AMERICAN ENTERPRISE INSTITUTE

EXPANDING OPPORTUNITY IN AMERICA: A CONVERSATION WITH HOUSE BUDGET COMMITTEE CHAIRMAN PAUL RYAN

INTRODUCTION: ARTHUR C. BROOKS, AEI

SPEAKER: PAUL RYAN, US HOUSE OF REPRESENTATIVES (R-WI)

PANELISTS: STUART BUTLER, HERITAGE FOUNDATION; ROBERT DOAR, AEI; RON HASKINS, BROOKINGS INSTITUTION; PAUL RYAN, US HOUSE OF REPRESENTATIVES (R-WI); BOB WOODSON, CENTER FOR NEIGHBORHOOD ENTERPRISE

MODERATOR: ROBERT DOAR, AEI

9:00 AM – 10:00 AM THURSDAY, JULY 24, 2014

TRANSCRIPT PROVIDED BY DC TRANSCRIPTION – WWW.DCTMR.COM

ARTHUR BROOKS: Good morning, ladies and gentlemen. I was going to ask you to take your seats, but there’s standing room only. I’m delighted to see that. I’m Arthur Brooks, president of the American Enterprise Institute. I’m honored to welcome you today and to welcome the chairman of the House Budget Committee, Congressman Paul Ryan, here at AEI.

Congressman Ryan has spoken here many times. He’s a friend of AEI’s and we’re delighted to see his continuing willingness to tackle important and difficult issues that many others are not willing to confront. Today he’s here to talk about an issue that’s near and dear to my heart and those of my colleagues here at AEI, Expanding Opportunity in America.

He’s particularly focused on low income and vulnerable populations in the United States. One of the things that those of you who follow Congressman Ryan’s career and his pronouncements remember and notice consistently is that he knows that great leaders, that patriots, fight for everyone, no matter how they vote. When we forget this, we don’t represent all Americans. When we remember this, we can truly reunite our country. We’re excited about that. We have a moral vision at AEI that Congressman Ryan shares and we’re looking forward to hearing about his new plans today.

We’re going to be hearing from a distinguished panel after Congressman Ryan’s remarks. And after that panel in which Congressman Ryan will participate, he will be taking your questions from the audience for the balance of the hour.

Please join me in welcoming Congressman Paul Ryan. (Applause.)

REPRESENTATIVE PAUL RYAN (R-WI): Morning everybody. How are you? First off, I want to start by thanking Arthur for his hospitality, for all that he’s done, for the patience of his team and for opening up this great facility. I look forward to seeing the new place you’ve got. And I also look forward to hearing from everybody. This is going to be a participatory event today.

But let’s start with a principle we can all agree on: Hardworking taxpayers deserve a break in this country. Too many families are working harder and harder, yet they’re falling further and further behind. That’s just what’s happening in America today. The cost of food, housing and energy and gas, they keep going up. But paychecks have not budged.

So, whether you are a Republican or a Democrat, let’s all agree that America deserves better. What do we want? We want a healthy economy. And a big part of that is having a safety net that is strong, both for those who cannot help themselves and for those who just need a helping hand to get up and going in life. That’s our goal. The problem is, that’s not what we’re getting, though it’s not been for a lack of trying.

We spend $800 billion each year on 92 programs at the federal level just to fight poverty. And yet, we have the highest poverty rate in a generation. Deep poverty is near record highs. When you take a step back and look at all of this you’ve got to think, we can do better than this.

Now, I don’t have all the answers, far from it. Nobody does. But the way I see it, we have an obligation to expand opportunity in America, to deliver real change, real solutions, real results. And to do that, we need to stop listening to the loudest voices in the room and start listening to the smartest voices in the room.

So I have spent the last year traveling all over this country, learning from people fighting poverty on the front lines. I’ve been to a high school in Milwaukee that has eliminated 14 gangs from its school grounds. I’ve been to a church in Indianapolis that has helped hundreds of men get off drugs. I’ve been to a homeless shelter in Denver, a rehab center in San Antonio. You know what the point is? There is a lot of good that is going on in this country. It’s amazing. And since Washington can’t fight poverty alone, it is time to bring in the reinforcements.

So today I would like to start a conversation. I want to talk about how we can repair the safety net and help families get ahead. And the thing I want to talk about, in addition to that, is a few ideas that some of my colleagues in the House and Senate have proposed to help issues like income support, education, criminal justice, and cutting down on red tape. Each idea touches on a very different topic, but they all reinforce the same principle: Give more flexibility in exchange for more accountability.

My thinking is: Listen to the boots on the ground. Listen to the local leaders who are actually changing the status quo, and who are actually succeeding. Let them try unique and innovative ideas with a proven track record, and then test the results. That’s my guiding principle. And the first place to apply it is the safety net. Today, federal aid is fragmented and formulaic. Washington looks at each person’s needs in isolation, like food, housing, or energy. It doesn’t see how their needs interact. And what’s worse, Washington looks at each person in isolation. It doesn’t see how people need to interact. The secret to our country’s success is collaboration – people working together, people learning together, people building together of their own free will.

What government should do then is encourage collaboration, bring people together, get them into the mix, empower them, don’t oversee them, don’t force them. What we need to do is to coordinate assistance to families in need and get the public and the private sector working together. That’s how we can smooth the transition from assistance to success.

