[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
HOW OUR WELFARE SYSTEM CAN
DISCOURAGE WORK
=======================================================================
JOINT HEARING
before the
COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON HUMAN RESOURCES
and the
COMMITTEE ON AGRICULTURE
SUBCOMMITTEE ON OVERSIGHT
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
JUNE 25, 2015
__________
Committee on Ways and Means Serial No. 114-HR05
Committee on Agriculture Serial No. 114-3, pt. 2
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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COMMITTEE ON WAYS AND MEANS
PAUL RYAN, Wisconsin, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
DEVIN NUNES, California JIM McDERMOTT, Washington
PATRICK J. TIBERI, Ohio JOHN LEWIS, Georgia
DAVID G. REICHERT, Washington RICHARD E. NEAL, Massachusetts
CHARLES W. BOUSTANY, Jr., Louisiana XAVIER BECERRA, California
PETER J. ROSKAM, Illinois LLOYD DOGGETT, Texas
TOM PRICE, Georgia MIKE THOMPSON, California
VERN BUCHANAN, Florida JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska EARL BLUMENAUER, Oregon
LYNN JENKINS, Kansas RON KIND, Wisconsin
ERIK PAULSEN, Minnesota BILL PASCRELL, Jr., New Jersey
KENNY MARCHANT, Texas JOSEPH CROWLEY, New York
DIANE BLACK, Tennessee DANNY DAVIS, Illinois
TOM REED, New York LINDA SANCHEZ, California
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
JIM RENACCI, Ohio
PAT MEEHAN, Pennsylvania
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
ROBERT DOLD, Illinois
______
Joyce Meyer, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
______
Subcommittee on Human Resources
CHARLES W. BOUSTANY, Jr., Louisiana, Chairman
TODD YOUNG, Indiana LLOYD DOGGETT, Texas
KRISTI NOEM, South Dakota JOHN LEWIS, Georgia
PAT MEEHAN, Pennsylvania JOSEPH CROWLEY, New York
GEORGE HOLDING, North Carolina DANNY DAVIS, Illinois
JASON SMITH, Missouri
ROBERT DOLD, Illinois
COMMITTEE ON AGRICULTURE
K. MICHAEL CONAWAY, Texas, Chairman
RANDY NEUGEBAUER, Texas, COLLIN C. PETERSON, Minnesota,
Vice Chairman Ranking Minority Member
BOB GOODLATTE, Virginia DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma JIM COSTA, California
STEVE KING, Iowa TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama MARCIA L. FUDGE, Ohio
GLENN THOMPSON, Pennsylvania JAMES P. McGOVERN, Massachusetts
BOB GIBBS, Ohio SUZAN K. DelBENE, Washington
AUSTIN SCOTT, Georgia FILEMON VELA, Texas
ERIC A. ``RICK'' CRAWFORD, Arkansas MICHELLE LUJAN GRISHAM, New Mexico
SCOTT DesJARLAIS, Tennessee ANN M. KUSTER, New Hampshire
CHRISTOPHER P. GIBSON, New York RICHARD M. NOLAN, Minnesota
VICKY HARTZLER, Missouri CHERI BUSTOS, Illinois
DAN BENISHEK, Michigan SEAN PATRICK MALONEY, New York
JEFF DENHAM, California ANN KIRKPATRICK, Arizona
DOUG LaMALFA, California PETE AGUILAR, California
RODNEY DAVIS, Illinois STACEY E. PLASKETT, Virgin Islands
TED S. YOHO, Florida ALMA S. ADAMS, North Carolina
JACKIE WALORSKI, Indiana GWEN GRAHAM, Florida
RICK W. ALLEN, Georgia BRAD ASHFORD, Nebraska
MIKE BOST, Illinois
DAVID ROUZER, North Carolina
RALPH LEE ABRAHAM, Louisiana
JOHN R. MOOLENAAR, Michigan
DAN NEWHOUSE, Washington
TRENT KELLY, Mississippi
______
Scott C. Graves, Staff Director
Robert L. Larew, Minority Staff Director
______
Subcommittee on Nutrition
JACKIE WALORSKI, Indiana, Chairman
RANDY NEUGEBAUER, Texas, JAMES P. McGOVERN, Massachusetts,
GLENN THOMPSON, Pennsylvania Ranking Minority Member
BOB GIBBS, Ohio MARCIA L. FUDGE, Ohio
ERIC A. ``RICK'' CRAWFORD, Arkansas ALMA S. ADAMS, North Carolina
VICKY HARTZLER, Missouri MICHELLE LUJAN GRISHAM, New Mexico
DAN BENISHEK, Michigan PETE AGUILAR, California
RODNEY DAVIS, Illinois STACEY E. PLASKETT, Virgin Islands
TED S. YOHO, Florida BRAD ASHFORD, Nebraska
DAVID ROUZER, North Carolina SUZAN K. DelBENE, Washington
RALPH LEE ABRAHAM, Louisiana
JOHN R. MOOLENAAR, Michigan
C O N T E N T S
__________
Page
Advisory of June 25, 2015 announcing the hearing................. 2
WITNESSES
Olivia Golden, Executive Director, Center for Law and Social
Policy, Testimony.............................................. 41
Chanel McCorkle, accompanied by Marsha Netus, Director of
Operations, America Works, Baltimore, MD, Testimonies.......... 79
Casey Mulligan Ph.D., Professor, Department of Economics,
University of Chicago, Testimony............................... 13
Erik Randolph, Senior Fellow, Illinois Policy Institute,
Testimony...................................................... 31
Eugene Steuerle Ph.D., Senior Fellow, Urban Institute, Testimony. 63
SUBMISSION FOR THE RECORD
Feeding Texas.................................................... 109
HOW OUR WELFARE SYSTEM CAN DISCOURAGE WORK
----------
THURSDAY, JUNE 25, 2015
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Committee on Agriculture,
Subcommittee on Oversight,
Washington, DC.
The subcommittee met, pursuant to call, at 9:30 a.m., in
Room 1100, Longworth House Office Building, the Honorable
Charles Boustany [Chairman of the Subcommittee] presiding.
[The advisory of the hearing follows:]
HEARING ADVISORY
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman BOUSTANY. Welcome to today's hearing. I will ask
our witnesses to take their seats.
As chairman of the Ways and Means Human Resources
Subcommittee, I am honored to welcome Chairman Conaway of the
Agriculture Committee, along with Chairwoman Walorski and our
colleagues from the Agriculture Nutrition Subcommittee for
today's joint hearing.
In the interest of time and so we can move quickly to our
witness testimony, both sides have agreed to limit members'
opening statements to 3 minutes apiece.
Since we are accompanied by Chairman Conaway, we will break
precedent here, and I will yield time to Chairman Conaway to
make his opening statement.
You can go first, since you are set, and we will go to
Chairman Ryan afterwards.
Mr. CONAWAY. I want to thank the chairman. I want to thank
Chairman Ryan and Chairman Boustany and the Ways and Means
Committee for hosting the first joint hearing between our two
committees as we explore how our welfare system can discourage
work. It is surprising that our committees have not engaged
formally before given the overlap in our recipient populations.
According to the most recent SNAP characteristics report,
20 percent of SNAP recipients receive Supplemental Security
Income, 24 percent receive some form of Social Security income,
9 percent receive child support enforcement payments, 7 percent
receive support from TANF, and 4 percent receive unemployment
income.
While today's hearing is about work, the level of overlap
suggests this is only the beginning of our efforts to better
coordinate programs across the committee jurisdictions.
Throughout our top-to-bottom review of the past, present, and
future of SNAP, we have had an eye towards strengthening the
program so that it doesn't become a trap, but rather a tool to
help individuals move up the economic ladder.
We have included a number of former recipients and front-
line, nongovernmental organizations who we now know are
succeeding despite our welfare system.
Our hearing series have shown us that SNAP does not operate
in a vacuum and that it plays an important role in the lives of
nearly 46 million Americans. This is why the hearings like
today are important: Recipients don't think in terms of
program. But while we do, it is our responsibility to look
beyond our programs to understand the experience of the
recipients and the potential unintended consequences.
During our last hearing, we heard from practitioners about
how they engage individuals to help them succeed in the
workforce. We quickly encountered the reality of the ``cliff
effect'' when programs designed to support work do just the
opposite.
There is great dignity that comes from being able to
provide financially for one's own family, but that feeling can
easily be overrun when our welfare system creates a situation
where earnings do not necessarily translate into higher income.
This is not a problem that can be addressed by SNAP alone. It
is going to take a coordinated effort.
Thank you again for hosting this important joint hearing. I
look forward to working with Chairman Ryan, Chairman Boustany,
and your committee to ensure that our welfare system is
prepared to address current and future challenges.
We know that work is the best way to help individuals climb
the economic ladder, and we must ensure that our policies
reward that work. I look forward to the hearing, and I yield
back.
Chairman BOUSTANY. Thank you, Chairman Conaway.
Now I am pleased to yield time to Chairman Ryan, chairman
of the Ways and Means Committee.
Chairman RYAN. Well, first of all, thank you. Welcome
everybody. It has been a long time since I have sat down here
in these seats. The view is a little different, I got to admit.
I want to welcome our colleagues from the Agriculture
Committee, including my friend Chairman Conaway and Chairwoman
Walorski and Ranking Member McGovern. We are happy to have you,
we are happy to host this, but we want to thank you for letting
us use your committee room twice when we were renovating this
room earlier in the year.
This is an important hearing because for the past 50 years
we have been waging this war on poverty, and I don't think you
can really call it anything but a stalemate. I am not saying we
haven't made any progress. We clearly have. But the Federal
Government has spent trillions of dollars on dozens of
programs, and yet upward mobility is no better than where it
was when we started. Today, if you were raised poor, you are
just as likely to stay poor as you were 50 years ago.
Here is the problem. We have created 80 different programs
to try and fill 80 different holes in people's budgets, health
care, child care, energy, education, and more. You qualify for
these programs on income, naturally. If you don't make much,
you get a lot of benefits, but as you make more, you start to
lose your benefits very quickly in some cases. Because we have
piled these programs right on top of each other, the falloff
can be really steep, and the more you make, you can end up
losing a ton.
Take a single mom with one child earning the minimum wage,
and she gets offered a job paying her $3 more an hour. When you
factor in the taxes and the benefit cuts that she will
experience, she will only get to take home 10 cents of every
extra dollar she makes. What is the point in taking that job?
So you find that we have been filling holes, but we have
actually been building a trap, and we are isolating people from
the rest of the communities, we are isolating people from
getting out of poverty. Right now we have a safety net that is
designed to catch people falling into poverty. What we need is
a safety net to help lift people out of poverty.
And so the way I see it, we have got three choices. Number
one, we either accept the status quo and just do nothing.
Number two, we reinforce the status quo and simply just do more
of the same. That will only make it harder for people to get
from welfare to work. Or number three, we reform the status
quo, we try something different, get people in jobs or in
training, customize benefits to fit people's needs, make sure
that it always pays to work. These are the principles that we
want to put into practice. We need another round of welfare
reform so that we can actually have a safety net pulling people
from poverty, from welfare, into work, into a better life.
You know, Pope Francis recently said: ``Where there is no
work, there is no dignity.'' That is the challenge we face, to
protect and to promote the dignity of work. I look forward to
working with our colleagues in the future to do just that, and
I think this hearing is a great start.
Thank you.
Chairman BOUSTANY. Thank you, Chairman Ryan. I would like
to amplify that this hearing is a very historic event. Since
1995, the Human Resources Subcommittee has held joint hearings
with other committees only twice and never with our colleagues
on the Agriculture Committee. It is way overdue that we
approach this subject matter in this way. That is despite the
wide overlap between the programs we oversee that assist
millions of Americans with food stamps and other welfare
benefits.
So today's hearing is long overdue and reflects the start
of what I hope will be much closer cooperation ahead between
our committees. What we will explore today is one of the worst
side effects of current welfare program rules, the fact that
getting a job or working more does not always make families
better off. This poverty trap may be unintended, but for those
in its grips, it is all too real.
We need to review how we got here, how real people are
affected, and how we can reform the system to help people go to
work and earn more instead of making them worse off when they
do just that.
Consider how destructive today's anti-work signals are. We
have a chart. I will put it up on the screen. This chart shows
one thing we know for sure is that work, and especially full-
time work, is really the only cure for poverty. Less than 3
percent of people who work full-time are poor. In contrast,
people who don't work are 8 to 10 times more likely to be poor.
So promoting work is the real key to helping people avoid
poverty. Benefits can and should serve as a temporary bridge
between jobs or to supplement earnings when someone can find
only part-time work. But unless we are willing to tolerate more
poverty--and I am not--those benefits need to reinforce, not
undermine the importance of work. Redesigning welfare benefits
to do just that is the challenge before us.
I look forward to all the testimony and to working with
Members on both sides of the aisle to find solutions to this
problem.
And with that, I am happy to yield to my colleague, Mr.
Doggett, the ranking member of the subcommittee, for an opening
statement.
