Debating Means Tested Poverty Programs | Adam Millsap, George Mason University | Lincoln-Douglas

Couple quick things before we begin. We’re excited to have a lively conversation in the chat box, but please remember to be respectful. You can raise your hand by clicking the button in the top right has a little raising hand icon and I will send you a chat to see how I can help you. And now without further ado, Mr. Adam Milsap. Hi everyone. Thanks for um having me tonight. I’m excited to talk about this with you guys. So, um, as Kate just said, so I’m a research fellow at the Mercada Center at George Mason University. And so, tonight we’re going to be discussing means tested poverty programs in the US. So, I have some slides. I think that you guys can all see them. So, I’m going to use those as a guide for our conversation um, tonight. So, and if anything comes up and we’d like to get back to the slides or refer to anything, please let me know during the questions and we can bring those up later on in the session. So first so as you said resolve the uh prompt for this discussion tonight is the United States federal government should substantially reform one or more of its means tested poverty programs. So what is means tested means? So meansested poverty programs are programs that are only available to people whose own resources also called their means are below some threshold. So some means tested programs consider both income. So the money you make on a given basis weekly or yearly and then also wealth or asset. So potentially the ownership of cars and things like that might also be a part of your means. Um often homes, things like that are usually omitted from the um asset test, but um other things like I said like cars and things like that are sometimes included for certain programs. So um just giving some background here on poverty. So first of all measuring poverty what does it mean to be in poverty in the United States. So the family resources that are currently using the official poverty measure which was developed in the 1963 um in 1963 by a worker actually at the um uh department of labor. Um, so the resources used determined to include pre-tax income. So money you make before paying any kind of federal taxes or local, state or local taxes plus cash transfers. So that would be things like cash welfare payments, social security payments, unemployment insurance benefits. So UI, things like that. But it does not include tax credits or non-cash transfers. So in kind transfers. So, an example of the tax credit, which we’ll discuss more here later on, is the earned income tax credit, also called the EITC. And then SNAP benefits, um, more commonly go by food stamps. So, we’ll talk about those more later as well. So, because it doesn’t in uh include these non- tax credits or these non- tax transfers, it’s not really a complete measure of the purchasing power of individuals. So since then the there’s

been some recognition that the official poverty measure because of this and some other things I’ll talk about here in a minute um is kind of lacking. They wanted to come up with a different kind of measure that includes these kind of things. So an alternative is the supplemental poverty measure called SPM. This corrects for tax credits. So it includes things like EITC and it corrects for non-cash transfers. So benefits in kind like food stamps, things like that. Plus it also tries to control for the differences in housing cost. So, you know, and I’m sure people know that, you know, in California, say around San Francisco, housing is much more expensive than it is in say Clemson, South Carolina, where I went to grad school. So, the supplemental poverty measure tried to correct with that um in order to decide whether someone’s in poverty or not. Another issue with the official poverty measure is the under reporting of benefits. So, some data. So in 2004 only 49% of these aid for dependent children benefits AFDC and then TANF which is temporary assistance for to needy families benefits. So these are cash benefits only 49% of them were actually reported and only 57% of the food stamp benefits were actually reported and this is down from 75% and 71% respectively 20 years earlier. So, if people don’t report all their benefits during these surveys that we take of how well people are living, then it looks like they’re doing worse than they actually are. So, that’s another issue with the official poverty measure. Um, that’s not corrected with the supplemental poverty measure. It doesn’t correct for that either. That’s just a problem that’s that’s kind of known and people are always looking for better ways to to get the data. Um, and then another issue is overstating of inflation. So, earlier consumer price index calculations, that’s what the CPI is. as a way to measure inflation. So how the purchasing power of money changes over time. So previously some of the CPI calculations overstated inflation which made it appear that people were worse off than they actually were. Um so and like I said the geographic variation in the cost of living is also not in the official poverty measure. So that being said the official poverty measure has some problems but it’s still the one that you hear about in the media. So if you read a newspaper article and it says you know 16% of the people are in poverty in the US or whatever the number might be for a given year what you’re hearing is the official poverty measure. All right so just something to keep in mind um as we’re having this discussion. So what are the current thresholds just to give you guys a sense of what the thresholds are for someone. So these are the 2015 thresholds. So I highlighted the in orange single adult households with children and then in yellow we have excuse me two adult households with children. So you can see in the first yellow box there, that would be three people. That’s two adults, one child. So the poverty measure for them is $19,78. All right. Um above that, the 16,337 in orange, that’s um two adults or single adult with one child. All right. So the orange is a single adult with

