Opinion

The Great Debate

from Reihan Salam:

Paul Ryan’s promising new plan to end poverty

Ryan speaks at the SALT conference in Las Vegas

Paul Ryan has long been known as the GOP’s budget guru. With the release of his new report on expanding opportunity in America -- the most ambitious conservative anti-poverty agenda since the mid-1990s -- he is on the cusp of becoming something much more than that.

Loved by the right and loathed by the left, Ryan has been the architect of the most consequential Republican domestic policy initiatives of the Obama era. In spirit if not in name, Ryan spent much of President Obama’s first term as the leader of the opposition, rallying Republicans against Obamacare and in favor of long-term spending reductions. His controversial calls for entitlement and tax reform as chairman of the House Budget Committee were singled out by the president for over-the-top denunciation. In the spring of 2012, well before Ryan was named the Republican vice-presidential nominee, the president went so far as to characterize the Wisconsin congressman’s budget proposal as “thinly-veiled Social Darwinism.”

And yet Ryan soldiered on. As Mitt Romney’s running mate, Ryan often seemed ill-at-ease, uncomfortable in the role of attack dog. Those close to Ryan maintained that he would have been far more comfortable doing more listening than talking, and getting a feel for communities across the country still reeling from the lingering effects of the Great Recession. Once the campaign drew to a close, Ryan decided to do just that. He retreated from his role as the Republican Party’s chief intellectual strategist to think hard about the problems plaguing America’s most vulnerable neighborhoods and families. With the help of Bob Woodson, president of the National Center for Neighborhood Enterprise, Ryan and his team traveled across the country to find community groups, churches and local governments that were working to better the lives of the poor, and to learn about the obstacles they faced and how the federal government might lend a hand.

Ryan’s ultimate aim has been to find a new approach to combating entrenched poverty. In March, the House Budget Committee released a richly-detailed report on federal anti-poverty efforts, and the many ways they’ve failed to help poor families achieve economic independence. But the report was more of an autopsy on a half-century’s worth of failed programs and frustrated ambitions, not a new agenda in itself. With this week’s report, Ryan has gone further.

Though Ryan is known for having devised budgets designed to shrink deficits by aggressively -- some would say too aggressively -- trimming the growth of Medicaid and domestic discretionary spending in the coming years, the first and most important thing to note about Ryan’s new anti-poverty agenda is that it is deficit-neutral. Rather than reduce anti-poverty spending in the immediate future, Ryan’s proposal aims to make anti-poverty spending more effective by leveraging the strengths of the federal government (the resources at its disposal) and of states, local governments, and private organizations (their local knowledge). Eventually, more effective anti-poverty spending will yield savings by helping women and men trapped in poverty become solidly middle-income workers who will pay more in taxes than they will collect in benefits. But Ryan’s proposal recognizes that helping families achieve this goal will take time and resources.

Why not a war on child poverty?

President Barack Obama’s recent speeches at the LBJ Presidential Library and National Action Network marking the 50th anniversary of the War on Poverty and the Civil Rights Act had a serious omission. While acknowledging “our work is unfinished,” Obama failed to mention this nation’s worst social trend: the stunning increase of children and youth living in poverty.

Since 1969, the proportion of children and youth in poverty rose by 56 percent, even as the economic fortunes of the elderly improved under programs like Medicare and Social Security. Today, 32 million American children and youth are confronting poverty — including 7 million suffering utter destitution, another 9 million living in serious poverty and 16 million more in low-income households struggling just above poverty lines.

Even as Obama has launched My Brother’s Keeper, an initiative to help poorer young men, his administration continues to largely ignore this larger issue. In fact, Obama said, addressing youth poverty “doesn’t take all that much.” No federal money has been budgeted for the initiative.

Tackling inequality: Where a president meets a pope

There has been much speculation about President Barack Obama’s meeting with Pope Francis on Thursday. One Catholic church authority asserted, “it is not the task of the pope to offer a detailed and complete analysis of contemporary reality.” The pope got that message — he wrote it himself in his first official “Papal Exhortation” last year.

Yet Francis has also asserted that his papacy has a “grave responsibility” to  “exhort all the communities to an ever watchful scrutiny of the signs of the times” — particularly to know the face of the poor and outcast.

For the pope, this scrutiny must take in the fierce public debate about government cuts that now overshadows U.S. politics. The left and the right are battling over sharp reductions in foods stamps and unemployment benefits, denial of healthcare to those least able to afford it and cuts in many programs designed to help the poor and needy.

How ambitious the world?

For more than a decade, the very idea of multilateralism often seemed to be on life support — damaged by the Iraq invasion and its messy aftermath, buffeted by the global economic crisis and bruised by the difficulty of coming to agreement on critical trade and climate issues in Doha and Rio, respectively. Now, the world’s attention is riveted on whether the United States and Russia’s agreement to avert the immediate crisis triggered by the use of chemical weapons in Syria can be effectively overseen by the United Nations Security Council.

But a more consequential test for multilateral cooperation is looming, one that will shape the world for decades to come. That is whether, by 2015, the international community — from the halls of U.N. headquarters to the poorest corners of the globe — can identify our shared challenges and collectively act to solve them.

