House Republicans Release Poverty Recommendations

The House Republicans' Task Force on Poverty, Opportunity, and Upward Mobility released a report this week outlining recommendations for poverty, career training, and education programs. The recommendations generally do not provide specific details but give an idea what the House majority would do to encourage work and better develop the workforce's skills.

The report divides its recommendations into two broad sections, the first addresses safety net programs and the second addresses education and workforce development programs. For poverty programs, the report's policies generally encourage work by more widely applying work requirements, reducing the "benefit cliff" where rising incomes bring even higher marginal tax rates because of reduced benefits, and improving the effectiveness and payment accuracy of programs. The safety-net policies recommendations include:

• Requiring states to engage Temporary Assistance for Needy Families (TANF) recipients in work
• Better connecting child-support enforcement to state workforce development programs
• Better aligning re-employment strategies in Unemployment Insurance with each state's employment opportunities
• Spending Supplemental Security Income on needed services instead of cash assistance
• Aligning housing assistance programs with TANF work requirements
• Reducing the "benefit cliff" by either giving states flexibility to design benefit packages to address the benefit cliff or increasing the Earned Income Tax Credit (EITC)
• Adjusting federal matching of state administrative costs, increasing rates for activities that produce better program automation or coordination and lowering rates for traditional administrative expenses that are less coordinated
• Potentially reducing federal matching rates for individual benefits over time to encourage states to promote beneficiaries to return to work
• Increasing the portability of housing vouchers
• Increasing data coordination and the use of information technology to make program payments more accurate
• Reducing overlap and duplication across the 80+ federal poverty programs

The second section focuses on early education, child nutrition, higher education, career training, and the private retirement system. The policies include:

• Better aligning career training programs with local economic needs
• Streamlining the nine higher education support programs into one student loan program, one grant program, and one work-study program
• Making Pell Grants available year-round
• Repealing college data reporting requirements that are deemed unnecessary
• Providing more flexibility for states in how they administer child nutrition programs
• Increasing Pension Benefit Guaranty Corporation (PBGC) premiums to meet the program's financial needs
• Making it easier for small businesses to offer joint 401(k)s with other companies

Assessing the budgetary effects of these proposals would require more details, and the policies could have mixed effects. Reducing the marginal tax rates faced by workers from benefit phaseouts could cost money if the phaseouts were lengthened or the EITC were increased, or they could save money if benefits are reduced. Making more stringent or expanding the use of work requirements should reduce spending. Consolidating programs could save money, at least from reduced administrative costs, and could have additional effects depending on whether the new program is more or less generous than the previous ones. Increasing PBGC premiums (or reducing PBGC spending so premiums do not need to be increased) would save money, while expanding the use of group 401(k)s could reduce revenue. In short, the magnitude of the potential budgetary effect and the direction of the effect for a few policies is uncertain.

We will be continuing to watch as these ideas go from concept to legislation. Much can be done to reduce poverty and raise incomes in the United States, and we hope actions are taken in a fiscally responsible manner so that reducing income inequality within one generation does not cause increased income inequality in later generations.