that many children. So you can see three, two children, three children, four children, and then the yellow is two adults with one child, two child, two children or three children. This actually goes out longer. There’s actually it goes up to nine people. So you could have up to seven children and still be a part of this box. I just cut it off for brevity’s sake, just to give you some idea. So, five people um which would be so one adult with four children, they would be considered in poverty if they had less than $27,853 of pre-tax cash income and other cash benefits. All right, so those are some of the current thresholds. So, now that we have a little discussion about measuring poverty and some of the issues there are with that, um when did this whole thing start? So the war on poverty President Lyndon Johnson declared war on poverty at his 1964 state of the union address. The um war on poverty is actually initiated by John F. Kennedy was actually very interested in poverty um from various studies and stuff that had been brought to his attention. Um he was obviously assassinated in 1963. So after he died and Lyndon Johnson became president, Lyndon Johnson picked up um on John F. Kennedy’s poverty crusade and so he announced the war on poverty in his state of the union address in 1964. So the economic opportunity act created the office of economic opportunity and the goal here was to design and oversee the various anti-poverty programs that were going to be implemented. Um and so now we’re going to do a little bit history of some of these programs here just kind of a summary of what of what was going on. So the early programs from 1965 to 75 the main goal was to pro provide income support and services. So, as I mentioned before, aid to families with dependent children, also called AFDC for short. There’s a lot of ACT acronyms in the poverty programs world and in the government world in general. So, hopefully we’ll keep them all straight, but there are a lot of them. Um, this was cash assistance to single mothers. So the idea, especially then, um, potentially more so now as as culture and stuff has changed over time, but most single mothers were not single because they had children out of wedlock, but were single because their spouse had died or they had they had gotten divorced, but even that was much rarer than it is now. So often it was it was considered that you were a single mother because something had happened to your spouse. And so that was a very um sympathetic situation to be in. So there was a big effort to try to give um money to single mothers with children. So that’s AFDC. Um also there’s a legal services program that tried to provide people with legal aid and legal counseling for various issues. There were job training programs, job core and neighborhood youth corps to train not only um children for jobs when they were teenagers and things like that who may have went to, you know, maybe not graduated high school, dropped out and things like that, but also adults who had maybe dropped out of high school and needed some assistance with getting the training that they needed in order to find productive employment. And there’s also the Head Start program for young children. This was a program

for you know three or four year olds to get them started on their educational development at a young age hopefully leading to you know better job prospects you know way down the line when they turned into adults. So those are some of the earlier programs during this time these programs poverty actually fell pretty rapidly. So from 1965 to 1972 they see some pretty encouraging results when it comes to poverty. So here’s various different groups. So on the far left um we have all people. So you can see that the poverty rate fell from about 14 15% down to about 11%. Um that was a pretty rapid drop. Everyone like I said was pretty excited about this. Um for people with less than eight years of education, so people that were not educated very well. Poverty rates also fell from 30% down to about 22% for non-white males. Um, so at the time this was primarily would have primarily been African-Americans. Um, the poverty rate fell pretty drastically. Um, the next move over is non-white females. So single family single family uh female headed households also it fell pretty rapidly. It was still very high obviously much too high there at almost 56% but had come down from well into the mid60s. Um, elderly poverty was a problem. So greater than 64 years old that also fell. Um and then southerners and people in rural areas tended to be poorer than people than other people on average. So there was also encouraging results in the south and in rural areas in general. So an initial after these exciting um results that people had seen there was this idea that poverty would be eradicated. People thought that by the early 80s there would be no more poverty. So um a lot of that was because of this. But as we all know now and as we’ll see here later that that didn’t quite happen. So that’s what we’re going to discuss here today. Maybe why that hasn’t happened and what we can do to to change that. So starting in 1975 after these results the focus of anti-poverty programs kind of shifted over to incentivizing work rather than giving people cash aid and cash benefits. So the earned income tax credit was passed in 1975. Um I mentioned it before and that’s now today one of the biggest anti-poverty programs out there. Um from 1985 to 2000 there were more there was more work-based reform. Um people became concerned about the growing evidence of work disincentives. So the idea was that giving people cash benefits only was not was disincentivizing them from actually seeking out employment. And so people got worried about that and they said what can we do in order to help people but also encourage them to work and hopefully help themselves at some point in the future. Um aid for dependent children a for families with dependent children was modified to emphasize work and this was part of the family support act. Um, and then probably the most the most recent and one of the most debated

welfare reforms that’s happened recently or at least within the last 25 years was the personal responsibility and work opportunity reconciliation act. Um, this was pushed for by President Clinton and the um Republican black house representatives in the uh mid90s. Um, and it was signed by President Clinton in 1996. So the 20-y year anniversary of that came up this year and there was a lot of talk in the newspapers and things about how successful that has been. So let me just go here to the next slide. So what did this do? It ended the aid for dependent uh for aid for families with dependent children entitlements. So rather than you just get them for simply meeting some threshold, it turned these things into expenditures into block grants under given to the states. So the states now were in charge of administering the program and they could do it in different ways depending on what they thought would be best. Um and then it was also the name was changed to temporary assistance to needy families. That’s the TANIF I talked about earlier. So it gave it a new name. Um it also put some other stipulations in there. Recipients were required to start working after two years of receiving benefits. So you couldn’t just be on them forever without ever having worked or without working in the future. And also there was a five-year limit on federally funded benefits. So states could choose to give more money if they wanted to, but the federal government cut benefits off after 5 years. So you can see this graph here. This came out in an economist article um talking about this uh program. And so you can see that the cash welfare recipients starting in 1996 was over 10 million and since then here in 2015 it’s fallen to about three and a half million. So there was a big drop in the number of people receiving cash benefits after these um rules went in such as start have to start working after two years and the five-year limit. So in that sense it was successful. Um if you the goal was to get people off of the off of the cash benefit roles um it was successful but the question is how did it do with poverty? What happened to these people after they got off the roles? Did they go and get jobs? Were they forced to, you know, live just poorer? Um, what did they do to take care of themselves once they were no longer receiving these benefits? So, we’ll see some evidence that it doesn’t necessarily look like it necessarily led to a lot of reductions in poverty here in a minute. All right. So, here’s a graph of long-term poverty since 1969. So, the solid line is the official poverty measure. That’s the one I talked about that doesn’t include things like t uh tax credits and non-cash benefits like food stamps. And then the one above it, the dash line, that’s the supplemental poverty measure that tries to correct for the cost of living, corrects for the tax credits and things like that. So you can see if you look at the official poverty measure, it’s been pretty flat. It was actually the lowest it’s ever been way back in 1973. Um

