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The War on the Poor: Donald Trump's win opens the door to Paul Ryan's vision for America

Poverty, empty wallet Shutterstock

Donald Trump has won the White House. But it’s Republicans who have won Congress, and it’s House Speaker Paul Ryan who, in practice, leads those Republicans. And so for all the effort being made to divine what Trump really, truly thinks, the reality is it may matter less than what Ryan thinks — and that’s a question we already know the answer to.

Ryan has spent the better part of a decade crafting a coherent, sweeping agenda to reform and slash the American safety net. His agenda of slicing and dicing programs targeting America’s poor isn’t the agenda Trump ran on. But it’s one to which he’ll default. He’s already endorsed Ryan’s plans on Medicaid and has attacked food stamps at length. His vice president, Mike Pence, is a longtime friend and congressional ally of Ryan’s who if anything has argued for larger cuts than the ones Ryan wants.

What’s more, Trump enters office as a historically unpopular president distrusted by his own party in Congress. He’s not in a position to dictate to them what he wants. To keep them on his side, he’s going to have to do what they want. And what they want — and have repeatedly voted to pass in recent Congresses — is Ryan’s budget.

This is a disaster for America’s poor.

“I’ve been working on these issues since 1972,” Robert Greenstein, the founder and president of the Center on Budget and Policy Priorities and Washington’s leading advocate for poor and low-income Americans, says. “This is by far the gravest threat to the safety net, and to low-income people, that I’ve seen in my close to half a century of working on these issues. I think there’s a potential in the first seven months, by the August recess, for Congress to pass policies that do more to increase poverty and hardship and widen inequality than we’ve seen in half a century.”

Ryan’s proposals would repudiate the federal government’s 50-year guarantee of medical care and food to America’s poorest residents, a promise generated by Lyndon B. Johnson when he made food stamps permanent in 1964 and created Medicaid in 1965. The expectation has not always been met, especially for childless adults, whom Medicaid largely did not cover until the Affordable Care Act, and whom non-expansion states still don’t offer coverage to. But for the poorest families with children, those two programs were there, providing at least modest assistance in desperate times.

If Paul Ryan and his allies in the House enact their domestic agenda, this promise will fall apart. The Affordable Care Act will be repealed, but the damage will hardly end there. Medicaid will see its funding gutted, federal guarantees of coverage and access removed, and its status as an entitlement upon which poor Americans can depend destroyed. The Supplemental Nutritional Assistance Program (SNAP, or “food stamps”) will be slashed and turned over to states, which will likely use the money as a slush fund for other endeavors.

The safety net will not be repealed in one blow. States will still get some federal money to run weaker, less comprehensive versions of Medicaid and food stamps. But if the experience of block granting welfare in the 1990s is any guide, no state will have a program anywhere near as generous or comprehensive as the ones they did have. The 1996 welfare reform law effectively rendered welfare dead, according to sociologists of poverty, particularly in the eyes of the extreme poor, who ceased to see it as a program that can help them at all. If Ryan’s policies are enacted, that same fate could await food and medical assistance for the poor. Not for nothing, the disabled and elderly Americans who rely on Medicaid for long-term care will see support slashed as well.

This is an agenda that goes further than just repealing President Obama’s signature accomplishments. It’s an agenda that guts LBJ’s, that declares war on the Great Society and subjects it to death by a thousand cuts. And while programs for the aged, like Social Security and Medicare, have the president-elect’s backing, there’s no indication that Donald Trump will do anything to stop the gutting of Medicaid and food stamps.

Ryan doesn’t just repeal Obamacare — he also slashes deep into Medicaid

Florida Residents Sign Up For Affordable Care Act On Deadline Day
And it’s not just Obamacare.
Joe Raedle/Getty Images

The effects of Obamacare repeal have, rightly, received copious attention in the wake of the election. The repeal bill Congress is likely to take up would deny 22 million people insurance and, even if accompanied with a promise of a replacement bill later on, could rather quickly throw the entire insurance market into disarray.

“That’s a very dicey scenario if a replacement isn’t in well before the end of 2017,” Larry Levitt, a senior vice president at the Kaiser Family Foundation and health reform expert, says. “Otherwise, the ACA [Affordable Care Act] would still be in effect, and the Trump administration would have to run an open enrollment period for 2018, which I imagine is not a prospect they’d relish. With a highly uncertain future, I would expect insurers to exit the ACA marketplaces and the individual market in droves. The individual insurance market would be in chaos. This would affect not only low-income people receiving ACA subsidies, but also people like the self-employed, farmers, and small-business owners buying their own insurance.”

And it’s a safe bet that replacement, at least as contemplated by Republicans in Congress, will not cover anywhere near as many people as the Affordable Care Act currently does.

