The Conservative Plan to Tackle Poverty

House Speaker Paul Ryan says that improving the lives of low-income Americans is a top priority. To do that, the GOP plans to help businesses first.

Gary Cameron / Reuters

While fighting poverty hasn’t historically been a major focus of the Republican Party platform, House Speaker Paul Ryan has said that it will be one of his top priorities in the coming year. Approximately 13 percent of Americans live below the poverty line, a fact Ryan says is one of the “most persistent, stubborn problems facing the country.” That—at least—is something that both Democrats and Republicans can agree on. But when it comes to how to solve this problem, the two parties’ ideas differ greatly. On Thursday, at a conference hosted by the conservative American Enterprise Institute and several other groups, Ryan gave the audience a glimpse of how Republicans plan to tackle economic issues, including poverty, when they return to Capitol Hill in the new year.

In Ryan’s oft-touted policy agenda, “A Better Way,” he argues that social services may help Americans cope with poverty, but they do little to eliminate it. That’s why it’s no surprise that in the GOP’s anti-poverty plan, the welfare system—also called the “entitlement” system, depending on who you ask—is to be a main target for cutbacks. Ryan cites the fact that official poverty rate has hardly budged since the War on Poverty began in the late 1960s—though some academics argue that these figures don’t accurately measure real poverty—as proof that such programs don’t work, and should be fixed. Ryan also proposes creating stricter rules to ensure adults on welfare programs are actively looking for work, requiring evidence—in the form of evaluations and testing—that federally-funded programs are working, and expanding the Earned Income Tax Credit (a strategy that has bipartisan support).

These policies reflect Ryan’s view that moving more unemployed people into full-time jobs is the fastest way to get them out of poverty, and that there should be more of a financial incentive to work than to stay on welfare. He and his fellow Republicans also want the federal government to have a more limited role in providing these social services. Instead they want nonprofits and local governments to fulfill those roles.

But Ryan made it clear during his speech that altering policies specifically aimed at reducing poverty won’t be an immediate priority. Instead, the GOP will focus on tweaking policies they think will help businesses grow and provide more opportunities for low-income Americans: removing business regulations and cutting taxes, classic conservative solutions for jumpstarting economic growth. “It’s the initial shot that we need,” he said. Removing regulatory burdens, which he calls “the strangulation of businesses,” is priority number one, he says. That might include weakening the Dodd-Frank Wall Street reform bill and the Clean Power Plan. Cutting taxes comes next and will most likely ease the tax burden on corporations and the wealthiest Americans. Under his proposals, top individual income tax rates would drop from 39 percent to 33 percent, and corporate tax rates would fall from 35 to 20 percent.

It won’t be hard for Ryan and his fellow Republicans in Congress to make this happen, especially since President-elect Donald Trump has repeatedly railed against business regulations and high taxes. It’s unclear, though, what Trump thinks about Ryan’s anti-poverty policies. When asked, Ryan was cautious, and said that he a Trump discuss the issue a lot. “There is a lot of enthusiasm there, a lot of desire,” he said.

The problem for Ryan’s approach is that even if the economy does grow from removing business regulations and cutting taxes, it’s not clear that that growth will come in the form of wages for the poorest Americans. More than half of the country’s income growth in the last decade went to the wealthiest 1 percent of American families. And new research from economists at Stanford and Harvard University shows that rising inequality—not sluggish economic growth—is most likely to blame for Americans’ limited opportunities for upward mobility. That means the traditional Republican plan of spurring growth in order to boost the economic standing of the poorest Americans won’t do much to end poverty unless they can also ensure the money is going to those who need it most.