The fact is, each person’s needs fit into a coherent whole – a career. And each person fits into a coherent whole – a community. So if the public and the private sector work together, we can offer a more personalized, customized form of aid, one that recognizes both a person’s needs and their strengths, both the problem and the potential. So I would start a pilot program called an Opportunity Grant. It would consolidate up to 11 federal programs into one stream of funding to participating states. The idea would be, let states try different ways of providing aid and then test the results. In short: More flexibility in exchange for more accountability.

My thinking basically is, get rid of these bureaucratic formulas and put the emphasis on results. Participation would be voluntary. No state would be forced to join. And we would not expand the program until all the evidence was in. The point is, you don’t just pass a law and hope for the best. If you’ve got an idea, let’s try it. Let’s test it and see what works. Don’t make promise after promise. Let success build on success.

Here’s how it would work: Each state that wanted to participate would submit a plan to the federal government. That plan would lay out in detail the state’s proposed alternative. If everything passed muster, the federal government would give the green light. And the state would get more flexibility. It would get to combine into one funding stream up to 11 different programs- things like food stamps, housing assistance, child care, and cash welfare. This new, simplified stream of funding would become the Opportunity Grant. And it would be budget neutral.

The state would get the same amount of money as they would under current law, not a penny less. In effect, the state would say, give us some space and we can figure this out. And the federal government would say, go to it, on four conditions: First, you have to spend this money on people in need. You can’t take this money and put it on roads or bridges, no funny business. Second, every person who can work should work. Third, you’ve got to give people basic choices. The state welfare agency can’t be the only game in the town. People must have at least one other option, whether it’s a nonprofit, a for profit, or what have you. Fourth, you’ve got to test the results. The federal government in the state must agree on a neutral third party to keep track of progress. That’s the deal. So if approved, a state could use that money to expand state programs and partner with local service providers. In other words, families in need would have a choice. There wouldn’t just be a federal agency or a state agency. Instead, they could choose from a list of certified providers.

We’re talking nonprofits like Catholic charities, for profits like America Works, or even community groups that are unique to your neighborhood. These groups would work with the people one-on-one and provide personalized aid through case management. Think of it this way: Right now, you’ve got to go to a bunch of different offices to enroll in a bunch of different programs, each with all their different rules. Under the opportunity grant, you could go to one office and you’d go to work with one person for all of your needs. That person would give you financial assistance and would also act as a personal resource.

Maybe you’re struggling with an addiction and you need a counselor. Maybe you come from a broken family and you need a network of support. The point is, you would work together to get you from where you are to where you want to be. Let’s take one example. Let’s call her Andrea. She’s 24. She has two kids, they’re two and four years old. Her husband left the family six months ago. She doesn’t know how to contact him. Andrea graduated from high school, but her only work experience was a two-year stint in retail. She and her kids now live with her parents in a two-bedroom mobile home. Her parents can’t support her over the long haul. She’s been trying to find work for the last five months. She doesn’t have a car. She can’t afford child care. And her dream is ultimately one day to become a teacher.

Here’s how it would work under this plan. Andrea would go to a local service program. She would sit down with her case manager and develop an opportunity plan. That plan would pinpoint her strengths, her opportunities for growth, and her short, medium, and long-term goals. The two of them would sign a contract. Andrea would meet specific benchmarks for success. She’d establish a timeline for meeting them, consequences for missing them, and rewards for exceeding them. Andrea’s short-term goal is to find a job. But her long-term goal is to find the right job- to become a teacher. So she might find a job in retail to pay the bills. Meanwhile, her case manager would help pay for transportation and child care so that she could take classes at night.

Over time, Andrea could go to school, get her certification, and find a teaching job. The point is, with someone involved in there to help coordinate her aid, Andrea would not just find a job- she would start a career. And all this time, a neutral third party would keep tabs on each provider and their success rate. It would look at the key metrics agreed to by the state and the federal government. How many people are finding jobs? How many people are getting off of assistance? How many people are moving out of poverty, and so on?

Any provider who came up short wouldn’t be able to participate any further. And at the end of the program, we would pool the results and we would go from there. In short, we are reconceiving the federal government’s role here. No longer would the federal government try to supplant our local communities- it would try to support them.

In my view, the federal government is the rearguard. It protects the supply lines. It’s the people on the ground who are the vanguard. They fight poverty on the front lines. They have to lead in this effort and Washington should follow their lead. In that spirit, I want to throw my support behind a number of ideas that I think a lot of good colleagues, both on the left and the right, have been supporting in the House and the Senate that I put forward.

They all expand opportunity by taking decision-making away from Washington and bringing more accountability to government at all levels. First, we should make sure that in this country it always pays to work. I would do that by increasing the Earned Income Tax Credit for childless workers. You know, after reviewing the federal government’s role in all of this space, this is one of the programs that has really shown results. It encourages people to work by increasing the rewards of work. And we all know that the more people that we have in the workforce, the more opportunity we have in this country.

So I’d roughly double the maximum credit for childless workers to $1,000. And I would lower the minimum eligibility from 25 to 21 years old. This is similar to what the president has proposed, but with one big difference. I wouldn’t raise taxes. I’d pay for it by eliminating ineffective programs and corporate welfare, like subsidies to energy companies. My thinking basically is, stop the programs that don’t work and support the programs that do.

