Paul Ryan’s Opportunity Grant Raises More Questions than Answers

By Carolyn Burstein
July 25, 2014

At a July 24 event, Paul Ryan officially unveiled his own anti-poverty program, the heart of which is called an “Opportunity Grant” – part of the “Expanding Opportunity in America,” a discussion draft of the House Budget Committee, that he chairs. This is Ryan’s attempt to re-conceptualize the federal government’s role in providing a safety-net for people in poverty. This first step in a journey towards evaluating the strengths and weaknesses of the social safety net leaves much to be desired, but as a discussion draft one can hope there remains room for compromise and change.

As we are all well aware from his numerous criticisms of federal anti-poverty efforts, Ryan has previously proposed massive cuts in many of these programs. The “Opportunity Grant,” however, re-structures the safety-net programs, but leaves their funding intact.

His “Opportunity Grant” proposal is a voluntary pilot program to be undertaken by select states whereby up to 11 federal anti-poverty programs would be consolidated into a single funding stream. Here are some of its main components:

  • States would have the flexibility to combine such things as food stamps, housing subsidies, child care assistance and cash welfare (TANF)
  • The same amount of funds would be spent as current law allows
  • A state’s plan would be required to meet these conditions to achieve approval:
    1. Monies would have to be spent exclusively on people “in need”
    2. Work requirements must be incorporated and the duration of funding must be limited
    3. Multiple service providers (at least two) must be allowed to offer services
    4. An evaluation by a neutral third party would be required to track metrics
    5. Any service provider who came up short could no longer participate in the program

After assessing many pilots, “we would pool the results and go from there,” Ryan said.

He explained that families in need could choose from approved non-profits, for-profits, community groups or their state program office. In this streamlined procedure, families or individuals would deal with one person, their case manager, who would be a personal resource to assist them in their efforts to overcome poverty.

While there are many unanswered questions in the proposal (e.g. If the federal government plays a more limited, reinforcement type of role for state-organized programs, how are “people in need” defined? Would the same criteria be used by each state in that definition? How limited would the duration of funding be?), answering them could be the nature of any “pilot” effort. One is reminded that the sub-title of the proposal is “discussion draft.” Is Ryan open to push-back?

One needs to be wary for the simple reason that Ryan’s track record in the area of federal safety-net programs is less than sterling. Many think that an attempt to consolidate programs for those who are needy is merely a prelude to cutting them. An editorial in the Washington Post on July 25, called Ryan’s proposal “ambitious, thoughtful and not entirely persuasive.” Here are some areas of the “Opportunity Grant” program that I find problematic.

The “Opportunity Grant” has all the hallmarks of the 1996 “reform” of welfare, which subsequently became Temporary Assistance for Needy Families (TANF). In Ryan’s words, he is proposing a “more dynamic form of aid” than the safety net programs establish, by incorporating work into the system. As indicated above, work requirements are an integral part of the proposal. Even some of the key metrics to be used by the states are similar to those used in TANF – percentage of people who find work, who get off assistance, who move above the poverty threshold, obtain their high school diploma, and grow their wages. There is ample evidence that TANF, compared with other safety-net programs, did not perform well during the Great Recession. As a matter of fact, Jared Bernstein’s July 23 blog reminds us that turning federal programs into state block grants has been a primary way to end their essential counter-cyclicality. In graph form, Bernstein shows that from 2007 through 2012 when unemployment soared, food stamps and several other federally-administered safety-net programs rose in tandem with unemployment as expected, but TANF remained essentially unchanged and did not serve its intended beneficiaries.

Ryan appears to anticipate this criticism by suggesting that possible options exist for designing a block grant that would be counter-cyclical. For example, funds could be varied based on the level of unemployment in the state, or states could be required to set aside a portion of their grant funds for future expenditures. The latter option might cause deprivation to people in the short-term if the grant is not designed carefully–even this suggestion precludes any political nastiness resulting from disagreement. But the options that he suggests are very tentative.

Strangely, with its central emphasis on work, the “Opportunity Grant” program (as well as the other three sections of his complete program) is entirely devoid of any suggestion of how additional jobs would be created.

