Matt O’Brien: Three ideas from Ryan’s poverty plan that liberals can love

07/30/2014 12:00 AM

07/29/2014 5:57 PM

Liberals are used to hating Rep. Paul Ryan, R-Wis.

And it’s not hard to see why. He’s an Ayn Rand fanboy who’s authored budget after budget that purportedly balances itself by cutting taxes for the rich and cutting spending for the poor even more – to almost comically low levels. Indeed, the left-leaning Center on Budget and Policy Priorities calculates that 69 percent of his latest proposed cuts would come from programs that primarily serve low- and moderate-income households. It’s enough that, back in 2012, even Alan Viard of the conservative American Enterprise Institute said that Ryan’s cuts would “target lower-income people to a degree that is greater than preferable.”

So it was easy to be cynical about Ryan’s new poverty plan. Wouldn’t it just be more of the same regressive spending cuts and rhetoric about “bootstraps” and “opportunity”? Well, no. Unlike his budgets, Ryan’s new plan wouldn’t cut safety net spending at all. It would just take the money we’re using to fight poverty and try to use it better. Now, there’s still plenty for liberals to criticize, but there’s also plenty to like.

Here are the three ideas that Democrats should copy and paste from Ryan’s poverty plan and try to pass tomorrow:

•  Expanding the earned income tax credit for childless workers.

It turns out there’s a pretty proven way to help poor people. It’s called giving them money. Now, that’s not on the agenda here, but the next best thing is: doubling the EITC for nonparents.

The EITC is as simple as it is effective. It’s a refundable tax credit that subsidizes wages for low-income workers, which means they get the full value of it regardless of how little income tax they owe. Conservatives like it because it promotes work. (Although some of them don’t like how it creates “lucky duckies” who owe no, or even negative, income tax.) And liberals like it because it does work.

The only problem, as Council of Economic Advisers chairman Jason Furman points out, is that it isn’t available to more workers. Tax policies, like the EITC and child tax credit, have markedly reduced poverty for parents the past few decades, but have actually increased it for nonparents. That’s because childless workers aren’t eligible for most of these credits, and have been hurt by other tax changes.

Take the EITC. If you don’t have a kid, you can’t get much from it: just $503 a year. But building on similar proposals from President Obama and Sen. Marco Rubio, R-Fla., Ryan wants to make this much more generous. Specifically, he wants to: double the maximum benefit to $1,006; double the phase-in and phase-out rates, so lower- and higher-income people can get it, relative to today; decrease the minimum age from 25 to 21; and send the money out each month, instead of as a lump sum at the end of the year.

This is almost identical to Obama’s plan – except for how to pay for it. Ryan wants to take money from social programs he doesn’t think are working, ag subsidies and maybe green energy subsidies. Obama wants to get money from closing both the carried interest loophole, which lets hedge funders pay capital gains rates on what should be ordinary income, and the “S corporation loophole.”

A functioning political system would figure out a compromise.

•  Prison sentencing reform.

The U.S. imprisons far more people than any other rich country, in part because we imprison so many nonviolent people. But it’s not just that we’re sending people to jail who we probably shouldn’t. It’s that we’re sending them to jail for so long. This leaves them all but unemployable when they do get out – which can push them back into crime.

Why are we doing this? Well, part of the problem is that “mandatory minimum” laws dictate harsh sentences for some nonviolent offenders. So part of the solution should be relaxing these laws. At least that’s the thinking of Sens. Mike Lee, R-Utah, and Dick Durbin, D-Ill., who have sponsored a bill that would give judges more sentencing discretion in nonviolent cases. Ryan agrees, and Democrats should, too.

•  Occupational licensing reform.

Nobody ever asked if his hypnotist had a license. Same with hair-braiders. But more and more state governments are making people complete long classes to work in these kind of jobs. This is supposedly about protecting consumers, but it’s often about protecting incumbents instead. See, licensing requirements limit competition, which raises wages – one study found as much as 18 percent – at the expense of jobs.

Ryan criticizes these kind of rules, but he doesn’t actually propose doing anything about them since they’re a state, and not a federal, issue. But as Vox’s Matthew Yglesias points out, the federal government could offer states incentives to streamline these licensing requirements. How big an incentive and where the money would come from are tougher questions, but not so tough that Congress shouldn’t try.

Liberals will never love Paul Ryan, but, if his poverty plan is any indication, they can work with him. Wouldn’t that be something for Washington.

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