Press Release - Empowerment Agenda for the 21st Century
The federal government continues to waste hard-working taxpayers' dollars while failing to help poor Americans rise out of poverty. The current welfare system is so broken that it not only fails those on welfare, but it contributes to a sense of unfairness among non-welfare recipients, who feel they work hard yet support a system that does not encourage work.
Under President Obama, the weakest economic recovery since World War II has only made matters worse. Today, 6.8 million more Americans live in poverty than when President Obama took office. Nearly one-in-five households worry that the food they can afford will run out before the end of the month.
Worse, economic mobility — the hallmark of a successful economy and the backbone of the American dream — is woefully low for poorer Americans. Over 40 percent of children growing up poor remain poor as adults. That is a rate of economic mobility no better than half a century ago — before the 'War on Poverty' began.
The facts show that economic growth is the best anti-poverty program we have. Under President Obama, the "new normal" of 2 percent economic growth limits opportunities for poor Americans — and Secretary Clinton only offers more of the same. That is why Governor Bush has developed a pro-growth economic agenda to fix our nation's broken tax code, end burdensome regulations and develop an energy policy that will meet the needs of a growing economy. The result will be 4 percent economic growth — double President Obama's dismal record — rising middle class wages and 19 million new jobs.
Sustained, strong economic growth is only half of the equation for expanding opportunity and reducing poverty. To ensure all Americans have the right to rise, we must also develop policies that support the ingredients to permanently exiting poverty — work, family and education. Currently, our education system fails the poor and the nation's social safety net discourages work and weakens families. To fix our education system, Governor Bush has a forthcoming plan to close the opportunity gap and make sure all children have access to a quality education.
Likewise, Governor Bush believes the nation's welfare programs need radical reformation. The only way forward is to start over and create a 21st century safety net. His empowerment agenda will fix the nation's safety net by:
- Giving Control Back to the States — The current one-size-fits-all approach to welfare policy gives Washington D.C. too much power and fails to meet the needs of impoverished families. That has to change. Governor Bush will eliminate bloated, destructive welfare programs and give control back to the states through a block grant so they can better meet the needs of poor families.
- Promoting Work — Too many of our safety net programs are based on the mistaken belief that simply writing bigger checks will increase opportunity and upward mobility. But we know that a job is the best way to improve the lives of poor individuals and families. Governor Bush's plan promotes work by ending program requirements that discourage work, requiring work for able-bodied welfare recipients and doubling working tax credits for childless filers (EITC). This will not only benefit welfare recipients, it will also ensure that hardworking Americans are no longer forced to subsidize those capable of work.
- Cutting Waste and Abuse — The nation's safety net is subject to considerable waste, fraud and abuse. This is unfair to the taxpayers who fund the program and to the poor families who need help. Governor Bush's plan cuts the waste and abuse in welfare programs by doing more to verify recipients' income. His plan will also eliminate billions of dollars in wasteful spending by cutting federal administrative costs.
- Strengthening Families — The most effective anti-poverty program is a strong, two parent family. But today our welfare programs not only fail to promote marriage and the importance of two active and consistent parents in children's lives, they also have reduced efforts to ensure that single parents receive child support from absent parents. As president, Governor Bush will ensure that safety net programs encourage marriage. His administration will end welfare programs that penalize marriage and instead support marriage and parenting improvement programs. Governor Bush will also reinvigorate our nation's child support enforcement system to ensure hardworking single moms get the support they deserve.
Failing the Poor: The Current State of the Social Safety Net
The lack of economic opportunity for impoverished Americans comes at a time when welfare caseloads are at an all-time high. In 2000, 17 million Americans received assistance from the Supplemental Nutritional Assistance Program (SNAP, formerly Food Stamps). Today, the number of beneficiaries has increased by nearly 30 million to over 46 million. In 2014, the federal government provided housing assistance for nearly 10 million Americans. And over 4 million Americans currently receive cash assistance through the Temporary Assistance for Needy Families (TANF) program, and related state programs.
The nation's failure to reduce poverty is a consequence of a confusing, poorly designed social safety net. Our welfare programs fail to encourage work, weaken families, are rife with waste and abuse, and do not work well together.
Problem #1: Programs Discourage Work
There is no better way to eliminate poverty than through a good-paying job. A job provides money, as well as the necessary work and life skills needed to rise out of poverty. It sets an example for children, increasing upward mobility in the next generation. However, our social safety net shows a surprising disregard for getting people back into the workforce. This creates an unfair system where Americans not receiving assistance work hard to make ends meet, but those receiving assistance are not encouraged to work their way toward independence.
