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Forbes.com

 

Paul Ryan's New Upward Mobility Plan

July 24, 2014

By Scott Winship

Paul Ryan, chairman of the House Budget Committee, released his much-anticipated “antipoverty” plan this morning.* I've added the quotation marks there because I much prefer to call this an “upward mobility” plan. Reducing poverty is one thing—giving people money will do that. Increasing mobility is another.

The War on Poverty aspired not simply to move people above an arbitrary threshold by putting cash in their pockets. As Lyndon Johnson put it fifty years ago, “We are not content to accept the endless growth of relief rolls or welfare rolls. We want to offer the forgotten fifth of our people opportunity and not doles.” The War on Poverty was supposed to be about independence and opportunity, not checks from the government.

Since 1964 we have cut poverty in half, as I discussed in my contribution to the YG Network's reformocon manifesto, Room to Grow. But upward mobility hasn't budged. In forthcoming research using datasets that followed young men into adulthood I find that men born in the early 1980s who grew up in the poorest fifth of households have experienced no more upward mobility than their counterparts born in the late 1940s did at the same age.

It takes more than money to expand opportunity. Too often we have fixated on simplistic shortcuts for assessing our safety net policies: the generosity of means-tested benefits and the funding levels of social programs. This has led to a proliferation of inefficient spending and duplicative, often ineffective programs.

In truth, we have needed a shakeup in our thinking around the safety net for a while. Ryan's discussion draft on expanding opportunity is the latest salvo in what Reihan Salam rightly notes has been a remarkable year for conservative policymaking. Taken together, Ryan's proposals constitute a sweeping re-imagination of the safety net and a coherent framework for expanding opportunity—all in a budget-neutral package. The proposals include:

  • A pilot “Opportunity Grant” project to consolidate means-tested programs, impose work requirements on beneficiaries, and offer them personalized case management from local providers.

This truly original approach would build on the success of the 1990s welfare reforms which made anti-poverty policy more generous to workers but less generous to non-workers. Those reforms imposed work requirements and time limits on the primary cash assistance program of the day. However, they left many other programs with few or no work incentives. Like Senator Marco Rubio, Ryan would give states a lump sum to serve their low-income residents with relatively few strings attached, combining a number of existing programs. In Ryan's case, the Opportunity Grant would consolidate the primary cash assistance program for nondisabled nonelderly families, food stamps, housing assistance and other programs—eleven in total. Social Security would be unaffected, as would the cash assistance program for poor disabled adults and children and federal health benefits.

Ryan's proposal would depend on local providers (private or public) to engage in intensive case management. Case managers would work with beneficiaries to build a “life plan” designed to personalize benefits and move recipients into independence. By promoting work, Opportunity Grants are likely to reduce child poverty, as the reforms of the 1990s did, but they are also more explicitly geared toward building skills, social connections, and character in a more ambitious way than the earlier reforms. Opportunity Grants could be a game-changer for upward mobility, and should the program disappoint, as a pilot project it would be straightforward to modify or repeal it. There is much more to say about Opportunity Grants, and I will be addressing concerns about work-promoting safety net reforms in my next column.

Ryan has passed on tackling the problems of federal disability and health programs here, but that should not detract from the boldness of Opportunity Grants as an innovative way to reorganize safety net policy.

  • Expanding the Earned Income Tax Credit for childless workers.

The EITC is a refundable tax credit aimed at low-income workers, which is to say that even eligible workers with no income tax liability benefit. Ryan's proposal, like President Obama's, would double the maximum credit for which workers can qualify, make that maximum available to more workers, make the credit more generous at other income levels, and lower the eligibility age for childless workers from 25 to 21. That latter reform would help make work pay for young men with low skill levels, addressing one of the major economic challenges we face today—declining work among men with limited job opportunities. By keeping some men in the workforce early in their careers, the proposal could help them build skills that will ensure they continue working and in better jobs.

  • Block-granting Head Start, encouraging states to expand parental choice in early childhood education, and funding a demonstration program to test the effectiveness of competing models.

These reforms are consistent with proposals Russ Whitehurst and I have advocated as an improvement on today's relatively centralized and ineffective early childhood policy. They point toward a conservative, choice- and competition-based early childhood program focused on evaluation and experimentation. There is little encouraging evidence on long-lasting effects of early childhood programs. However, the answer is not to stop trying to help poor children and their parents reach higher but to create a system to discover effective approaches through experimentation (and de-fund ineffective approaches). I think this is the sleeper component of the proposal from the perspective of upward mobility.

  • Converting the major federal elementary and secondary education program, Title I-A, into a block grant and allowing states to use the funds for broader school choice for low-income children.

It appears that the extent of choice this change would create would be up to states, and because there is no way to predict which states would bite or what their proposals would look like, the impact of this shift is impossible to predict. The idea builds on similar proposals by Congressmen John Kline and Eric Cantor and Senator Lamar Alexander. Ryan would also convert remaining federal elementary and secondary education programs into a second block grant. States could use both of these block grants much more flexibly than current policy allows. The proposal would allow states to determine their own metrics for schools' adequate progress under No Child Left Behind and their own remedies for failing schools.

