More Block Than Grant?

More Block Than Grant?
By Andrew Sullivan

Josh Voorhees spells out his main concern with the Ryan plan, i.e., that the block grant mechanism he proposes for assistance programs like SNAP will result in benefit cuts:

Under the current setup, any American who qualifies for SNAP benefits receives them, regardless of how much money Washington has already spent on the program that year. But switching to a block grant would effectively set a cap on SNAP spending by stopping the program from automatically increasing along with need. That, critics warn, could leave the program unprepared and underfunded when the next economic downturn sends more Americans than expected scrambling to put food on the table.

The best case for those who want to protect SNAP and other social welfare funding would be for Congress to freeze current funding levels for the foreseeable future. That technically wouldn’t be a reduction in funding, but inflation would tell a different story. That’s what happened to the Temporary Assistance for Needy Families program during Washington’s last attempt at major welfare reform. Since that program was block-granted in 1996, funding has remained pretty much flat at $16.6 billion per year while the program has quietly lost nearly one-third of its spending power to inflation. Under Ryan’s proposal, food stamps would risk a similar fate.

To illustrate this point, Andrew Flowers imagines that the Ryan plan had been in place during the recession that began in 2007 and calculates how big a hit the program would have taken:

At the end of 2007, the number of SNAP recipients totaled more than 26 million, with cumulative expenditures at more than $33 billion. By 2013, expenditures had more than doubled to nearly $80 billion, with recipients surging to about 47 million. If funding had remained constant, the average monthly benefit would have fallen from $133 (its actual number in 2013) to about $53.

The impact of these safety-net programs is dependent not just on how the funding is delivered — whether as separate programs or one catch-all Opportunity Grant — but also on how the programs respond to economic conditions. It’s the difference between leaning back too far in a rocking chair and on a bar stool.

Mike Konczal also looks to the 90s for historical clues as to how a block grant system would fare:

Rather than a “welfare reform — yay or nay?” conversation, it would be really useful if people arguing for the block-granting of the entire anti-poverty agenda would point out what they do and do not like about what happened in the 1990s. Especially as proponents hold up welfare reform as the model.

As Matt Bruenig notes, the work requirements and other restrictions go against the concept of subsidiarity. Greenstein writes, “the block grant would afford state and local officials tantalizing opportunities to use some block grant funds to replace state and local funds now going for similar services…That’s what happened under the Temporary Assistance for Needy Families (TANF) block grant.” In retrospect, TANF didn’t survive the business cycle, and it clearly has cut spending by cutting the rolls. Is that what people want to accomplish with food stamps, which have done wonders to boost childhood life outcomes? If not, what can be done other than assert that this time will be different?

Meanwhile, Max Ehrenfreund argues that a universal basic income is a more conservative solution to poverty than what Ryan proposes:

Another reason to see why a universal basic income is more conservative than Ryan’s block grant proposal is to compare it to other aspects of his plan. The tax code offers a yearly bonus to poor people who work, called the earned-income tax credit. It is another one of Friedman’s good ideas, and liberals should support it as well because it helps the poor get by, as Matt O’Brien argues. Ryan, like President Obama, wants to expand the earned-income tax credit for adults without children.

Yet if the goal is really to reward the poor and out of work for finding jobs, then this tax credit isn’t a perfect solution. The bonus is not available for those who earn a little more money, so the working poor have less of a financial reason to aim for a raise. They’ll pay a larger share of their income in taxes when they do. A universal basic income would solve this problem. Your payment from the government doesn’t get smaller if you start making more money.





July 28, 2014 at 4:45PM
via The Dish http://ift.tt/Uy6G9M