sacrifices should be honored and appreciated by society, and that should be reflected in government policy. But there has to be a way to push sensible limited-government policy reforms without making unmarried Americans feel left out." Philip Klein in the Washington Examiner.

RITHOLTZ: Free ride ending for money market funds. "Of all the outrages endured during the financial crisis, perhaps the most perplexing involved money-market mutual funds. In an example of moral hazard writ large, this uninsured risk instrument — with $2.57 trillion in assets — somehow became too big to fail. Five years later, the Securities and Exchange Commission is finally taking steps to address this. Money-market funds invest in a variety of short-term securities whose values fluctuate....However, the funds' net asset value, and thus the share price, was always $1, regardless of what the underlying assets were really worth. This is quite bluntly, a fraud, with a couple of twists." Barry Ritholtz in Bloomberg View.

PETHOKOUKIS: Inflation obsession is ruining the GOP. "Maybe it's a legacy of how rapidly rising prices in the 1970s swept conservatives into power....Maybe it's how many conservative talk radio shows are sponsored by gold companies who stand to benefit....Maybe it's a belief that every single economic metric must be a nightmare under President Obama. But whatever the reason, the GOP's preoccupation with phantom price increases is distracting it from the actual problems afflicting the U.S. economy — such as low social mobility, stagnant wages, and the decline of middle-class work. The price of not addressing those issues is rising every year. And that is the kind of inflation worth obsessing over." James Pethokoukis in The Week.

Toddler interlude: Toddler rallies the summer camp.

2. The international fallout of the migrant crisis

Ahead of meeting, Central American country leaders put much of the blame on U.S. "'Your country has enormous responsibility for this,' Honduras’s Juan Orlando Hernández said in an interview with The Washington Post....The criticism set the stage for a meeting Friday at the White House in which President Obama and Vice President Biden will host Hernández, Guatemala’s Otto Pérez Molina and El Salvador’s Salvador Sánchez Cerén." David Nakamura and Ed O'Keefe in The Washington Post.

U.S. mulls refugee status for Honduran migrants. "The Obama administration is considering whether to allow hundreds of minors and young adults from Honduras into the United States without making the dangerous trek through Mexico....If approved, the plan would direct the government to screen thousands of children and youths in Honduras to see if they can enter the United States as refugees or on emergency humanitarian grounds. It would be the first American refugee effort in a nation reachable by land to the United States, the White House said, putting the violence in Honduras on the level of humanitarian emergencies in Haiti and Vietnam." Frances Robles and Michael D. Shear in The New York Times.

Maps: Some House districts will feel greater impacts from the migrant surge than others — including based on country of origin. Dante Chinni in The Wall Street Journal.

Obama is also plotting a strategy with Mexican President Nieto. "President Barack Obama is praising Mexico's attempts to target smugglers who are trafficking unaccompanied children from Central America through Mexico to the United States....The White House says Obama and Pena Nieto discussed how to coordinate their governments' responses to the surge of minors....Mexico has announced a government strategy to secure its borders with Guatemala and Belize in hopes of preventing immigrants from beginning the often treacherous journey. Obama and Pena Nieto also discussed regional efforts to address conditions in Central American states that are leading people to seek entry to the U.S." Associated Press.

The path to compromise on migrant-crisis legislation lies through...Israel? "Mikulski (D-Md.) took President Barack Obama’s request and compressed it into a four- to five-month period to carry agencies through just the end of this calendar year. In a bid for Republican votes, money is included to help Israel and to fight wildfires in the West....Across the Capitol, House Appropriations Committee Chairman Hal Rogers (R-Ky.) wants less spending and more offsets. But he also has embraced the concept of a four- to five-month time frame, and this raises the question of whether temporary changes in immigration policy can be found to match the temporary relief in funding." David Rogers in Politico.

Two problems that could hold up the legislation:

Moderates in the Senate hold the key. Burgess Everett and Seung Min Kim in Politico.

Conservative revolt in the House? Jake Sherman and Seung Min Kim in Politico.

Is Guard deployment necessary? White House wants to find out. "President Barack Obama has sent a team to Texas to assess whether a U.S. National Guard deployment would help to handle an immigration crisis at the Mexican border, White House officials told Reuters on Wednesday, having so far resisted Republican calls for such a move....The officials said the federal team would study whether such a role would be useful and make recommendations upon its return." Jeff Mason in Reuters.

Scammers are trying to take advantage of immigrant children's families. "The FBI is investigating how scammers obtained confidential information to defraud migrant children's families of thousands of dollars by telling them they needed to pay a fee to get their children out of federal custody. The investigation, which began July 18 in San Antonio, has uncovered evidence of similar scams in a dozen states, including California. The FBI issued a warning about the scams this week as the investigation broadened." Molly Hennessy-Fiske in the Los Angeles Times.

