HOUSE BUDGET Committee Chairman Paul Ryan (R-Wis.) has produced his latest take on conservative anti-poverty policy. As is often the case with Mr. Ryan’s proposals, this one, launched under the heading “Expanding Opportunity in America,” is ambitious, thoughtful and not entirely persuasive.
Mr. Ryan’s best idea is a substantial expansion of the earned-income tax credit, a wage supplement for low-income workers administered through the tax code. Currently the third-largest federal poverty-fighting program at $59 billion per year, the EITC has a proven track record of lifting families out of poverty and stimulating work effort. But it offers only skimpy assistance to childless adult workers, which Mr. Ryan would remedy by doubling the maximum annual credit for such workers to $1,005 and lowering the eligibility age from 25 to 21. It’s nearly identical to a proposal in President Obama’s 2015 budget that would have cost roughly $60 billion over 10 years.
The other pillar of Mr. Ryan’s plan is less satisfactory. He would not reduce the money Washington currently spends on some 11 anti-poverty programs — the largest of which include food stamps, public housing and cash welfare, known as Temporary Assistance for Needy Families (TANF) — but would fold them into a single block grant, available to states that wish to operate their own consolidated aid programs for the poor. States that took the option would have to meet federal conditions, including a work requirement for recipients, in return for far greater flexibility in how their agencies, public and private, meet the needs of individual clients for housing, drug treatment, training and the like. Mr. Ryan’s model is the series of state-level pilot projects that preceded 1996 welfare reform, which ultimately trimmed caseloads nationwide.
No doubt this could reduce the bureaucracy and complexity associated with administering the government’s myriad aid programs. Whether that necessarily translates into better outcomes for the disadvantaged is a different question. Mr. Ryan argues that the poor do better when grass-roots agencies, public and private, are in charge. Yet rolling food stamps into a single funding stream would seem to forfeit that program’s usefully counter-cyclical feature (that is, it spends more when the economy turns down and less when it recovers). Mr. Ryan has only tentative proposals to address that. Even thornier, though, is the work requirement, which can’t succeed unless jobs are plentiful. It’s one thing to link a single source of aid — TANF — to work, as the welfare reform law did. It’s quite another to make everything depend on it, including food.
The thing to do, therefore, is focus on the most promising, most bipartisan part of Mr. Ryan’s plan — the EITC increase. With support not only from Mr. Ryan and Mr. Obama but also, in different iterations, leading members on both sides of the aisle in the Senate, there should be no problem getting this passed. Heretofore the sticking point had been that the two parties could not agree on how to pay for the measure’s relatively modest cost. Mr. Ryan says to cut corporate welfare — including the Democrats’ pet green-energy grants. The Democrats say to close tax breaks for the rich such as the carried-interest deduction. We say both have a point. So do some of both and get on with it.