through the 70s, it stayed pretty flat. It went up a little bit during the early 80s. Um, so there was a recession in the early 80s. So we see the poverty rate rising a little bit. It falls when things get better in the 80s, goes up again. There was a recession in the late 80s, early 90s again, falls during the boom, the economic boom in the 90s and then again kind of rises and goes rises and falls with the business cycle. Um, we can see it going up again here at the end in the uh during the last recession. So, but it’s pretty flat though if not actually has increased slightly. Um, on the other hand, the supplemental poverty measure, which tries to correct for some of these cost of living things, though it starts out higher, it actually shows more of a downward trend. So, the optimist, they look to the supplemental poverty measure and say, and they say, “Hey, you know, looks like things have gotten better. You know, we we’ve we spent a lot of money. We’ve tried to fight poverty. It looks like things have improved a little bit.” People who are more pessimistic would tend to look at the official poverty measure and say, “Hey, we’ve done all this stuff. We spent all this money, but we haven’t really seen a big drop. It still looks like roughly on any given year anywhere from, you know, 12 to 15% of the people in in America are living in poverty. So, what can we do? What can we do to fix this?” So, despite these, as I said, as I kind of alluded to before, despite these pessimistic results, it hasn’t been necessarily for a lack of spending. Um, so there’s been effort to try to fix this, but as I just showed in the last graph, there hasn’t been a lot of results potentially depending on depending on how you look at it. So this graph right here shows expenditures per capita, so that means per person on poverty programs. And you can see that they have actually increased over time. So the top line there are the top 84 programs. So just to give you an idea of how many programs are, so it’s at least 84 programs. This graph doesn’t include them all. It just includes some of the biggest ones. Um you can see that spending per person has gone up. So there was a big increase in the early in the 60s and 70s. It kind of flattened out during the 80s and then started increasing again during the 90s and 2000s. Um the bottom graph, the dash line, that’s just the top 10 largest programs, but again you see very similar trend in increased spending per person. So, the lack of results that we might see in a previous graph, they aren’t necessarily from a lack of trying. Um, we’ve been spending money, we’ve been doing things, but we haven’t necessarily seen the results that um we had hoped. So, not every program has increased though. So, this next graph, and feel free to make this thing larger on your guys’ screen. I don’t know how it looks for you guys. For me, it’s kind of small, but feel free to blow it up. Um this next graph is spending per person um on various programs. So not all of the programs have increased and not all of the programs have decreased. So when you look at this one the EITC so their earned income tax credit housing aid so vouchers and spending for um improved housing for people of low incomes with

low incomes supplemental security income which is primarily for parents with disabled children or with blind children. um and also just disabled and blind adults as well. That’s primarily what that goes for. Food stamps have generally increased. So those things have gone up while direct cash aid so again that aid for dep aid for families with dependent children and then the temporary assistance for needy families. So the direct cash aid has declined over time while those other things have gone up. Another one that they have in the graph the CTC if you can see that that’s the child tax credit. So that’s a tax credit that goes to parents with dependent children. and they can claim it at the end of the year on their taxes and they get um partially reimbured for that. So today the EITC, the child tax credit and supplemental and the SNAP food stamps are pretty much the core of income support. Um in 2013 each of these programs uh received over $80 billion in order to in order to be funded. So that’s really the core of kind of where the money is spent. All right, so let me go here to the next one. So what are the trade-offs of welfare reform? So welfare programs have three goals when we’re looking at these things. The first is to increase well-being and living standards of the poor. And to do that, you have to redistribute income. So that’s one of the goals. Redistribute income from wealthier people to poorer people in order to improve the lives of the uh poor. The second is to encourage work. So ultimately we want people to be able to take care of themselves if possible, assuming that they’re not disabled in some uh debilitating way or anything like that. We want them to be able to work and provide for themselves. So, we want to not only increase their well-being, but we also want to encourage them to gain skills and get out into the workforce. The third goal, we want to do all of this for as little money as possible. We don’t want to just waste money. So, we want to try to do as efficient as we can. So, we want to keep the cost of the program as low as possible in order to achieve those goals. So, in order to achieve these three things, the governments can do two things. They can alter two parameters. The first is the benefit guarantee. So the amount of the benefit that they actually give to their recipients, they can alter that. The second thing is the benefit reduction rate. So how quickly, how fast is that benefit phased out over time. So those are the two things that the government can alter. And so unfortunately, this is called the iron triangle of welfare reform here is that you can usually only do two of those things at once rather than all three. So if you want to encourage work, so say let’s just say take the uh benefit guarantee for example. We can increase the benefit guarantee which would which will redistribute more income but that actually discourages work and it’s expensive. It doesn’t keep costs low. Alternatively, we could we could increase the benefit reduction rate. So actually or I mean decrease the benefit reduction rate. So we could slow the phase out. So, you work a little bit and we take some money away, but if we lower that, we don’t take as much money away.

