The Republican Attack on the American Dream

The GOP speaker of the House says social mobility for the poor is a core American value. His plans to cut Medicaid would almost certainly achieve the opposite.

Eric Thayer / Reuters

In an age of political polarization, one of the few values with near-universal bipartisan support is upward mobility—the idea that poor young Americans should have a chance to escape poverty and become middle-class or even rich adults. Most people simply call it the American Dream. But to understand how Donald Trump’s presidency might help or hurt people’s chances of achieving that dream, the best place to look might not be inside the White House, but rather inside that other large, white, marble building a few blocks away.

In Congress, House Speaker Paul Ryan has put upward mobility front and center in his new conservative reform plan. Ryan's thesis sounds simple, moral, and intelligent: Work is the surest path out of poverty, and government programs should encourage low-income workers to find jobs, develop skills, and work their way off government support.

But unlike many liberal reformers, Ryan pushes a kind of minimalist-design-aesthetic approach to social policy—to add, one must first take away. With a deep belief that government support for the poor often hurts them in the long run, Ryan has repeatedly proposed to cut welfare programs by trillions of dollars in the next decade. More than two-thirds of the cuts in Ryan’s last budget came to programs for low-income people, like Medicaid or the Supplemental Nutrition Assistance Program (SNAP), commonly referred to as food stamps.

There are two problems with Ryan’s approach. First, to build support for his anti-welfare agenda, he exaggerates the failures of America’s fight against poverty. "Americans are no better off today than they were before the War on Poverty began in 1964” is the first line of Ryan’s latest reform plan. This claim is the keystone to his thesis that anti-poverty efforts are actually pro-poverty traps. But Ryan’s statement relies on a nonsense measure of poverty that doesn’t account for tax credits or adjust for the spending habits of a modern family. By more reasonable measures, which account for the growth of tax credits and the falling cost of food, the poverty rate has fallen significantly since the 1960s, particularly among the elderly, thanks to many of the very government programs that Ryan has insisted on reforming, like Social Security, Medicare, and Medicaid.

But there is a second, more consequential downside of Ryan’s approach: It will undermine his larger stated goal to help poor children achieve upward mobility.

Take, for example, his goal to cut Medicaid, which provides insurance to the poor and long-term care for the old and sick. The most recent Republican budget would cut $2.1 trillion from Medicaid in the next ten years, including the repeal of Obamacare's Medicaid expansion. As a result, more than 20 million people would lose health insurance, and in ten years, the Children's Health Insurance Program (CHIP) would be cut by about one-third.

What effect might these cuts have on the upward mobility of poor children? Academic researchers already have an answer. Since Medicaid expansions occur state by state, rather than among all states at once, this provides an ideal dataset for comparing outcomes of similar children with different Medicaid eligibility from several states. Their conclusions suggest that Medicaid cuts could have a devastating cost on the future health, education achievement, and future income of today’s poor children.

In a 2015 paper “The Long-Term Effects of Early Life Medicaid Coverage,” the economists Sarah Miller and Laura R. Wherry found that poor children whose mothers had access to prenatal coverage under Medicaid later had lower obesity rates, higher high-school graduation rates, and higher incomes in adulthood. The authors even found that children of new mothers on Medicaid showed “less reliance on public assistance” as adults. Another 2015 paper by the economists David W. Brown, Amanda E. Kowalski, and Ithai Z. Lurie found that children who benefitted from Medicaid expansions earned higher wages as adults and collected less welfare from the government.

In other words, Medicaid and CHIP don’t seem to trap families in poverty, as conservatives often suggest. To the contrary, they help poor children escape poverty, so that as adults they are less reliant on government support.

Conservatives’ “less-is-more” approach to upward mobility is alluring to some for its unsentimental logic: If poverty is extremely uncomfortable, the poor will have no choice but to work their way out of it. But the research on Medicaid’s benefits for poor children suggests that Ryan and his acolytes have things perfectly backward. In fact, more government support for poor working families might be the most cost-effective way to fight poverty, not only because it makes poverty slightly easier to escape, but also because early investments in poor young children pay dividends later in their lives.

Among other things, Trump’s victory was about the American Dream and its perceived evaporation for many middle-class families. Counties with less upward mobility were more likely to support Trump, according to a widely circulated Gallup study. But as Republicans are poised to enact an undiluted conservative agenda, they should consider another intuitive frame for fighting poverty at a discount: Early money is like yeast. Investments in poor young children’s lives improve their adulthood outcomes, thus reducing government anti-poverty spending in the future. Slashing these investments to make room for large tax cuts for the wealthiest Americans is a strategy to help rich families hoard opportunity for their own children, while poorer kids merely inherit their parents’ poverty.