Supplemental Nutritional Assistance Program — SNAP is the nation's largest food security program. While the program alleviates poverty and reduces food insecurity, it does so at a very high cost to recipients. SNAP includes an effective tax on working where every extra dollar in earnings above certain levels reduces benefits by 24 cents. SNAP is supposed to require able-bodied adults without dependents to engage in full-time work. However, states with high unemployment rates have been granted waivers from this requirement. In 2015 — more than six years since the official end of the recession — 28 states plus Washington D.C. still have statewide waivers and an additional 13 states have partial waivers. These waivers help explain why only 16 percent of the 4.5 million households with able-bodied adults without dependents receiving assistance report any earnings.
Temporary Assistance for Needy Families (TANF) — TANF, the product of the bipartisan Personal Responsibility and Work Opportunities Reconciliation Act of 1996, was successful in reducing poverty and promoting independence through a renewed focus on work and temporary assistance. Over the years, though, the program has become less concerned with getting people out of poverty and into work. There are work requirements in TANF, limiting assistance to families who do not enter the workforce after a specified amount of time. But, these work requirements are often too weak to effectively encourage recipients to find permanent employment. In 2012, the official work participation rate for TANF recipients was only 34.4 percent.
Housing Assistance Programs — Poor families may be eligible for rental subsidies or federally financed public housing programs. With few exceptions, federal housing assistance does not require work. Like SNAP and TANF, housing assistance creates an implicit tax on working. For every dollar of earnings, benefits typically fall by 30 cents. That is one reason why only half of the working age, able-bodied housing assistance recipients receive the majority of their income through work.
Problem #2: Programs Undermine Families
Poverty in the United States is heavily concentrated among single-parent families. Single-mother families are four times as likely to be impoverished as married couples. Over 60 percent of impoverished families are headed by single individuals, most of them women.[xiii] Yet, the nation's safety net programs fail to promote marriage and some actively discourage it.
Single parenthood has an impact on the economic mobility of children as well. After controlling for demographics, young men (age 28-30) from intact families earn $6,500 more than other young men, while young women from intact families earn $4,700 more. Children of intact families are more likely to graduate from high school, and they work more hours once they enter the labor force. Single-parent families are much more likely to use federal assistance programs than married families.
Too many of our nation's federal and state welfare policies impose financial penalties on marriage. Economists Adam Carasso and C. Eugene Steuerle have written, "Most transfer programs for low-income families with children contain mainly marriage penalties — the additional income introduced by a spouse generally reduces or even ends benefits received before marriage."
While the welfare system discourages marriage, Governor Bush understands that marriage is not possible in every family. However, parents must still take responsibility for their children's well being. Single parents with custody of their children need financial support from the absent parent. Currently, too many hardworking single mothers are not getting the support they deserve.
For poor families especially, child support collections are an important resource making up a substantial portion of their income. But the percentage of custodial mothers who receive support has dropped significantly over the past decade. A growing number of single mothers in poverty are not being served by child support services and are not getting the financial support they and their children need. In Florida, Governor Bush led efforts to nearly double child support collections in the state.
Problem #3: Programs Waste Taxpayer Dollars
Taxpayers' money is too often wasted. In 2014, the Government Accountability Office estimated that 24 percent of the $60 billion in earned income tax credit (EITC) payments were improperly paid. Combined with housing assistance and SNAP, more than $18 billion in improper payments were made in 2014. This is unfair both to the hardworking Americans who deserve assistance and to the taxpayers who fund the program.
The abuses go beyond improper payments. Legislation has also made it easier for states to increase SNAP enrollment to individuals with assets above existing limits.[xix] This means more SNAP dollars are going to those who can provide for themselves, wasting taxpayer dollars and creating more dependency.
Problem #4: Programs Are Not Coordinated
The nation spends over $400 billion annually on non-health related low-income assistance programs. Including health care programs, there are at least 82 different programs, and these programs often work against one another. This exacerbates the large work and marriage penalties found in many programs. Poor coordination also wastes taxpayer money by increasing opportunities for graft and abuse.
Poorly-coordinated programs can be a barrier to rising out of poverty because "benefit cliffs" — situations where public benefits decrease very quickly when a person's income rises by a small amount — discourage work and increased earnings. Funds restricted for use in one way are used to treat the assigned symptom, but too often, these interventions fail to take a complete view of a person's individual needs or develop a new path forward.
Poor coordination among programs also magnifies marriage penalties. One study that examined multiple safety net programs found large marriage penalties for families across the income spectrum. A couple with two children with a household income of $20,000 faces a marriage penalty ranging from $1,800 to $8,900, depending on the state and the division of earnings.