Well, what that does, that increases your well-being. It allows you to keep more of the money as you earn more. It also encourages work because your benefits aren’t declining as you earn more of your own income. So, then you’re more likely to go out there and earn extra money because you won’t see a big drop in your benefits from the government. But again, that also gets expensive. Okay? So, that’s another reason why we can’t achieve all three. And then finally, if we just wanted to keep keep the cost of the program low, well then we wouldn’t be able to redistribute very much income, nor would we be able to that would encourage work, but we wouldn’t be able to redistribute that much income, and so it wouldn’t help as many people, and it wouldn’t help them get over the poverty level. So the idea is that it’s really only possible to to do two out of three of those things at any one time. Excuse me. So that being said, here’s an example with the earned income tax credit. So this graph is somewhat confusing and I but I really wanted to show this just because it gives you some idea of what I’m talking about. So on the bottom on the x- axis, that’s earnings in dollars. On the y ais, the vertical axis, that’s the marginal tax rate. So that’s the tax rate you that you uh are faced with for each additional dollar you earn. So if the marginal tax rate is 20%, that means if you make one more dollar, the government takes 20 cents of it and you get to keep 80 cents. All right? So that’s the idea here. So what you can see is that with the earned income tax credit, initially your tax rate is actually negative. So if you were very low levels of income below $10,000, your tax rate is actually negative. And that’s because the earned income tax credit is refundable. So, if you earned $8,000 and you didn’t pay any taxes, but your earned income tax credit was $4,000, you just get to keep that $4,000. It’s just added right to your income. So, that’s actually like a negative tax rate. So, in the beginning, for very low levels, the tax rate’s negative. But we can’t do that forever obviously because that would get very, very expensive. That’s this whole idea of wanting to keep cost low. So, we fade it out, but we don’t want to fade it out too quickly because that will encourage people not to work because they’ll be like, “Well, I could go get a job and make a little bit extra money, but if I, you know, make two more dollars, the government’s going to take one more dollar of my benefits away.” So, that’s essentially like a tax rate of 50%. So, you can see that right around $10,000, the marginal tax rate shoots up and it goes all that negative tax rate goes away. That’s because your benefits are being phased out. Your benefits are being taken away from you. So, what we usually see, and this is just one example of this, what we usually see is people tend to cluster right around that $10,000 mark. So, people will make up to that amount, but they won’t make any more because if they do, they’ll start losing their benefits, right? So, that’s this idea that it’s hard to encourage work when when you have this phase out because right around where the money starts to phase out at a pretty high rate, people tend to stop there and not earn many more income on

their own, right? So we can talk about that more if you guys have questions about that when we talk about potential reforms. So just some policy effects of what we’ve seen so far. The EIPC, the earned income tax credit has been shown to actually increase labor force participation. So it gets people into the workforce. They go out and get that first job knowing that they’re going to get this benefit from the government, this bonus when they work, but it doesn’t really alter their hours or their earnings for those already working. And that’s because of this phase out problem. So people don’t tend to work more, but if they’re not working, it gets them in the labor force. So it has that benefit, especially for single mothers. That was a big deal for mothers got into the labor force a lot with the earned income tax credit. Another problem with the earned income tax credit, though, with this high level of fraud and error. So on their website, the IRS reports that anywhere from 21 to 26% of the payments of the earned income tax credit payments are either are are given a mistake either due to fraud or the IRS just makes a mistake and pays somebody that they shouldn’t. So that’s also an issue too. Um the second thing we could do is we expand food stamps, expand benefits or or increase subsidies for child care or housing, increase housing vouchers, things like that. That would decrease property, that would solve the redistribution problem. It would give money from those who are richer to those who are poorer, but it doesn’t directly incentivize work. So, it doesn’t it doesn’t solve the goal of encouraging work and encouraging people to become self-sufficient over time. Also, it can get very expensive. Um, our alternative issue that has been brought up a lot more recently is this idea of a universal basic income. So, universal basic income simply means that everybody gets more money, everybody gets some amount of money from the government, say $9,000 a year. um that then has some uh work effort reductions initially because you’re getting $9,000 a year for doing nothing. But it doesn’t have the it doesn’t have the phase out problem because everybody gets it. So if you wanted to make more than $9,000 a year, you could go out and find a job and you don’t face any of these really high marginal tax rates because there’s no phase out. Everybody gets it. So everybody from me and you and everybody listening to this conversation tonight all the way up to Bill Gates and Warren Buffett would get the $9,000. And then finally another one training programs. So we talked about the job cores and neighborhood cores trying to get people to get to work. So we we train them and try to give them the skills they need in order to be productive workers. Overall the results in that have been pretty mixed. Um in the short term sometimes it leads to more income, sometimes it doesn’t. Sometimes it leads to better job market outcomes, sometimes it doesn’t depending on the program, depending on the study, but the evidence is fairly mixed. But overall, the consensus is that they have largely failed to produce any economically meaningful or longlasting results. So the training programs as they’re currently designed and currently in place don’t seem to be very effective for um encourage for for helping people find jobs and earn more money. All right. So what are the alternatives here? We can talk about these as we go