Paul Ryan's "A Better Way" plan foresees replacing the ACA with a system with much lower regulatory burdens for insurers (partly achieved by enabling the selling of insurance across state lines, which would effectively ban states from enacting stricter regulations), more health savings accounts, and a refundable tax credit available for all to purchase coverage. The latter replaces the current sliding-scale tax credits of Obamacare, which grow with need to help those at the bottom more.

The right-leaning Center for Health and Economy estimated that the plan would reduce insurance overall by 4 million over time. But there’s reason to think that number is much too low. As Levitt explained to me, the lower regulatory requirements will lead to skimpier, less valuable insurance plans that also cost less. "Would people at least buy something, even if it’s skimpy, since they’d otherwise be forgoing the tax credit?” he asks. “Or would many decide that the skimpy insurance is so lousy it’s not worth the trouble? We don’t know for sure how people would respond. It is a safe bet, though, that the insurance people would get would cover less than what they get under the ACA."

In other words, either a few million people lose insurance and many more are transferred into significantly worse insurance, or many millions will lose insurance and fewer retain it but see its quality go down. As my colleague Sarah Kliff explains, the effects of the other main congressional replacement plan, Senate Finance Chair Orrin Hatch’s Patient CARE Act, are similar. Center for Health and Economy projects 4 million fewer insured; the RAND Corporation projects 9 million.

Trump’s replacement plan, such as it is, is even worse. The Committee for a Responsible Federal Budget estimates it’d spare just 1 million people who’d otherwise lose insurance through Obamacare repeal. Full repeal without replacement takes insurance away from 22 million; Trump’s plan takes it away from 21 million. The difference is minimal.

But it doesn’t end with Obamacare. One of the biggest policy areas where Trump and Ryan are in agreement is Medicaid block granting. They don’t just want to revert Medicaid to the less generous program it was before the Affordable Care Act. They want to cut the program’s budget by about a third and hand the remaining money back to the states.

The human toll here could be immense. The Urban Institute's analysis of the fiscal year 2013 House budget — one prepared by Ryan and closely resembling subsequent budgets — found that its cuts and block granting would kick 14 million to 20 million people off the Medicaid rolls. That’s in addition to everyone who’d lose coverage through ACA repeal. And because most of these people are extremely poor, the odds of them finding private insurance to replace Medicaid are quite low. So if Medicaid is block granted and cut, and the ACA repealed and replaced according to Trump’s plan, the total increase in the uninsured could very well reach 30 million to 40 million.

And the human toll won’t just consist of an increase in the uninsured population. Block granting will wreak havoc on the safety net for people with disabilities. Medicaid is the main source of funding for long-term care for disabled people who need it, and block granting would eliminate its role as an entitlement.

“If block granting proceeds, it would enable state officials to kick disabled adults and children out of life-preserving services for reasons of budget constraints, pressure from influential providers seeking to promote other business models, or any reason at all,” Ari Ne’eman, a former member of Obama’s National Council on Disability, writes. “Under a block grant, disabled Americans might effectively lack any rights to support services under federal law.”

Ending America’s last line of defense against hunger and deprivation

SNAP tokens in Portland, Maine farmer's market
SNAP tokens at a farmers market in Portland, Maine.
Gregory Rec/Portland Press Herald via Getty Images

Medicaid is hardly the only program in line for block granting and cuts. Recent House budgets, and Ryan himself, have expressed interest in applying this approach to just about every federal program for low-income people that isn’t the earned income tax credit.

CBPP estimates that the most recent House budget gets 62 percent of its cuts from programs for low- and moderate-income people. That includes at least $150 billion in cuts to food stamps and nearly $500 billion in mostly unspecified cuts to other low-income programs like SSI (which provides cash to the disabled and elderly), Pell Grants, and what little remains of welfare.

About $25 billion in the food stamp cuts come from specific proposals, which would kick a combined 3 million people off the program, mostly childless adults, low-income seniors, and low-income families with high child care costs. The other $125 billion comes from block granting the program and slashing the size of the funds states get by nearly 30 percent over five years. If states respond by reducing eligibility, the result would be 10 million people kicked off the program. If they respond by reducing the scale of benefits, that'd take about $40 per month per person away from the program. A family of four would lose nearly $2,000 every year.

Either one of these scenarios is frightening. “One thing that low-income Americans lack is cash, and SNAP is not cash but it’s near cash,” James Ziliak, a professor of economics and founding director of the Center for Poverty Research at the University of Kentucky, says. “At this point in time there’s really nothing else. SNAP is the closest thing to an entitlement program in the country. If you take that away, you take the social safety net of last resort away.”

Most of SNAP’s beneficiaries are families with children, with most of the remainder made up by seniors and people with disabilities. The program is important for just about every American at or near poverty, and is an important counter-recessionary force during downturns (when its ranks swell automatically, pumping more government cash into the economy), but it’s particularly crucial for the extreme poor.

