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Ryan "Opportunity Grant" Proposal Would Likely Increase Poverty and Shrink Resources for Poverty Programs Over Time

While some other elements of the Ryan poverty plan deserve serious consideration, such as those relating to the Earned Income Tax Credit and criminal justice reform, his "Opportunity Grant" would likely increase poverty and hardship, and is therefore ill-advised.
Erica Williams
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Director of State Policy Initiatives at the Center on Budget and Policy Priorities

Director of State Policy Initiatives at the Center on Budget and Policy Priorities
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US Rep. Paul Ryan, R-Wis., gestures as he speaks during a gala prior to the start of the Virginia GOP Convention in Roanoke, Va., Friday, June 6, 2014. (AP Photo/Steve Helber)
US Rep. Paul Ryan, R-Wis., gestures as he speaks during a gala prior to the start of the Virginia GOP Convention in Roanoke, Va., Friday, June 6, 2014. (AP Photo/Steve Helber)

A centerpiece of House Budget Committee Chairman Paul Ryan’s new poverty plan would consolidate 11 safety-net and related programs — from food stamps to housing vouchers, child care, and the Community Development Block Grant (CDBG) — into a single block grant to states. This new “Opportunity Grant” would operate initially in an unspecified number of states. While some other elements of the Ryan poverty plan deserve serious consideration, such as those relating to the Earned Income Tax Credit and criminal justice reform, his “Opportunity Grant” would likely increase poverty and hardship, and is therefore ill-advised, for several reasons:

  • While Chairman Ryan describes the proposal as maintaining the same overall funding as the current system for each participating state, that would be a practical impossibility. His proposal would convert the nation’s basic food assistance safety net — the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps — from an entitlement that responds automatically to increased need into part of a sweeping block grant that gives each state fixed funding for the year and, thus, cannot respond in the same way. This would be a particularly serious problem when need rises, such as in recessions. (Read more here.)

  • All ten programs other than SNAP that would merge into the block grant serve only small percentages of those eligible, and federal funding for them (other than low-income rental assistance programs) is comparatively modest. As my colleague Donna Pavetti points out, this means that if some people receive more services under the proposal, as Chairman Ryan envisions, those services will likely be paid for by cutting assistance that helps poor families put food on the table or a roof over their head. Some of the service programs to which funds would likely be shifted have higher administrative costs than programs like SNAP and rental vouchers, so less would remain for basic assistance to needy families. And, in some cases, more powerful state and local political forces may seek to corral more of the funding. For example, many state and local officials likely would try to shift part of the former SNAP benefit dollars to CDBG-type “development” proposals that politically powerful local developers (who often make large campaign contributions) often favor.

  • While Chairman Ryan says he’s driven by evidence and research, his plan would jeopardize basic nutrition assistance for poor children, which research has shown is highly effective not only in reducing child malnutrition, but also in improving children’s long-term prospects. A path-breaking recent study examined what occurred after food stamps gradually expanded nationwide in the late 1960s and early 1970s. It found that poor children with access to food stamps in early childhood (and whose mothers had access during pregnancy) had an 18-percentage-point higher high school graduation rate — and were less likely as adults to have stunted growth or heart disease or to be obese — than comparable children who lackedaccess to food stamps because their counties hadn’t yet implemented the program. By eliminating poor families’ entitlement to SNAP and placing funds for basic food assistance at risk of being diverted, the Ryan plan would jeopardize these crucial gains.

  • Total funding to assist low-income families — from federal, state, and local levels combined — likely would decline, because 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. Chairman Ryan says that the federal block grant funds would have to be used for the poor. But that wouldn’t prevent states and localities from substituting some of these funds for existing state and local funds that they now use for some of the same purposes. That’s what happened under the Temporary Assistance for Needy Families (TANF) block grant, even though Congress tried to forestall that through a maintenance-of-effort requirement and non-supplantation provisions. With broad block grants of this nature, some substitution by state and local governments is almost impossible to prevent.

  • History clearly shows that when policymakers combine a number of programs into a block grant, federal funding typically declines over time, often dramatically. That has occurred in most broad-based block grants of recent decades. When a broad array of programs are merged into a block grant, policymakers find it virtually impossible to identify a specific level of needed federal funding — or the likely human impact of program cuts. As a result, the broad block grant often becomes easy to squeeze in the competition for federal budget dollars.

    • Chairman Ryan describes the “Opportunity Grant” proposal as providing the same level of resources for low-income families and individuals, not cutting them. For the reasons stated above, however, that’s very unlikely to end up occurring. And that is why Chairman Ryan’s plan would likely boost poverty and hardship over time and would prove particularly problematic in recessions.

    Lest we forget, the nation has made enormous strides in reducing hunger and malnutrition, especially among children, since the late 1960s, when child malnutrition and nutrition-related diseases in some parts of the United States were similar to those in some Third World countries. SNAP’s entitlement nature lies at the heart of this success. The single most troubling aspect of the Opportunity Grant proposal is its removal of that essential feature from one of the biggest successes in American social policy. For that reason, as well as others noted here, the Ryan Opportunity Grant proposal would likely make conditions for America’s poor families and children worse overall rather than better.

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