Second, we need to expand access in education. We need to give students more options. In other words, we need accreditation reform. Sounds dry, but has a huge difference. This is similar to what my friend, Senator Mike Lee of Utah and Congressman Ron DeSantis of Florida proposed. We need to bring competition to the college cartels. Let other schools in on the action. And we need to keep reforming job training programs. If employers can design their own curriculum, then workers will know just what skills they need.

Third, we need common sense criminal justice reform. We need to get people the opportunity to earn a second chance in this country. Luckily, my colleagues have done a lot of good work on this front. Senator Mike Lee, Congressman Raul Labrador, and Bobby Scott- they’ve introduced a very good piece of legislation reform on sentencing guidelines. It would give judges more discretion with low-risk, non-violent offenders. All we’re saying is, they don’t have to give the maximum sentence every time. There’s no reason to lock anyone up longer than necessary.

And we also have to tackle recidivism. You know, about half of our ex-cons are re-incarcerated within three years of release. Think about that. But we know that there are programs that work, that get people out of a life of crime. That’s why Congressman Jason Chaffetz and Bobby Scott have introduced the Public Safety Enhancement Act. We let low-risk, non-violent offenders exchange time in prison for time in pre-release custody, as long as they complete a program with a proven track record. Here’s the point. Non- violent, low-risk offenders- don’t lock them up and throw away the key. Get them in counseling. Get them in training. Help them rejoin and contribute to our society.

Carl Orff, great opus there. (Laughter.) (Inaudible.)

Finally, you know what we need to do? We need to cut down the bureaucratic red tape. A lot of families are trying to get ahead, but Washington is just simply getting in the way. So I would propose a very simple rule for future regulations. If you are a federal agency and you want a regulation that would unduly burden low income families, you’ve got to go to Congress. If they want it, they have to fight for it and they have to do so on the record. It’s your government, and you deserve a voice and a vote.

Look, all of these are good ideas. They’re just a start. What we’re releasing today we’re calling a discussion draft because it is meant to start a discussion. We want to hear from people. We want people to send us their ideas. We want constructive feedback. So please, email us at [email protected].

You know, when I was in Milwaukee or Denver or Indianapolis with my friend and mentor Bob Woodson, nobody asked me what party I belong to. They welcome anybody who is there and who is there to listen and learn. That should be our approach in Washington. Enough with the politics. Let’s talk solutions because this really isn’t a Republican or a Democratic issue. It’s an American people. As a matter of principle, we need to build a society where hard work is rewarded and every American has the opportunity to succeed regardless of birthplace or background. And to do that, everybody’s got to get involved. Everybody’s got to pull in the same direction. And if we all work together, we can build a healthy economy. We can fix this. We can get this done. And that’s what the good people of this nation are expecting of us. That’s what they deserve.

Thank you very much and I look forward to this conversation.

(Applause.)

MR. BROOKS: We’re going to turn the podium over now, virtually, to Robert Doar, the Morgridge fellow in poverty studies at AEI. He has joined us only in the past six months, is expanding AEI’s poverty focus greatly, and we’re delighted to have him host this next panel.

ROBERT DOAR: Thank you, Arthur. And as Congressman Ryan said, let the discussion begin. We have an outstanding panel today of experts in this field who are well known to many in the audience, so I’m going to keep the introductions very short.

Starting on my immediate left is Ron Haskins, who is a senior fellow in economic studies program and co-director of the Center on Children and Families at the Brookings Institution. He’s also a senior consultant at the Annie E. Casey Foundation in Baltimore. And from February to December of 2002, Haskins was the senior advisor to the president for welfare and policy at the White House. Ron is well known and extremely well respected in this field and we’re very honored to have you here with us today.

Next to Ron is Stuart M. Butler, a distinguished fellow and the director of the Center for Policy Innovation, a division of the Heritage Foundation, charged with designing innovative solutions to some of America’s toughest challenges. Before taking the helm of CPI in August, 2010, Butler guided Heritage’s domestic policy research for almost 30 years as vice president for domestic and economic policies. Stuart, we’re glad that you’re here as well.

And finally, Bob Woodson, on the far left, next to Congressman Ryan, is founder and president of the Center for Neighborhood Enterprise.

REP. RYAN: (Off mic.) – far left.

MR. DOAR: Yeah. (Laughter.) Bob’s social activism dates back to the 1960s, when he developed and coordinated national and local community development programs. And during the 1970s, he directed the National Urban League’s Administration of Justice Division. Later, he served as a resident fellow at the American Enterprise Institute, so he’s an alumnus of this august institution. Welcome back, Bob. We’re very honored to have you.

So to start the discussion, we’re going to have Ron go first, then Stuart, then Bob, then Congressman Ryan will respond. And then I’ll ask a question, and then we’ll open up to the audience. So go ahead, Ron.

RON HASKINS: All right, I’m going to make four points. First it’s a sweeping proposal. This is worthy of a think tank. It’s full of references to social science. Things are justified, are explained. It’s a spectacular document. And I would emphasize sweeping: opportunity grants, EITC for childless workers, education at all levels, criminal sentencing and other prisoner reforms, regulatory reform, and program evaluation. I have not seen anything like this from an individual member in many years introduced in Congress.

