An exhaustive critique of the federal social safety net released by Rep. Paul Ryan on Monday is meant to be the intellectual foundation for an overhaul of the federal anti-poverty programs. But interviews with economists – a number of whom are cited in Ryan’s paper – suggest that he may be building his house on sand.
Ryan’s 204-page report, The War on Poverty: 50 Years Later, is documented with hundreds of citations of academic work. The paper breaks down federal anti-poverty programs into eight separate categories – cash aid, education and job training, energy, food aid, health care, housing, social services, and veterans affairs – and reviews the evidence for and against their effectiveness, relying in large part on academic research.
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"Today, the poverty rate is stuck at 15 percent—the highest in a generation,” Ryan noted in the report. “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."
However, several economists and social scientists contacted on Monday had reactions ranging from bemusement to anger at Ryan’s report, claiming that he either misunderstood or misrepresented their research.
Ryan’s paper, for example, cited a study published in December by the Columbia Population Research Center measuring the decline in poverty in the U.S. after the implementation of Lyndon Johnson’s “War on Poverty.”
One of the study’s authors, Jane Waldfogel, a professor at Columbia University and a visiting scholar at the Russell Sage Foundation, said she was surprised when she read the paper, because it seemed to arbitrarily chop off data from two of the most successful years of the war on poverty.
Waldfogel and her colleagues looked at an alternative measure of the poverty rate known as the Supplemental Poverty Measure (SPM), which factors in government benefits like food stamps and programs like the earned-income tax credit. That alternative measure is thought to present a more accurate and realistic gauge of the poverty and the real-world effects of government programs aimed at combatting it.
The Columbia researchers found that, using their model of the SPM, the poverty rate fell from 26 percent in 1967 to 15 percent in 2012. Ryan only cites data from 1969 onward, ignoring a full 36 percent of the decline.
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“It’s technically correct, but it’s an odd way to cite the research,” said Waldfogel. “In my experience, usually you use all of the available data. There’s no justification given. It’s unfortunate because it really understates the progress we’ve made in reducing poverty.”
The Ryan report uses the same paper to support its assertion that a welfare reform program instituted in 1996 was the cause of a decline in child poverty.
Chris Wimer, the lead author on the paper and a researcher at Columbia, said Ryan’s conclusion ignores the major expansion of the earned-income tax credit in 1993 and the roaring dotcom economy of the mid-to-late 1990s. “While our data can't disentangle those three things, attributing the decline in poverty after 1993 to the welfare reform of 1996 seems to go beyond what the data show,” Wimer said.
Barbara Wolfe, a professor at the University of Wisconsin at Madison, said Ryan’s paper simply misstates the findings of one of her papers studying the effect of housing assistance on labor outcomes.
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Ryan’s report says the authors find that “recipients initially experience an average annual decline in earnings of $858 in the initial year of voucher receipt. However, the negative income effect decreased to $277 five years after voucher receipt.”
“This is misstated,” Wolfe said in an email. “Our findings are a decrease of $598 NOT his $858 and in five years the decrease we estimate is $47.46 (which is not statistically different from zero).”
(UPDATE: The House Budget Committee has since corrected its reference to Wolfe's work.)
Wolfe pointed out that Ryan’s paper did not mention another study by the very same authors finding that “the housing program has more benefits than costs so focusing on only one outcome is insufficient from a policy perspective.”
Wolfe also objected to Ryan’s use of another of her studies, which his paper claimed found “Only a minority of families alter their employment decisions in response to Medicaid’s design.”
Wolfe said that the study had been restricted to a small percentage of recipients, and that its findings were limited to the years prior to the welfare reform bill that passed in 1996.
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“This minority refers to individuals with health problems,” Wolfe wrote. “I would note that this link has not been in effect since welfare reform, when it was no longer a requirement to be on cash assistance (AFDC) to get Medicaid.”
The Ryan paper also cites a study by Jeffrey Brown and Amy Finkelstein studying whether Medicaid “crowds out” private long-term care insurance. The study finds that Medicaid imposes an “implicit tax” on beneficiaries – meaning that the potential loss of benefits from an increase in income has an effect on consumers’ spending decisions. The Ryan paper artfully says that “because of this and other factors” the implicit tax explains between 66 percent and 90 percent of the lack of participation in private plans.
In an email, Brown, the William G. Karnes Professor in the Department of Finance at the University of Illinois at Urbana-Champaign, said the Ryan report’s description of his 2004 paper “is an accurate representation of our work. My only caveat would be that although Medicaid has this effect, there may also be other factors that would continue to limit the size of the private market even if Medicaid was reformed.” *
Asked about the criticism, a spokesperson for Chairman Ryan said, “We’re glad to hear the report is encouraging a debate on the performance record of federal anti-poverty programs.”
The spokesperson also pointed to comments Rep. Ryan made today: “This report will help start the conversation. It shows that some programs work; others don't. And for many of them, we just don't know. Clearly, we can do better. . . . This 50th anniversary of the War on Poverty is an opportunity to review the record in full. And we should seize it.”
*Clarification: This article has been updated to clarify Jeffrey Brown’s response. It originally said that Brown "noted that while the [Ryan] paper cites the study accurately in a literal sense, it ignores the caveat that ‘there may also be other factors that would continue to limit the size of the private market even if Medicaid was reformed.'” In the comments section below, Brown says he does not believe Ryan ignored that caveat or misrepresented his work.
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