Tuesday, July 29, 2014

What Paul Ryan’s anti-poverty plan means for housing

by Ethan Handelman, National Housing Conference 

Last week, Rep. Paul Ryan (R-Wisc.) proposed a policy agenda to reduce poverty and increase opportunity. It builds on some traditional Republican themes of consolidating programs and block-granting assistance, but takes on a broad range of issues aims to stimulate a policy conversation. For housing, there’s some good stuff and some bad stuff, and housing stakeholders should give it a careful read.

Here’s a quick and slightly oversimplified summary of the Ryan proposal for safety net programs. It would create a pilot program in which states could combine multiple federal assistance programs at their current total funding level, get more flexibility on program rules, and provide aid to recipients through case managers. The aim is to reduce the bureaucratic burden on people receiving assistance and improve outcomes while also removing disincentives to work and counterproductive interactions among programs. Those are laudable goals, but achieving them may be tricky, particularly with housing programs that deal with long-term investments in real estate.

From an initial read, here’s my quick take from a housing perspective. I’ve divided points into “good stuff” and “bad stuff” for simplicity. I take Rep. Ryan at his word that this is a discussion draft open to modification, so take my observations in the same spirit.

Good stuff
  1. Emphasis on case management and service coordination. The proposal supports individualized case management for recipients across many fronts, so that a single professional will help people with housing, child care, basic needs, job training, financial literacy, savings and more. In housing, we know how valuable that can be (foreclosure prevention is a great example) and have struggled for years to get more funding for service coordination and counseling. It’s unclear how the plan would pay for and train new service coordinators.
  2. Potentially bipartisan message on addressing human need. Poverty has an individual element (people needing skills, education, and opportunity) and a structural element (mismatch between income and wealth vs. need and human potential). If we can get past the callous and politically stale question of “Who deserves help?” and on to the fruitful question of “How can we provide help effectively to those in need?” we might actually make a dent in poverty. The proposal at least starts to address the individual level through program reform and the structural level through expansion of the Earned Income Tax Credit. Both could move the conversation in the right direction.  
  3. State-level experimentation. States are good labs for trying out new programs. The Section 236 mortgage program for affordable rental housing arose at the state level and became a federal program through FHA. In the Low Income Housing Tax Credit program, states change their allocation plans every year, often modeling these changes on other states’ successes in areas like preservation of existing housing, green standards and permanent supportive housing. State-level experimentation can go wrong, too, which is why the strict outcome measures and accountability are important.
  4. No cuts, at least to start. The proposal explicitly does not reduce total funding for assistance. It’s a proposal to change the form of assistance, not reduce it. Although I do worry about how the block grant formula will address natural increases in rental costs once the program is separated from the specific property-level rental assistance, that’s conceivably something fixable in program design.
Bad stuff
  1. Potential loss of federal investments in housing. The proposal would consolidate people-based programs like TANF, food stamps, the Housing Choice Voucher program and others with property-based assistance like Section 8, public housing and USDA rural rental assistance. However, rental housing properties and the people living in them depend on reliable funding from those federal programs. Diverting it, even to worthy uses, risks destroying federally funded investments that took years to create and could last for years to come.  This area of the proposal needs much more thought.
  2. Political vulnerability of block grants. The proposal isn’t a typical block grant, but it suffers from the same weakness. When federal funds pass to the state, it’s not clear to recipients exactly who is providing the help. That makes it politically easier to cut funds, add further mandates without more funding or otherwise erode the programs over time.
  3. Reduced countercyclical role. Some of the included programs like TANF and food stamps are entitlements, which mean they expand when need rises and contract when need declines.  That countercyclicality helps people in need faster and helps the economy recover more quickly. Although the proposal acknowledges the need to keep these programs countercyclical, but of the options it offers to do so, only one would actually increase spending in tough times, while the others just shift funds from current need into rainy day accounts.
  4. Conditions on assistance. Accountability is good, but our country often takes it much farther on poverty assistance than we do in other entitlement or discretionary programs, and this proposal is no exception. Work requirements and individual contracts for assistance loom large. From recent research in cognitive science, we’ve learned that this approach can be counter-productive. The proposal starts to explore differences in approach for the elderly and disabled, but it doesn’t address the impact on children, who may suffer from when aid to families is cut or conditioned. More thought is needed here to design programs using the latest research and proven best practices, not ideology (from the right or the left).

In short, there’s a lot to work on and discuss in this proposal, and that’s just my take from the housing perspective. If this is just positioning for a presidential run or the midterm races, it may not get the attention it deserves. As presented, however, it’s a thoughtful take on improving our national response to poverty, one that could benefit from thoughtful engagement by those who know housing well. 

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