Second point: results driven research. So if you need to sleep, now would be the time because people don’t pay much attention to this. But I’m telling you, it’s one of the most important things going on in the country now. We are, at last, learning that our programs don’t work and that they can be evaluated, and you can use the evaluation to improve them. The Bush administration was huge on this. Obama’s even bigger. And so this creates a real possibility for bipartisanship and a focus on results, which we should do in all our programs.

Third, the opportunity grants, by far the most controversial part of this and the part that I think – I hope doesn’t get all the attention, but I’m afraid it might, because it’s the part that’s the most controversial. It gives flexibility on the authority, as Paul explained, and I hope, as Bob Woodson will emphasize, what I like most about block grants, and I think most people do – they call them opportunity grants – but we all know it’s giving flexibility to states, which is something that Democrats traditionally have been very chary about. So the point about Bob Woodson is this is a way to get money to the local level and the platoons of society – civil society can benefit from some of the money. He funded to do things that government just can’t do, like tell people, you’ve got to stop that. You have to stop that. And I’ve heard many people say with Bob, and Bob himself, say the same thing.

So the opportunity grants are really crucial. If you were a Republican and you believed the opportunity grants and flexibility in block grants are the way to go, you could not improve on Paul’s proposal. Why? Because it’s not national. It’s not changing the statutes of Food Stamps and TANF and so forth. They remain in place. But five states, seven states, some number of states will in effect be experiments, and we’ll find out if these ideas really play out, and if that money does actually get down to the local level. That is exactly the way to go about it and it’s a compromise right from the beginning.

Finally, the politics of this situation that we’re in now. First, I hope Paul will excuse me for observing that almost everything in his proposal is possible for bipartisanship. It is really a bipartisan proposal from the very beginning. If the media focuses on the controversy, that’s a huge mistake. They’re missing the story. There’re very few Republicans who would have the courage, especially in this situation we now face, to introduce such a bipartisan, reasonable proposal. And this raises a question.

The second question is about Republicans about politics. And that is if they’ll have the sense to support this. In 1996, Republicans reformed welfare reform in a way that had never been done before, and it was because they were united. The Republicans in the House, Republicans in the Senate, there were a lot of fights behind the scenes, ugly and everything, but publicly everything was – it was agreed upon. And eventually, the president agreed with us and a majority of Democrats on the Hill voted for it.

If we take the Senate and the Senate introduces something along these lines and both the House and the Senate pass it, we can put something on the president’s desk that will become law.

REP. RYAN: Thanks for saying “we.” (Laughter.)

MR. HASKINS: Already partisanship, come on. (Laughter.)

STUART BUTLER: I think our late and mutual friend Jack Kemp would call this an audacious proposal. It’s bold. It shakes up thinking. It has a potential for bipartisanship, as Ron said. And it raises lots of questions that have to be discussed and considered in terms of turning this into a major proposal.

So I’m very supportive of this approach and I welcome the Congressman for putting it forward. I think if you look at some of the elements, I want to raise some issues and some questions about the proposals, whilst supporting very much, certainly, the Opportunity Grant idea. It is absolutely critical, if you’re going to see innovative public policy in this country, to give incentives to states and to localities and to non-government organizations to try out ideas, to be innovative, and to learn from them. And that’s the heart of the opportunity grant proposal.

I think it’s very important to somebody that’s been very much devoted to the idea of federalism myself for many, many years, not to be romantic about states. And this proposal isn’t romantic about states. It recognizes that you’ve got to somehow, in some cases, push innovation, as well as give incentives for innovation. So the conditions that Paul Ryan mentioned in his remarks are very, very important. It is critical that as part of the opportunity grant idea that work requirements are quite elements of that approach. We have work requirements to some degree in the welfare system right now. They were never as widely placed into the law as they should have been in 1996, but they should be extended and will be extended by this proposal.

It’s very important, too, to go beyond the state bureaucracies as I’m sure, Bob Woodson, you found when you went around the country. Very often, local organizations, very innovative groups, are held back by the frustrations of rules and regulations and bureaucrats. This proposal directs the states, if they want to get the green light, to show in very clear ways how they are going to reach past the bureaucracy and enable these organizations to play a much greater role.

It’s also critically important to have evaluations, as the Congressman said. We’ve had so many policies in this country that sound good, sometimes look good, but actually do nothing or very little. And so building in systematic evaluations is absolutely essential to see if innovations are true and to enable the key elements to be exported elsewhere.

And it’s very important for states to have some financial skin in the game. I’m less sure that the pure Opportunity Grant has enough to encourage states to have skin in the game and to see the kind of financial rewards necessary. The 1996 legislation gave states very powerful financial incentives to get people out of welfare and into independent work. I don’t see that in this and I think that’s an element that has to be looked at more carefully.

In terms of the Earned Income Tax Credit, it is clearly better to get people to work and to be able to get higher take-home earnings than to increase the minimum wage, which very often actually cuts jobs for people who are very low-skill and just starting from school. It’s much more targeted.

But of course, there are design issues to get this right. And these will have to be part of the conversation that follows this proposal. One of the issues is fraud. We have a lot of fraud in the EITC currently. And so in tandem with expanding it, it is very important to look at better ways of rooting out that fraud.