Mr. DOGGETT. Thank you for the opportunity to consider
these matters.
You know, when Lyndon Johnson declared war on poverty, he
got underway programs that have changed the lives of millions
of Americans for the better. In 1996, when we approved welfare
reform, which I supported, we recognized there was a need to
consider some of those programs and make alterations.
When I hear talk this morning of another round of welfare
reform, I want to be sure that the reform that is coming
achieves more than the 1996 reform, does not simply use Federal
resources to permit the States to displace their own commitment
and denies so much assistance to individuals compared to where
we were in 1996. It needs to be about lifting people up, not
just reform that is about cutting and numbers.
There are things that this hearing can focus on that I
think can be helpful. If you means test programs, benefits
eventually stop after an individual earns a certain amount of
money, we can and should mitigate the impact by preventing
eligibility cliffs. And we have one model for that, though it
is under constant attack in this room, and that is the
Affordable Care Act. It did just that for low-income workers by
allowing them to earn more and still receive Medicaid in those
States that had the good judgment to accept 100 cents of the
dollar to finance their Medicaid or to receive private tax
credits for private insurance.
But our Republican colleagues have continued to insist that
these important steps must be repealed, and many governors,
like my own, have refused to fully implement the promise of the
Affordable Care Act. We can increase the phaseout range for
programs so that benefits decline more gradually when a person
goes to work. We can support programs that now actively promote
and reward work, like the Earned Income Tax Credit, the Child
Tax Credit.
But for some people the solution to every problem--I view
it as rather blockheaded--it is to block grant everything.
Rather than pursuing these commonsense approaches of supporting
work, I hope that this one-size-fits-all answer of block grants
is not the only one advanced along with cutting Federal
funding.
Mr. Chairman, Americans deserve better than a cut-and-run
strategy. We need concrete proposals for helping Americans
find, keep, and advance in employment, not a reduction in the
Federal commitment to reaching this critical goal. I hope our
witnesses will provide additional insight and recommendations
for how we achieve that objective.
And I yield back, and thank you.
Chairman BOUSTANY. I thank the gentleman for his statement.
I now yield time to the chairwoman of the Agriculture
subcommittee, Mrs. Walorski, for the purposes of an opening
statement.
Mrs. WALORSKI. Thank you, Chairman Boustany, thank you to
Chairman Ryan as well, for hosting this historic joint hearing
between our two committees as we better explore how our welfare
system can discourage work.
As the chair of the Nutrition Subcommittee, we have spent
the past 5 months exploring the Supplemental Nutrition
Assistance Program, also known as food stamps. Our review of
the past, present, and future of SNAP is why we are here today.
We will explore real issues with another committee that is
having many of the same discussions as we are.
Throughout our review, I have stressed that we cannot just
examine SNAP in a vacuum. We have to recognize there are other
programs that exist and explore how they work or don't work
together. In my home State of Indiana, my fellow Hoosiers
aren't concerned about whose jurisdiction of committees this
is. They care more about how we as legislators work together.
Today is the next step in that process.
During our last hearing, witnesses discussed the importance
of case management and how they engage with recipients. We
heard stories detailing the barriers they face. For example,
workers near the poverty line who are eligible for multiple
assistance programs stand to lose financially by increasing
their income as their benefits are phased out. This is
described by analysts as the welfare cliff.
In the face of such a scenario, many people forego raises
or put in fewer hours. Individual programs may attempt to
address this, but it still requires a broader view of how
programs interact to ensure that we as policymakers are not
inadvertently discouraging work.
Welfare programs should support those in need, not deter
them from reaching their full potential in the workplace. I do
worry that this cliff is a serious obstacle when recipients try
to enter, reenter, and remain in the workforce in order to
climb the economic ladder. Helping recipients move into better
paying jobs not only benefits their families, but also benefits
taxpayers.
I am looking forward to hearing about ways to explore how
we can improve the operation of these programs in order to help
millions of Americans seeking a better future.
Again, I thank Chairman Ryan and Chairman Boustany for
hosting, and I look forward to working with them in the future.
I also want to thank all of our witnesses for being here today
with us and look forward to their testimony.
Chairman BOUSTANY. I thank the gentlelady.
I now yield time to the ranking member of the Agriculture
subcommittee, Mr. McGovern.
Mr. MCGOVERN. Thank you.
You know, the hard reality is that we can and we must do a
better job in fighting hunger and poverty in America. For 7
years now I have called for a White House conference on food,
nutrition, and hunger. Holding a White House conference like
this would be a major step forward in our effort to reduce
hunger and poverty by better connecting the dots amongst
Federal and State agencies, nonprofits, faith-based
communities, schools, hospitals, and the business community.
Such a conference would help us better understand and meet the
needs of the millions of Americans struggling to put food on
the table and to help them transition to a better place.
Being poor in America is hard work, and quite frankly, our
safety net has some holes in it, and it must be strengthened to
meet some of our families' most basic needs. Talk to those who
run our food banks. They will tell you that at the end of every
month SNAP families are at their doors because they can't
afford to purchase any more food.
And while we all want to encourage work, let's state for
the record that a majority of those on SNAP are kids, elderly,
and the disabled. They are not expected to work. Of those who
are expected to work, more than half do. Among those who work,
58 percent work full-time for 6 months or more after receiving
SNAP. Remember that the next time you hear someone claim that
SNAP recipients don't work. About 60 percent of SNAP recipients
who are expected to work do work for 6 months or more after
receiving SNAP benefits.
The real problem is that those who work earn so little that
they still are eligible for the program. I believe that if you
work in this country, you ought not to live in poverty. Where
is the outrage over lousy wages? And yes, Pope Francis, and I
agree with him, said: ``Where there is no work, there is no
dignity.'' But what about the indignity of low wages, of
working hard two, three jobs, and still living in poverty?
No doubt this is a complex problem, and I think American
families deserve more, but that means talking about raising the
minimum wage to a livable wage so that workers can earn enough
to support their families, and it means creating a sustainable
path to phase out safety net benefits only after they are on
solid footing.
Some of my friends have suggested we lower the marginal tax
rates. An easy way to accomplish that is to extend phaseout
ranges for programs in addition to SNAP, which I am sure some
of my friends might not be crazy about because it will cost
more. But without that critical investment, any changes in SNAP
could hurt the program and actually make poverty worse.
I am all for flexibility too, but if flexibility is code
for block grants, I have got a big problem with that. Too often
this results in anti-hunger programs like SNAP being
underfunded and our most vulnerable families being left behind.
Passing the buck to States, finding more ways to avoid
adequate Federal investments in battling poverty solves
nothing. Cutting SNAP as we did last year in the farm bill,
cutting funding for job training, not permanently extending key
features of the EITC or Child Tax Credit, these are dangerous
policies that have often been presented by some of my
colleagues as solutions.
These ideas make me nervous about what the majority is up
to, and everyone at today's hearing should think carefully
about the consequences of such reckless approaches to the very
programs that are essential to helping America's most
vulnerable families get on the path to the middle class.
And I thank the chairman.
Chairman BOUSTANY. I thank the gentleman for his opening
statement. Without objection, each member will have the
opportunity to submit a written statement and have it included
in the record at this point.
Now we will turn to our panel of witnesses. I want to
remind our witnesses to limit their oral statements to 5
minutes. However, without objection, all of the written
testimony will be made part of the permanent record.
This morning we will hear from Dr. Casey Mulligan,
professor, Department of Economics, University of Chicago.
Next--and we are going to accommodate our next witness'
schedule when she arrives, she has had a little transportation
issue--we will have Chanel McCorkle of Baltimore, Maryland,
accompanied by Marsha Netus, director of operations at America
Works of Baltimore.
Thirdly, Erik Randolph, senior fellow, Illinois Policy
Institute. Fourth, Olivia Golden, executive director, Center
for Law and Social Policy. And fifth, Dr. Eugene Steuerle,
senior fellow, Urban Institute.
We welcome all of you. Your testimony is going to be very
helpful as we carve a path forward on this.
And so with that, Mr. Mulligan, please proceed with your
testimony.
STATEMENT OF CASEY MULLIGAN, PH.D., PROFESSOR, DEPARTMENT OF
ECONOMICS, UNIVERSITY OF CHICAGO, CHICAGO, IL
Mr. MULLIGAN. Chairman Boustany, Chairman Walorski, Ranking
Member Doggett, and Ranking Member McGovern, and all the
Members of the Subcommittee, thank you for really the
opportunity and the honor today to discuss with you about how
public policy has affected the reward to working.
A basic economic principle is that the monetary reward to
working has important effects on how many people are employed
and how much they work. People without jobs or otherwise with
low incomes sometimes receive benefits from social safety net
programs. The benefits themselves are rarely called taxes by
laymen, but economists understand the benefits to have many of
the characteristics of tax rates because a program beneficiary
loses some or all of her benefits as a consequence of accepting
a job.
I have illustrated the reward idea in figure 1 of my
testimony. The left bar in that figure measures the resources
available when working, and the right bar measures the
resources the same person would have if not working, including
subsidies net of taxes paid. The difference between the two
bars is the monetary reward to working.
Now, consider adding a new safety net program, which I put
in green, or expanding an old one. Exactly because it gives
more help when not working, the new program reduces the reward
to working. The combined effect of taxes and subsidies on the
reward to accepting a job can be summarized as a penalty, the
effective amount that is lost from paying taxes and replacing
benefits associated with not working. I like to express that
penalty as a marginal tax rate, namely as a percentage of
employee compensation.
If there were no penalty, then the marginal tax rate would
be zero. Thanks to a labyrinth of tax and subsidy programs, the
marginal tax rate can equal or exceed 100 percent, which means
that at least as many resources are available when not working
as when working.
Government tax and spending rules reduce the reward to
working for two separate reasons. First, the rules include
income contingencies. The more income from work means more
taxes and fewer benefits. But second and separate and not
unimportant is the rules include employment contingencies. More
employment for a family affects its taxes and benefit amounts
even if their income is the same.
For unmarried middle-class Americans, SNAP is not a
marginal tax on their income, despite the 30 percent benefit-
reduction rate, because they are ineligible for the program
whenever they are working. But SNAP is a marginal tax on their
employment because every month out of work is another month of
SNAP eligibility. This is one of the many examples where a
program's employment contingencies have different economics
from its income contingencies.
Legislation that cuts or credits taxes, so to speak, can
nonetheless reduce the reward to working and increase the
marginal tax rate if it cuts taxes more for those who work than
it cuts taxes for those who work less.
At the same time the safety net programs implicitly tax job
acceptance, they also implicitly subsidize layoffs because the
programs absorb some of the income and production that employer
and employee together lose when an employee stops working.
Layoff subsidies give employers and employees less incentive to
take the steps that might avoid or delay layoffs.
Let me be clear, America absolutely must have taxes and
safety net programs even though they reduce the reward to
working and even though they subsidize layoffs. But if you want
to understand what is happening in the labor market or to the
budgets of social programs, it is counterproductive to
approximate marginal tax rates as zero or to assume that they
are eternally constant regardless of what comes in new
legislation.
The resources provided for people not employed or
underemployed have increased in the past decade. SNAP program
rules have changed in a variety of ways. Unemployment benefits
are now paid in a variety of new circumstances. The Recovery
Act and now the Affordable Care Act help unemployed people pay
for their health insurance.
Figure 2 shows my estimates of 9 years marginal tax rates
coming from tax and subsidy programs, taking into account that
some of the poor and unemployed do not participate in all or
sometimes none of the safety net programs. The combined effect
of these and other changes through this year was to reduce the
reward to work, that is, increase marginal tax rates for most
of the nonelderly population.
The cumulative effect of all this legislation is to
increase average marginal labor income tax rates by 7
percentage points over what they were in 2007. A presumably
unintended consequence of the recent safety net expansions has
been to reduce the reward to working and thereby keeping
unemployment and poverty rates high, keeping national spending
low, longer than they would have been if safety net program
rules had remained unchanged.
Thank you.
Chairman BOUSTANY. I thank the gentleman.
[The prepared statement of Mr. Mulligan follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
We will defer on Ms. McCorkle and Ms. Netus' testimony
until she arrives. So next we go to Mr. Randolph.
Mr. Randolph, you are recognized for 5 minutes.
STATEMENT OF ERIK RANDOLPH, SENIOR FELLOW, ILLINOIS POLICY
INSTITUTE, CHICAGO, IL
Mr. RANDOLPH. I want to sincerely thank the chairwoman, the
chairman, and all the Members of the Subcommittees for inviting
me to be here today and allowing me to speak.
You have before you a very challenging issue. This is
difficult and complex, and I am pleased that you have the
courage to undertake it. It is solvable. Let me say it is
solvable, and you can succeed, and I think you will succeed,
and this Nation will be better because of your efforts.
My name is Eric Randolph, and I am a senior fellow with the
Illinois Policy Institute, and I also provide analytical
services as an independent consultant. Last year, the institute
sponsored me to develop a computational model examining welfare
benefits, Federal, State, local, and to determine the impact of
economic incentives relative to employment. The results of the
study are nothing short of astounding. In some cases, it
literally does not pay to climb up that career or opportunity
ladder.