  • Simplifying financial aid application, reforming the Pell grant program, capping graduate student and parent loans to reduce tuition inflation, and reforming loan repayment options.

Ryan would make it easier to apply for financial aid by shortening the application, and he would give students advance notice of their likely eligibility for aid to help them decide between schools. He would fold one federal higher ed grant program into the Pell grant program and give recipients more flexibility about when they can use the funding over the course of their enrollment. Ryan proposes to reduce the number of loan repayment options but floats the idea of making income share agreements an option (whereby private investors finance a student's expenses in exchange for a time-limited claim on a portion of the student's future earnings—an idea championed by Rubio). He also suggests that the federal programs offering support services to disadvantaged college students might be reformed and would fold expiring Perkins Loan funding into the Federal Work-Study Program.

  • Reforming higher-education accreditation.

The plan calls for easing the way for new accreditors of schools to gain recognition by the Department of Education (and thereby qualify the institutions they evaluate for federal aid). It would also allow accreditors to accredit individual courses and to accredit degrees earned by accumulating these individual courses. Ryan would have the Department of Education encourage accreditors to include employer and worker representation on accrediting boards. Finally, he would build on Obama's Pay for Success proposal so that providers of industry-recognized certificates as well as non-accredited providers of free two-year degrees could receive funds for demonstrating their credential has beneficial outcomes.

•Reorganizing job training programs The proposal calls for consolidating three jobs programs into a block grant (with a state option to fold in three more). States could use this funding flexibly, including toward technical education and apprenticeships. This could lead to an expansion of Career Academies, a well-evaluated school-within-a-school approach that connects high school students with area employers and is focused on building skills for jobs with high local demand. Career Academies have been shown not only to increase earnings but marriage rates. Ryan's proposal would also allow states to move funds between job training programs for veterans.
  • Instituting federal sentencing reforms, providing more rehabilitative services to prisoners, and allowing the incarcerated to earn time off their prison stay by participating in rehabilitation.

Recognizing that mandatory-minimum sentencing guidelines for nonviolent offenders do not serve anyone's interest, Ryan endorses reforms proposed by Senators Mike Lee and Dick Durbin and Congressmen Raul Labrador and Bobby Scott. Judges would be given discretion to ignore the mandatory minimum in some cases, and the mandatory minimum sentences for nonviolent drug offenders would be reduced. Some prisoners sentenced under earlier more punitive guidelines would also gain the right to petition for a sentence reduction. Ryan also endorses proposals by Senators John Cornyn and Sheldon Whitehouse and Congressmen Jason Chaffetz and Bobby Scott to better assess federal prisoners' risk of recidivism and provide targeted rehabilitative services, to provide more rehabilitative services, and to allow prisoners to earn privileges and time in pre-release custody (like home confinement or wearing an ankle bracelet) through participation in rehabilitation. All of these reforms are bipartisan, though they only apply to federal sentencing and federal prisons—a small share of the incarcerated.

  • Requiring regulatory agencies to assess the distribution of costs and benefits from new regulation and to get approval from Congress if the regulation disproportionately affects low-income households or low-income jobs.

The idea here is that regulations often raise the cost of living disproportionately among the poor by making purchases more expensive that they would otherwise be or by reducing job growth. This is outside my wheelhouse, but it does seem like such cost-benefit analyses would require significant resources and capabilities that the agencies are unlikely to have. It makes sense to protect poor families from questionable regulations that impose large costs on them, but obviously the ultimate legislation should not be written so that policy implementation is delayed unnecessarily in the event that other considerations (including benefits to others) routinely trump small costs borne by the poor.

  • Creating a Commission on Evidence-Based Policy Making

Finally, Ryan would create a commission to improve the evidence that is brought to bear in making policy. The commission would recommend ways to make restricted-use data more accessible to researchers, to create linkages across disparate databases, to expand the amount of data that follows individuals and families over time for purposes of economic mobility research, and how to promote outcomes measurement and experimentation in policy evaluation. This is a super-wonky topic even for Paul Ryan, but these sorts of changes would greatly improve researchers' abilities to better-understand how policies do or do not affect mobility and other outcomes and how different life influences affect or do not affect mobility. The fact that it is included in the plan is a testament to how thoughtful he and his team have been in approaching the problems of mobility and poverty.

Brookings scholar Ron Haskins was exactly right at the AEI event where Ryan rolled out his discussion draft: it has been some time since a Member of Congress on either side of the aisle has formulated such a comprehensive package of policies. And he was right, too, in suggesting that there is much here that could be embraced by the left and the right. There is a lot we could do to help the 70 percent of poor children who will fail to reach the middle class in adulthood. Let's turn off—or just tone down!—the partisan sniping and make some progress.

*Disclosure: I provided input to the Ryan proposal, along with what I gather to be many other think tank and academic researchers.

Original Source: http://www.forbes.com/sites/scottwinship/2014/07/24/paul-ryans-upward-mobility-plan/

 

 
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