State of the global economy: Are the clouds clearing at last?


State of the global economy: Are the clouds clearing at last?



Ryan and House Republicans propose to fight poverty and expand economic opportunity

A House Republican working group, under the overall leadership of Speaker Paul Ryan, released a report today full of good ideas for reform of the nation’s social programs. The report continues the approach that Ryan and his staff have taken in the past to making policy proposals. They write reports that are a cross between a scholarly study and a political document. The hallmarks of the reports are an analysis of a particular policy problem; lots of charts, statistics, and references to studies; a specification of broad policy goals; and then a set of proposals that are spelled out in some detail to achieve the goals. Democrats often disagree with Ryan’s proposals, but it makes for much better and more focused debate if both sides know exactly what is being proposed and why.

A notable characteristic of today’s report is the emphasis on evidence, to which an entire section of the report is devoted. Especially important is the discussion of the Evidence-Based Policy Commission, recently created and guided through Congress to a presidential signature by Ryan and his Democratic Senate colleague Patty Murray. Who said there’s no bipartisan cooperation in Washington! Yes, discussions of evidence tend to induce yawns among Washington insiders and the public. But if the evidence-based proposals released today by Ryan became standard procedure in Washington and state capitals, especially by executive agencies, the nation would know a lot more about effective ways to address our nation’s most pressing social policy problems. These include lack of work, low earnings, low economic mobility, and the delayed development of poor children. Equally important, using evaluation to determine which programs are working, and then using the evidence to improve underperforming programs or try new programs in their place, promises to greatly improve the impacts of the nation’s social policies.

The report is organized around two broad sets of proposals: reforming safety net programs that aim to promote opportunity and improving the skills and knowledge of the workforce. Within this framework are more than 35 proposals, some of them spelled out in considerable detail. Some of the proposals, such as new state flexibility and stronger work requirements are likely to be opposed by Democrats. But the task force makes several proposals that will enjoy bipartisan support. For example, on higher education, the report proposes to clarify information for parents and students about applying for college aid and for simplifying applications to federal aid programs, both of which are likely to generate bipartisan support. Similarly, the call for more accountability in spending federal dollars – and nearly all the recommendations on generating and using evidence of program effectiveness – will garner bipartisan support.

Another proposal that will appeal to Democrats is what the report calls “Social Impact Financing,” but many others call “Pay for Success.” This approach to policy development has created a lot of excitement in the social policy world and is now being implemented at more than 30 sites throughout the U.S. The idea is that investors put up money to pay for social intervention programs which are then carefully evaluated. If the programs achieve their goals and save the government money, the government pays back investors with interest. If the program doesn’t meet its goals, the government pays nothing. Either way, government wins, by either paying for positive results or by learning what doesn’t work. Social Impact Financing is too new to be deemed a success, but early results are promising.

An issue that is not addressed in the report is whether to spend additional money on these proposed programs. Given the positions taken by the Democratic presidential candidates (and in all likelihood by the Democratic Party Platform), in which tens of billions of dollars are proposed to be spent on social policy initiatives, bipartisan legislation will likely require at least some new spending. Under budget rules, which Ryan does everything possible to follow, new spending must be offset either by cutting existing programs or raising taxes. Tax increases have been off the table for Republicans for several years. Thus, a serious package of social reforms that spends several billion dollars over five years will require some major spending offsets. Funding, in short, will be a challenge. Nonetheless, today’s report suggests that Republicans and Democrats may be able to come together around an important new reform agenda to reduce poverty and increase economic mobility if the financing issue can be resolved.

In their final paragraph, the Ryan forces label their report and its proposals “the beginning of a conversation.” This is exactly the approach needed to kindle a real debate among Republicans and Democrats on some of the nation’s most pressing social problems. That, in turn, could lead to important social reforms that will decrease poverty, increase economic mobility, and improve the lives of millions of Americans.

Editor’s note: This piece originally appeared in Real Clear Markets.