Now, just imagine that you are a single parent with two
children living in Lake County. It is a suburb of Chicago. You
have a job earning $12 an hour. Someone offers you a job for
$18 an hour. Should you take the job? Well, under the scenario
that we studied, the answer is no, keep your $12 per hour job.
At first glance, this makes no sense. Of course someone
would prefer to make $18 as opposed to $12. But as a single
parent managing a household with children you want to maximize
all your resources. You have children to take care of, yourself
to take care of, and it doesn't matter if those resources are
earned through work or if it is given to you through benefits.
A single parent in Lake County earning $12 an hour brings
home just over $22,000 a year. However, that same single parent
is eligible for an array of welfare benefits that we can
categorize, the refundable tax credits, the food assistance,
housing assistance, subsidized childcare services, and medical
assistance. When you add up the value of all the benefits that
they can receive from these programs, it comes to an astounding
$40,000. Now, that makes the total receivables, when we include
the earned income, almost $62,000.
Now, in comparison, suppose this mother would take the job
earning $18 an hour, okay? She would lose almost $34,000 in the
benefits to gain only $11,000. Now, why would anyone take a job
to gain $11,000 but lose $34,000 in benefits?
This is the welfare cliff that we are talking about, and
this is what traps people. This is just but one scenario we
studied using the computational model. We studied two other
counties in Illinois, and we studied two-parent households, and
guess what, it is essentially the same.
So the system that we--well, let me just say, we drew a
number of conclusions looking at this. The very first one is
the magnitude of the potential benefits of the family that they
receive is large. It is a general conclusion. $40,000 is not a
small sum of money. The second is that the welfare cliff can be
significant, and it is cruel. The third is economic
disincentives are real, major, and they can indeed trap
families. The fourth is the system is inequitable, and that is,
to compare someone who is not receiving these benefits, could
be worse off financially than someone receiving these benefits.
That is not equitable. Fifth, programs with the steepest
cutoffs are the greatest culprits.
Finally, everyone should agree that there ought to be an
income ladder such that when someone earns more money, he or
she is in fact better off. However, this is not the system we
have as a Nation today. It will take the cooperation of many
individuals and political courage.
In my opinion, we will not be successful by giving more
control to the Federal Government. We can only succeed if we
take advantage of the laboratories of democracy, allowing
States to innovate and finding the best solutions.
Chairman BOUSTANY. I thank the gentleman.
[The prepared statement of Mr. Randolph follows:]
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Ms. Golden, you are recognized for your oral testimony.
STATEMENT OF OLIVIA GOLDEN, EXECUTIVE DIRECTOR, CENTER FOR LAW
AND SOCIAL POLICY, WASHINGTON, DC
Ms. GOLDEN. Good morning, Chairman Boustany, Chairman
Walorski, Ranking Member Doggett, Ranking Member McGovern, and
Members of the Committees. Thank you so much for the
opportunity to testify. I am Olivia Golden, the executive
director of the Center for Law and Social Policy, an anti-
poverty organization that promotes effective Federal and State
policies.
In addition, I bring to this testimony experience in
directly administering safety net programs at the Federal,
State, and local levels, as well as studying them as a
researcher at the Urban Institute. I will briefly summarize
three main points from my written testimony.
First, researchers have demonstrated that the Nation's core
safety net programs, programs like the Earned Income Tax
Credit, SNAP, childcare assistance, health insurance, sharply
reduce poverty. They cut it almost in half. They improve
nutrition and health care for millions of children and
families. And--and this is really important emerging research--
they have positive effects on children's health, work
trajectory, and income many years later into adulthood. Just to
take one example, SNAP benefits alone kept more than 10 million
people, including almost 5 million children, out of poverty in
2012.
Second key point. The research evidence indicates
overwhelmingly that the safety net as a whole supports work,
particularly for low-income parents. It is not too much support
from the safety net but too little, such as the absence of
enough help with child care, that typically holds people back
from working.
While some individuals encounter barriers to work related
to safety net programs, researchers find that these effects are
much smaller than the programs' work-promoting effects, and
many past barriers have been fixed in recent years. I think Mr.
Doggett alluded to the Medicaid improvements. In fact, the
majority of people who get help from core safety net programs
today are working but earning too little to make ends meet
without help.
To take a moment to summarize the research, theories about
work disincentives are just not supported by what researchers
find about low-income families' actual experiences. Rigorous
studies find that when low-income working parents can get and
keep the full package of work support programs, they are better
able to stabilize their lives, keep a job, move up, and help
their children thrive.
For example, studies of parents leaving welfare for work
have concluded that families accessing these supports were more
likely to be stably employed. Studies of the Earned Income Tax
Credit show large effects in increasing labor force
participation. And empirical studies of the effects of the
safety net taken as a whole confirm that, in practice, these
programs' work disincentives are so small as to have, quote,
``almost no effect on their anti-poverty effectiveness.''
In fact, one of the major success stories of the past two
decades is that the safety net has made work pay as a result of
specific decisions by Congress and the States to improve work
incentives. One striking piece of evidence: Poor and near poor
mothers who are eligible for the widest range of safety net
benefits have become far more likely to work than they used to
be. By contrast, employment has declined among childless
adults, the group with least access to the safety net.
Finally, my testimony highlights practical next steps. I
urge the Members of the Committees to consider six next steps
that build on past success.
First, extend the improvements to the Earned Income Tax
Credit and Child Tax Credit that now expire at the end of the
2017.
Second, expand the EITC to childless workers, including
young adults, who now don't benefit from this work incentive.
Third, expand funding for childcare assistance whose
importance was recognized by a recent bipartisan
reauthorization in the Congress.
Fourth, fully fund implementation of another program
reauthorized in a bipartisan manner, the Nation's workforce
program, so low-income workers can move into family-supporting
employment.
Fifth, explore two-generational strategies that help
parents move up at work and enhance children's life chances at
the same time.
And sixth, avoid counterproductive ideas such as block
grants that would turn back the demonstrated successes of the
safety net.
In conclusion, as a result of policy improvements over the
last two decades, the major national safety net programs
combine a strong impact on poverty with positive work
incentives for low-income families. I urge you to consider
building on this momentum with additional practical steps such
as those I have highlighted here.
Thank you very much, and I look forward to your questions.
Chairman BOUSTANY. Thank you, Ms. Golden.
[The prepared statement of Ms. Golden follows:]
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Next we will go to Dr. Steuerle.
You are recognized, Dr. Steuerle.
STATEMENT OF EUGENE STEUERLE, PH.D., SENIOR FELLOW, URBAN
INSTITUTE, WASHINGTON, DC
Dr. STEUERLE. Thank you, Chairpersons Boustany and
Walorski, Ranking Member Doggett and McGovern, Chairman
Conaway, and Chairman Ryan, if he returns. I thank you for this
opportunity to testify before you again. My name is Gene
Steuerle, and I have worked with you on many tax, budget, and
welfare issues over time, and again, it is an honor to be here
again. My remarks reflect my own views and not those of the
institutions with which I am associated.
Despite the rhetoric about living in an age of austerity,
we live in a time of extraordinary opportunity. On a per-
household basis, our income is higher ever than even before the
Great Recession, and 60 percent higher, by the way, than when
Ronald Reagan was elected President.
The best options, in my view, for the future of a social
welfare budget cannot possibly be determined well by the needs
and parameters established decades ago in a very different
economy and driving the programs we are talking about today.
Two examples enlighten us as to how bipartisan efforts actually
led to important forward-looking shifts from past policies.
Republicans and Democrats did not always agree on the
merits of either AFDC or the Earned Income Tax Credit, yet they
did favor a shift from welfare toward wage subsidies. Ditto for
moving from public housing to housing vouchers. To me, these
give evidence that there are bipartisan ways of getting around
the type of problem we are talking about today.
I also sense that both the American public and you, their
elected representatives, are united in wanting to create a 21st
century social welfare budget. That budget, I believe, should
and will place greater focus on opportunity, mobility, work,
and investment in human, real, and financial capital. However,
for the most part, we have never really had a social welfare
budget that is focused on mobility and work.
As I show in ``Dead Men Ruling,'' you hold office at a time
unique in our Nation's history, a time when the politically
unattractive option of reneging on promises the public feels it
has been made has been turned into a requirement. Economic
growth, even if modest, always provided new opportunities. It
is just that you now operate within a budget where too many
choices have already been preempted by dead and retired elected
officials who continue to rule.
For instance, projections by the Congressional Budget
Office and others imply that government is scheduled to spend
in excess of $1 trillion more annually in about 10 years. And
by the way, those numbers come about whether you are dealing
often with a Republican or a Democratic budget because they are
derived from economic growth. Yet all of that money, plus some,
has already been absorbed by other commitments that have been
made, and the traditional source of flexibility in the budget
has been removed.
Now, one important component of the reform that is
necessary, if we could reallocate those future resources,
increased resources, would be the combined marginal tax rates
imposed mainly on lower-income households and their potential
negative effects on work, wealth accumulation, and marriage.
To see how many programs combine to reduce the reward to
work and marriage, I invite you to look at the first figures in
my testimony. There I show that for households with children,
combined marginal tax rates from direct taxes and universally
available programs, like the Earned Income Credit, SNAP, and
health insurance, average about 66 percent when moving from
about $15,000 of income to about $55,000 of income, typically
when moving toward full-time work, taking a second job in the
household, and particularly facing the very large penalties if
you happen to marry another worker.
Those beneficiaries of additional housing and welfare were
not even included in this first figure. You add those in, and
the rates get up above 75 percent on average.
Now add in items like transportation, consumption, and
childcare costs--childcare costs are dealt with quite clearly
by the testimony by Ms. McCorkle--and the gains from work fall
even more. Sometimes there are no gains at all.
So while there is widespread disagreement on the size of
these disincentive effects on work and marriage, there is
little doubt that they do exist. One way out of this bind, as I
keep trying to emphasize, would be to focus future increased
resources more towards an opportunity budget that emphasizes
early childhood, quality teachers, work subsidies in lieu of
more subsidies just for consumption, decent neighborhood
environments, and similar items.
Combined tax rates could also be made more explicit, and
work could be made a stronger requirement when they receive
some benefits. And by the way, cutting healthcare cost plays a
big role here too.
I will be glad to discuss these options further with you as
the hearing proceeds. Thank you.
Chairman BOUSTANY. Thank you, Dr. Steuerle.
[The prepared statement of Dr. Steuerle follows:]
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And we now welcome Ms. McCorkle. We are glad you were able
to make it. I know transportation can often be treacherous
around here. But anyway, we certainly welcome you, and you may
proceed with your testimony.
STATEMENT OF CHANEL MCCORKLE, BALTIMORE, MD, ACCOMPANIED BY
MARSHA NETUS, DIRECTOR OF OPERATIONS, AMERICAN WORKS,
BALTIMORE, MD
Ms. MCCORKLE. Hello. How is everyone today? Thank you for
allowing me the opportunity to testify before you today. My
name is Chanel McCorkle, and I am grateful to share my story.
I moved to Baltimore in April 2011 with my daughter and her
father. We were new to Baltimore and had no place to go. I
moved in with my two sisters and was told about the City Homes
program. I was told it was an organization that would help me
find affordable housing for my family and me.
The same day I applied, I was rejected. According to City
Homes, I had not worked in the State for at least 18 months and
therefore was ineligible for assistance. Forced to remain with
my sisters, my next step was to go to the Department of Social
Services for additional support. Fortunately, I was granted
food stamps and medical assistance.
I found a job at Rite Aid Pharmacy as a cashier making $9
an hour. When I let the Department of Social Service know of
this job and my earnings, they dramatically lowered my food
stamps. The $200 reduction made it difficult to make ends meet.
One year later, I found a better opportunity as a grill
chef at St. Joseph's Hospital. The full-time position required
me to find and maintain stable and reliable daycare for my 3-
year-old daughter. I again went to the Department of Social
Service for help. I applied for daycare vouchers and was turned
down. I was informed that $11 per hour was too high of an
income to receive vouchers. I was forced to rely on friends,
family, and neighbors to babysit while I worked.
I found myself bouncing my daughter around from place to
place, from person to person, in order to keep my job. After a
while, the holes in my daycare situation became more and more
apparent as friends and family were not able to commit full-
time due to their own work obligations. I struggled with my
attendance every day, and over the course of 2 years, I was
calling out weekly due because I had no sitter for my child and
I could not afford to pay a childcare center.
In 2012, I became pregnant with my son, and after he was
born, I needed additional help with childcare. I added him to
my social service case and still was not eligible for daycare
vouchers. I was eventually let go from St. Joseph's Hospital
for missing too many days of work.
After I lost my job, I applied for temporary cash
assistance through the Department of Social Services. Thirty
days after I applied, I was granted cash assistance and
immediately received daycare vouchers and an increase in food
stamp assistance. The daycare vouchers I so desperately needed
while I was working were finally granted to me after it cost me
my job.