Empowering Families: Fixing the Safety Net
The nation's welfare programs are hopelessly broken. The programs fail to encourage work, hurt families and cost taxpayers billions of dollars in waste and abuse. We must do better. Governor Bush's empowerment agenda for the 21st century will end wasteful welfare programs, give power and money back to the states and empower recipients by focusing on work and families. His plan will create a safety net that protects hardworking Americans when they fall but no longer traps families in perpetual dependence. A safety net where work pays more than welfare, and power does not rest with Washington D.C.
Giving Money and Control Back to the States
Governor Bush will replace the current major means-tested welfare programs with Right to Rise Grants to states. States will have the opportunity to develop programs and benefits that best meet the needs of their impoverished citizens. The grants will replace the following programs:
- Supplemental Nutrition Assistance Program
- Temporary Assistance for Needy Families
- Section 8 Housing Choice Vouchers
- Section 8 Project-Based Rental Assistance
- Public Housing Programs
These programs amounted to nearly $130 billion in federal spending in FY2013, or 32 percent of the non-health anti-poverty budget. The grants will be given in proportion to how much a state and its residents currently receive from these assistance programs.
Right to Rise Grants will give states more flexibility in how services and benefits are delivered. As the former governor of Florida, Bush understands first-hand that states are the laboratories of democracy. He implemented innovative reforms across the state's low-income assistance programs. For example, Florida received federal Medicaid waivers that allowed the state to increase choice and provide Medicaid recipients with more control over their healthcare. Providing states with more flexibility will open the door for transformative ideas to eliminate poverty and increase opportunity.
Additional flexibility will also allow states to better target assistance. Each poor family faces unique circumstances and challenges. This is especially true across different states. Poverty in California looks different than poverty in Ohio or South Carolina, but our nation's current safety net insists on a one-size-fits-all approach. Under Bush's plan, states will partner with local government and community organizations to tailor programs that best meet the needs of their citizens.
The grants will not be an open-ended entitlement to states. Instead, states will be required to meet several conditions before they qualify for the grants. States must:
- Identify Benchmarks for Success — Too many federal and state welfare program bureaucrats measure the success of their programs by the size of their caseloads. Instead, states will develop quantifiable goals based on how well their programs get people back to work and out of poverty. In addition, states will be expected to develop outcome-based goals to reduce out-of-wedlock births and promote marriage. To measure their progress, states will be expected to develop improved and streamlined records.
- Prioritize Assistance — These grants must primarily go to families living in poverty. States will not be permitted to redirect federal dollars to other projects unrelated to alleviating poverty. Likewise, states must not use these grants to offset existing state expenditures.
- Institute Real Work and Time-Limit Requirements — States will adopt strong work requirements and reasonable time limits for able-bodied adults. To ensure a robust safety net for those who have severe employment barriers and challenges, such as especially low skill levels, states will be permitted to exempt a minority of beneficiaries from these requirements. The reform will provide additional funding in the event of an economic downturn.
The federal government will partner with states to ensure low-income families are not adversely affected during the transition to the new system. In addition, evidence suggests that residential mobility is important in expanding opportunities for low-income families.[xxiv] States will accordingly be encouraged to coordinate with each other to allow for greater portability of benefits.
Most safety net programs were designed decades ago and have never been meaningfully reformed. Combined with Governor Bush's health care proposal, Right to Rise Grants will bring the nation's safety net into the 21st century. This holistic approach will encourage innovation among the states, allowing them to develop new technologies and approaches to eliminating poverty. The result will be a system better equipped to meet the immediate needs of recipients and improve economic mobility for low-income families.
Full-time employment is key to permanently exiting poverty. That is why Right to Rise Grants will include real work requirements for able-boded adults. Emphasizing work among recipients, though, is only half the answer. The plan will also make sure work pays for low-income families and individuals. Hillary Clinton and other democrats argue that we can increase take-home pay by simply increasing the minimum wage, but this only makes it harder for low-income Americans to find a job. Instead, Governor Bush will increase take-home pay by lowering taxes for working Americans.
Governor Bush's tax plan will deliver immediate tax relief for working families. Under his plan, a married family of four earning under $40,000 will pay no income taxes. Single individuals will pay no income taxes on the first $15,000 earned. Businesses will have more incentive to invest and expand, ultimately leading to higher wages and more jobs.
