Economists steamed over Paul Ryan report

Some experts whose work was cited in the paper say Ryan either misunderstood or misrepresented their research.

By The Fiscal Times Mar 5, 2014 2:58PM

Credit: © Chip Somodevilla/Getty Images

Caption: House Budget Committee Chairman Paul Ryan (R-WI)By Rob Garver, The Fiscal Times


An exhaustive critique of the federal social safety net released by Rep. Paul Ryan (pictured) on Monday is meant to be the intellectual foundation for an overhaul of the federal anti-poverty programs.


But interviews with economists -- a number of whom are cited in Ryan's paper -- suggest that he may be building his house on sand. 


Ryan's 204-page report, The War on Poverty: 50 Years Later, is documented with hundreds of citations of academic work. The paper breaks down federal anti-poverty programs into eight separate categories -- cash aid, education and job training, energy, food aid, health care, housing, social services, and veterans affairs -- and reviews the evidence for and against their effectiveness, relying in large part on academic research.

 

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"Today, the poverty rate is stuck at 15 percent -- the highest in a generation," Ryan noted in the report. "And the trends are not encouraging. Federal programs are not only failing to address the problem. They are also in some significant respects making it worse. Changes are clearly necessary, and the first step is to evaluate what the federal government is doing right now."


However, several economists and social scientists contacted on Monday had reactions ranging from bemusement to anger at Ryan's report, claiming that he either misunderstood or misrepresented their research.


Ryan's paper, for example, cited a study published in December by the Columbia Population Research Center measuring the decline in poverty in the U.S. after the implementation of Lyndon Johnson's "War on Poverty."


One of the study’s authors, Jane Waldfogel, a professor at Columbia University and a visiting scholar at the Russell Sage Foundation, said she was surprised when she read the paper, because it seemed to arbitrarily chop off data from two of the most successful years of the war on poverty.


Waldfogel and her colleagues looked at an alternative measure of the poverty rate known as the Supplemental Poverty Measure (SPM), which factors in government benefits like food stamps and programs like the earned-income tax credit. That alternative measure is thought to present a more accurate and realistic gauge of the poverty and the real-world effects of government programs aimed at combatting it.


The Columbia researchers found that, using their model of the SPM, the poverty rate fell from 26 percent in 1967 to 15 percent in 2012. Ryan only cites data from 1969 onward, ignoring a full 36 percent of the decline.


"It's technically correct, but it's an odd way to cite the research," said Waldfogel. "In my experience, usually you use all of the available data. There's no justification given. It's unfortunate because it really understates the progress we've made in reducing poverty."


The Ryan report uses the same paper to support its assertion that a welfare reform program instituted in 1996 was the cause of a decline in child poverty.


Chris Wimer, the lead author on the paper and a researcher at Columbia, said Ryan's conclusion ignores the major expansion of the earned-income tax credit in 1993 and the roaring dot-com economy of the mid-to-late 1990s. "While our data can't disentangle those three things, attributing the decline in poverty after 1993 to the welfare reform of 1996 seems to go beyond what the data show," Wimer said.


Barbara Wolfe, a professor at the University of Wisconsin at Madison, said Ryan's paper simply misstates the findings of one of her papers studying the effect of housing assistance on labor outcomes. 


Ryan's report says the authors find that "recipients initially experience an average annual decline in earnings of $858 in the initial year of voucher receipt. However, the negative income effect decreased to $277 five years after voucher receipt."


"This is misstated," Wolfe said in an email. "Our findings are a decrease of $598 NOT his $858 and in five years the decrease we estimate is $47.46 (which is not statistically different from zero)." (Update: The House Budget Committee has since corrected its reference to Wolfe's work.)


Wolfe pointed out that Ryan's paper did not mention another study by the very same authors finding that "the housing program has more benefits than costs so focusing on only one outcome is insufficient from a policy perspective."


Wolfe also objected to Ryan's use of another of her studies, which his paper claimed found "only a minority of families alter their employment decisions in response to Medicaid's design."


Wolfe said that the study had been restricted to a small percentage of recipients, and that its findings were limited to the years prior to the welfare reform bill that passed in 1996.


"This minority refers to individuals with health problems," Wolfe wrote. "I would note that this link has not been in effect since welfare reform, when it was no longer a requirement to be on cash assistance (AFDC) to get Medicaid."


