Will Paul Ryan’s big new anti-poverty plan be an improvement or a new way to cut the U.S. safety net?

Jared Bernstein
July 23, 2014
Jared Bernstein, a former chief economist to Vice President Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of “Crunch: Why Do I Feel So Squeezed?” among other books.

House Budget Committee Chairman Paul Ryan (R-Wis). (AP Photo/Susan Walsh)

House Budget Committee Chairman Paul Ryan (R-Wis.) on Thursday is coming out with a new poverty plan that’s generating some buzz.

My colleagues at the Center on Budget and Policy Priorities and I will surely have more to say about it once the details are public, but based on two points that have leaked out, let me give readers a heads up. According to The Post:

  1. This is an “anti-poverty proposal that seeks to overhaul the safety net but also leaves in place existing levels of funding.”
  2. “It would consolidate a range of safety-net programs — from food stamps to housing vouchers — into a single grant offered to states. State governments, working with local officials and nonprofit and faith groups, would then distribute the money, with strict accountability standards. Medicaid, the health program for the poor, would not be included.”

Why are these points important?

First, if you have even a passing familiarity with Ryan’s budget ideas, you know that they have historically proposed trillions in spending cuts from safety net programs.  As CBPP found in reviewing his latest budget:

“Paul Ryan’s new budget cuts $3.3 trillion over ten years (2015-2024) from programs that serve people of limited means.  That’s 69 percent of its $4.8 trillion in total non-defense budget cuts.”

The fact that he’s now talking about revenue-neutral policy changes suggests he’s moving away from the extremely aggressive cuts to those programs that he’s proposed in the past.  Since cuts of that magnitude would have significantly deepened poverty and hardship among the poor, this is potentially a step in the right direction.

That said, the second point’s got me worried.  Consolidating the funding of federal anti-poverty programs and providing them to states in block grants, even with “strict accountability standards,” could easily be a very bad idea.  Moreover, depending on how this part of the plan is structured, this could over time prove to be a back door way to accomplish the same type of spending cuts Ryan has proposed in past budgets.

Consider the experience of TANF, or Temporary Assistance for Needy Families.  This program for poor families with kids was block-granted as part of welfare reform and since then the basic funding has been largely frozen at $16.5 billion, such that real funding (inflation-adjusted) is down more than 30 percent.

As the figure below shows, that problem has zapped TANF’s counter-cyclicality, i.e., its ability to expand to meet the needs of poor families in downturns.  The figure plots the cumulative percent increase in the number of the unemployed, the number on SNAP, or food stamp recipients, and the number of TANF caseloads over the last recession.  SNAP, a non-block-granted federal program, clearly expanded to meet need.  TANF clearly did not.

 


SNAP CASELOADS RESPONDED TO THE DOWNTURN.  TANF CASELOADS DID NOT.  GUESS WHICH ONE IS FUNDED THROUGH A BLOCK GRANT? Source: CBPP

Now, it is possible to craft a block grant to expand with economic need — to build in counter-cyclicality — although by definition you’re giving states discretion to decide how they want to divvy up the anti-poverty resources.  So that’s a detail we’ll want to look for in the plan once it’s out.

But even if the ability to expand to meet need is a part of the new plan, I still think anyone who cares about the anti-poverty effectiveness of the U.S. safety net should be awfully nervous about this idea (and yes, that safety net is actually quite effective in reducing poverty).

First, it is not immediately obvious why I should trust Albany or Sacramento or Springfield or Cheyenne (yes, I know my capitals … hardly had to Google any of those!) more than D.C.  Second, let’s say Ryan does get this right and builds in counter-cyclical response.  By putting everything in one package, you’re still making it easier for future Congresses to hack away at the block grant.  And while “strict accountability” means you can’t use anti-poverty funds for other stuff — like a new governor’s mansion — that’s another potential downside of this approach.

So, good for Ryan for shelving his historical slash-and-burn approach to low-income programs. And no question, while our poverty programs are actually quite effective in both poverty reduction and investing in a better future for poor kids, they could definitely be improved.  But the devil is in the details, and block granting anti-poverty programs can be a good way of undermining their effectiveness.

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