This column by ACRU General Counsel and Senior Fellow for the Carleson Center for Public Policy (CCPP) Peter Ferrara was published May 10, 2012 on Forbes.com.
On April 26, House Budget Committee Chairman Paul Ryan delivered the 2012 Whittington Lecture at Georgetown University focused on his 2013 budget and its implications for poverty programs and the poor. That budget has now passed the House of Representatives.
Ryan addressed the Catholic institution “as a Catholic holding public office” trying to conform his work to Catholic “social doctrine as best I can make of it.” He presented a vision that would be far more effective in helping the poor than current federal policies that have prevailed for decades. Georgetown is to be congratulated for giving him a high profile platform for presenting that vision. But too many among the faculty and students indicated that they were not interested in even listening to any new vision or policies, preferring to stick doggedly to the cutting edge ideas of 1935.
Ryan was greeted by a 50 foot banner asking the illuminating question, “Were you there when they crucified the poor?” That was accompanied by a letter from nearly 90 members of the faculty that already condemned his budget as a plan that “decimates food programs for struggling families, radically weakens protections for the elderly and sick, and gives more tax breaks for the wealthiest few.” But Ryan’s budget doesn’t do anything like that, and the faculty members should have been ashamed to attach their names to a document reflecting political rhetoric and cheap party talking points rather than a serious discussion of the issues.
The letter continued with the same mindless political rock throwing, saying, “In short, your budget appears to reflect the values of your favorite philosopher, Ayn Rand, rather than the gospel of Jesus Christ.” Jesuit Father Thomas J. Reese intoned with prideful self-importance, “Our problem with Representative Ryan is that he claims his budget is based on Catholic social teaching. This is nonsense. As scholars, we want to join the Catholic bishops in pointing out that his budget has a devastating impact on programs for the poor.”
But in his lecture Ryan demonstrated a far superior grasp of both Catholic social teaching and federal poverty policies than any of the 90 letter signers, none of whom displayed even a rudimentary understanding of his budget or that any of them had ever even cracked open Ryan’s budget document, “A Path to Prosperity.”
William McGurn accurately summarized Ryan’s Georgetown critics in the May 1 Wall Street Journal, writing:
“So the Sermon on the Mount now becomes a call for a single-payer system of universal health insurance. In this worldview, those who believe otherwise, i.e. those who argue that you best help the poor by breaking down barriers to ownership and opportunity — are not simply mistaken. They are selfish and uncaring….[Ryan’s critics] assume only one possible interpretation of Catholic social teaching: their own.”
Ryan began his lecture by explaining that civil public dialogue goes to the heart of the catholic principle of solidarity, “the virtue that does not divide society into classes and groups but builds up the common good of all.” Then he responded to his Georgetown critics first by saying, “Simply put, I do not believe that the [Catholic] preferential option for the poor means a preferential option for big government. Look at the results of the government-centered approach to the war on poverty. One in six Americans are in poverty today – the highest rate in a generation. In this war on poverty, poverty is winning. So we need a better approach. To me, this approach should be based on the twin [Catholic] virtues of solidarity and subsidiarity–virtues that, when taken together, revitalize civil society rather than displacing it.”
Ryan then explained his proposed reforms of programs for the poor, saying,
“Instead, our budget builds on the historic welfare reforms of the 1990s – reforms proven to work. We aim to empower state and local governments, communities, and individuals – those closest to the problem….My mentor, Jack Kemp, used to say, “You can’t help America’s poor by making America poor. The President’s failed economic policies have driven poverty rates to record heights, and the mountain of new debt he’s helped create, much of it borrowed from China or simply printed by the Federal Reserve, has made America poorer. Those unwilling to lift the debt are complicit in our acceleration toward a debt crisis, in which the poor would be hurt the first and the worst.”
The strongly bipartisan 1996 welfare reforms to which Ryan refers involved the old, New Deal, Aid to Families with Dependent Children (AFDC) program. That reform returned the share of federal spending on AFDC to each state in the form of a “block grant” to be used in a new welfare program redesigned by the state based on mandatory work for the able bodied. Federal funding for AFDC previously was based on a matching formula, with the federal government giving more to each state the more it spent on the program, effectively paying the states to spend more. The key to the 1996 reforms was that the block grants to each state were finite, not matching, so the federal funding did not vary with the amount the state spent. If a state’s new program cost more, the state had to pay the extra costs itself. If the program cost less, the state could keep the savings. The reformed program was renamed Temporary Assistance to Needy Families (TANF).