The Ryan paper also cites a study by Jeffrey Brown and Amy Finkelstein studying whether Medicaid "crowds out" private long-term care insurance. The study finds that Medicaid imposes an "implicit tax" on beneficiaries -- meaning that the potential loss of benefits from an increase in income has an effect on consumers' spending decisions. The Ryan paper artfully says that "because of this and other factors" the implicit tax explains between 66 percent and 90 percent of the lack of participation in private plans.


In an email, Brown, the William G. Karnes Professor in the Department of Finance at the University of Illinois at Urbana-Champaign, said the Ryan report’s description of his 2004 paper “is an accurate representation of our work. My only caveat would be that although Medicaid has this effect, there may also be other factors that would continue to limit the size of the private market even if Medicaid was reformed.” *


Asked about the criticism, a spokesperson for Chairman Ryan said, "We're glad to hear the report is encouraging a debate on the performance record of federal anti-poverty programs."


The spokesperson also pointed to comments Rep. Ryan made this week: 'This report will help start the conversation. It shows that some programs work; others don't. And for many of them, we just don't know. Clearly, we can do better . . . This 50th anniversary of the War on Poverty is an opportunity to review the record in full. And we should seize it."


*Clarification: This article has been updated to clarify Jeffrey Brown’s response. It originally said that Brown "noted that while the [Ryan] paper cites the study accurately in a literal sense, it ignores the caveat that ‘there may also be other factors that would continue to limit the size of the private market even if Medicaid was reformed.'” In the comments section, Brown says he does not believe Ryan ignored that caveat or misrepresented his work.

 

More from The Fiscal Times

104Comments
Mar 5, 2014 4:22PM
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"Today, the poverty rate is stuck at 15 percent -- the highest in a generation," Ryan noted in the report. "And the trends are not encouraging."

Seeing how you and others are pushing this Global Right to Work Harder for Less, why wouldn't the poverty rate keep rising? The massive transfer of Wealth off the backs of the Working Poor and Fading Middle Class is destroying America.
Mar 5, 2014 4:27PM
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"Asked about the criticism, a spokesperson for Chairman Ryan said, "We're glad to hear the report is encouraging a debate on the performance record of federal anti-poverty programs."

Maybe more folks would take folks in Congress on a more serious level if they stopped all their PORK programs for their individual states. Maybe more folks would take these crooked government officials more serious if they stopped trading votes for MONEY. Maybe folks would take this leeches in Government more serious if they stopped this Family and Friends network of handing out Tax Payers Dollars to themselves.

How is it we have Record Wealth and rising poverty in spite of the FACT that American Workers are more Productive then ever before. The Working poor and Fading Middle-Class do all the real work yet the BARKING dogs get all the Rewards.
Mar 5, 2014 3:16PM
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As usual for ANY politician, cherry-picking the data to support preconcieved ideas. Didn't that kind of thing get our country into trouble in some place in the Mid-East, the name of which, I think, started with an "I"?    ;)
Mar 5, 2014 5:59PM
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The war on poverty is as stupid as the war on drugs. The best way to reduce (not eliminate) poverty is to help people get the skills they need to become productive workers and join the middle class. The larger the middle class the more money the rich can make as they have more skilled workers to hire and more demand for their products. Everyone wins.
Mar 5, 2014 5:27PM
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As long as we keep killing off public education in this country, the poverty level will never drop.
Mar 5, 2014 4:27PM
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How do you establish cause and effect in all this. Take this for example:

Ryan's paper, for example, cited a study published in December by the Columbia Population Research Center measuring the decline in poverty in the U.S. after the implementation of Lyndon Johnson's "War on Poverty."


Was the decline in poverty from the "War on Poverty", or the war in Vietnam boosting our economy?
Mar 5, 2014 3:23PM
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When has Ryan ever been right?NEVER.
Mar 5, 2014 5:25PM
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Sounds like Paul Ryan's report is a great deal like his sub 3 hour marathon.
Mar 5, 2014 7:05PM
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Commons causes for being poor:

 

Dropped out of school ( stupid decision making)

Used drugs (stupid decision making)

Got pregnant no spouse ( stupid decision making)

Got pregnant again , different baby daddy (stupid decision making)

Criminal record ( stupid decision making)

Got pregnant again , different baby daddy (stupid decision making)

Lazy, easier to vote for a living than work  ( stupid decision making)

Handicapped

Bad luck

 

Anyone liberals see a common thread?