Extreme poverty increase, 1996 to 2011 Shaefer and Edin, 2013

This is a chart of extreme poverty — the share of people living on less than $2 a day in cash income — from 1996 to 2011. It was put together by the University of Michigan's Luke Shaefer and Johns Hopkins's Kathryn Edin, America's leading researchers on extreme poverty. The gap you see between the solid and dotted black lines is the difference between the extreme poverty rate not counting food stamps and the rate counting food stamps. Roughly 2.1 percent of households with children in 2011 were kept afloat, barely out of the $2-a-day range, if you count food stamps. That's a little under 800,000 families, representing millions of children. If food stamps are cut, they could fall back into extreme poverty.

The two faces of Ryanism

Paul Ryan Holds Weekly Press Briefing At The Capitol Mark Wilson/Getty Images

Paul Ryan has laid out his vision for government in dozens of bills, proposals, and white papers over the past decade, with occasional contradictions and tensions between them along the way, but two central precepts of Ryanism have remained constant: He wants to drastically cut basically everything the government does outside of defense and retirement spending, and he wants to radically restructure government safety net programs to turn over more control to states.

The cuts can be found in his budgets, proposed each year from 2007, when he became ranking member of the House Budget Committee, through his ascension to chair the more powerful Ways and Means Committee in 2014. The substance of the plans evolved over time, but over the last few iterations, Ryan’s cuts found a fairly stable form. Under House Speaker John Boehner and during Ryan’s stint on Mitt Romney’s ticket, he consolidated support for the budget outlines and made them the de facto governing manifesto of the Republican Party. And lest you think they’re going anywhere, they’ve been preserved in the proposals of his Budget Committee successor, Rep. Tom Price.

More than two-thirds of the cuts in Ryan’s last budget came from reduced funding for programs for low-income people, like Medicaid or food stamps. In some sense, that’s out of necessity. Ryan, like most Republicans, wants to increase defense spending. He refuses to raise taxes. He is willing to propose reforms to Social Security and Medicare but loath to actually argue for reductions in spending, and the cuts he does suggest tend to take a decade or more to kick in. The largest program category in the budget left, once the military and old-age social insurance programs are out of the way, is programs for the poor.

When forced to defend these cuts, Ryan typically denies they’re cuts at all (they’re merely reductions in outlay growth, he says) and then insists that the programs being cut are hotbeds of wasteful spending that fail to meaningfully cut poverty. “The federal government provides an open-ended match to what the states spend on Medicaid, which gives them a perverse incentive to spend as much money as possible,” his staff explained upon announcing the FY2015 budget.

In the same document, Ryan contends of food stamps, “Spending on SNAP has quadrupled in the past decade. It’s grown in good times and bad, because of the open-ended nature of the program. States get more money if they enroll more people. This setup encourages waste, fraud, and abuse.”

One of his favorite talking points is his insistence that poverty has not fallen at all since the war on poverty began in the 1960s. “After a 50-year war on poverty and trillions of dollars spent, we still have the same poverty rates,” he declared on CBS’s Face the Nation in 2015.

That’s not true — if you measure poverty properly, taking safety net programs into account, poverty fell by 40 percent from 1967 to 2012.

Likewise, his descriptions of Medicaid and SNAP are barely recognizable to many experts on those programs. “The fat in [SNAP] is minimal,” Kentucky’s Ziliak says. “The error rate, the rate at which benefits are over-issued or under-issued, remain at historic lows for the program.” Medicaid, similarly, pays dramatically less than private insurance for the same procedures, and has enjoyed substantially lower cost growth than private insurance in recent years. These are very lean programs, not cesspools of waste.

Ryan’s cuts versus Ryan’s reforms

If Ryan’s budgets lay out the “cuts” side of his proposals, the reform side is contained in documents like his 2014 poverty plan or his 2016 “Better Way” plan for poverty. These plans pointedly do not call for cuts. Instead they call for reforms, like “opportunity grants,” a pilot project wherein states would get a lump of money to replace existing federal spending on SNAP, Temporary Assistance to Needy Families (TANF, or welfare), child care, housing assistance, and other programs — a block grant, basically. The 2016 plan simply says, “States should test ways of repackaging welfare benefits to reward desired outcomes.”

Ryan insists in his 2014 proposal that “[i]t is important to note that this is not a budget-cutting exercise—this is a reform proposal.” He claims that his block grant would be budget-neutral, his own budgets to the contrary. Ryan has never resolved this contradiction, and subsequent proposals have only made it worse.

The 2016 Better Way plan makes the same point. In a FAQ, in response to the question, “Doesn’t the House budget call for significant cuts to welfare programs?” he explained, “This plan does not cut spending for the poor by a penny. This plan is focused on reforming our welfare system so that it works better and helps more people get on the ladder of opportunity.” It is the first FAQ I’ve ever seen that goes out of its way to duck the questions it poses to itself.

