Who’d have thunk it? The hot new topic among ambitious Republicans is poverty. In November, Senator Mike Lee of Utah delivered a speech at the Heritage Foundation on the topic. In December, Senator Rand Paul flew to Detroit to do the same. Yesterday alone, Senator Marco Rubio and House Majority Leader Eric Cantor delivered poverty-related speeches, and Representative Paul Ryan conducted a poverty-related interview. (The Ryan interview is the only one I wasn’t able to watch or read).
Good. Simply declaring that poverty is the problem, rather than the poor—as Mitt Romney famously did when he called the bottom half “victims, who believe the government has a responsibility to care for them”—is progress. Rubio gets particular credit for breaking with GOP jingoism and acknowledging that economic mobility is higher in Canada than it is here. Lee and Paul deserve praise for challenging criminal-justice laws that make it difficult for people convicted of crimes to ever recover economically from their misdeeds.
Still, taken together, the new Republican anti-poverty speeches have a depressingly theological quality. They usually begin with a catechism: Washington can’t effectively fight poverty. “After 50 years, isn’t it time to declare big government’s war on poverty a failure?” Rubio declared in a warm-up video for his speech. “What Detroit needs to thrive,” added Paul, “is not Washington’s domineering hand but freedom from big government’s mastery.”
Rarely is serious evidence offered for these assertions, because they are not statements of fact; they are declarations of faith. In truth, there’s ample evidence that some Washington programs significantly reduce poverty. A 2011 National Bureau of Economic Research paper, for instance, found that Social Security “reduces deep poverty” among the elderly and disabled “almost to zero.” In 2011, according to the Center for Budget and Policy Priorities, the Earned Income Tax Credit and the Supplemental Nutritional Assistance Program (food stamps) together lifted almost 10 million Americans above the poverty line. That doesn’t mean Washington doesn’t waste money. But by denouncing federal-government programs per se, folks like Paul declare an entire category of anti-poverty tools illegitimate. It’s like beginning a speech on national defense by affirming your doctrinal opposition to tanks.
With federal efforts largely ruled out, the Republican anti-poverty crusaders look to one of two saviors: states or the market. Rubio and Lee go the first route. In his speech yesterday, Rubio proposed that “we turn Washington’s anti-poverty programs—and the trillions spent on them—over to the states.” At Heritage, Lee called for putting the states in charge of Medicaid and Head Start. Both are cribbing from Ryan, whose famed 2011 budget called for giving the money Washington uses for Medicaid to states in the form of “block grants.”
It’s worth noting that when Ryan first unveiled his block-grant idea, he touted it as a way to fight not poverty, but debt. (Ryan’s 2011 budget, titled “The Path to Prosperity” includes 10 references to “poverty” and 132 references to “debt”) There’s a reason for that: Block grants are a lousy way to fight poverty. It may be true, as Rubio, Lee and Paul insist, that when it comes to the poor in their states, governors and state legislators are smarter and more compassionate than the Feds (though the folks in North Carolina’s Moral Monday movement might disagree). But they’ll have to be a lot smarter because block grants will make them do more with less.
The reason is simple. Programs like Medicaid and food stamps are (brace yourself) “entitlements.” That means that when recession hits and more people need them, spending on these programs goes up. That may or not be good for the federal budget, but it’s good for the poor, who can see a doctor and afford food in good times as well as bad. With block grants, by contrast, Washington gives the states a fixed amount of money irrespective of fluctuations in need. When times are good, the block grant may be sufficient. When they aren’t, the states—most of which are legally barred from running deficits—generally cut benefits. Theoretically, Washington could send them more money. (And there are hints that Rubio’s proposal might include mechanisms to do that.) But in general, as Ryan’s budget made clear, the point of block grants is to save Washington money, and so far from going up, the block grants rarely keep pace with population growth and inflation. As the Urban Institute noted in a 2004 review of block grants, “The real value of block grant funding tends to diminish over time.”
There’s a great illustration of this phenomenon going on right now. Ironically, it’s welfare reform, which Ryan and Rubio cite as their model. In 1996, Washington made Aid to Families with Dependent Children (i.e., “welfare”) into a block grant called Temporary Assistance to Needy Families (TANF). Because TANF wasn’t adjusted for inflation, its real value declined 28 percent between 1997 and 2011. In the late 1990s, when the economy was booming, that wasn’t a problem because it was easy to find jobs and fewer people needed TANF. But then the economy cooled and then it collapsed. Because TANF is a block grant, it couldn’t meet rising need. So many states began cutting the amount of assistance they gave or making it harder to qualify for any assistance at all.
By 2011, according to the Center for Budget and Policy Priorities, TANF benefits in South Carolina for a family of three equaled only 14 percent of the poverty line. In 2012, the New York Times’s Jason DeParle interviewed some of the mothers who had lost their TANF benefits. He found that they “talk with surprising openness about the desperate, and sometimes illegal, ways they make ends meet. They have sold food stamps, sold blood, skipped meals, shoplifted, doubled up with friends, scavenged trash bins for bottles and returned to relationships with violent partners—all with children in tow.”
Why were these desperate women able to sell food stamps? Because unlike TANF, it’s a still federal entitlement, and thus rose 45 percent between 2007 and 2009 to meet the increased needed sparked by the Great Recession. But that could change, since Rubio and Ryan want to block grant food stamps too.
If Rubio, Lee, and Ryan propose turning the battle against poverty over to the states, Paul and Cantor want to turn it over to the free market. Paul’s big idea is “economic-freedom zones.” As he explained in Detroit, any community where the unemployment rate exceeds 12 percent would see its personal, corporate, and payroll taxes slashed and its capital-gains taxes suspended. The idea, as Paul acknowledges, originated with Jack Kemp, who began championing low-tax, low-regulation “enterprise zones” as a response to poverty in the late 1970s and 1980s. But according to the economist Bruce Bartlett, who worked for Kemp during that time, there’s an important difference between Kemp’s proposal and Paul’s. “When Kemp began talking about this,” Bartlett notes, “it was an untried idea. Now they’ve been created and they don’t work.”