through this. So we have reform existing programs. We can expand and modify the earned income tax credit. Um one of the discussions right now is to make the earned income tax credit available for people without children. U make it larger for the people without children and also available for um single people. So we could expand food stamps. We could increase other kinds of benefits, other kinds of subsidies. for child care, housing, um things like that. More training opportunities. Um job filtering is one idea that I’ve read about recently. So instead of just training the people who need the jobs, we train the people who are most capable, who show the most initiative and wanting to learn that additional skill and work their way up the income ladder. And by doing that, we free up the jobs that those people used to have for those who may not have the skills nor the desire to get those skills to take the um less skilled jobs. So just think of an example be like at a fast food restaurant. Rather than training somebody to become a fast food restaurant manager that doesn’t have a job currently, we train somebody who’s already working at the restaurant who is interested and really wants to become a manager. and then by moving them up to a manager, we free open a spot for a cashier or something like that to bring someone else in who doesn’t have a job. Alternatively, we could create a whole new programs. One being the universal basic income that I talked about before, right? I said right now that’s kind of a big one on a lot of people’s list to do something like that. Um, another thing, do we need to have labor market reforms in addition to poverty reforms? So, in addition to increasing these benefits, increasing um any of these programs, are there things we need to do on the labor market side in order to free up more jobs? One that’s talked about a lot is occupational licensing. So, reducing some occupational licensing for jobs like hair stylists or, you know, nurses and nurse practitioners and things like that. Um to make it easier for people to get into those occupations, plumbers, electricians, whatever it might be, to make it easier for people to get into those occupations and not have to go through such expensive credentiing processes in order to do that kind of stuff. So, that might help. Um, people talk about raising the minimum wage or decreasing the minimum wage. That’s another one that that people discuss in order to maybe alleviate poverty. Um, and finally, another one, criminal justice reform. So, one one thing that both the um Council of Economic Advisors, which is a um body of economists that advise the president, they’ve recently written a report that talked about criminal justice and how it leads to additional poverty. So in the 1990s when after the drug laws really got strengthened, we started sending more people to jail, particularly African-Americans, males, we’ve seen an increase in poverty. And part of the thing that people think is causing that is that once people come out of the legal out of the legal system, if they’re convicted felons, it’s much harder to get a job as a convicted felon. So potentially, we need criminal justice reform. We need to make it easier for people or send less people to jail, number one, or make it easier for people to transition from having been a

criminal or been a felon to getting in becoming part of the workforce again. Um, so that may not be another thing we would need to do in tandem with any kind of usual um poverty, anti-poverty programs that might be in place. And then finally, just in general, something when you get from reading in the literature and the research on on poverty programs and welfare programs is that simplifying and consolidating them would be very helpful. Not only would it make it easier for the recipients to figure out what’s going on. A lot of times recipients are getting aid from multiple different programs and multiple different offices with multiple different forms they have to fill out. It can be very confusing even for a very intelligent person. When you’re thinking about the people that are usually in poverty, people that might have dropped out of high school, things like that, who don’t really have the knowledge and the train and understand all this, it can be very complicated. So simplifying it might help a lot of people take advantage of the programs that aren’t currently doing that. And it would probably lower some of the administrative costs of all these programs as well. And also there’s some simplification across government. So right now you might have the local government doing one program say like you know the city of Arlington where I live is doing one thing the state of Virginia is doing another and the federal government’s doing something else. So there’s a lot of governmental overlap that could be simplified as well. And then finally well I’ll just stop there because I think I’m running over time. So let’s get to your guys’ questions here. So all right where are we at here? So I see some questions. Let me scroll up and see what we got here. So, what can the new president do to help lower poverty rates? So, like I said, I I just gave some examples of of what they could do. Um, obviously, the president can’t do any of this stuff on their own. Congress needs to pass laws, um, things like that. It’s not clear what the president can do just with executive authority. But I think one of the big things I think that both sides agree on that I hear from both Republicans and Democrats from being here in Washington is that expanding the earned income tax credit is something that most people seem to be behind. So making that larger for people with families and also giving making it larger for people right now that currently don’t have children. So making it easier for them to receive that money. Um like I said, there’s a high rate of fraud and and mistakes made with that. So it’ be nice if they address that in tandem. that would save that money for the people who actually deserve it and should be getting it. But I think that’s a big one. I wouldn’t be surprised if we see either Hillary Clinton or Donald Trump when everyone happens to get elected pushing for that. Um, what else do we have here? How much So, how much flexibility the states get with block grants and what they use the money on? I’m not super familiar with all of the different programs that the states do, but I know the idea behind block grants though is that is is the idea of federalism. So, you know, we have let let 50 flowers bloom. So, if each state can try something, we can see

what works and then we can have the other states mimic that once we figure out what works. So, for things like they have a lot of flexibility in doing whatever they think is the right thing to do. Um, it doesn’t always work out though. Sometimes states don’t spend the money um maybe in the most efficient way they can. You know, there’s a lot of politics that go on at the state level just like there are at the federal level, but currently states have a lot of leeway when it comes to block grants. They can pretty much spend the money, you know, under these broad things of helping reduce poverty and things like that, but they can pretty much spend the money however they want. There’s not a lot of guidance in the sense that like, oh, you have to give this amount of money to certain people or you have to provide these job training programs. they can pretty much do do what they want with it based on what they think is going to work and then they can adjust it as they see fit as well. Um what is the difference between mean-ested poverty programs and other poverty programs? So means tested just means that you have to qualify based on your income or your assets. Some things are just entitlements where you know you get them no matter what. So you can think of something like Medicaid or not Medicaid but on Medicare for Medicare you turn 65 and you get it all right that Medicare and as it started out same with social security are anti-poverty measures for elderly people. So social security again if you work you get social security now your benefits change depending on your income but you get something as long as you work the appropriate amount of um quarters you get some money at the end. Same with Medicare. Once you turn 65, you get access you get access to Medicare no matter how much money you have. It’s not means tested. Everybody gets it. So, those are two examples of elderly poverty programs that you get just by your age, not having anything to do with how much money you have. Um, people that want the slides after the program, absolutely. I’m happy to send those off. If I can give this to Kate and she can I’m sure email them out to the uh whole group here. Um, is per capita spending inflation adjusted? Yes, the per capita spending in those graphs were inflation adjusted. You can read the footnotes the footnotes of all the have the notes and I tried to include those, but yeah, it’s suggested for for inflation. Um, what about section 8 housing program? Has spending increased or decreased? Do you think this program should be eliminated or kept with a time limit? So, I don’t know about all the particulars of section 8 housing, whether it’s been in whether it’s increased or decreased. Um, as for section 8 housing, I’m definitely broadly speaking, I’m for vouchers. I’m for giving people vouchers and letting them spend them as they want. I don’t like public housing in the sense that like here’s some houses that were built for poor people. I don’t like that. If we’re going to give money to help people with housing, I think we should just give them the money directly, excuse me, and let them choose the housing that they think is right for them. I think too often we try to stick people in neighborhoods that they don’t necessarily want to be in um for a