It’s also very important to look at perverse incentives that can occur. If a young man has a larger EITC and is working today and under this proposal then marries a woman who’s also obtaining the EITC, you can have a situation of a very strong marriage penalty if that tops out, and then if the total amount tops – goes above the total amount under the EITC rules – you could find financial penalties for getting married.

If we undermine marriage, that would be a terrible thing as a result of this proposal. And therefore, I think, when you look at the design stage, it’s really important to look at those incentives, as well as potentially perverse incentives of discouraging year-round work. If you increase the EITC, you may see people not working full-year. So it’s very important to look at design changes that will encourage yearlong work. And I think the work requirements in combination with EITC would be the right way to do that.

Thirdly, the accreditation, I echo what you said, Congressman, that if you look at what is necessary to enable people to get the skills to command real wages, good wages in the workforce, then getting college or college equivalent is critical. Today, we have enormous financial barriers about doing it. I think the way we will see a solution to that problem is dramatic reductions in the cost of tuition. You now have College for America, part of the Southern New Hampshire University, offering $10,000 degrees. All of these highly innovative approaches to delivering low cost, but effective higher education encounter accreditation. Accreditation protects the existing providers. It protects the large, expensive universities.

And you’re right, Senators Lee and others have put forward proposals that would allow states and other institutions to credential courses and accredit institutions. That is an absolutely essential feature of this proposal.

And then, finally, I would just echo what others have said – that looking at the issue of sentencing and alternative sentencing, of dealing with the tremendous rules and regulations that get in the way of ex-cons trying to get a job, terrible rules and licensing obstacles need to be looked at, as well as the alternative sentencing. And I’m sure you mentioned this in the proposal and I think that’s going to be a very, very important part of it.

So I think, as I said, with Jack Kemp, this is audacious. I hope it provokes the kind of bipartisan conversation that it should do and, I hope, will do. I think we should all be part of that conversation. And I’m very grateful to you, Congressman, for taking the step of introducing a proposal like this.

BOB WOODSON: Thank you. I’d like to join my colleagues. It’s critically important that we have a dialogue that goes beyond money. For the past 40 years, the anti-poverty expenditure has been $15 trillion. 70 cents of every dollar spent on poor people goes not to the poor, but to those who serve poor people. These professional providers ask not which problems are solvable, but which ones are fundable.

So we have created a commodity out of poor people, where there are perverse incentives for maintaining people in poverty. We wonder why it expands. And so it’s important for us to recognize that this control has to change. But in addressing poverty, it’s important that – we tend to make the mistake of generalizing about poor people. Not everybody is poor for the same reason. I identify four categories of poor people. The first category of people are just broke. (Laughter.) They lost a job or a bread-winner died or there’s a temporary illness, but the person’s character is in place. And for them, they use welfare and assistance the way it was intended – as an ambulance service, not as a transportation system.

And then, you’ve got category two, a person that confronts perverse incentives for maintaining – staying on – welfare. For instance, the single mom in Milwaukee, many years ago, who saved $5,000 on welfare to send her daughter to college only to be charged with a felony. So she concluded, well, I’ll just…Her character is in place, so perverse incentives.

Category three would be someone who’s physical or mentally disabled. But category four, that I think concerns most of us, are those who are poor because of the poor choices that they make, the character flaws that they have. They’re drug addicts. They have serial out of wedlock births. Just giving money to people like that injures with the helping hand. And so it’s important for us to disaggregate this population of the poor. People on the left tend to look at the poor as if they’re all category one. And people on the right tend to look at the poor as if they’re all category four.

And so it’s very difficult, when we do that, to have a meaningful dialogue, because as Paul proposal identifies, you need a strategy to address poverty to address the needs of each of these groups. At the Center for Neighborhood Enterprise, we concentrate on all people in category four. Eighty percent of my best friends are ex- something.

And these are the people that I have taken Paul around the country to see. The point is these are the new – both people on the left and right had myths about the poor. People on the left, when they look at poor people, they see a sea of victims. People on the right see a sea of aliens.

There’s an old African proverb that when elephants fight, the grass always loses. So in this – what we believe, and what I’ve tried to show Paul, is that the real solutions to poverty, and people in category four, are the people who are resident in the community experiencing the problem. They are the healing agents, the antibodies. And so it’s important to go into those communities. The qualities that make them effective also make them invisible. So you got to be like a Geiger counter and go in and seek them out. And what you will find is that what makes them effective is they provide character coaching and moral guidance to the people that they serve. They witness to people by their example that they can be restored and reclaimed and redeemed in the midst of poverty.

So Paul has gone to some of those crime-ridden, drug infested neighborhoods and he has witnessed redemption occurring among the most fallen, the most broken people you can imagine. It’s important that any anti-poverty approach takes into account these real anti-poverty experts that are resident in there. And so what we intend to do is take this proposal to our whole network of 2,500 grassroots people in 39 states. So for the first time, grassroots groups who are suffering the problem will have a seat at the table. So their views, their opinions on what should be done to address poverty will be factored into whatever deliberations that we have. Only when you allow people suffering the problem to provide their own input do we have change.