Video: Who are the kids of the migrant crisis? NPR.

Other immigration reads:

Groups cite "horrific" conditions at immigrant detention center. Benjamin Goad in The Hill.

These tea partiers aren't anti-immigration. They just want to close the borders. Alexia Campbell and Reena Flores in National Journal.

SPILIAKOS: Conservatives' mixed immigration message. "Reagan...was articulating sentiments rather than proposing a set of policies. When this romantic open borders sentiment meets the reality of the US wage premium over what is earned by billions of people, then things get very complicated very quickly. The result is a kind of division of mind within the right. Jeb Bush might be called the heir to Reagan’s utopian open borders sentiment, and the 2012 'self-deport' edition of Mitt Romney might be called the heir conservative open borders skepticism. The mean between these two extremes has not proven to be a desirable compromise....Conservatives must move beyond both Bush and Romney." Pete Spiliakos in First Things.

Animals interlude: Deer walks up to camera — and proceeds to lick it.

3. More good news on the job market.

Better news for workers: Layoffs are dwindling. "As the U.S. economy has improved and employers have regained confidence, companies have been steadily shedding fewer workers. Which is why applications for unemployment benefits have dwindled to their lowest level since February 2006 — nearly two years before the Great Recession began — the government said Thursday. The trend means greater job security and suggests a critical turning point in the economic recovery. It raises the hope that workers' pay will finally accelerate after grinding through a sluggish recovery for the past half-decade." Associated Press.

And the long-term unemployed seem to be finally getting jobs. "We can get a better picture of the long-term unemployed if we look at the yearly, rather than the monthly, numbers. That eliminates most of the noise from short-term jobs, and short-term moves between unemployment and non-participation....By this measure, the recovery is finally starting to reach the long-term unemployed a little bit more....From Cajner and Ranter, 38 percent of the long-term unemployed from a year ago have a job today. That's almost as many did in 2007, right before the recession hit. And even better, it's more than the number who exited the labor force in the past year." Matt O'Brien in The Washington Post.

Lastly, jobless claims hit an 8.5-year low. "While another report on Thursday showed a sharp decline in new homes sales in June, economists cautioned against reading too much into the drop, noting that other data have pointed to housing getting back on track after stalling in late 2013....Economists said the Federal Reserve would look at the claims data favorably as it considers when to raise interest rates. Fed Chair Janet Yellen cautioned last week that the U.S. central bank could raise rates sooner and more rapidly than currently envisioned if the labor market continued to improve faster than anticipated by policymakers." Lucia Mutikani in Reuters.

Charts: Why it’s unusually tough right now to find a newly built home. Dina ElBoghdady in The Washington Post.

But stagnant wages are leaving Yellen & Co. in a tough spot. "Policymakers can set monetary conditions to pull the economy out of a trough and keep credit flowing — and through those mechanisms their crisis response arguably helped keep tens of millions of people at work. But as the recovery matures, the lack of wage growth in the developed world stands out as an area where loose monetary policy has generated underwhelming results. Economists like Prakken, former Treasury Secretary Lawrence Summers and others have begun to debate whether much larger structural issues are coalescing to keep wages down." Howard Schneider and Eva Taylor in Reuters.

Other economic/financial reads:

Rules for money-market funds arrive, finally. Neil Irwin in The New York Times.

LeBron James interlude: Frank Caliendo reads LeBron James' homecoming announcement letter in Morgan Freeman's voice.

4. Another execution gone awry, and it's still not likely anything will change.

Will anything change after Arizona's latest controversial execution? "Wood’s prolonged death could increase scrutiny of how states use the sedative midazolam in executions. That drug was used, along with hydromorphone, during the execution....Wood’s attorneys had argued that more information was needed about these two drugs, which were combined for the first time in an execution in Arizona. The state altered its lethal injection protocols to use these two drugs because the ongoing shortage of lethal injection drugs left it unable to find pentobarbital...The drawn-out execution in Arizona renewed calls for the United States to do away with capital punishment....But officials in states that conduct the most executions said they did not plan to change how they carry out the death penalty." Mark Berman in The Washington Post.

Explainer: How did Arizona execution go wrong? Michael Muskal in the Los Angeles Times.

Primary source: The federal court transcript shows just how terrifying and dramatic the nearly two-hour execution was. National Journal.