variety of reasons, and I think that’s the wrong way to go about it. So, I’m definitely much for a voucher program, whether it’s section 8 or some other voucher program that allows people to choose the housing that they think is right for them. and then you know the rest of us with tax dollars whatever might be subsidize that. So like I said I don’t know all the particulars of section 8 housing exactly how it works on that. I’m sure there’s details that I would like to change but broadly speaking I think vouchers are the way to go. Um is the SPM currently in place of terms how people qualify? No, it’s still evaluated on OPM. So anything all the means tested stuff. So the things when you hear about Obamacare for example and it talks about people who are making people are eligible for subsidies as they’re making say 150% of the poverty level that’s based on the OPM the official poverty measure. The SPM is just something that is also published um in order for other people to take a look at. And there’s also alternative measures. There other there’s other measures besides the SPM too that various economists and other researchers have come up with that do things slightly differently. But the official measure that all the government programs are actually tied to is the OPM, the official um poverty measure. We have one more question being typed it looks like right now. Okay. If the poverty rate was around 15% when the war on poverty began, what caused the poverty rate to drop to 15% in the first place? So, it was a little higher than that. If I go back to and I’m thinking of my fact one graph I showed you only went back to 1969. Um and when the big drop happened was from 1965 to 72. So if this graph would go back farther I think originally the poverty rate was right around 20% when they first when they first got the measure and they looked at it. it was right around 20% and then it dropped down to about 11% in the early 70s and that’s when they thought they were seeing um big big uh gains in in you know poverty reduction. Everybody got really excited and thought that poverty would be eradicated by the early 80s but sure enough things leveled off and it didn’t quite work out like that. What are your ideas for reducing prisoner acidivism? That’s a um that’s a tough that’s a tough question. Um I I personally well I think there’s a lot of evidence that um people who go to jail for nonviolent drug offenses um maybe there’s a better way to deal with those kind of people. So I personally am for am for definitely taking reducing the drug war a little bit and and making it so that you know people who do drugs but don’t harm anyone don’t go to jail. And I think that would help a lot. who wouldn’t have nearly as many felons as we have for those kind of reasons. And that might help them stay stay as a part

of their communities, not be separated from their families, separated from their children, and also allow them to be more productive citizens if we treated, you know, drug abuse and things like that more of like a public health problem rather than a criminal problem. So, that that’d be one thing I think could be done. Um, I I say I was going to go for bad audio. Is it better now? So hopefully I’ll just repeat that just in case. So the idea I was saying is that um dealing with the war on drugs, making it um less of a crime to do drugs and treating more of a public health issue, I think would help send less people to jail. And so that’d be the place I would start first. I think there’s a lot of lowhanging fruit with dealing with the drug war and trying to help those people um live productive lives and get treatment rather than rather than send them off to jail where usually end up staying. in the same situation they’re in when they got when they when they went in as when they get out. So, that’d be one thing I would do. Um asking which presidential candidate do you think would be more effective addressing poverty? Um good question. Um I don’t I don’t know that either one of them is going to be particularly effective at at addressing poverty. I think obviously with Hillary Clinton, you would probably get more redistribution. So there would be more money potentially available for reducing poverty. I’m not sure that she from what I’ve seen has any, you know, unique or unique plan to address it once she gets the money. I mean, earning income tax credit might help. You know, maybe maybe some um additional vouchers might help some people, but I don’t think either one of them has a has a big plan for addressing it. you know, taking it from like 15% down to like, you know, 10% or 9%. I don’t see that happening for either one of them. Um, so it’ll be interesting to see. Maybe maybe they’ll prove me wrong. Maybe they have something up their sleeves that I just don’t know about. But currently, I don’t I don’t have a lot of faith in them. I think ultimately when we’re thinking about poverty, too, you know, economic growth is very effective at eliminating poverty. So a growing economy with a lot of opportunities, more jobs, more employment, more production, I think that really helps. So I think economic growth would be one way to deal with it. When you see looking at this poverty measure right here, you see that during the boom times, the poverty rate declines during the recessions, the poverty rate increases. So increasing the booms and limiting their recessions or helping us get out of recessions quicker, I think that would go a long ways in helping reduce some poverty as well. And I don’t think even one of them has a very good plan for economic growth. So, so we’ll see. Um, voucher programs for housing creates too much dependency. I think it can. Um, I think we have to be ultimately all of these things. Like I said, the trade-off there is between redistributing income and making people better off and then also encouraging them to help themselves. So, encouraging work. So, I