Final point is that also, I think, we have to destroy this false dichotomy that somehow if we spend more, we care more. If we spend less, we care less. And that is – we have demonstrated this in our programs around the country that you visited in Milwaukee, Wisconsin, where we have, for the past eight years, an anti-violence effort where we hire young adults from the same cultural and geographic zip code as the children experiencing the problems and we put them full time into schools as character coaches and moral mentors. And as a consequence, the kids are redirected away from lives of pathology and we’re able to reduce crime and violence by 25 percent in just three months.

We started with one school. Now, we’ve expanded to 12. And this is an initiative, Paul, we want to take throughout the country. And also, the Running Rebels Organization has a very unique program where, for the past eight years, young men who are violent offenders, instead of being sent to 22 and 30 years in prison, are given community-based detention where they’re supervised by other people. Every six – every two hours, they have to make a contact with their mentor, usually someone who’s been in prison himself. But as a consequence, we have had 800 young men come through that program with a 80 percent success rate. And the program gave a mock check to the Milwaukee County commissioners for $63 million. This is the money that the county saved as a consequence of keeping these young men out of prison. So that’s another example that demonstrates the point that if we invest more wisely in creative, community-based poverty warriors, that we can help more people at lower cost and expand opportunity for everybody. Thank you.

MR. DOAR: Congressman, you want to respond to those comments?

REP. RYAN: Sure, first of all – now I got it. Thank you very much for that feedback. And, as I mentioned at the beginning, the whole point of this is to start this conversation. And I just touched on a few of the ideas that are contained in this proposal. As the gentleman here mentioned, there’re a lot of others that are in here.

I’ll just go down because I wrote all your comments and I’ll try and be as quick as I can to continue to open it up. Both Ron and Stuart sort of used ‘block grant’. This isn’t exactly a block grant. It’s not your garden variety of block grant where you just cut a check to the states and call it a day.

This is very different because, as Stuart mentioned, there’re going to be abuses with that. This Opportunity Grant is designed to streamline funding streams into one grant that is there to have customized and personalized aid to each person. So to Bob’s point, each person has a different issue. There are different kinds of poverty. Unfortunately, this Washington one-size-fits-all, know-it-best first in Washington approach shrieks them as if they’re the same. And so you have to bring this down at the local level and have a customized, personalized form of aid. And it’s not as if this is a new idea. This is actually working out there in the country if it’s ever been applied or where it’s been applied.

I can just point to in Wisconsin alone, Catholic Charities or America Works, Lutheran Social Services, where they, in spite of the federal government, offer very holistic services, where they have a person that works with a recipient to come up with a plan for their lives, to help them meet their benchmarks, and with carrots and sticks, accountability and rewards. And this, to me, could be so much better delivered and accelerated through the Opportunity Grant.

The problem we have here is if you look at these things like marginal income tax rates – and there’re a lot of economists that look at this stuff. Right now, we have such a disjointed system which inadvertently makes it less likely a person’s going to leave assistance and go to work, because they lose more money in many cases when they do so. So we want to remove those disincentives to work. We want to remove those disincentives which are just rational-thinking people making rational decisions to get on to a better life. And we think the flexibility of the opportunity grant, combined with requirements and flexible time limits – and remember work requirement means work related activities. Working or looking for work or in job training skills development, getting yourself prepared for work. And so it’s a little bit more than just, I’d say, a block grant.

Ron mentioned results-driven research. We’ve spent the last year and a half in our committee, lots of committee hearings, lots of staff research, trying to find metrics. There’s just so little help there. And we don’t do a good job of measuring success. So if I had to take a 30,000-foot view of this proposal, it is basically this: Our approach to fighting poverty has basically been let’s measure by inputs. Success is measured by how many programs we create and how much money we spend, not on outcomes, not on results.

How many people are we getting out of poverty? How many people are getting out of poverty and staying out of poverty? And so we need to do a better job of understanding how effective our policies are by measuring them better. And that’s why we had a proposed commission for a clearinghouse of data. Plus, we have to get ahead of the privacy issues that are inevitable in the 21st century with the kind of data issues we’ve got. So that’s one of the proposals.

And then remove the barriers. Accreditation reform I think is a key way of getting at tuition inflation, lowering the cost of college, making it easier, more accessible. Licensing reform, I think this is really important. This is not a federal issue, but it’s a state and local issue. There are barriers to entry that are making it harder for people to get in the professions. Whether it’s somebody with a felony who wants to get a commercial driver’s license to drive a truck or whether it’s somebody who just wants to, you know, be a beautician or a barber. We need to do licensing reform at the local levels.

You also talked about, Stuart, crowding out civil society and local organizations. I think this is among the other big points we’re trying to make here is the federal government has inadvertently basically come into our communities with strings and rules and duplicating programs and, you know, archaic formulas, and has crowded out what we call civil society.

Economists – you know, if you talk to Raj Chetty or others, they’ll tell you this is social capital. What that basically means is these cultural, social antibodies of people in our communities, who care and are involved and want to make a difference- in many cases the federal government’s role has been to displace them, to crow them out, to push them to the side. Government needs to respect its role. And the federal government here can provide resources. The federal government can man the supply lines. But again, the people on the front lines, the people who are fighting poverty eye to eye, soul to soul, person to person, they’re the ones who make the difference. They’re the ones who are actually really achieving something. And if you bring the federal resources behind them in this kind of an innovative way, I think we can focus on a more results-oriented approach. I think that’s really, really important.