I was also placed with America Works of Maryland, Inc.
America Works taught me how to dress professionally, answer
interview questions, format a resume, and seek current and
worthwhile job opportunities. I feel like I had to lose my job
in order for social service to really help me.
I have recently accepted a job working 40 hours per week
with excellent benefits. I am really excited to return to work.
I know that after the Department of Social Service gets
notified, I will lose some, if not all of my benefits, and that
is scary. I am sure they will take my daycare vouchers from me
or make the copayment too high, my food stamps will be
decreased or nonexistent, and my medical benefits may end.
I have tried to make provisions if those things should
happen. I have just started to get back on track, and I know I
am well on my way, no matter how much of an uphill battle it
may be. I am fighting to get back to work to support my family
and become independent once again.
Thank you for allowing me this opportunity. I look forward
to any questions.
Chairman BOUSTANY. Thank you, Ms. McCorkle, for sharing
your story with us.
For the members, we have three votes. There are about 9\1/
2\ minutes left. We are going to continue for a while longer,
and then we will recess for votes when we get down a little
further on the clock.
With that, Ms. Netus, you may proceed with your testimony.
Ms. NETUS. Chairman Boustany, Chairman Walorski, thank you
for the opportunity to speak before the committee today. I
would also like to thank the House Ways and Means Committee
Chairman Paul Ryan and the rest of the distinguished committee
members. My name is Marsha Netus. I am the vice president and
general manager of America Works of Maryland, Inc. It is my
pleasure to testify before you today.
America Works was founded in 1984 and was the first for-
profit company dedicated to helping individuals become self-
sufficient through employment and retention services. Founder
Peter Cove and president and CEO Dr. Lee Bowes made it their
life mission to improve workforce development programming by
connecting socially deemed hard-to-serve job seekers with
private sector employment.
In 1997, the Maryland office located in downtown Baltimore
was opened with the goal to help long-time welfare recipients
find unsubsidized employment. Since then, the Maryland office
has expanded its services to assist even harder-to-serve
populations, such as violent ex-offenders who have been
incarcerated for at least 1 year, long-time SSI or SSDI
beneficiaries, disabled veterans, and youth aging out of foster
care.
Collectively, we have placed over 10,000 people into stable
employment. Our networks of employers rely on us to connect
them with qualified individuals eager to work. I have been part
of this branch since its inception, witnessing the
implementation of the Personal Responsibility and Work
Opportunity Act through the transition to the Deficit Reduction
Act of 2005.
Through my observation, regardless of the population
served, Chanel's testimony demonstrates a true reality for
those facing upward mobility. Fear is linked to the reality of
the clients we serve. Even when finding clients to testify
before you today on their realities of life, fear surfaced
among them that retribution could occur, making an already
difficult situation worse, like sanctions for choosing to be
selective with employment.
Individuals will turn down a job for fear their other
support services could be interrupted. Here you have Chanel, a
single mother raising two young children, highly motivated to
work, but apprehensive of taking full-time employment because
although she will earn a livable wage, her daycare copay and
the loss of food stamps could keep her in the same
socioeconomic status as before employment.
When I met Chanel, she was elated to share she was hired at
the new Amazon distribution center in Baltimore, a 40-hour-a-
week job with excellent benefits, but gravely concerned that
this opportunity could result in a repeat of the past. She had
great jobs before, decent wages, good benefits, and chances to
create a career path for her family, but lost them because
although it sounds like a good situation, the reality is she
still needed transitional assistance.
Although she is excited about this new opportunity, she is
feeling a bit leery about her outcome. Will this really be the
chance to get off the system? Although our retention team will
provide her with the guidance and supports needed to succeed,
certain supplements are simply out of our control. Clients have
declined good jobs for fear it could affect their extended
supports, such as housing, child care, medical assistance, and
food stamps.
As wages increase, the likelihood of the client
contributing more equally increases. Our experience has found
that there are others that will just take the opportunity,
eager and determined to provide more for their families, only
to result in being terminated because the reality is they are
still relying on public assistance like daycare vouchers.
Without a true support system, they cannot make it work.
Sadly, once their earnings exceed a federally defined hardship
amount, they no longer qualify for assistance, and in all
likelihood it may be eliminated altogether.
This could be the case for Chanel. Despair enters their
world, and my staff and I aggressively work to instill hope
back into their lives. This is even more challenging for those
who have gone through specialized training programs.
Chairman BOUSTANY. Ms. Netus, because of the vote schedule,
can I get you to wrap up on your oral testimony? We have your
full written testimony for the record.
Ms. NETUS. Sure.
[The prepared statement of Ms. McCorkle and Ms. Netus
follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman BOUSTANY. Thank you.
Ms. NETUS. Often at a financial cost to themselves, never
resulting in employment, yet alone earnings initially marketed
to them.
America Works has developed several programs where skills
development is in direct correlation with private sector needs,
providing the individual with not only the theory aspect of the
job, but the realistic experience of understanding.
I petition the committee to truly evaluate the transitional
process and support systems for helping low-income working
families leave the welfare system. Unfortunately, the priority
is aimed at ensuring full participation of work activity, as
defined by the law, to not accrue penalties instead of a system
designed to guarantee stable employment.
Through our experiences, we know people want to work. With
proper matching, there is a job for everyone, but we need an
unmitigated system to ensure longevity of employment, which
will result in reduction of the welfare rolls.
Thank you for the opportunity to testify before you today.
Chairman BOUSTANY. Thank you, Ms. Netus.
I will inform members that we have just over a minute left
on the vote if members do want to break out to vote. There are
three votes. And when we do recess for the vote, we will come
promptly back and resume the hearing.
So with that, I will begin questioning of our witnesses. We
will go through a round of questions.
These programs, we have a myriad of welfare programs that
have been created over a course of years. They were
individually designed to help families in need. But the
collective effect of this, as we have heard in testimony, can
discourage people from working and make them actually
financially worse off because of cliffs and the things that we
have heard about.
Ms. McCorkle, your story is very compelling and very
helpful to us, to give us a real-life example of what happens,
because our goal is to help individuals like yourself who are
trying to do the right thing, working hard day in and day out
to do the right thing, taking a job, trying to get ahead,
trying to improve, but we want to make sure that these programs
work appropriately and don't penalize you when you try to do
the right thing.
So in your opinion, how are we doing, based on your
experience?
Ms. MCCORKLE. Based on my experience, I feel like you are
doing okay. I just feel like you should allow more time, don't
just snatch the benefits away from the client because they
found a job. Give like a couple of months to get yourself
together. If you didn't save money, give you time to save your
money, give you time to just get yourself established, and then
decide if you are making enough money, you can handle it, then
go ahead and take it out. Don't take it all the way away, just
knock it down a little bit until they are established enough to
actually get off the system.
Chairman BOUSTANY. So as you were looking to go back to
work, were you afraid that you might end up worse off? Did you
encounter fear or were you concerned? And then once you went
back to work, did you feel like, ``Well, this is not working
out for me, I am worse off''? Is that the case?
Ms. MCCORKLE. When I wasn't working, I felt like everything
was okay. I went back to work, I felt like I was worried
because of the hours I was working. You couldn't find a daycare
open for those hours, and then you couldn't pay the cost, and
then you had to find people. But then if the people didn't work
out for you, I had to call out, so I was worried.
So I am not working now, but I do start my new job
tomorrow. I will be back. I am excited. At the same time I am
worried about losing the vouchers or having the copay too high.
You just start getting paid, so how are you going to pay your
copay, and then you have to pay somebody to watch your kids. So
it is actually like a worry. And then they are going to cut
your food stamps, so who is to say you made enough to put
enough food in your house for your kids?
Chairman BOUSTANY. Did you feel like you were in a trap?
Ms. MCCORKLE. It kind of does, yes.
Chairman BOUSTANY. Okay.
Ms. MCCORKLE. It does.
Chairman BOUSTANY. Thank you. Your story is very strong. It
is a very helpful story to us because it is a real-life example
of what we are trying to deal with as we coordinate these
programs.
Individually the intentions have been good over time to
create a good safety net, but the problem is, the way these
programs have interacted, I think they are not fair to
individuals like yourself. And so the whole purpose of this in
coordinating with the other committee is to try to figure out
how we can better make these programs work for those that they
are intended to help.
Dr. Steuerle, this problem, I assume you would answer yes,
that this problem calls for a national answer. This is a
national problem. It is Federal policy interacting with State
policy. But we need certainly guidance from Congress as we
clean this up.
Dr. STEUERLE. I think that is correct, Chairman Boustany.
And part of the issue, as you say, this issue has arisen over
the years and the decades, and the question is whether there is
any quick fix.
Part of what I am trying to lay out in my testimony is, is
if we think ahead 15, 20 years when resources in the economy
are going to be greater, we can, I think--I think we have an
established base to provide people minimum levels of
consumption. I think we can start moving on this particular
problem.
So, for instance, primary education, we don't think of it,
creating marriage penalties and work disincentives. There are a
lot of things we do. Visiting nursing programs that a number of
people are engaged in.
The other issue, which nobody wants to address a lot, is a
lot of this has arisen jurisdictionally when spending used to
be determined by the expenditure committees and taxes were
basically paying for public goods. Now that we have about
$35,000 on average per household in transfers coming from the
government, now the tax-writing committees do transfers, the
spending committees do taxes.
And so I think there is a jurisdictional issue too that you
are trying to address by having this joint committee of how you
can make joint decisions about these issues, and I don't think
that is resolved at all.
Chairman BOUSTANY. Right. Yeah. Well, I think we are just
getting started on that, and hopefully we will be able to clear
up a lot of this. But then the other issue is how do you
empower those closest to those in need, working with the States
and people at the State level to coordinate those efforts?
Because we have to do work up here, but we also have work at
the State level since these are combined programs.
Dr. STEUERLE. So I have a lot of options in my testimony,
but one of them is to think about giving at the State level,
there is this debate about whether you actually give grants to
the States, but you could give State workers more flexibility
to, say, combine some of the programs, provide the same level
of benefits, say, to somebody who is getting these benefits,
but merge them in a different way. Maybe they need
transportation, maybe they are willing to sacrifice something
to do education. To create a little more of those types of
options I think----
Chairman BOUSTANY. More of a customized casework approach
perhaps, with the flexibility built in.
Ms. GOLDEN. Can I comment?
Dr. STEUERLE. In conjunction with the client.
Chairman BOUSTANY. Yeah, Ms. Golden, quickly, because I
have to run to vote here.
Ms. GOLDEN. I am just going to comment on Ms. McCorkle's
situation and your courage.
First of all, you should be a reassured. Given the numbers
in Maryland, you should end up with your income almost
doubling, and that is because of one thing that is Federal,
just to highlight the committee's jurisdiction, the Earned
Income Tax Credit and the Child Tax Credit.
But second, I want to highlight your concern about child
care, which again goes to that Federal-State relationship, is
an enormous issue for mothers across the country, and the
challenge there, I think, is not flexibility but money. The
State of Maryland does enable people who leave welfare to stay
on child care, but you couldn't get on before when you were
working because they have a waiting list, and that is because,
flexibility or not, they just need those resources and they
can't stretch them far enough. So I think that is a piece of
the Federal-State dynamic.
Chairman BOUSTANY. Thank you.
I am going to have to recess the hearing now. We have
votes. We have three votes. We will resume immediately upon
concluding the last vote. So with that, the committee stands
recessed.
[Recess.]
Chairman BOUSTANY. The subcommittee will now resume
proceedings. And given that I have concluded my questioning of
the witnesses, I will now turn to Mrs. Walorski for
questioning.
Mrs. WALORSKI. Thank you, Chairman Boustany. And, again,
thank you to the panel for being here.
Ms. McCorkle, I didn't get a chance to say hi when you came
here, and we just came back from votes. But thank you so much
for being here and testifying, Ms. Netus as well accompanying
her. We have all the experts here. We have seen the graphs, so
we have studied this. But you are the one that has actually
lived through the process. So when we talk about, we have been
talking about this cliff, this welfare cliff. And so my
question to you is do you think the welfare cliff is real, and
if so, can you just talk about the challenges of this whole
process of reentering the workforce.
Ms. MCCORKLE. Yes, I believe the cliff is real. It is what
I am experiencing. The process of going through work is it is
really easy to find the job. It is really easy to get the job.
It is just really hard to keep the job if you don't have the
support you need to help with child care and child care is
being a big issue, then it is kind of hard to keep your job.
Mrs. WALORSKI. And so, Ms. Netus, if you could also kind of
fill in here, and with what your organization does, and kind of
like tie in this network and web together. So is Ms. McCorkle
an exception to the rule? Do you see this pretty much as a--
they have a new phenomena of this cliff?