think we have to be very careful about how we um administer the vouching program. But ultimately, I think we also just have to accept the fact that we want to help. If we want to help people, some of them aren’t going to work. There’s always going to be people that are going to try to gain the system that aren’t going to want to work. I think there’s a very small subset of people. I’m an optimist when it comes to people. I think a lot of people want to work. So, I think if we just create opportunities for them to do something productive with their lives, I think a lot of people will take advantage of it. But certainly, if you make the bouncers vouchers too generous, then that can create some real problems. So I think we need to be we need to set a level that we think is appropriate for the for the person based on their area and things like that and for a bare minimum of housing give them shelter you know make sure they have a roof over their heads but ultimately we can’t we we can’t be paying for you know very nice places and things like that that allows people to become too comfortable without necessarily helping themselves. Um, one can so someone said during the years when poverty decreased, what was done to help the decline of the poverty level? Um, I think a that’s hard to say. I think a lot of it’s there a lot of people have been pointing to culture recently. So since the 60s and things like that, there’s been a lot more out of wedlock births, a lot more single mothers and single mothers tend to have a very high poverty rate. again when you know when um a lot of uh African-American men started going off to jail that really started picking up in the 60s and 70s um then through the 80s and 90s. So I think that’s contributed to the poverty rates stagnating. Um you could have multiple generations. So prior to prior to all these poverty programs in the 60s, there wasn’t really a lot out there. people were were more required to take care of themselves or see their family members or their churches or their immediate social networks to help them out and help them get through poverty. Once the government started doing that for them, there was less of that. So, I think there’s been um maybe a decline in people’s local social networks, you know, the kind of things that help people out when they’re down on their luck. you know, strong families, strong churches, strong civic organizations, whatever it might be that used to help people deal with these kinds of issues. So, I think there’s there’s there’s been a kind of been a cultural breakdown there over the last 40 or 50 years, but I think it’s contributing some of it, certainly not all of it, but I think there’s something to be said that uh that that’s kind of had a culture and that kind of had an effect and I don’t think it’s something we understand very well yet. Um, global poverty. So I I contribute a lot of the decline in global poverty just to capitalism in general. Um free trade, globalization, you know, when America started trading with China, when we started trading with India, when India did their promarket reforms, when China did their pro market reforms, that helped a lot of people get out of poverty. So regardless of how you feel, you know, about free markets and things like that, I think the spread of capitalism in general, you know, less socialism, less communism, that’s helped

a lot of people get out of poverty right there. we see what’s going on in Venezuela right now kind of that failed socialist experiment down there and that was a lot of countries you know 50 years ago that was a lot of places and now it’s not so I think that in itself um was was a big benefit to a lot of places and hopefully that kind of stuff continues especially in some of the African countries and things like that I think when when capitalism broadly speaking you know even if it’s not even if the imperfect capitalism we have in the US today I think when capitalism spreads when there’s private ownership and you the rule of law, things like that, then people are generally very successful and people can thrive. So, I think that’s been a big part of it on the world stage for sure. Um, what effect of immigrants on our poverty program expenditures? My understanding from the research is that immigrants are actually less likely to um take assistance from the government for the most part. So, I don’t think um immigrants are a huge problem with with uh with increasing expenditures on poverty. Um part of this could be because maybe some of them maybe the illegal ones are afraid to, you know, apply for benefits and things like that, worried about potentially getting deported. But, um a lot of immigrants come here for a specific reason though too, and that’s to work. You know, most most people don’t, you know, come to America and say, “Oh, I can’t wait to get there and get that get a piece of that social safety net.” Most of them come here because they want to get a job. They want to improve their lives. So I think most of the immigrants that are coming over here aren’t coming over here to to take advantage of any of these kind of anti-poverty programs. They’re coming over here to work. So I don’t think currently immigrants are having a big and like I said the research that I understand it they’re not having a huge problem but that might change in the future but currently I don’t think it’s a big issue. Um gosh, what would be some good ways to cut down on fraud? That’s a tough one. Um, without knowing the real specifics of what’s going on, I I don’t know exactly how it how it could be done. Part of it could just be we need more IRS workers. As much as that pains me to say, um, my understanding is that they’re they’re overworked and there’s a there’s it’s hard for them to monitor everything that’s going on. So, one of the things could be I mean, if you want more fraud, you got to have more if you want to have less fraud, you got to have more policemen, right? That’s essentially the gist of it. So maybe there’s ways they can do it with technology now that I’m not aware of or anything like that, but I’m sure there’s ideas out there. I haven’t read a ton on them, but hopefully people have some and know more about it than me and they can make some progress along that front. Um, man, we got a lot of socialism, communism uh comments now, which is um great. So my thoughts on socialism is that I don’t think it’s a very good way to run an economy. So socialism in its strict sense means social ownership of the means of production. So I think a lot of times people talk about socialism in Europe and things like that, but that’s not what’s going on in Europe and places like Denmark and Norway and Sweden that a lot of people are talking