There’re so many other points that you mentioned, but I think the key here is let’s stop focusing on treating the symptoms of poverty. Let’s stop propping up a poverty management system. Let’s get to a results oriented system. And let’s integrate. Let’s bring the private sector and the public sector and the charitable sector together, integrated, pulling in the same direction, not competing with one another, so that the focus is on results. Are we getting people out of poverty?

And we have to know, when we do that, there’re different kinds of poverty. There’re different kinds of needs. Let’s respect those different types of poverty, those different kinds of conditions, and bring aid that is customized and personalized. And that to me is how you deal with a lot of the problems that we have. And this is the kind of conversation that I think we have to evolve to so that at the end of the day – we started welfare reform with waivers in the early 1990s. We did this in Wisconsin to great effect, witnessed it. It was very impressive. And then we brought those ideas to Congress, and they passed in 1996, and since then we have not been reforming. We’ve got 92 other programs spending $800 billion a year that are in dire need of reform, so that we don’t measure success on inputs, but based on outcomes.

MR. DOAR: Congressman, as you know, I was an administrator of all these programs for Mayor Bloomberg for the last seven years. And there isn’t any question that there’s a great deal of frustration among administrators in the incoherence of the various federal streams and the lack of connectivity, so that I think you’re tapping into something important there. But the biggest program that you are putting in the Opportunity Grant, it seems to me, is the Food Stamp program. And you’re offering states, it looks to me, an option of being able to not necessarily have that be a voucher and have the benefits associated with Food Stamps go for other needs in the household.

And I was wondering if you’d address that issue and what is it that you saw in your investigation of this issue that led you to believe that this really longstanding program (this would be a big change) is in need of that kind of opportunity for experimentation.

REP. RYAN: The critical part of this, and the reason for that, is to combine it all together so that you can design an aid package that is necessary for this person’s particular needs. Maybe she needs more for transportation or maybe she needs more for child care. Right now, you have these structured programs that don’t recognize her unique problems and unique needs, so that your case manager can actually adjust the benefit.

If a state wants to, they can make it a cash assistance program or they can have the EBT card, which is what most states have, designed within the Opportunity Grant. I also think that having the carrot-and-stick approach, having the work requirements or the work-training requirements with a time limit that applies to the person’s particular needs is really essential, so that this is known not as a permanent condition, but as a helping hand for the able-bodied to get them up and on with their lives. I think that’s really an important part of it. And then the states can design it however they choose to, whether they want to put it on EBT or make it more of a cash form of assistance that a person’s case manager works on.

MR. DOAR: OK, thank you. Now, we want to open it up to questions from the audience and see what we’ve got. I’m trying to see. Right there, in the first row there. Wait for the microphone and we want questions, not statements.

Q: My name is Caleb Orr. I’m an intern at the U.S. House of Representatives. I know there’re some policy scholars, including AEI’s own Jim Pethokoukis, who have advocated for a wage subsidy. And Congressman Ryan, you opt to go with EITC. Could you guys discuss the merits of a monthly paycheck that comes as a wage subsidy versus the annual lump sum of EITC extension?

REP. RYAN: I agree with Jim’s point. And I forgot to mention this. Stuart, I think mentioned about EITC reform. This is something I think the Ways and Means Committee, a committee I serve on, needs to get into. There are some fraud issues that we need to police and do a better job. And I believe, ultimately, it’s a good idea to get the EITC to become a monthly system, so that you see it in your paycheck every month, so that – I think by reforming and working within the EITC structure, that’s a more successful outcome and a more likely reform than – wage subsidy is a good idea – I just think we can take the attributes of that idea and apply them to EITC because we have a program that has a good success rate that needs some reform- monthly, going after fraud.

The other thing is it works. I mean, this is one of the – I think Uncle Miltie – excuse me, we conservatives call Milton Friedman Uncle Miltie (Laughter.) – this was an idea that was inspired from some of his work. So this is an idea that has great philosophical principle origins that has been practiced in society that actually shows that it really does pay to work and it’s getting people…Here’s the other point: Twenty percent of Americans between the ages of 20 and 21 are not working or are not even in school. And so we need to pull people into the workforce. When you take a look at our very low labor force participation rates, it’s the worst in this category: a childless adult who is 21 to 25 years old. And these are people who are in the prime of their lives that need to get into the workforce.

And on the marriage point, I would just respectfully say to Stuart, I think it shows that if you have a job, you’re more likely to get married. If you’re able-bodied and you’re working, you’re more likely to have a stable life, a stable marriage, and a stable family. And so I think applying EITC to childless adults is actually going to help facilitate marriage. I think it’s going to be good for the family.

MR. DOAR: OK, next question. Right there in the – moustache, in the back. Sorry.

REP. RYAN: In the moustache, yeah, that’s great. (Laughter.) You put that on this morning? (Laughter.)

Q: Congressman, you and several of the panelists mentioned college and nothing about vocational education. Is it your view that the college is trump in terms of vocational needs or –

REP. RYAN: Did you say “trumped?”

Q: Yes. Is it more important than vocational training?