2015 marks the deadline for important negotiations on development, climate change, finance and trade. And the jury is still out on whether the world’s nations can reach agreement in any of these areas — much less all of them. Given the enormous stakes involved, all the U.N. member states must seize this opportunity to revive global partnership.

We need to support anti-poverty measures that work

The U.S. Census Bureau’s release of 2012 poverty data tells us once again that millions of Americans in our wealthy nation continue to struggle at the economic margins, with no signs of progress. The nation’s just-released official poverty rate in 2012 was 15.0 percent, which represents 46.5 million people living at or below the poverty line. This marks the second consecutive year that neither the official poverty rate, wages, nor the number of people in poverty was statistically different from the previous year’s estimates.

Have we become so used to these annual reports that we no longer pay much attention? I hope not.

Research by the University of Michigan’s H. Luke Shaefer and Harvard’s Kathryn Edin shows a sharp rise in the number of people living on less than two dollars per person per day — a World Bank standard used to document global poverty. But in this case, these people live in the U.S. For some of our fellow citizens, two dollars is expected to buy, well, everything.

First chapter for ending extreme poverty

Children queue for free porridge at a local government feeding program in Tondo, Manila, Oct. 29, 2011. REUTERS/Erik De Castro

President Barack Obama believes it. President Ellen Johnson Sirleaf of Liberia believes it. I believe it, too: By 2030, we can eradicate extreme poverty.

This is not a hollow platitude. The generations living today are the first in human history that could eliminate extreme deprivation and hunger. It is critical that all nations strive to meet this goal. Not only for our own security, though we know that a more prosperous world is more stable, but because ending extreme poverty is the right thing to do.

We must focus on the working poor

In many respects the economy is healing, as both the unemployment rate and hiring statistics slowly improve. But there are growing numbers of Americans being left out.

These are not just the unemployed. Rather they are families that, despite having a working adult in the home, earn less than twice the federal poverty income threshold – a widely recognized measure of family self-sufficiency. They are working, but making too little to build economically secure lives. And their number has grown steadily over the past five years.

They are cashiers and clerks, nursing assistants and lab technicians, truck drivers and waiters. Either they are unable to find good, full-time jobs, or their incomes are inadequate and their prospects for advancement are poor.

Government can reduce inequality, but chooses not to

This essay is a response to the Reuters special report The Unequal State of America.

Income inequality is a difficult story to get your arms around, and I think Reuters has done a splendid job. I was particularly intrigued to read about the hollowing out of middle-class jobs within the federal government in D.C. I wasn’t aware that the government had so thoroughly followed the private sector’s lead in this regard.

It is important to acknowledge that while government has played an enormous role in creating the trend toward growing income inequality in the U.S., surprisingly little of that role has involved the most obvious ways government affects income distribution, i.e., taxes and benefits. Overall, the federal government redistributes about one-quarter less today than it did in 1979. But the inequality trend is more pronounced when you look at changes in income before taxes and benefits are taken into account. For example, the share of the nation’s income going to the top 1 percent of households more than doubled from 1979 to 2008. For years economists concluded that such findings meant that income inequality was market-driven. But they failed to ask whether government policies might be shaping the course of the market.

Where is Obama’s promised minimum-wage hike?

During the 2008 campaign, presidential candidate Barack Obama made a pledge to raise the minimum wage to $9.50 per hour by 2011. Promises like this one inspired a generation of young voters, excited long-neglected progressive voters and gave hope to millions of his supporters across the country.

President Obama ran a campaign of soaring rhetoric and uplifting ideas. Amidst two unpopular wars, a rapidly deteriorating financial crisis and the wildly unpopular presidency of George W. Bush, Americans were desperate for a change. He was viewed as a “transformational” candidate, a president who would turn the page on the stagnant politics of Washington.

It is now four years later, and there has been no increase to the minimum wage. There has been no congressional vote, much less a whisper from the White House on the minimum wage.

Good riddance to the tax refund loan

Tax season is full of familiar rituals – mounds of receipts on the kitchen table, midnight news reports from the post office and, of course, all those wacky come-ons from tax preparers promising easy money.

There are the Liberty Tax guys dancing at strip malls in Statue of Liberty costumes. The “FA$T CA$H” banners plastered on storefronts. And in a cult classic of advertising, all over the South there were those ridiculous Mo’ Money Taxes commercials in which buffoonish Southerners bumble through financial crises. Each one ends with advice on how to avoid a similar mess: “Just come on down to Mo’ Money!”

All of these campy promos are actually selling costly loans against your own money, but they have in fact generated lots of easy cash – for the lender, if not the borrower.

Refund anticipation loans, as they are called, have been risk-free business for most of the past decade. Lenders offer roughly 10-day advances of tax refunds, for which they charge exorbitant subprime fees. More than 12 million taxpayers got anticipation loans in their peak year, in 2004, according to the National Consumer Law Center. IRS data shows that over 90 percent of people who applied in 2010 were low-income.

Don’t be fooled, though, refund anticipation loans are no fringe market. Throughout the so-called boom years, the same banks that sit at the center of our high-end economy spread this fraud-ridden industry throughout its bottom tier. Take for instance Mo’ Money, which has faced several fraud probes. Until 2010, its storefronts were actually agents of JPMorgan Chase. The bank backed roughly 13,000 independent preparers in this business.

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