Ms. NETUS. Chanel is actually--she is common. Most of the
people coming through the door that have moved on into
permanent employment, as I stated earlier, are very fearful
because, not only Chanel, her greatest fear is child care. I
have a number of participants whose fear is housing. The moment
they start working, their housing expenses start to rise. We
also have a number of individuals that deal with just food
stamps. As Chanel mentioned as well, too, that once they start
working, the month after, their food stamps are more than
likely adjusted.
Mrs. WALORSKI. Yes. I need to pause you there.
Ms. NETUS. So it is common.
Mrs. WALORSKI. Mr. Steuerle, I just have a really quick
follow-up on something you said as well when you talked
governors and changing mind sets, things like that. What can
local and State governments do? What kind of role can they play
in this whole mobility issue?
Dr. STEUERLE. I don't know what they can do directly. I do
sense, as I responded to Chairman Boustany, I think we can give
them more options to think about combining or merging programs
or giving--say, a recipient is eligible for a given level of
benefits, to take that level of benefits and split it some
other ways maybe for transportation, education, or something.
Maybe they are willing to accept a little bit less food stamps.
The complication is a lot of cases, they don't have the
jurisdiction. There is a huge jurisdictional splits. It is also
an issue that my colleagues have dealt with a lot. There is not
one-stop shopping for the client as well. So there is all sorts
of coordination. One thing you might try to provide incentives
as far as just figure out ways to get these data sets together
so we can actually figure out what is going on state local
levels.
Mrs. WALORSKI. I appreciate it. My time is up. Mr.
Chairman, I yield back my time. Thank you.
Chairman BOUSTANY. Now I yield to the ranking member of the
subcommittee, Mr. Doggett.
Mr. DOGGETT. Thank you. And thanks to each of you for your
important testimony. I am pleased to note that as you have been
testifying, Chief Justice Roberts writing for six members of
the United States Supreme Court has upheld the health care
security of many of the people that we are talking about right
now. As he wrote, quote, ``Congress passed the Affordable Care
Act to improve health insurance markets, not to destroy them.''
And he rejected the rejectionist argument that he said would,
quote, ``likely create the very death spirals that Congress
designed the Act to avoid.''
So I hope that as we address the issues that you are
raising in your important testimony, that we will learn from
the Affordable Care Act; we will cease the 60-plus attempts to
repeal it, and get about the business of how we improve and
strengthen it. And as it relates to this whole question of
cliffs, how we can learn from the important legislative changes
that were made in the Affordable Care Act.
Let me ask you, Ms. Golden, I appreciate your answer to the
last question, to talk a little more about what I refer to as
the block-headed approach of giving States like Texas that are
rejectionist States, that have rejected the Affordable Care
Act, despite the 800,000 Texans that are benefiting already
from these marketplaces and the many more who could benefit
from the expansion of Medicare, what the likely effect is of
providing Texas and other such States a block grant, and how
block granting programs like SNAP are giving the States the
option of pushing multiple programs into one block grant
program? What will that likely actually do for the working
poor, for the people that are out there struggling with two or
three jobs but don't really have a living wage?
Ms. GOLDEN. So I think we know----
Mr. DOGGETT. Would you turn your----
Ms. GOLDEN. We know a lot about the disadvantages of block
grants, that they risk turning back the successes of the safety
net and making the work issues worse. You note the State choice
around Medicaid. Ms. McCorkle doesn't have to worry about her
health insurance because Maryland made the right choice on
Medicaid expansion. In Texas, she would have to worry about it.
So a couple of things about block grants. One is that they,
in every case I can think of in the poverty and human services
area, they go down over time. TANF is down by 40 percent. Child
care, my written testimony says, we are serving, you know, the
fewest people we have for a dozen years. And not only do they
go down over time, they don't respond to economic trouble.
So during the recession when family need was greatest for
those struggling low-income working people, SNAP and Medicaid
responded to that need, kept people access to health insurance
and food, TANF as a block grant did not.
As you know, they raised the big problem of State--of
differences by State. So that the benefits for children that I
talked about, depend on where a child is born. And the forth
thing, which I think is a very big issue, they don't solve the
problem that has been identified today. If the State of
Maryland, which we were just hearing about, is not able to
provide sufficient child care benefits, to make sure that
people are able to keep that for, you know, for the long--a
long time, or to get it when they are in low-wage work, that is
not about flexibility. It is not that that family needs child
care instead of healthcare coverage for their kids, it is about
dollars.
And the Congress has come to a bipartisan reauthorization
of child care legislation. There is money proposed by the
authorizing committee for that. There is a proposal by the
President in his budget for expanding dollars. Child care is
very flexible. States get to make lots of choices about how to
spend it, but flexibility doesn't compensate for not having the
resources to meet the needs that you have got.
Mr. DOGGETT. Thank you, so much. I yield back, Mr.
Chairman.
Chairman BOUSTANY. Now I go to Mr. McGovern.
Mr. MCGOVERN. Well, thank you. And I appreciate your answer
to Mr. Doggett's question, because I think--you know, I think
we want to be clear here, that when people are talking about
block granting programs, they are not talking about expanding
the resources that States have to be able to do more. And, you
know, earlier, I think Ms. Netus was talking about Ms.
McCorkle's issue with day care. But that was--that was a
problem with the day care block grant in Maryland. And my
colleague from Illinois, Mr. Davis, when he comes back, might
be able to respond with some information about how Illinois is
doing a better job with their day care block grant. But it
points out, I think, how States have to make tough choices when
it comes to block grants that are--you know, that don't mean
that we are expanding resources.
On the issue of the cliff, I understand, because I bumped
into people, you know, who have told me their stories. But the
challenge is, the problem they talk about is that the benefits
earn--end too soon. They would like them to continue. I think
that is something--I think we should have that discussion. But
let's be honest, that is going to require additional resources,
which I think--I don't know where the mind set of the current
leadership in this Congress is, but it is probably not in that
direction.
But, Ms. Golden, I mentioned in my opening statement that I
think if you work in this country, you ought not to have to
live in poverty. And it infuriates me that, you know--that
there are too many workers in this country who earn such
abysmally low wages that we tolerate here, in some cases even
encourage by some of our policies here, but these people still
qualify for a lot of these benefits, including SNAP.
The American taxpayer is subsidizing low-wage work in this
country. Can you talk about how raising the minimum wage to a
livable wage might actually help people transition off of SNAP?
Because a livable wage is what we want here. It is not just
going to get people into the workforce. We are doing that, and
people are still so poor. How do we--how could that help here?
Ms. GOLDEN. So, I am glad you raised that, because one of
the things I highlight in my testimony is that the problem for
low-wage workers is a lot about the labor market. The public
safety net programs are doing a lot of what they need to do
very successfully, but when you look at, say, kids in poverty,
70 percent of them are living with someone who work, a third of
are living with someone who works full-time full year. So the
issues are wages that are too low and hours that are
insufficient, and jobs that are transient and impermanent.
So addressing the problem of wages essentially offers the
opportunity for someone to raise kids and work in a family-
sustaining setting. And I want to note that I think it also
probably makes it easier for them to above up beyond that.
Because we do a lot of work at CLASP also on workforce
training, post-secondary education. And if you are trying to
balance work, school, and raising kids, having enough income
from the work piece so that you can do the whole thing is
virtually impossible at the minimum wage. So I think that that
is a very important piece.
Mr. RANDOLPH. May I interject, Mr. Chairman, and answer
that same question?
Chairman BOUSTANY. Quickly.
Mr. RANDOLPH. When we modelled the welfare cliff in
Illinois, actually increasing the minimum wage would not help
the family that we looked at. Because if you actually take a
look at the charts that are provided in the data, that if a
person moves from the minimum wage up to $12 per hour, that it
is relatively flat. There is not much advantage at all. If you
raise it beyond that, you push them off the cliff so that they
are actually harmed.
Mr. MCGOVERN. By the way, I am talking about a livable
wage.
Chairman BOUSTANY. The gentleman's time has expired.
Mr. Young, you are recognized.
Mr. YOUNG. Thank you, chairman. You know, I have long been
intrigued by what has become a very popular formulation. I
think J.F.K. first said it, or at least it first caught fire
when he said, a rising tide lifts all boats. And I think that
generally is the case. We need to do those macroeconomic
things, like reform our Tax Code, reduce the number of
burdensome regulations, and so forth so that that tide can
rise. But I think it is clear now, when you look at the data,
when you visit with enough people, that there are some boats
that require patching.
And I see a unique role, not necessarily for the Federal
Government, in many cases for State governments to tailor
programs to unique needs of, say, the State of Indiana where I
hail from as opposed to Massachusetts or California. I also see
a real role for what still, to this day, is the most vibrant
civil society in human history. Mr. Randolph, perhaps you could
speak to some of those interventions we have seen at the State
level, the local level, our churches, our not-for-profits, what
role do they have ensuring that people get back to work and
enter sort of the path to upward mobility?
Mr. RANDOLPH. Yes, thank you.
I think you are right. If we really want to solve the
problem and really help people, you want to involve these
nonprofit organizations. A number of them are faith-based, and
they can be extremely helpful. There are a number of them
around the country, that they call pathways, I think what,
pathways out of poverty. And they actually provide coaching and
a number of things to help individuals come out.
Did I understand your question correctly? Did I answer the
question?
Mr. YOUNG. You did indeed.
Mr. RANDOLPH. Okay.
Mr. YOUNG. The purpose of this program--this hearing,
rather, is to investigate some of the distortions that are
created by our government programs, the disincentives created
for someone going back to work. So I was particularly struck by
your example. I think the calculations you made work, someone
from Lake County Indiana, a single parent, working at $12 an
hour, which amounts to $22,000 a year, would rationally say,
no, I am not going to take this $18-an-hour job offer, which
amounts to $40,000 a year because, you know, it is--I would end
up losing money in the whole course of this sort of
calculation. And this is--this is an abomination and something
we need to solve here.
Mr. RANDOLPH. You are correct again. I mean, just think of
it from the point of view of that single parent. I mean, they
have children to take care of, and their decision is going to
be in the best interest of their family and their children. So
if we put them in a position where they have to turn down a
higher paying job, then that is wrong. And it happened. I mean,
it happened in Maryland, but it happens in other places. It
happens in Illinois; it happens in Pennsylvania. I actually
helped managed a focus group in Pennsylvania that looked at
some of these issues, and we heard a number of different
stories that said basically the same thing.
Mr. YOUNG. So two tracks here: Patching the boats and
removing the disincentives created by the Federal Government,
and I think we will be in a better spot. I yield back.
Chairman BOUSTANY. I thank the gentleman.
Next we will go to Ms. Fudge.
Ms. FUDGE. Thank you very much, Mr. Chairman. I appreciate
it.
I am not even sure where I want to begin today. But let me
just say this about the historic nature of this hearing today.
The only thing that is historic is we have spent about 6 or 7
various hearings on SNAP. We have spent almost that many on
child nutrition just as if there is nothing else going on in
the world or in this Congress. That is what is historic, that
we have spent so much time feeding one issue today.
I sit and I listen to people talk about how people
calculate whether they are going to take a job making $18 an
hour from one making 11 because they are going to lose it. The
average person has no clue what the value of their benefits
are. They don't sit and make that kind of a calculation. And
there is nothing that you can say to give me any data that they
do, other than what you said to them.
There is nothing. There is no proof anywhere that being on
public assistance discourages work. There is no proof of it. It
is just something that people want to talk about. Absolutely no
proof. Maybe what we should be discussing is ways to lift
people out of poverty by raising the minimum wage, extending
paid sick and family leave for all workers so that their
parents don't have to risk losing their jobs to take care of a
sick child or a parent, and we need to be talking about
enhancing and permanently extending tax credits for working
families.
But maybe what we should talk about is corporate welfare.
What is their disincentive? They get more money from the
Federal Government than all the poor people that you are
talking about. Why don't we talk about corporate welfare? These
are people who work every day? They are not lazy, but they get
corporate welfare. Even in the Tax Code they call it an
entitlement. But we never talk about them. We only talk about
poor people. And at some point you just have say to yourself,
what is the point? What is it that we are trying to do? We are
talking about SNAP incentive farm bill. We passed the farm
bill. It was a 5-year farm bill. Why are we talking about it?
It is done. I don't understand we are wasting this kind of
time.
Ms. Golden, could you tell me why you think you are here
today really?
Ms. GOLDEN. I think that--so, first of all, may I just
support your point that these facts don't make sense to you,
because I think we have looked at some of the calculations in
Mr. Randolph's report, and the housing calculation. In fact, it
doesn't work that way. People don't get pushed off when their
income hits. They stay on. They just can't come in new at that
level. So I think one of the lessons is many theoretical
calculations, in fact, aren't true the way the program happen
on the ground.
In terms of the reasons for this hearing, I will tell you
my hope. I won't tell you what I would worry about. My hope is
that we are here to talk about the extraordinary successes of
the safety net, Like the fact that we have sharply reduced
poverty; we have insured that the safety net supports work for
the vast majority of low-income people, and that we are getting
evidence about how it supports children's life-long
effectiveness, and then maybe we will talk about some of the
practical next steps that you have highlighted that the
committees could take, like extending the earned income tax
credit further, like increasing investment in child care. So
those would be my hopes for what would come out of it.