REP. RYAN: I grew up Euchre playing in Wisconsin, so I know what he means when he says that. No. If you go into the report- I’m doing a cliff notes version here- if you go into the report, voc ed is very important. And I think in many ways, it’s primary. I think we’ve overemphasized in America, you got to go do a four-year degree and you got to go get English or something like that, when, especially where I come from, vocational education is fantastic.

Now, look, if we can work on a resurgence of our manufacturing industry, a whole another issue, we’re going to need high skilled workers earning great paychecks, family-supporting wages. And I think vocational education is a really important part of it. That’s why we talk about job training reform. That’s why we talk about flexible job training reform that’s individual based, that goes to the individual, so that they can take that aid and go to the provider of their choice, be it an employer who’s, you know, setting aside 50,000 square feet to teach people how to get a welding degree or a CNC machine tool and die degree or a vocational technical college or what not, that’s why we put a lot of emphasis on job training reform. I just didn’t mention it in my opening remarks.

MR. WOODSON: I think we should also look at enterprise formation as one strategy, too. For instance, Paul met a man in Indianapolis, Kurt Moore (sp), who spent 13 years in federal prison and came to himself and came to Christ and came out and started washing cars in people’s driveway. Now he has 15 employees, other ex-offenders, and just established his business because we connected him to some business leaders in the community who partner with him, so we have a conservative enterprise partnership and there’re about 12 other entrepreneurs in this community with Kurt’s profile that need the kind of help that we can provide. So that would be another strategy to provide incentives and remove the barriers for people like Kurt Moore to start a business and so.

REP. RYAN: That brings up one important – I’ll make it a brief point – is right now, I’d say we have a lot of silos and divisions within our society that are isolating the poor from the rest of our communities. And that we need to reintegrate that. And I think the inadvertent design of the federal government’s approach has been to basically reinforce this idea that this is government’s responsibility. You know, if there are poor people in your community and you’re worried about them, just pay your taxes and government’s going to fix that. Don’t get involved. We need to break down that mythology. And I think this approach – it attempts to basically do that, so that we localize, personalize, customize, and integrate.

One of the things we’re trying to do, say, in Milwaukee, is hook up employers and manufacturers with people who are in need of skills and jobs together. We’re getting suburban churches working with poor community churches so that we can help bring all the tools and the things that they have to help make a bigger difference. And I think this is, along with voc tech is a really important area. And so by getting everybody integrated and pulling in the same direction and not displacing these relationships that’re happening today, I think you’re going to make a big difference and you’re going to see, you know, really a thousand flowers bloom. You’re going to see, you know, what I call force enablers that are going to really help make this outcome-based approach really successful.

MR. DOAR: We have time for one more question and we’ll take the lovely lady in the front row.

Q: I’m Joanne Florino with the Philanthropy Roundtable and I think that’s going to give you a clue as to the question I’m going to ask. It seems to me that –

REP. RYAN: (Tax ?) question, right?

Q: Well, you know, I wasn’t going to do that, but since you said that.

REP. RYAN: That’s the usual one I get.

Q: It seems to me that this program, which is amazing and I congratulate you on that, opens the door for a new and expanded role for private philanthropy at the local level, at the state level, and possibly at the national level. So what about incentives for private philanthropy? We are looking at the tax code. We’re looking at some of the possibilities, some of the provisions that were in the Kemp draft. I think you know how the reaction has been from the sector. What can we do to ensure that private philanthropy remains as healthy as possible and engaged with those boots on the ground?

REP. RYAN: Yeah, we will not solve these programs and get people out of poverty in a lasting way without private philanthropy, without private charity, without good works. And so digressing for a moment on the Ways and Means tax side, if you notice that draft, the one thing it did preserve of all the tax expenditures out there was the open ended nature of donating to charities, of private philanthropy. That is a very important distinction that I think needs to be noted. And there’re some other good ideas, like letting people file – take their donations that occur up until April 15 to claim on their tax return.

I think there’re a lot of innovative ideas that are out there and will help pull money into the charitable private sector, in the philanthropy sector, and tax policy is a big way of doing that. So I think the right kind of tax policy can help integrate and expand civil society by encouraging giving.

But the other thing is I think a lot of the problem we have is the federal government is displacing and crowding out and competing with private charity in many ways. And the purpose of this is to stop that competition and respect the good works that are being done by people on the ground, the experimentation that’s occurring.

That’s why we want to have good measurement, but respect it. What the federal government can do better is provide resources. What private charities, what public charities, what nonprofit, for profit – what they can do is provide expertise, boots on the ground, and customization.

And so by respecting these various roles, I think we can integrate the roles, so that they work better at the end of the day. And that to me is what we ought to do if we want to truly get everybody working in the same direction and focused on an outcome-based, results-based policy. And I think tax incentives like we have in the code are something that ought to be preserved, so that we keep this part of civil society or social capital going.

MR. DOAR: Thank you, Congressman Ryan. Thank all of you who’re here. I wish you all would stay seated whilst Congressman Ryan leaves. And Arthur?

MR. BROOKS: We’ve come to the end of our session. I’m very grateful to Congressman Ryan, to our panel, and especially to all of you for giving us some of your time, for joining us in the War for America’s poor. (Applause.)

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