It is worth being clear about this: Ryan can have his budgets, which cut spending on programs for the poor, or his reform proposals, which do not, but he can’t have both. The ambiguity, however, makes it very difficult to debate Ryan’s agenda, as these ideas are very different depending on whether they are accompanied by massive cuts in overall program spending.

Ron Haskins, a senior fellow at the Brookings Institution and one of the drafters of the 1996 welfare reform law, is enthusiastic about the no-cuts, reform iteration of Ryan’s agenda. “States could use flexibility. But we don’t want to collapse all off these programs into one block grant,” Haskins says. “We need language to let states request the ability to combine programs for a specific purpose, and they’d have to lay out what the purpose is.”

Even the more dramatic plans to block grant the safety net have smart defenders. Tony Keck, who served as South Carolina's director of Health and Human Services under Republican Gov. Nikki Haley from 2011 to 2014, told me that a Medicaid block grant would've helped him address public health problems like smoking or teen pregnancy or housing instability more effectively. Oren Cass, a senior fellow at the Manhattan Institute and domestic policy director of the Mitt Romney campaign, argued in an email that there's been little incentive for states to try to find waste in Medicaid, and that a block grant could help them locate it.

But both, like Ryan, emphasized the case for block granting as a reform that needn’t change overall spending. Indeed, both raised the possibility that block grants should send more money to states during recessions.

Other analysts, like Greenstein, think it’s a fool’s errand to do what Ryan is demanding, and evaluate the program reforms Ryan has put forward outside of the massive cuts that he and his allies clearly favor.

“It’s directly contradicted by every budget Ryan and Republicans have passed over the last five years,” Greenstein says. “Their Medicaid and SNAP block grants cut billions, and they agreed that those were the right figures each time they marked up their budgets. Ryan would then get away with talking about poverty and saying it isn’t a budget-cutting exercise. But when you talk about actual legislation they put on the floor, they had huge cuts in Medicaid and SNAP.”

This is just what Ryan wants for the poor. There’s more for everyone else.

President-Elect Trump And Vice President-Elect Pence Meet With House Speaker Paul Ryan On Capitol Hill
The dream team.
Zach Gibson/Getty Images

And that’s just the beginning.

Ryan’s plan for the poor’s safety net doesn’t include his most famous budget proposal, which would see Medicare turned into a version of Obamacare, with seniors given a choice between subsidized private coverage and traditional single-payer Medicare. It doesn’t include his 2004 plan with then-Sen. John Sununu (R-NH) to privatize Social Security, a plan so large in scale that that the private accounts it created would wind up owning every stock and bond in the United States.

It also doesn’t include his tax plan, which would cost at least $3 trillion over the first decade and by its second decade would give 99.6 percent of its cuts to the top 1 percent. Ryan’s plan is structured such that it likely would not cause the tax increase for single parents that Donald Trump’s tax plan would — but the upper middle class, the rich but not superrich, those making $150,000 to $300,000 or thereabouts, would see large tax increases, of $2, 000 to $3,000 a year on average.

There’s reason to be skeptical that Ryan will succeed in reforming Social Security and Medicare, which Trump campaigned aggressively on preserving and not cutting. The politics around taxes is also tricky, as Senate Finance Committee Chair Orrin Hatch is insisting on doing tax reform on a bipartisan basis, which rules out the sweeping cuts for the rich that Ryan and Trump both want.

Even on programs for the poor, you can expect opposition to pop up as these ideas become actual bills. Providers and nursing homes that depend on Medicaid dollars will fight block granting the program. SNAP cuts will face resistance from companies like Walmart, where SNAP dollars are largely spent, and whose employees often depend upon the program. This is in addition to liberal groups, organized labor, and other traditional advocacy organizations that can be expected to fight cuts.

But these are the stakes. Congress hasn’t ironed out all the details, but Paul Ryan has spent the past five years making it very clear to everyone who’ll listen what he intends to do to the American safety net. He intends to cut it, drastically, to return it to the states, and give the states unprecedented flexibility in how to spend that money. That would mean the end of the guarantee of health care and food to America’s poorest residents. States might offer a variety of different guarantees instead, but the universal floor that exists now would be no more.

The consequences of this for America’s poor will be absolutely massive. It’s hard to estimate now exactly how many will be pushed into poverty, but the number is surely in the millions. The already poor will make do with fewer resources. The social compact between America and its most vulnerable citizens will be broken.

It’s easy to get distracted by the latest Trump gaffe or blow-up or rumored appointment. But Ryan’s agenda could wind up being his most important legacy.


Watch: Repealing Obamacare could change millions of lives