Ms. FUDGE. Thank you, Mr. Chairman. I yield back.
Chairman BOUSTANY. I thank the gentlelady.
Next we will go to Mr. Davis. You are recognized.
Mr. RODNEY DAVIS OF ILLINOIS. Thank you, Mr. Chairman, and
thank you for letting us, poor Ag Committee members come into
such a nice spacious committee room. We know how good you have
it here on Ways and Means now.
Chairman BOUSTANY. You only have 3 minutes. Get to your
questions.
Mr. RODNEY DAVIS OF ILLINOIS. I am not yielding back.
Actually, I just want to welcome my friend, Mr. Randolph, from
the great State of Illinois. It was nice, my colleague, Mr.
McGovern, was interesting in some of the policies that are
being implemented in Illinois, and I can't wait to have that
discussion with him in a future hearing.
I appreciate your work and your discussion on the cliff
that you are talking about. As somebody who is a supporter of
SNAP programs, I want to make sure that those who need benefits
get them and that those who are on those benefits have the
ability to transition into that workplace and not have to make
a decision between getting benefits or getting a higher wage.
You have talked about the cliff, now I want to hear some of
your suggestions that we might be able to take into
consideration in this institution on how to make it better.
What can we do to fix it? So I would ask you that. What can we
do to fix some of the problems that you have identified?
Mr. RANDOLPH. Thank you. I mean, we have got to keep in
mind that what is important is that we are talking about these
single moms, we are talking about the families that want to
help their lives. So we shouldn't--we shouldn't get jealous of
jurisdiction or Federal control over the States. So I think the
important thing is to rise above that and then realize that if
we are going to really solve the problem, we have to allow
flexibility at the State level for them to address.
And just this past Monday, I was at--did you want to say
something?
Mr. RODNEY DAVIS OF ILLINOIS. No. Go ahead.
Mr. RANDOLPH. Just this past Monday I was at a group where
there were 20 different secretaries for human services across
this country, and they all were telling me the same thing, and
that is that if they were given more flexibility, there is more
things that they can do to manage these programs better.
Mr. RODNEY DAVIS OF ILLINOIS. What are a couple of examples
that you can give as to how they are managing those programs
better? What can we do in a State like Illinois to do exactly
what you are talking about?
Mr. RANDOLPH. Right. What I would like to see is I would
like to see that, like, for example, in the SNAP program, that
there is flexibility that the funds could be fungible with
other welfare programs so that when you are at a State level,
you look at the person, and you say, okay. You have these
various needs. Right now we can't move any of the SNAP money
over to child care. We can't move the child care money over
here. If you would blend the programs together, similar to the
document put together for the opportunities grants, that would
be a great way to allow States to have flexibility to better
serve the needs of the individuals and the families.
Mr. RODNEY DAVIS OF ILLINOIS. Great. My time has expired. I
will yield back my one second. But I look forward to working
with you, Mr. Randolph.
Chairman BOUSTANY. I thank the gentleman.
Next we will go to Mr. Ashford.
Mr. ASHFORD. Thank you. And I am not sure who to direct
this question to exactly, but maybe to Ms. Golden. Back in
Nebraska, I served as an executive director of the Omaha
Housing Authority, and one of the--for 3 years. And one of the
real tragedies of that appearance was that halfway through my
tenure there, the self-sufficiency program at the Housing
Authority--at HUD was defunded.
So essentially, what the rule was, is look at, you are a
housing agency, you are not an employment agency. You are not a
workforce agency. And actually, in Nebraska, we passed welfare
reform. It was my bill. It was 1994, one of the early welfare
reform bills prior to 1996. And in that bill, we--and as a
result of it, we have reduced, as has been the case generally,
reduced welfare rules. I thought Chairman Ryan was absolutely
correct when he said, I don't know how we structure all of
these things, but when we look at--the numbers we are seeing
today are the same numbers--not the same numbers, but the same
kinds of percentages to a certain degree that I have been
seeing since 1986, as long as I have been in public life.
And it is frustrating because it seems to me that the issue
and the 80 programs are out there, and there are still a lot of
people in poverty. And, clearly, and I will shut up here,
clearly, running the Housing Authority, I learned the cliff is
dramatic. It is absolutely dramatic. And there are so many
young families that stayed in the Housing Authority
generationally also, not because they didn't want to work or be
part of the workforce, but because they could not get out.
And so I am on the side of anything that will enhance
workforce. I also notice in CNBC this morning, they listed the
States that were the most viable economic States in the
country, and one of the States that had moved up dramatically
to number 1, actually, was Minnesota, because of the indicia
being workforce investment.
So I guess my question is, no matter how we structure TANF
or how we structure food stamps, if we don't figure out a way--
the first job is not a job that will make it for these
families. So we have got to enhance incomes as fast as
possible, and that can only come from job training, and I
don't--could you respond to that?
This is the most frustrating issue in my whole professional
life I have ever been involved in, because it is not working
the way it should be right now.
Ms. GOLDEN. So let me highlight the job. You have raised a
lot of issues. Let me start with the job-training one, which I
think is really important. So one of the things Congress did in
a bipartisan way in 2014 was pass the reauthorization of the
Nation's workforce program, but not put additional dollars into
it. And so that is another point where there are many positive
things in that law. For example, one of the past challenges of
that law was that it didn't really focus on, above all, on the
low-income, low-skilled people you are talking about. And the
Congress changed the incentives in order to make it more.
So I actually think that focusing a lot on that and the
Nutrition Subcommittee, of course, and the reauthorization of
the farm bill, the TANF training pilots, that is another
opportunity to really get that right. And I am--I am sorry. You
were going to say something?
Mr. ASHFORD. No. I am not. I am just--I am leaning forward.
I am sorry.
Ms. GOLDEN. The other thing that I--I guess, two things I
want to say looking forward. One is I do think the workforce
legislation and the opportunities there are crucial. Second, I
think that--you know, I have spent a lot of my career at the
State and local level and worked a lot with States, and I think
there are big opportunities for States to seize these moments,
but SNAP E&T is an example, they have lots of flexibility; they
don't draw it down. So they need to see the importance of doing
that.
On the cliffs, I would just note that I think there has
been important progress. You described since 1986, and an
example is that back then there was essentially no child care
resources. But what has happened is that families are working
more than ever in struggling low-waged jobs, and so adding the
capacity to address the cliffs I think is needed to solve it,
too.
Chairman BOUSTANY. The gentleman's time has expired.
We will next go to Mr. Dold. You are recognized.
Mr. DOLD. Thank you, Mr. Chairman.
I want to thank our witnesses for taking the time to come
and testify before us today. And I want to thank the chairman
for holding this joint hearing, because the topic that we are
talking about is very important. We have 80 or so different
programs that are out there right now are welfare programs. We
want to make sure that these dollars are actually stretching
the furthest that they possibly can. And ultimately, our goal
is that we want to make sure that people who are on welfare,
that they are able to get up and out of welfare and stand on
their own two feet, raise their families, and carry out the
lives as they choose.
Coming from the great State of Illinois, Mr. Randolph, we
certainly appreciate your work at the Illinois Policy
Institute. I wanted to follow up on some of the things that you
had talked about before.
The study that you had mentioned before was done in Lake
County, Illinois. That happens to be an area that I represent.
I think the study that you did was talking about a single
mother with two children and the differential between making
$12 an hour and the benefits that that family would receive
versus what I think most people would think would be a natural
evolution to say, okay, I am doing well. I would like to get
that raise and get a raise, and $18 an hour. And ultimately,
that would be economically a detriment to that family.
Can you kind of talk--in your experience, you know, is that
a common thing that we are seeing that cliff?
Mr. RANDOLPH. I think it is common. This is something that
people face. I mean, we have a panelist here who has a similar
situation that she encountered. You know, we see it--you know,
we study three counties in Illinois, and it was true for all
three of those counties. So my answer would be, I believe it is
common. It is a real issue, and I am very happy that you are
holding this hearing to try to solve it.
Mr. DOLD. Well, and that is one of the things that I hope
we can get. And obviously, we have got a very short period of
time, but we would like to get some solutions. This isn't just
an opportunity for us to talk. Hopefully we are highlighting a
scenario that is out there that is a problem that we need to
fix, and we need your help to come up with some solutions.
Because we don't want to discourage that individual from
getting the raise, from trying to pull themselves out of
poverty to try to better their family.
Ms. Netus, let me just ask you, from your experience
working first hand with individuals, do you think that the
people are generally aware of the phase out rates for the
programs that they receive and are disincentivized to work for
advancement?
Ms. NETUS. I think they are very familiar with it. I mean,
amongst just talking to each other, they can hear what is going
on out there. Often they are finding out these situations a
little too late. By the time they take the job, they now get a
letter in the mail that says, your benefits are going to
expire.
So, yeah, I think they are familiar with it. And I think
that once one person goes through it, they tend to share it
with the others. And so Chanel is a perfect example of someone
who has gone through it, and she is going to talk to her peers.
And true enough, you know, they will be able to make decisions
based on that.
Mr. DOLD. Well, I certainly appreciate that. And what I
will hope, and I do hope, is that we can figure out a way to
make sure that our safety net, that our welfare programs, don't
disincentivize people from trying to get themselves out. That
needs to be all of our goal because we want that social safety
net, but when we have created it in such a way where there is
disincentive to advance, I think we all lose.
My time has expired, Mr. Chairman.
Chairman BOUSTANY. The gentleman's time has expired.
Next, we will go to Ms. DelBene from Washington State.
Ms. DELBENE. Thank you, Mr. Chair. And thanks to all of you
for being with us today and taking the time.
This Congress, the Agriculture Committee has been
conducting what has been billed as a top-to-bottom review of
programs like SNAP. And the title of today's hearing, How
Welfare Benefits Can Discourage Work, makes me think that not
enough of us has been listening. SNAP doesn't discourage work.
If anything, we have learned that the benefits aren't adequate
enough.
Ms. Golden, your testimony talks about available workforce
development funding and SNAP employment and training that is
only used by a handful of States. In fact, my home State of
Washington is one of the leaders in the E&T programs. I
introduced a bill last Congress that was the basis for $200
million in new SNAP E&T pilot programs in the farm bill, and I
am definitely proud that these pilots are based, in part, on
criteria from Washington State's program that has helped
participants achieve self-sufficiency.
As you know, these programs differ widely in participation
and success across the States, but even at the height of the
recession, 60 percent of those enrolled in Washington's E&T
programs found employment, and in one study, less than half
remained on government assistance 2 years after starting the
program.
So I was wondering, Ms. Golden, can you further explain how
E&T programs promote, not discourage work when jobs are
available?
Ms. GOLDEN. Sure. I think I would highlight a couple of
things you said and then build on them. You have highlighted
the way SNAP encourages, not discourages work. And it is a fact
in stabilizing people's lives so they can work and move up. And
second, the role of employment training programs. There is a
big barrier for the low-income person trying to make that jump
is typically going to be about getting the promotion, having
the skills, in doing bipartisan workforce reauthorization that
the Congress did, the Congress, both parties, said really, a
post-secondary credential is likely to be crucial for moving
up.
So that puts employment and training front and center. And
Washington State, as you say, is a leader. What the farm bill
includes, in addition to the unlimited matching funds that
exist for employment and training in SNAP, as I said, many
States are not seriously drawing down, it adds pilots, 10
pilots, which ought to create lessons about doing this really,
really well. And one of the things that we are excited about is
that there has been a lot of innovation in the employment and
training arena, community colleges, workforce programs, but it
isn't necessarily known to SNAP agencies. And so building that
connection, using those pilots to people can make that leap I
think is a very excited next step.
Ms. DELBENE. And in the end, we should be focused on
results we are seeing. In our State we have seen strong results
strong results from these programs, and hopefully the pilot
will give us innovative new ideas that different States are
trying that continue to inform everyone in the program going
forward.
Ms. GOLDEN. Absolutely. And the issue for States is not the
flexibility to do those things. They have that. It is having
the ideas and making them work.
Ms. DELBENE. Thank you.
I yield back, Mr. Chair.
Chairman BOUSTANY. The gentlelady's time has expired.
Mr. Meehan.
Mr. MEEHAN. Thank you, Mr. Chairman. And I want to thank
all of the panelists for your presence here.
Mr. Randolph, I thank you for your testimony and your
submitted testimony as well. I know one of the things that you
introduced was a chart that described activity in my own home
State of Pennsylvania, in which you had done some work. And
curiously, you were able to identify a circumstance in which a
single mother who was making--was better off earning an income
of--gross income of $29,000 with $57,000 net income and
benefits than to be earning $69,000 with a net income and
benefits of $57,000.
Could you elaborate what you meant by that in the chart?