Two-hour long executions might not affect public opinion on the death penalty. "Public support for the death penalty in the United States has declined, but it remains strong, with at least 60 percent of respondents in surveys saying that they favor capital punishment. Whether the public would support the kind of execution that the state of Arizona administered on Wednesday, in which a convicted murderer took two hours to die after a lethal injection, is another question, one that pollsters can't yet answer." Max Ehrenfreund in The Washington Post.

Charts: Death penalty sentences and executions, by state. "In short, both sentences and actual executions have declined along with the crime rate....But the other lesson from Arizona and and the high-profile botched execution in Oklahoma earlier this year is that the death penalty sentencing and the actual carrying out of that sentence varies widely on a state-by-state basis." Philip Bump in The Washington Post.

Is the death penalty 'cruel and unusual'? "There are two reasons for arguing that the death penalty is a 'cruel and unusual punishment', and thus unconstitutional. One was on grim display in Arizona on July 23rd, when Joseph Wood, a double-murderer, took nearly two gasping, choking hours to die by lethal injection. The other came under legal attack on July 16th, when a federal judge, Cormac Carney, struck down capital punishment in California for being too slow and capricious." The Economist.

There's a lot we don't know about how these executions are carried out. "Whatever we know...the known unknowns are greater. Because the states will not share them, we don't know the dosages of the drugs administered. We don't know the drugs' manufacturers or their quality-control procedures. We mostly don't know the credentials of those administering the drugs. More importantly, the defendants don't know any of this, either. Without this information, those sentenced to execution cannot challenge the execution procedures in court nor check for possible medical complications." Matt Ford in The Atlantic.

Other legal reads:

Thousands of prisoners treated for mental illnesses. Kevin Johnson in USA Today.

Beyonce interlude: Woman turns "Single Ladies" into a monologue.

5. Politics are crushing VA care reform

VA reform talks may have just collapsed. "Staring down the August recess, the effort to overhaul the agency is on the verge of collapse. The trouble doesn’t center on substantive policy differences. In fact, Democrats and Republicans agree on the core outlines of the bill. Instead, Congress is in the middle of another standoff over money. Democrats and Republicans are struggling to agree on how to pay for legislation that could cost between $25 billion and $30 billion. That logjam is transforming the VA debate from one that united both parties to yet another fiscal fight, prompting the same type of partisan finger pointing that has become familiar after years of budget showdowns." Burgess Everett and Lauren French in Politico.

Primary source: The VA's two-page justification for its $17.6 billion request. The Washington Post.

But the House did closer to approving Boehner's Obamacare lawsuit. "The House Rules Committee approved a resolution Thursday allowing the full House to vote on authorizing a lawsuit against President Barack Obama accusing him of abusing executive authority. The 7-4 vote was split along partisan lines, just as the vote in the full chamber is sure to be. A vote by the whole House to move forward on the legal action is expected next week." Lauren French in Politico.

Veterans generally like their VA care. "The newest generation of combat veterans is struggling with integration into civilian life, confronted by suicidal thoughts, mental-health issues, unemployment and the inability to get timely assessments of their disability claims, according to a nationwide survey of 2,089 members of the Iraq and Afghanistan Veterans of America. Yet post-9/11 veterans who have used the Department of Veterans Affairs health-care system generally have a favorable impression of the medical services provided, the survey found." Paul Giblin in The Arizona Republic.

Other health care reads:

Are patient privacy laws being misused to protect medical centers? Charles Ornstein in ProPublica.

Science interlude: How playing an instrument helps your brain.

Wonkblog roundup

The drug that’s forcing America’s most important — and uncomfortable — health-care debate. Jason Millman.

3 ideas from Paul Ryan’s poverty plan that liberals can love. Matt O'Brien.

Two-hour long executions might not affect public opinion on the death penalty. Max Ehrenfreund.

We are one step closer to a new generation of cheaper drugs. Jason Millman.

What Paul Ryan still misses in his new, more serious poverty plan. Emily Badger.

These two charts explain why it’s unusually tough right now to find a newly built home. Dina ElBoghdady.

The long-term unemployed might finally be getting jobs. Matt O'Brien.

No, you aren’t crazy: Some Lay’s potato chip bags actually do have fewer chips inside. Roberto A. Ferdman.

Et Cetera

Democratic senator's bill on NSA is stricter than House's. Charlie Savage in The New York Times.

Social Security spent $300M on "IT boondoggle." Associated Press.

Report backs computer-based testing for students. Caroline Porter in The Wall Street Journal.

Nuclear plants should focus on risks posed by external events, study says. Matthew L. Wald in The New York Times.

How not to shut down coal plants. Lydia DePillis in The Washington Post.

Got tips, additions, or comments? E-mail us.

Wonkbook is produced with help from Michelle Williams and Ryan McCarthy.

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