about now, especially Bernie Sanders was big about talking about those countries during his uh presidential run. That is not that is not socialism. Um that is capitalism with a big welfare state with a lot of redistribution. But people are free to start their own businesses. There’s private property. There’s rule of law, things like that. So socialism in its strict sense of the government owning the means of production of government owning businesses. I think that is a bad way to run an economy. So Venezuela social Venezuela socialism that is bad. Um we see the food shortages there now. The lines. It’s very important that you let the price system work that you let prices are like are signals. They tell people how scarce goods are relative to one another. So, a working a a functioning price system, private property, um you know, the right to earn a living, the right to exchange, to trade goods and services with others, all those things are very important. And when those things are prohibited in places like there were in Venezuela where it’s, you know, hard to start a business, when you’re worried about the government just coming and taking your business away from you at any time, that does not that that is not a good way to to run an economy. So, um, so, so speaking on socialism on its true definition, I think it’s a very bad program. Same thing with communism. Um, I’m I’m not a fan of communism. I just don’t think it works. And I think history has shown that it’s been very ineffective everywhere it’s been tried. So, um, I think capitalism is the way to go. If you’re worried about poor people, if you’re worried about poverty, if you think that capitalism is incapable of addressing those problems, I personally don’t, but if you are, I think still the idea then is to have capitalism, but then just more redistribution. So, if you want to have higher tax rates or something like that and then give that money to the poor, that is a much better way of doing it than having the government just control everything and then distribute it as they see fit. Um, if I could change one thing about the way we do welfare, what would it be? Um, and there’s another question that goes with that. What to what degree is the government responsible for poverty and general welfare of population? I think we should have a social safety net. I’m not against I’m not against zero social safety net. This idea that everyone should spend for themselves. You know, bad things happen to good people sometimes and um so I’m okay with having some kind of basic safety net. In the sense of going along with that question, if you could change one thing about what we how we do welfare, I am personally in favor of a universal basic income of some sort. Um I think it’s in a rich country like the US, I think it’s possible now that we could do something like that. I think it has to be small. I think $9,000, $8,000 would be appropriate. Certainly not as large as some people say. Um, but I think that would be a very effective way of getting rid of poverty. I think there’d be less administrative costs, so it’s not nearly as expensive. You don’t need workers just to get people money, so there’d be less government bureaucracy involved with it. Um, it has the least amount of

work disincentives associated with it. So that would be if if I was if I was made king for the day and I could implement one program that would be what I would implement. My worries about it now on the flip side is that it would quickly spiral out of control. So it would start at something like$8 or $9,000 which I think is somewhat feasible and and very quickly politicians would start saying well hey if you elect me I’ll up it to $12,000. And then the other politician would say hey elect me I’ll up it to $15,000 or $20,000. I that that that that is my one big fear about it is that it would start to get out of control and start to turn into something that was that was completely unsustainable. So, but if if that fear could be alleviated if someone could convince me that that wouldn’t happen, then I think a universal basic income would ultimately be be the way to go as far as um solving the poverty issue. Um what time is it now? I’ll give you a time for a couple more here. Do you think the US may be on the path towards socialism? I don’t think so. I don’t think we’re getting to that point where I’m worried about the government um owning like I said in the strict definition owning the means of production. But I think our version of capitalism that we’re on that we have here in the US today is not very good. I think there’s too much favoritism towards certain businesses, towards certain industries, towards certain people who are who know the right people. Um some people call it crony capitalism. Some people just call it cronyism. Whatever term you want to give to it. I think right now our version of capitalism is not very good. It’s not about free markets. It’s not about innovation. It’s not about um letting people live their lives and in the most productive way that they see fit. So I would like to see, you know, some of the uh some of that cronyism go away. Um but like I said, I don’t think we’re on the path of socialism. It’s actually something a little bit different. But I also think ultimately it’s just as debilitating in the long run this crony capitalism that we’re moving towards with these favored industries and and favored businesses and things like that. So probably not socialism, but something that can be just as bad in the next 20 or 30 years. Um, has Obamacare fixed poverty? Certainly not. Um, just the numbers alone bear that out. Has it made it had an effect? I don’t know. Well, I mean, my understanding of Obamacare is right now premiums are going up and and why it added a lot, why people have insurance now, insurance and and healthcare are not the same thing. So, I would have to have see more evidence that people are able to get the health care they need rather than just have insurance because it’s one thing to have an insurance card in your wallet. It’s very different to be able to see a doctor when you want to. So, I know Medicare, for example, a lot of doctors and part of part of Obamacare’s based contribution was really expanding Medicare. So, that’s the um health insurance for poor people, for people below a certain income. And I know right now it’s very hard for some people to see a doctor. A lot of doctors

don’t accept Medicare anymore because the reimbursements rates are so low that it doesn’t make any sense for them to accept those kind of patients. So, again, having having health insurance is not the same thing as having access to health care. And I’m not convinced that Obamacare, the law, as it’s currently in place, is really increasing people’s access to health care rather than just giving them insurance. Um, and then finally, we’ll do the last question here. I know a family’s been in welfare for 20 years. You think making time limits on welfare usage would be effective? Um, absolutely. Um, I think, you know, like I said, I think time limits can be effective. Um, again, you run that risk whenever you have the phase out. This goes back to the phase out issue that people tend to bunch around. Once the benefits start phasing out, people tend to bunch around it. If the whole idea is just a time limit, a hard stop and you’re off at five years. You would hope that that would encourage people then to prepare for that and to be gaining skills over that time pe time period so that they can find a job once their benefits run out. But there’s a chance that they won’t. And then what happens to those people afterwards um if they don’t go on benefits? Certainly, you know, in a country as rich as America, we’re not going to let them starve on the street. So, the question is, what happened to them? Do they end up going into a homeless shelter? Is that a cheaper way to deal with them that allow them to stay on on welfare? So, I I think there’s some people who probably view it and there always will be. Um I I don’t know exactly how you draw the time limits and where you stick them in order to make it effective. This is one reason why I said go back to the universal basic income. This is one reason I like it because it’s a very clean, simple solution that doesn’t involve time limits, doesn’t involve phase outs, and goes to everybody equally. And I think it would go a long way in reducing poverty while also encouraging work and things like that. Um but under our current thing I think yeah the new I think some time limit and so in our current system are appropriate