Rep Ryan’s New Poverty Report: A Fat Thumb on the Evidentiary Scale

March 3rd, 2014 at 6:00 pm

Paul Ryan and the majority Republican staff of the House Budget Committee are out with a big document that purports to provide a balanced evaluation of the full spate of federal anti-poverty programs.  It’s a detailed, serious look at the issue but is beset with misleading evidence and conclusions.  While much of the commentary suggests that federal antipoverty efforts have failed and are fraught by wasteful duplication, the evidence—some of which is in here and much of which is conspicuously missing)—belies that facile claim.

Of course we could improve the efficiency of many of these programs.  But a close look at their totality shows considerable and even lasting anti-poverty effectiveness.

There’s also something that I found fundamentally odd about the report.  In 200 pages of detailed and carefully researched analysis (excepting omissions, as you’ll see), it’s all windup, no delivery.  Rep. Ryan never suggests what he wants to do differently in terms of antipoverty policy.  Is this a mystery serial where we have to wait for the next installment (i.e., the House budget)?  I think I know why he left out the punch line as I’ll reveal below (I too can create a wonky mystery!).

Here are some key areas where Rep. Ryan misrepresents what’s known about the policies he reviews:

Rep. Ryan: Federal antipoverty programs create a poverty trap that leads to higher, not lower poverty rates.

Facts: Because poverty programs are conditioned on income, they fade out as income rises.  In many programs this creates high implicit marginal tax rates or “cliff effects.”  The report argues that program recipients respond by suppressing their earnings so as to maintain eligibility and thus stay poor. The evidence says otherwise.

Economist Robert Moffitt and colleagues have done extensive research on this question.  See his work here (SNAP), here (the full spate of programs), and here in testimony I gave on this topic.  Here’s my summary:

–A recent, exhaustive review of the poverty reduction effectiveness of our safety net and social insurance programs found that “…the combination of the means-tested and social insurance transfers in the system have a major impact on poverty, reducing deep poverty, poverty, and near-poverty rates by about 14 percentage points in the U.S. population as a whole in 2004.”

–Importantly, the study concluded that “…this impact is only negligibly affected by work incentives which, in the aggregate, have almost no effect on the pre-transfer rates of poverty in the population as a whole.”

The conclusion of this analysis is important in understand the general misleading thrust of much of what’s in the Ryan report: the sign is correct, the magnitude is very much exaggerated.  That is, the disincentives Ryan et al note often exist (though not always—Ryan ignores how the ACA Medicaid expansion and premium subsidies have reduced a very large cliff formerly facing many poor adults).  But the key question is “how much do reduce the antipoverty effectiveness of the program?”  And the answer is far, far less than this report suggests.

Ryan: We’ve spent copiously on poverty reduction and yet have failed to get very far.

Fact: We’ve made a lot of progress, but you’ve got to measure poverty correctly to see it.

I won’t say much about this because it’s all here in CBPP’s extensive work on the 50-year anniversary of the War on Poverty (see here and here).  “Correctly” measuring poverty means including the impact of antipoverty programs we’ve significantly expanded that are left out of the official measure.  Rep. Ryan’s report generally—not always—sticks with the official statistics, despite the fact that they’re widely viewed as inadequate to the precise analysis he’s undertaking.

Today’s safety net — which includes important programs and improvements both from the Johnson era and thereafter — cuts poverty nearly in half.  It kept 41 million people, including 9 million children, out of poverty in 2012, according to the Census Bureau’s Supplemental Poverty Measure, a more comprehensive measure than the “official” measure.  And, poverty-reducing programs such as nutrition assistance and tax credits for working families have been found to yield lasting gains in children’s later health and education.

This discussion should also emphasize the economic developments like globalization and increased inequality that have, by reducing the return to work for low-income working families, demanded more from the safety net.

Ryan: Family structure is a major driver of poverty outcomes.

Facts: While the shift to more single-parent families has put upward pressure of poverty rates, the fact that these women are working a lot more of are more highly educated belies his simple claim.

Here we have a classic cherry-pick that’s characteristic of what’s wrong with the report. The report notes that following, citing an academic paper by Hillary Hoynes et al:

“If all else had been held constant over the past forty years, changes in family structure would have led to a rise in the poverty rate from 13% (in 1967) to 17% (in 2003).”

But the Ryan report neglects to read a few sentences further: “changes in family types substantially overpredict the actual increase in poverty rates over time…the increase in poverty was not as extreme as predicted by the changes in family structure, because this trend was accompanied by an increase in women’s earnings and labor force attachment. Increases in women’s education levels were another countervailing force.”

Again, we find a fat thumb on the scale.  It’s widely established that mother-only families are more vulnerable to poverty, and that’s a real problem.  But the careful research also recognizes the limits of marriage as a pathway out of poverty and recognizes the gains single moms have made and the importance of their facing a welcoming job market with deep work supports, factors I stress here.

 

There’s a lot more to say about all this — see my CBPP colleague Sharon Parrott’s detailed analysis here.  But for now, let me resolve the mystery as to the missing punch line.

In his past budgets, Rep. Ryan has deeply cut the safety net and block granted key federal antipoverty programs in order to partially finance tax cuts for the wealthy.  To include such policy recommendations in this report would have been inconsistent with its balanced tone (if not balanced evidence).

I don’t know what will be in his next budget and I hope I’m wrong.  Perhaps the better tone and positive observations in his poverty report suggests otherwise (the report is largely supportive of the EITC, for example).  But I suspect we’ll see more of the same in terms of shredding the safety net and the aggressive pursuit of YOYO (you’re-on-your-own) economics, and that today’s report is setting the table for that outcome.

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One comment in reply to "Rep Ryan’s New Poverty Report: A Fat Thumb on the Evidentiary Scale"

  1. Sandwichman says:

    “Rep. Ryan: Federal antipoverty programs create a poverty trap that leads to higher, not lower poverty rates.”

    A textbook case of Albert O. Hirschman’s “Rhetoric of Reaction”! Short summary from Wikipedia:

    “Hirschman describes the reactionary narratives thus:

    “According to the perversity thesis, any purposive action to improve some feature of the political, social, or economic order only serves to exacerbate the condition one wishes to remedy.

    “The futility thesis holds that attempts at social transformation will be unavailing, that they will simply fail to “make a dent.”

    “Finally, the jeopardy thesis argues that the cost of the proposed change or reform is too high as it endangers some previous, precious accomplishment.”


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