Series: Ryan Critique Of Poverty Programs Sparked Usual Battle Over Spending

By Roger Valdez

On February 3, 2023

While the world was a different place in 2014 when Congressman and recent Vice-Presidential candidate Paul Ryan emerged with his analysis and critique of the War on Poverty and the vast array of programs that emerged from it. What hasn’t seemed to change in the intervening decade is that the discussion over approaches to solving poverty still revolve around a dichotomy between approaches that rely on government programs and interventions and those that lean more on economic growth in the private sector.

This characterization might be dismissed as overly simplistic, but the discussions then and now about housing, for example, almost always end up about money; do people in poverty need the benefits of more spending on government funding housing or the benefit of lower prices created by a more competitive market. It’s worth looking at the broad conversation Ryan sparked before digging into the details.

When Ryan held the first hearing on the War On Poverty in the summer of 2013, he began saying that asking the questions about whether the War was successful was intended to start a conversation.

“This is not about cutting spending; this is about improving people’s lives. In this country, the condition of your birth should not determine the outcome of your life. If you work hard and play by the rules, you can get ahead. That is something that we all believe in and that we all care about. This is the central promise of this country. We want to protect that idea, and we want to preserve it for the next generation. And government does have a role to play. But we have been doing a pretty lousy job. The reason is government is focusing too much on inputs.”

His point then was one I’ve raised about homelessness; progress has always been linked to spending, not reductions in the measure of the problem. One Seattle City Councilmember articulated what Ryan was calling out when she doubted a fall in the count of homeless people in King County:

“I think we have to be cautious, because the amount of money we have been able to invest in this space has not jumped in a way that would lead me to believe we have a 38% decrease in chronic homelessness.”

After Ryan’s opening remarks, then Congressman and now Senator Chris Van Hollen of Maryland articulated the concerns of the other side.

“We will not win the War on Poverty by adopting budget proposals that reverse the modest gains we have made and throw millions of struggling Americans into poverty. And it simply adds insult to injury to pretend that deep cuts to food and nutrition programs and deep cuts to medical assistance will somehow, quote, ‘strengthen,’ unquote, that safety net and help people in poverty. That claim is based on a fictional storyline. It is based on the notion that people choose those safety nets, often mockingly referred to as hammocks, over finding work and over getting a job.”

And that’s the larger frame of the discussion; are safety net programs allowing people to live comfortably in poverty, or are they truly the ladder needed to move beyond poverty? Is the spending simply creating what Ryan called a “poverty trap,” or does the spending, as Van Hollen points out later in his comments, “keep people out of poverty.”

What did Ryan’s quantitative analysis find?

“Today, the poverty rate is stuck at 15 percent—the highest in a generation. And the trends are not encouraging. Federal programs are not only failing to address the problem. They are also in some significant respects making it worse. Changes are clearly necessary, and the first step is to evaluate what the federal government is doing right now.”

The report attributes this fact to lack of participation in the work force, suggesting that all the spending is incentivizing avoiding work. Furthermore, the programs themselves are redundant and layered on each other inefficiently. The report points out that in 2012, there were 92 War On Poverty programs, both in their original form but also new programs added on since the War was declared.

“For instance, there are dozens of education and job-training programs, 17 different food-aid programs, and over 20 housing programs. The federal government spent $799 billion on these programs in fiscal year 2012.”

The New York TimesNYT +0.8% editorial board seemed to sum up the criticism of Ryan’s criticism the best.

“The ideas are actually small and tired. There are scores of duplicative antipoverty programs, the report says, and since poverty persists, they are obviously wasteful and ineffective.” The Times says further that, “Mr. Ryan then goes about distorting the facts. For all of Medicaid’s billions, the report says, its recipients are less healthy than people on private insurance or Medicare!”

Then the Times introduces the orthodoxy I’ve heard before about housing subsidy programs like the Low Income Housing Tax Credit program: It worked for the people it worked for!

“Medicaid has made millions of low-income people healthier, and its expansions have dramatically reduced infant mortality and childhood deaths.”

When I criticize the efficiency of all the spending on housing, the response is often, “If we didn’t have these programs imagine all the people who would have gone unhoused!” But that logic is no different than saying, “We spent $1 million on feeding 100 hungry people, but only fed 25. Did you want those 25 people to go hungry?”

I do think it is always a stretch to attribute the choices people make in an economy to a single factor. Ryan’s connection to workforce participation and spending is as hard to substantiate as the other sides claim that if there was more local flexibility in the form of block grants, for instance, everyone would have starved to death years ago. I always rely heavily on the sentiment and arguments in August Hayek’s seminal article, The Use of Knowledge in Society. It’s worth quoting a full paragraph.

“The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate “given” resources—if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.”

In my review of the War’s housing programs as seen through Ryan’s critique, this is always my lens. There are many things we can’t know. But we can look at the stated purpose of the “unconditional war” declared on poverty, as measured in the 1960s, has at least not been won by the programs it created.

We must resist the notion that programs that provide a safety net – even cash payments – necessarily promote indolence, or that calls for improved efficiency necessarily mean a massive reduction in spending on subsidies. There really is a sense that, liberal economists like Friedman, trust poor people more than liberal politicians (see Milton Friedman’s negative income tax idea) preferring programs to cash. But conservatives are often too suspicious of cash-based programs as well. But make no mistake, poverty means not having enough income to cover expenses, and the fastest most compassionate way to solve that problem isn’t with massive program spending, but improving earning potential and reducing expenses.

This piece was republished from Forbes.