Mr. RANDOLPH. Certainly. Now, that chart that you are
referring to was an earlier version of the same computational
model. The one in Illinois is actually more sophisticated, and
that was when I worked at Pennsylvania's Department of, Public
Welfare when that was developed. And what was discovered with
that model was that it is the same cliff effect. It is
essentially, the same thing that it turned out in Illinois,
that someone can earn up to a certain point, that they earn
some sort of salary, but once they would earn more or have the
potential to earn more, they lose benefits. So it is the same
track. It is the same cliff effect. It is in Pennsylvania, and
it is in Illinois.
Mr. MEEHAN. Well, I thank you for describing, you know, the
cliff issue, which is one of the things we are looking at
about. How those affected by changing circumstances, and
particularly a lot of times, I think some of the times you were
looking, the issue of a recession. You know, we have economies
that aren't flat; they are cyclical. And during the period of
time when I was in Pennsylvania looking at this particular
issue, we actually saw an expansion of the activities
supporting, in my own Montgomery County, 118 percent increase
in the total number of persons receiving SNAP, 173 percent
increase in children receiving SNAP.
But these were children, and this was during a period of
time in which, notwithstanding the fact that some of them may
have been put back into jobs, the nature of the--you know, the
nature of the job was that the wages were such that they
weren't sufficiently escaping poverty to the point that they
were able to also escape the need for the assistance for the
food.
Can you give me some insights about how a recession affects
things?
Mr. RANDOLPH. Well, yes. I mean, we have a safety net for
situations. And certainly, during times of recession, economic
recessions, more people are going to need it. Much of what my
model was looking at, however, is the ladder that people have
to climb, the opportunity ladder or the career ladder, if you
will. And what has happened is, there are a whole bunch of
rungs kicked out. So they climb up maybe a third way up the
ladder, and now they can't reach the next step.
And that is what we are--that is my understanding we are
trying to solve. That is what the modeling that we have done
has shown. It has shown that the way the current system is
designed--and it is a hodgepodge, if you will. It has been
designed, you know, haphazardly. You know, no one person is at
fault. You know, you have a bunch of programs, and you kind of
layer one on top of the other, and the aggregate effect is that
you have got rungs kicked out of the ladder and people get
stuck on the third way up.
Mr. MEEHAN. Thank you. My time has expired.
Mr. Chairman, I yield back.
Chairman BOUSTANY. I thank the gentleman. We will next go
to Ms. Adams.
Ms. ADAMS. Thank you, Mr. Chairman.
And thank you all for your testimony today.
You know, I have talked about this issue for a long time,
where some poverty is pretty high in North Carolina. People are
working hard every day, two and three jobs. Working hard is not
enough if you don't make enough.
You know, according to Feeding America, the 12th District
of North Carolina, which is the district I represent, ranks 9th
in the Nation for food insecurity with a rate percent of over
26 percent. And I have serious concerns about efforts to block
grants, SNAP program, and I am pleased that North Carolina is
participating in the work support strategy initiatives to make
applying for SNAP and other safety net programs more efficient,
both for families that want to work and for State government.
Ms. Golden, can you elaborate on how the work supportive
strategies initiatives helps families get back to work in North
Carolina, and how it benefits families applying for SNAP while
also saving the government money?
Ms. GOLDEN. Sure. I am glad you highlighted that because
work support strategies initiative, which is a foundation-
funded initiative that we are leading at CLASP with two other
national partners, we are working with six States trying to do
exactly what you say, deliver Medicaid SNAP, and child care
subsidies using the flexibility that is already there, not
anything that would need new laws to work well for working
families.
As you mentioned, North Carolina, the others are Republican
and Democratic governor States, Colorado, Idaho, Illinois,
North Carolina, South Carolina, Rhode Island. And what I would
highlight is that one of the big things that the States have
been doing is getting rid of barriers that are not in policy.
They are certainly not in Federal policy, sometimes they are in
State policy, that were keeping working families out. Like if
you have to, in North Carolina, if you used to have to stand in
two separate lines for a whole day to be able to take care of
your health care and your nutrition needs, then if you were
working a low-wage job where you were going to be fired or miss
your paycheck for missing hours, you were not going to be able
to get that help, and that was going to destabilize your
family.
So what these States are doing is taking advantage of the
existing flexibility to deliver it better. They do, as you say,
save some administrative dollars because they are able to use
information and data they have already got rather than having
to process things multiple times over. But it is crucial to
them that they have the Medicaid and SNAP structures as they
are now, because that is how you can get the benefits to people
quickly. So I think that is a great example of flexibility that
exists now.
Ms. ADAMS. Thank you. As a follow-up, how is service
deliveries designed to not be a hindrance to working families,
and how is the program structured to encourage families to work
without disproportionately losing benefits?
Ms. GOLDEN. Well, I think both SNAP and health benefits. So
starting with SNAP. So, first of all, it is key that it is not
a block grant program. It doesn't require somebody to spend
hours interviewing you before you get your help with your
nutrition. It is a program that responds to recession. I think
Mr. Meehan highlighted that.
So when somebody needs the help, it can happen based on a
determination of their eligibility that you can do very quickly
and in an automated way. SNAP also is important as a work
support because of the gradual way that dollars phase out. So
it takes into account the fact that you will have more expenses
when you--when you work, and that gets taken into account.
A number of States, about half the States have chosen an
option that makes it even more--even less likely to have a
cliff, which is the categorical eligibility option. So the
Federal policy framework allows States to deliver it in a very
effective way, and those States that take a hard look at their
own delivery systems, their own computers, their own local
offices, are able to then live up to that promise.
Ms. ADAMS. Great. Thank you very much.
Mr. Chair, I yield back.
Chairman BOUSTANY. The gentlelady's time has expired.
We will next go to Mr. Thompson.
Mr. THOMPSON. Mr. Chairman, thank you for this hearing.
It's very important.
To all the members of the panel, thank you very much for
coming, lending your experience, your expertise. I want to
start out with Mr. Mulligan.
In SNAP, we expected the program rules to increase with the
recession. They did, rising by 81 percent since 2007 before
finally peaking in 2013. Since that peak, we have only seen a
decline of 3 percent. Can you talk more about what that data
says about the situation, or are you at all surprised?
Mr. MULLIGAN. Sure. Yeah. Our data is maybe a year or two
out of date. I looked at SNAP before and during the recession
through about 2011, and I saw that State by State, the rules
had changed. And probably the biggest thing that had happened
is the asset tests were eliminated, which eliminated some of
the barriers bringing people into the program. So now it is
easier to get into the program than it used to be. And so
naturally, you have more people on the program. That is
natural. The other economic side of it is you have to
disincentive. Especially for unmarried people, it is a kind of
new unemployment assistance program that can go far beyond 99
weeks.
Mr. THOMPSON. Thank you.
Ms. GOLDEN. Could I just add to that? Because I think the
answers that most economists have come up with who have looked
into that is that it is now going down. SNAP rose with the
recession. It is now going down. You would expect it to be
somewhat a delayed effect, because the effect of better income
for the bottom end of the labor force has happened last. So
most people think it is about the economy, not about the policy
changes.
Mr. THOMPSON. I want to talk a little bit about within the
process of the resources that are out there, because we talk
about obviously, providing incentives, job training. I co-chair
with a good friend of mine from Rhode Island, Jim Langevin,
Career and Educational caucus. And so I want to talk about not
so much a process, but the pathway in terms of job training.
And we are preparing an education and workforce with the
Perkins Act, which is all about job training, career and tech
ed funding. And I am not sure I am going to have time to get
input from someone, but if you have thoughts, I would
appreciate you sending those to me in writing.
So my question is I am looking for that response from, in
your experiences, what are the key considerations to assure
access to effective job training? In other words, job training
that actually leads to a job, family-sustaining job and a
greater--and a greater opportunity, put folks on that pathway?
I do believe that our programs that we have, our safety net
programs, SNAP, welfare--the other welfare programs, I think
they really need to be defined by--as workforce development.
Dr. STEUERLE. Mr. Thompson, if I could quickly answer. I
think there are a lot of efforts in the educational area that
are promising. I think apprenticeships are one of them, for
instance, where we have done very little. But I would also like
to comment, just general course of this hearing, there are
these programs that I think namely aimed at mobility,
education, training, I would probably include things like the
earned income tax credit, and there are other programs that
mainly aimed at consumption. It's the programs that are aimed
at consumption, providing minimum levels of consumption that
provide a lot of these cliffs and issues that we are facing.
If you look at the budget for children, we mainly have been
talking about programs for children, they are actually pretty
much in decline. The earned income credit is an index. It
doesn't grow with the economy. The child credit is an index for
inflation. I am guessing SNAP benefits in real terms per person
are not going up. They have expanding number of people getting
them. TANF has certainly been declining rather than the
economy. So those programs, children's programs, are actually
well in decline. That is a separate subject, because all of our
social welfare budget is going to health and retirement. So
that is a different issue. So I think that what has happened to
children's budget is it is eventually going to be turned
around. I see an opportunity, when that turnaround comes, to
start devoting more money to these mobility efforts. I am not
saying that every mobility effort works, but these types of
things like training and education do not create the types of
disincentive effects that we are actually talking about here.
Generally speaking, they are all in the positive incentive
effect. I am not saying they all work, but I think there are a
lot of opportunities about thinking about what a future budget
would be if it moves in the direction you are talking about.
Mr. THOMPSON. Thank you.
Chairman BOUSTANY. The gentleman's time has expired. Mr.
Davis your are--I am sorry--Mr. Davis, you are recognized.
Mr. DANNY DAVIS OF ILLINOIS. Thank you very much, Mr.
Chairman. I want to thank all of the witnesses for having been
here.
Dr. Golden, I know that you have done some work in
Illinois, and you were here when Ms. McCorkle testified. I
think maybe her situation may have been a little bit different
in Illinois. Could you comment on that and why it may have
been.
Ms. GOLDEN. Sure. So Illinois is one of the 6----
Chairman BOUSTANY. Please use your microphone.
Ms. GOLDEN. Illinois is one of the six States that we are
working with. And I would say a couple of things, both
similarities and differences to Ms. McCorkle's situation.
Illinois and Maryland have both made the choice to expand
Medicaid. So they are both States where taking a job--leaving
welfare and taking a job isn't going to force a parent to lose
their health insurance. So that is very important.
One of the things that Ms. McCorkle highlighted in Maryland
was about child care, right? It was about not only your
challenges in the co-pay now, but the fact that when you were
working before you went on welfare, you couldn't get compiled
care, because Maryland has a waiting list. Illinois, by
contrast, has a historic commitment to not having a waiting
list and to serving family, but the challenge right now is that
in terms of dollars, it goes back to that point that what the
States need is not flexibility, but resources. They are very
stressed trying to be able to keep that commitment. And so
additional Federal dollars to address child care needs for low-
income working families, I think will be very important in the
future as Illinois seeks to keep that commitment.
Mr. RANDOLPH. Can I interject on that? This is an issue
that we have studied. We have studied the child care issue
specifically in Illinois, and I have also worked with the
program in Pennsylvania and a couple of other States. It is
true that in Illinois, you do not have a waiting list for child
care. However, there are a number of steps that they can take
administratively to reduce the cost. The child care program in
Illinois is costing approximately $1.2 billion with a State
budget general fund of only $34 billion. So it is a significant
program, but there is certainly steps they can take
administratively to bring the costs down. You do not need to
increase Federal dollars to give to the State to solve the
problem. A lot of the problem can be solved simply by the
States better managing it.
Mr. DANNY DAVIS OF ILLINOIS. Thank you both very much. And
by no stretch of imagination would I suggest that Illinois does
not have problems and unmet needs. But I did want to point out
this difference because of the fact that there was a strong
advocacy effort on the part of citizens who made it happen, and
I simply wanted to give them an accolade for that.
So thank you very much, Mr. Chairman, and I yield back.
Chairman BOUSTANY. I thank the gentleman.
Next, we will go to Mr. Crowley. You are recognized now for
3 minutes.
Mr. CROWLEY. Thank you, Mr. Chairman. I did miss the
Chairman Ryan's opening statement, but I did take note in his
printed version of it that he quoted a very popular person to
quote these days, Pope Francis. And he said where there is no
work, there is no dignity. I think we can all find agreeance in
that. I know Mr. McGovern and Ms. Fudge talked about the
importance of a living wage. So here is another quote from Pope
Francis, and I quote, ``A just wage enables human beings to
have adequate access to all the other goods which are destined
for our common use.'' And that is from Joy of the Gospel 192.
So I hope this means we can consider legislation to raise the
minimum wage since Pope Francis said that as well. We won't
quote the climate change; I don't have enough time right now
for that. But I do want to thank the chairman. I want to thank
our colleagues from the Ag Committee for joining us today as
well.
Let me start by saying that I think the majority of us here
want to support, and do support work while we strengthen our
safety net programs. It is not an either/or situation.
Ms. Golden, you mentioned explicitly in your testimony that
there is overwhelming evidence that the safety net supports
work. So that is important to recognize. But I do want to make
sure we are clear on what it means to support and encourage
work. To me that meaning strengthening, not weakening programs
like the earned income tax credit and the child tax credit.
