Ryan’s Safety Net Speech Overlooks Real Problem

Published April 30, 2012

The debate over the nation’s entitlement programs has been mostly about how much money we ought to spend. Instead, it should be about how to reform these programs to make them the safety net they were originally intended to be.

In recent remarks at Georgetown University, House Budget Chairman Paul Ryan (R-WI) offered a moral defense of his budget approach, supplementing his normal fiscal message on entitlement reform with an argument that his is the truly responsible and merciful proposal. Ryan said “we must strengthen welfare programs” for those in need by putting them on better fiscal ground. “Government safety-net programs have been stretched to the breaking point in recent years, failing the very citizens who need help the most,” Ryan said, noting “one in six Americans are in poverty today–the highest rate in a generation. In this war on poverty, poverty is winning.”

Although his political opponents paint his plan as extreme, the truth is that even Ryan’s budget doesn’t solve the real problem. Strengthening the safety net is not what is needed. It has been stretched to the breaking point because government has dramatically expanded, and will continue to expand, the number of people eligible for such assistance.

The real moral failure is not that “poverty is winning”–it isn’t. Our false perception of poverty is inflated by the fact that the number-crunchers count only pretax monetary income, not the numerous additional taxpayer-funded benefits low-income individuals receive–public housing, Medicaid or other insurance, food stamps, etc.

The truth is not that we have a sustained rise in poverty in the United States–it’s that we have continually expanded the definition of poverty. And with it, we have increased the reach of taxpayer-funded government programs that create unintended disincentives for moving out of what is now called poverty. It’s a system that ensures there will always be plenty of people categorized as poor.

As ever-expanding government programs replace earned income, we create higher marginal costs for leaving these programs, thus trapping people within them–even if, as under Medicaid, they offer notoriously poor outcomes for the people they are designed to help.

When Medicaid was signed into law by President Lyndon B. Johnson, it was characterized as a safety net for the poorest of the poor. Today 68 million people, nearly one of every four Americans, are enrolled in the program. Study after study shows us Medicaid results in worse health outcomes than being uninsured, but the false promise of health care access makes the Medicaid ghetto easy to enter and tough to leave. This is the system to which President Barack Obama’s health care law will add another 25 million people in the next few years.

Similarly, although food stamp usage historically has fallen and risen with the rate of unemployment, in recent years the roster has continued to grow even as unemployment slowly declined, according to the Congressional Budget Office. Under Obama, the length of time people are allowed to receive food stamps has expanded, and steps have been taken to make it easier to get on the program. The result? In 2002, only about half of Americans eligible for food stamps signed up. In 2009, almost three of every four did so.

As more and more unemployed Americans have given up looking for work, the prospect of getting by on taxpayer money looks increasingly safe compared with engagement in a fragile economy. Would you rather trust the job market or the reliability of food stamps? This is an obvious decision for a person in need, even if it means remaining on the government dole.

This is the true moral failing of the expanding safety net: The government offers a helping hand, but escape becomes nearly impossible, creating a permanent underclass for whom the safety net is a prison.

Benjamin Domenech ([email protected]) is a research fellow for The Heartland Institute and managing editor of Health Care News.