To further increase take-home pay, Governor Bush will expand the Earned Income Tax Credit (EITC). The credit has been shown to be successful in getting people into the workforce. However, the credit currently offers meager work incentives for childless filers. Childless filers below age 25 are not eligible for the credit, and the benefit for childless filers ages 25 to 64 is capped at $503. Governor Bush will double the size of the credit for childless workers. This means childless workers will face a zero marginal tax rate when entering the workforce even after accounting for payroll taxes. The proposal will also expand the credit to younger filers who are not enrolled full-time in school.
Eliminating Fraud and Abuse
Governor Bush will also adopt reforms to reduce the waste in safety net programs. With more than $18 billion in improper payments in EITC, SNAP, and housing assistance programs, there is no doubt that reforms are needed in their own right, and also to protect the budget.
The EITC expansion will be paired with needed reforms to cut down on the waste and abuse of the credit. To ensure the credit is not abused, Governor Bush's tax plan will institute commonsense reforms, including:
- Verify Income — Some filers overstate or understate their income to maximize their credit. Currently, the IRS will often give refundable tax credits before even receiving tax forms that would verify a filer's reported income (e.g. W-2, form 1099), in essence creating an honor system. Governor Bush's plan will require the IRS verify a filer's reported income matches W-2s and other forms reported by employers and vendors. This will reduce overpayment and ensure filers only receive the credit they are eligible for.
- Check Other Assistance Programs — Records from other assistance programs can corroborate a tax filer's information. Evidence suggests that providing the IRS access to SNAP records could help identify filers who may have improperly claimed dependents. Under the Right to Rise Grants, states will be expected to maintain more detailed information on recipients. These records will be used by the IRS to further reduce improper EITC payments.
Allowing SNAP and housing assistance to be eliminated will end the abuse and misuse of federal taxpayer money in these programs. By ending these programs and replacing them with Right to Rise Grants states will have the authority and incentive to eliminate the fraud and abuse endemic in existing programs. Taxpayer dollars are also wasted on expensive federal bureaucracies that administer these programs. By giving control back to states, Governor Bush will eliminate the need for these Washington D.C. bureaucracies — saving taxpayers money and furthering the governor's goal of cutting the federal bureaucracy by 10 percent.
Greater flexibility for states, as well as a much stronger emphasis on work, will go a long way toward improving our nation's anti-poverty programs, but Governor Bush believes even greater gains will come when we have reestablished a societal norm centered on the importance of two active and consistent parents in the lives of children.
There is a growing bipartisan consensus that a two-parent family is key to reducing poverty. A recent report by the American Enterprise Institute and the Brookings Institution made it clear: "Marriage is more than an instrumental good; it is more than a mechanism through which households receive two incomes. Marriage matters."
Twenty-five years of extensive research and evaluation have shown that marriage matters when it comes to reducing poverty and increasing opportunity. Children raised in married intact families do better than children raised in single parent families on a whole host of measures including graduation rates, criminal justice involvement and earnings as adults. But too often in discussions of poverty, this vital issue is left out of the discussion. It won't be in Governor Bush's Administration.
In addition to reducing marriage penalties in welfare programs, Governor Bush's approach will have three main components:
- Promote Marriage — Governor Bush will promote marriage as the most reliable route to family stability and resources. As president, he will join with other political leaders, educators and civic leaders in being clear and direct about how hard it is to raise children without a committed co-parent. In the same way that leading institutions advise us to abstain from smoking, eat healthy foods, get plenty of exercise, read to our children, volunteer, and finish school, they should advise young people to postpone having a child until they have a stable partner and are ready to be parents.
- Develop Parenting Skills — Governor Bush will encourage parenting skills and practices, especially among low-income parents. In recent years, evidenced-based programs have shown success at improving outcomes for children by enhancing the parenting skills and practices of their parents. States will be encouraged to use a portion of their Right to Rise Grants to support and expand these programs.
- Invest in Future Fathers — Governor Bush will promote skill development, family involvement and employment among young men so that they can be better fathers. The governor recognizes that too often, our welfare programs have operated as if poor men and especially poor fathers were unneeded, or worse, unwanted. To reduce poverty through stronger families, Governor Bush will focus special attention on improving skills, labor force participation and parental involvement of young men so that they can be more reliable and effective fathers. This includes expanding the EITC to childless filers to promote work among young men.
- Invigorate the Child Support Enforcement System — As president, Governor Bush will help single parents who currently do not receive child support payments from absent parents. He will refocus the child support enforcement system on its core mission: the collection of child support payments — set at levels commiserate with the income of the absent parent. He will also extend the reach of child support by ensuring that single parent recipients of benefits provided from Right to Rise funding are referred to, and expected to cooperate with, child support enforcement efforts.
Jeb Bush, Press Release - Empowerment Agenda for the 21st Century Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/312239