These are programs that directly and without doubt reward work
for lowest income families. It gives them the net effect of
earning more, puts more money in their pockets. We need to
extend the expiring provisions of these program and ensure they
are reaching their full potential for the families that they
serve.
Enhancements like linking the amount of the child tax
credit through inflation, making permanent the higher credit
amount set in the American Recovery and Reinvestment Act, and
make the tax credits fully refundable. Another critical part of
the encouraging work through the safety net is child care. And
I appreciate the discussions before my testimony.
No matter what problem we are looking at, if we want to
help people work, we need to help them find and afford child
care for their children. If they simply will not work, we will
just be piling on to the social ills of a society which the
other side of the aisle would decry at the same time.
So otherwise, you can add in as many work requirements,
restrictions and other burdens you think of, and all you will
end up doing is forcing people off these programs to make those
tough choices, and quite frankly, spiraling them further into
deeper poverty. We need to make a significant investment in
child care to make sure it reaches more people who need it. I
will soon be reintroducing my Child First Act to make a greater
investment in funding for child care.
President Obama has proposed investing $82 billion over 10
years in mandatory funding for child care, which provide more
than an additional 1 million children under age 4 with access
to quality child care, not only helps the child, but helps the
family, helps society, and helps people work.
And with that, I will yield back to the chairman.
Chairman BOUSTANY. I thank the gentleman.
Next we will go to Ms. Grisham. You are recognized for 3
minutes.
Ms. LUJAN GRISHAM. Thank you, Mr. Chairman. In this
committee, my arms are barely long enough to actually reach the
button for the microphone, so thank you for your patience.
I am also very appreciative for the joint committee
hearing. And Mr. Chairman, I appreciate the opportunity to talk
about not only basic benefits, but a benefit that in my State
is incredibly important, which is the SNAP benefit.
And I really appreciate the remarks of my colleague, Mr.
Crowley, because I agree that we have a tendency, as
policymakers, to do an all-or-nothing design that we believe
potentially, and based on some of the testimony, that welfare
or entitlements or government support programs actually create
a disincentive to work.
And in my opinion, and in my experience, a disincentive to
work is poverty. A disincentive to work is hunger. A
disincentive to work is lack of adequate education and support
and investment. Environmental barriers, transportation
barriers, there are no dearth, and they are all really
devastating aspects and barriers to work.
Now in my State, we have one of the worst economic
recoveries in the country. We also have the hungriest children
in the country. Not something I am very proud of. And I would
love to see Congress and my State legislature declare a war on
poverty and assure that no child in my home State ever goes
hungry ever, ever again. It is devastating.
We also have one of the hungriest adult populations in the
country. And while I tell you this, because of this debate, our
State is enhancing our work requirements on young families,
mothers who are 19 without the education, training, or support
even in a productive job market to attain that work
requirement.
We don't have jobs. We are the only State in the country
where we have a migrating effect where people have to leave the
State to get jobs. This only translates to families losing
benefits, which means they have no opportunity to have their
basic needs met while we, as policymakers, figure out those
balances so that we create a safe and effective environmental
effort.
With whatever time I have left, can anyone talk about
making sure that there are ideas for States like New Mexico
where you cannot meet even the basic work requirements but we
don't want to minimize that people do want dignity and want
effective productive work available to them in a meaningful
way.
Ms. GOLDEN. Let me underline--I am sorry.
Mr. RANDOLPH. I can. You are correct that we still have an
issue of poverty in this Nation, absolutely. However, I just
want to say that if we attempt to solve the problem one piece
at a time, we are not going to get the answer. And let me just
go to what we talk about, training. I sat in a focus group. I
was not the participant. I was helping managing the focus
group, where we have had people who received training, but they
ran into that ladder, where the rungs are kicked out and they
had to give up a better job that offered more because they
would lose benefits.
So if we continue to look at this piece, just the SNAP
alone or another program over here, and hope that that is
somehow going to solve the problem, we will never get at the
answer. You have to approach it systemically. You have to look
at all the programs together and how do you combine the
programs.
Ms. LUJAN GRISHAM. As long as, Mr. Randolph--I am going to
reclaim part of my time.
Mr. Chairman, I don't know how much time I have.
Chairman BOUSTANY. You still have time.
Ms. LUJAN GRISHAM. Can I go to Ms. Golden?
Ms. GOLDEN. Yes. So what I would highlight is that, first
of all, you are absolutely right about the extent to which
poverty itself is a barrier to work. And the research supports
that and says that if you are able to eat and your life isn't
disrupted, and you are not constantly evicted, that contributes
to working and moving up. So I think that is exactly right.
And I do think that the other--with only one moment to say,
that job training for adults ought to go hand in hand with
investment in kids with children not being hungry. That is an
opportunity investment, right? We know that when kids are not
hunger and are able to get their health taken care of and in
early child care, that in itself is an opportunity investment
in their later lives. So we ought to be putting these things
together.
Ms. LUJAN GRISHAM. Thank you, Mr. Chairman I yield back.
Chairman BOUSTANY. The gentlelady's time has expired.
Ms. Noem.
Mrs. NOEM. Thank you, Mr. Chairman. One of the tenets of
the American dream is that no matter what your circumstances
are, if you work hard here in America, that you can succeed. In
South Dakota, we have a very strong work ethic and many are
willing to put in long, hard hours to make life better for
their families. It is those values that I try to instill in my
own children, and I follow when I am serving the people of
South Dakota here in Congress.
But, unfortunately, the Federal Government doesn't always
operate that way. Instead of encouraging work and taking home
higher pay, the programs can create disincentives to work, and
we have heard some of that testimony by all of here today. It
might not always make sense economically for a family to work
more hours or at higher wages in the current system that we
have today with a lot of our programs.
So, Ms. Netus, I wanted to ask you specifically, setting
aside the work disincentive effects of these programs, does the
shear complexity behind multiple benefit programs and tax
programs help or hurt families? Does it promote work and self-
sufficiency?
Ms. NETUS. I think it promotes work with limitations. I
mean, we have people that are eager to go to work so they want
to do so, but it is kind of they are tossed as to whether or
not they should take a full-time job versus a part-time job.
Mrs. NOEM. So would it help to streamline the programs in a
manner that wouldn't be so complex to help them utilize it in a
manner better to allow them to work and potentially have a
transitional program?
Ms. NETUS. I think so. I mean, we are looking more so for a
longer transitional period. I do know that in Maryland, they do
provide that, but, again, it is the timeframe or it is kind of
immediate that the transition happens, not often giving the
person the time or chance to really be able to build and save.
So it would be--you would need a transitional period. A little
bit more extended than what they have right now in order for
the person to be able to maintain.
Mrs. NOEM. Do you feel that most people need assistance
from an organization like yours in order to navigate the
programs that are currently available?
Ms. NETUS. They do. They need us because we know how to
essentially walk them through the system. Most people who are
going through this process, they have no one to tell them how
to do it. So when they come to our organization, we can help
explain a lot of the changes they are going to undergo. And so
a company like ours would definitely be able to help a person
like Chanel as we plan to do as she goes through her next
transition into employment.
Mrs. NOEM. Well, Ms. McCorkle, I wanted to ask you that. Do
the agencies providing you benefits give you clear information
about what happens if you work and if you earn more money? Have
you ever discussed with live people that are a part of these
agencies and departments what the consequences are? Did you
need an organization like Ms. Netus is a part of in order to
have that kind of clarification?
Ms. MCCORKLE. I actually did need America Works to help it
because when you are applying for your benefits, you don't
actually speak to anybody. Nobody actually tells you what is
going to happen when you get your job. It just happens that
they find out you work, the letter comes in the mail telling
you this is cut, this is cut, and this is what is happening.
And then you are at the office. You come to the office and
you want to talk to somebody. Half the time you don't get your
caseworker, you just get a different representative. They don't
explain it. They just tell you what happened. They don't
actually explain anything. It just comes through the mail.
Mrs. NOEM. Okay. I appreciate that testimony. That is very
helpful.
Thank you. I yield back, Mr. Chairman.
Chairman BOUSTANY. Mr. Smith.
Mr. SMITH. Thank you, Mr. Chairman.
Ms. McCorkle, it is a pleasure to hear your testimony
earlier, and I just thought it was very troubling, whenever you
look at the journey and the path that you had to take, but it
shows that you are a remarkable human being and you are doing
an amazing job, and I am extremely proud of you, to see
everything.
When I look at your testimony, that it talks about the
child care, that you couldn't get the childcare vouchers when
you had a job, but when you didn't have a job, you could get
the childcare vouchers when you are home. The whole process
just isn't working. And I just appreciate you being here before
the committee, and I just want to say thank you.
In regards to Mr. Mulligan and Mr. Steuerle, I would like
to hear if you both would like to add some additional comments
of how you could help incentives that we could try to break
this poverty trap to the benefits curve.
Dr. STEUERLE. Mr. Smith, as I said in my testimony, I think
the real way around this trap to break the Gordian Knot is to
start thinking in the future--because government does gradually
grow, and the social welfare budget does grow just because the
economy grows, it might be a smaller share of the economy or
larger--is to think about orienting more and more resources
towards things that provide mobility. It is education, it is
wage subsidies, it is a lot of the other items we have talked
about. And I think we have been moving in that direction. If
you look at both what welfare reform did, moving away from
AFDC, we have sort of been moving in that direction.
When we just try to provide minimum levels of consumption
by itself, initially, when people are starving or something, it
doesn't look good, but above certain levels it provides a lot
of discouragement. But things like primary, secondary education
doesn't discourage. So if we start moving the budget towards
this mobility front, I think we can go a long way.
And I would just like to clarify one earlier part of this
debate between whether these programs do or do not discourage
work. The movement we had recently has moved us away from a
poverty trap to what one of my colleagues and I nowI call a
twice poverty trap or three times poverty trap, it is from
about zero to about $15,000 of income.
We have moved our programs in the direction of encouraging
work. And if you take most of the examples that people around
the table have given, when you get to about $15,000 of income
up to about $55,000 of income, now you have got average tax
rates of maybe 66 percent in universal programs, 70 or 80
percent in the non-universal, and then you add on child care,
and you can get this type of trap.
So I think you have to distinguish where we are talking
about these traps encouraging, and right now, it is this trap
where if you move, as I say, beyond a part-time job, you marry,
you get a second job, that is where we really are discouraging
work quite a bit, or moving to a higher-paying job, as several
people have mentioned.
Mr. MULLIGAN. I will also speak for something that hasn't
been represented, and that is the marketplace, the employers,
they are teaching people things. It is not just government
programs that teach people things, not even just schools, even
though I come from one.
And things like the minimum wage go exactly in the wrong
direction. What the minimum wage says is you have to--a job is
a mix of things you learn and cash to take home, and the
minimum wage says: Look, you have to put it all into cash and
very little into learning. And that is only going to make these
kind of traps worse.
Human capital is many most important asset in America and
in the world, and policies like these discourage the
accumulation of human capital and keep people's incomes low.
Chairman BOUSTANY. I thank the gentleman. The gentleman's
time has expired.
Before we close this hearing, I want to read two quotes out
for the record. One is from Harvard Professor Jeff Liebman,
former economic adviser to President Obama, and I quote:
``Despite the EITC and child credit, the poverty trap is still
very much a reality in the U.S.,'' end quote.
And then the second quote comes from Congresswoman Gwen
Moore, who during a June 2012 Human Resources Subcommittee
hearing said, I quote: ``I once had a job and begged my
supervisor not to give me a 50-cent-an-hour raise, lest I lose
daycare,'' end quote.
The fact is, we still have poverty, the poverty trap still
exists, and the problem is complicated by the fact that we have
a myriad of programs that have been created over the course of
years without good coordination. And so this hearing, this
joint hearing is a start in trying to unravel that Gordian Knot
so that we have these programs that will work best for those
that they are intended to work for.
And with that, Ms. McCorkle, I think your personal story
was very compelling, very helpful to us. I just want to say
thank you for your courage in coming forward to present it.
I want to thank all of our witnesses for the tremendous
expertise you bring to the table. And as we try to deal with
this complex problem of how the program has disincentives to
move into the work world, you all did a terrific job to help us
shed light on these issues. I think members may have additional
questions, which we will submit to you in writing, and we would
appreciate your responses for the record within 2 weeks.
Chairman BOUSTANY. I also want to close by thanking our
colleagues on the Nutrition Subcommittee, starting with
Chairwoman Walorski, Ranking Member McGovern. From my
perspective, working together like this can only be helpful in
our efforts to provide better, more coordinated services for
those in need.
I want to thank Chairman Ryan and Chairman Conaway and the
rest of our colleagues also on the Ways and Means Committee. I
thank you and your staff for working with us to make this joint
hearing a reality. I look forward to working more with everyone
concerned in the weeks ahead.
And with that, the subcommittee now stands adjourned.
[Whereupon, at 12:08 p.m., the subcommittees were
adjourned.]
[Submission for the Record follow:]
Feeding Texas
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