Lacking a “job creation” component, raises immediate questions about the prospective viability of the effort. Ryan’s desire to enable people to get “out of poverty,” could be achieved through his (and his colleagues’) support of increasing the minimum wage — the Congressional Budget Office estimated that 900,000 people would move above the poverty threshold, if the minimum wage were raised incrementally to $10.10. Interestingly, many of the “Opportunity Grant” examples used in the text of Ryan’s proposal are of jobs that pay minimum wage (e.g. Andrea’s medium-term goals to be a teaching aid). People cannot live on, or care for a family on today’s minimum wage of $7.25 which, therefore, undermines his arguments.

Ryan envisions case managers helping people craft a life plan (or contract) that includes measurable benchmarks for success, a timeline for meeting these benchmarks, sanctions for breaking as well as incentives for exceeding terms of the contract and clear time limits for cash assistance. Case managers would also provide (or contract with others to provide) services that include mentoring programs and drug treatment programs, or any number of other programs. Since success is tied so closely to the effectiveness of case managers, one is entitled to ask who they would be and how they would be paid? What would happen to administrative costs if they were all paid a “living wage?” Would having sole authority for determining sanctions for breaking the terms of the contract include withholding benefits? The centrality of the role of case managers would hardly reduce the bureaucracy and complexity that Ryan decries.

Another significant question left unanswered is how these “contracts” will respond to changes in both the lives of the individuals and the economy. If a sudden shift in family situation or an unplanned illness prevents a worker from meeting their contractual obligation, how would the caseworker seek to punish this “failure” to meet a benchmark? Just as important given the last decades turbulent economy and job market, how will the contract’s stipulations on work—particularly attaining the individual’s ideal occupation, and not just a job to pay the bills, within a certain period of time—respond to shortcomings in the job market that occur through no fault of the individual? These are questions left unanswered in the document, potentially left at the discretion of the caseworker or the individual state, but that make a significant difference in the flexibility of the program.

It is answers to questions like the foregoing that will clarify the real intent behind the “Opportunity Grant” program. It is clear that some of Ryan’s long-held beliefs on work and the consequences of long-term government assistance are apparent in this proposal. Getting people to simply “move off welfare” and “out of poverty” by “accepting responsibility” for their choices and “holding them accountable” for their actions have become not only his personal mantra but are that of the party to which he belongs. Despite his praise for Catholic Charities’ programs and his recent experience in visiting other low-income aid programs as well as with people in poverty, Ryan still seems to have little understanding of the fact that many of the elements of his proposal are middle to upper-class concepts accepted globally by those classes, and that all Americans have not had the advantage of that type of upbringing or living with these values. One would hope that Ryan would challenge the current ideology of his own party as forcefully as he is doing in this proposal to merge safety-net programs that some advocates have spent their lives to garner in legislation.

To many safety-net program advocates, Ryan’s grant proposal is merely a cynical re-branding effort in an election year. Others are skeptical of Ryan because of his track record. One Center of American Progress (CAP) article by Melissa Boteach finds it nearly impossible to impute a radical change in Paul Ryan’s belief system after four years of radical budget cuts on the very programs he would now re-structure. Instead, she admonishes him to support policies like that for a national paid leave for families program, high-quality child care and an early education program as well as an increase in the minimum wage, all of which could cut poverty and increase economic mobility more than any attempt to change safety-net programs.

Robert Greenstein, Executive Director of the Center on Budget and Policy Priorities (CBPP), cautioned Ryan “to play it straight on poverty programs” and not mischaracterize or distort key poverty data, as he has done in the past. Greenstein, who is intimately familiar with research on the effects of all safety-net programs, is eager for Ryan to know that a recent academic assessment of the research on poverty, finds that safety-net programs have very little effect on the amount that people work.

While there are many facets of the Ryan proposal of which we should be wary, there are also many aspects of the OG that bear further discussion, and for that we should be grateful. Eschewing politics in this year of mid-term elections, let’s consider some straightforward possibilities in addition to support for job creation and the questions raised above. All of the suggestions should be tested from the perspective of the people in poverty who use the various safety-net programs. Here are just a few that should be questioned and would probably benefit from pilot testing based on clear metrics:

  • The haphazard and sometimes confusing way in which many federal safety-net programs are currently administered
  • The need for simplification and innovation in these programs (could be based on some “best practices” used in many states)
  • Collaboration among state program agencies, non-profits and community programs who are all trying to serve people who need assistance

These are a few suggestions that could form the basis of a dialogue with Paul Ryan and his colleagues responsible for the “Opportunity Grant” section of “Expanding Opportunity in America.”

Leave a Reply

Your email address will not be published. Required fields are marked *