The reform was opposed bitterly by the liberal welfare establishment. Their view was well expressed by Senator Daniel Patrick Moynihan, the Urban Institute, and others who predicted that the reforms would produce a “race to the bottom” among the states, and that within a year a million children would be subject to starvation. Nancy Pelosi said the reform bill would force millions of additional children into poverty. Rep. George Miller (D-CA) said it would completely dismantle the safety net for children. Rep. Pete Stark said it would result in millions of homeless and hungry children in America. Rep. Rosa DeLauro (D-CT) said it “will increase the number of children living in poverty and fail to move people off the welfare rolls and into the work force.”
But quite to the contrary, the reform was shockingly successful, exceeding even the predictions of its most ardent supporters. The old AFDC rolls were reduced by two-thirds nationwide, even more in states that pushed work most aggressively, as those formerly on the program went to work, or married someone who worked.
As a result, in real dollars total federal and state spending on TANF by 2006 was down 31% from AFDC spending in 1995, and down by more than half of what it would have been under prior trends. At the same time, because of the resulting increased work by former welfare dependents, the incomes of the families formerly on the program rose by 25%, and poverty among those families plummeted. Haskins reports, “[B]y 2000 the poverty rate of black children was the lowest it had ever been.”
Ryan’s budget would extend these same 1996 reforms, which greatly benefited the poor as well as the taxpayers, to Medicaid, food stamps, and as many of the remaining 200 or more federal, means-tested welfare programs as possible. That would similarly benefit the poor, more effectively assisting in getting them back to work and out of poverty.
For example, the dozens of federal job training programs can be consolidated by the states into one or more effective, streamlined programs better targeted to working for the poor. The poor would potentially benefit the most from state reforms of Medicaid, which only pays doctors and hospitals 60% or less of costs for their health services to the poor. Consequently, the poor on Medicaid face grave difficulties in obtaining timely a
nd essential health care, and suffer worse health outcomes as a result. Scott Gottlieb of the New York University School of Medicine writes in the March 10, 2011 Wall Street Journal (“Medicaid Is Worse Than No Coverage at All”), “In some states, they’ve cut reimbursements to providers so low that beneficiaries can’t find doctors willing to accept Medicaid.”
The deathly problem was illustrated by the case of 12 year old Deamonte Driver, from a poor Maryland family on Medicaid. When Deamonte complained of a toothache, his mother tried to find a dentist who would take Medicaid. But only 900 out of 5,500 dentists in Maryland do. By the time she found one, and got the boy to the appointment, his tooth had abscessed, and the infection had spread to his brain. Now she needed to find a brain specialist who took Medicaid. Before she could find one, the boy was rushed to Children’s Hospital for emergency surgery. He called his mother from his hospital room one night to say, “Make sure you pray before you go to sleep.” In the morning, he was dead.
States could better serve the poor by using Ryan’s reforms to provide vouchers that would help to pay for the private health insurance of their choice in the marketplace. Such health insurance vouchers would free the poor from the Medicaid ghetto, enabling them to obtain the same health care as the middle class, because they would be able to buy the same health insurance as the middle class. That private insurance pays market rates for health care, which would enable the poor to actually get essential health care when needed.
Ryan is correct to point out that these 1996 reforms implement the Catholic principle of subsidiarity–that government programs should be administered at the closest possible level to those to be served. Ryan said at Georgetown, “We put our trust in people, not in government. Our budget incorporates subsidiarity by returning power to individuals, to families, and to communities.” Too bad that Father Reese and the other Georgetown letter signers do not know anything about the 1996 welfare reforms and their breathtaking results. But it would not be remotely accurate to describe the resulting 50% savings of AFDC costs as decimating programs for struggling families, or the extension of such reforms to Medicaid as radically weakening protections for the sick. That is not adult discussion of the issues involved.
Ryan’s Georgetown critics countered that Ryan’s budget failed the Catholic principle of “subsidium,” which means the higher levels of government must provide help with funding “when communities and local governments face problems beyond their means to address such as economic crises, high unemployment, endemic poverty and hunger.” But the supreme ignorance of these critics regarding Ryan’s budget leaves them at a loss again. Ryan’s budget continues trillions in such federal subsidium to state and local governments for programs for the poor over the next 10 years, increasing it still more over current levels, more than will be needed in fact given the positive incentives resulting from Ryan’s reforms. That is what happened with the overfunded 1996 reforms.