 

Mar 5, 2014 3:40PM
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UHHH, he still does this? He fudged the data on his Debt/GDP ratio calculation now this?? What a hack.  We need to fact check him harder than Sarah Palin IMO.
Mar 5, 2014 6:02PM
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As usual, this author gets completely immersed in the minutia of his argument, and completely misses the fact that Ryan's conclusion was 100% correct - The "War on Poverty" has been a complete and utter failure!!!  Tens of trillions of dollars have been redistributed from the productive to the non-productive, and we have nothing to show for it but more poverty.

If you truly want to end poverty, stop paying people to be poor.
Mar 5, 2014 6:59PM
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Poverty will continue to grow as long as losers  are able to vote for a living. Grow the dependency , grow the democrat base.
Mar 5, 2014 5:37PM
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There is a large and growing segment of our population that has become dependent on the efforts of there fellow productive citizens, starting with these whiney professors who wish to control the debate. There is a moral component to this debate, if you subsidize poverty, you will get more of it. If you pay people to remain poor, surprise, they stay poor. Paul Ryan is correct and courageous to start this debate, paying people to stay poor helps no one, not even the democrats they vote for.   
Mar 6, 2014 8:40AM
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Economist are nothing but theoreticians. If they knew what they were doing we would not be in this mess. Remember it's called economic theory.
Mar 5, 2014 9:55PM
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How can the federal poverty programs effect be separated from the effects of the economy in general? Hasn't the fact that the US has become more productive made a difference in poverty? Government mismanagement of the taxes they extract by force, together with globalization and constant government created inflation have created more poverty. 
Mar 5, 2014 11:48PM
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Since people want to criticize Rep. Ryan for "cherry picking" data, let's talk about facts for a minute.  Selecting 1967 as the data starting point is also, "cherry picking" data.  Poverty in the US fell from approx. 40 million (22% of the population - 180 million) in 1960 to about 32 million (16.5% of the population - 194 million) in 1965 when the War on Poverty began to take effect.

Who is to say that the War on Poverty did not in fact stall out the tremendous progress that was being made in poverty reduction in the US?

Do I think that some of these programs have value?  Yes.  Do I think that there is a tremendous amount of waste in these programs and that they need a significant overhaul?  Yes.

http://www2.census.gov/prod2/popscan/p60-068a.pdf
http://www.washingtonpost.com/blogs/wonkblog/wp/2012/07/11/poverty-in-the-50-years-since-the-other-america-in-five-charts/
Mar 5, 2014 6:56PM
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Get the Corporations out of MY government, and they might start doing their intended functions. Governments are supposed to be the complete opposite of Corporations, governments don't exist to make a profit, they exist to help people. People like Ryan can't understand that, and that is why both governments and Corporations are failing under his watch.
Mar 6, 2014 12:50AM
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I think that we all have a clear understanding of how Paul Ryan operates.  He looks only at the data points that favor his position and leaves out everything else.  I think that leaving out important data is as much a lie as just plain lying.  Don't ever forget that this man earned the nick name Lyin' Ryan.

Mar 6, 2014 2:56AM
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Sometimes I give these fools the benefit of the doubt; maybe they just aren't too smart, which is true often enough. They just can't help being so stupid. But in this case, there can be no doubt. Deliberate misinformation, perhaps a tad more blatant than usual. These guys just don't care about you or me or America; just elections. Propaganda that *almost* rises to the Fox news level. Of course, FOX will take it and run the misinformation into the ground, tuern it into blatant lies that their anesthetized audience will willingly swallow. The lies become even more heinous when their on-airhead fools try to wrap their pea-brains around it. Same old GOP, same old lies, newer, less curmudgeon-like package. Ryan, who certainly knows better, is among the very worst of them.


Mar 6, 2014 8:43AM
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In the articles first example Ryan used the years 1969 to 2012 for a total span of 43 years to show the anti-poverty programs don't work.  The complaint was that Ryan left off 1967 and 1968...2 years out of a total of 45 years.  So what?  Two years is noise.  The article pointed out that 36% of the decreases in poverty happened over those two years.  Then clearly the anti-poverty program has become less and less effective. 

 

A person is in poverty.  The government gives them enough money that they are no longer in poverty.  And now do the same thing for millions of Americans.  Now do this for 45 years.  Is that a solution?  Or is that a way to keep American's living on the edge of poverty?  I know the answer a liberal would pick.

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