Federal anti-poverty “safety-net” programs
have worked miracles for tens of millions of Americans, helping to drastically
reduce “consumption poverty” — the number of people who lack sufficient resources
for basic life needs — since 1960. It hasn’t all been upside, however, as some
federal programs and policies have ensnared low-income Americans in a poverty
trap. AEI scholars and researchers have been at the forefront of efforts to
identify what works in anti-poverty policy, as well as what isn’t working, and
proposing alternatives that meet our shared goals of opportunity and prosperity
for all Americans.

AEI’s Director of Poverty Studies, Scott Winship, has brought keen analysis to the debate over President Joe Biden’s proposals to extend and expand child tax credits. In his recent report, “Reforming tax credits to promote child opportunity and aid working families,” Winshipfocuses on ways to provide support to working families without discouraging work and family formation. For more details on Winship’s report, check out this week’s episode of “Hardly Working.” Below you will find a short Q&A highlight from our conversation. The full transcript can be found here.

This transcript has been edited for length and clarity.

Orrell:
Why don’t you give us the background on Scott Winship and how he got to be one
of the most influential intellectual leaders on welfare policy in America?

Winship: I came from a small-town background and was fortunate enough to get to go to a great school, Northwestern. And then what was really influential is that in the spring of my freshman year, the LA riots happened in 1992, which really made me, I think, for the first time kind of want to understand better poverty, issues of racial inequality. And so I changed my major. I took an urban policy class with Christopher Jencks while I was there and ended up being a research assistant for him. And then later, he was my grad school advisor. And in between grad school and then, I did a stint doing community organizing at ACORN, which was, you know, a quite liberal, borderline-radical community organization.

Can
you talk a little bit about that? What happened?

So my first job out of college, I
ended up going to St. Louis and taking this community organizing job. And to
some extent, it was a bad fit. I wasn’t there all that long. My main job was to
kind of figure out what the policy details should be for a ballot initiative
campaign that we wanted to do statewide in Missouri to raise the minimum wage.

I realized it was going to be a bad
fit was when I said, “Well, are you at all concerned that 70 percent of
Missouri residents live in either Kansas City or St. Louis, and there’s a state
on the other side of the river in both of those cities where the minimum wage
is going to be $2 lower? Are we concerned that businesses are going to start
relocating, that will hurt economic growth in a way that will hurt the people
that we’re working for in the end.”

And the response was something to the
effect, “This is economist malarkey.” And so, you know, it was just a very
different orientation. When my student loans came due, my employer tried to
encourage me to just default to my student loans as previous generations of
activists had done. And we parted ways soon after that.

So in 2005, I moved down to DC and promptly got very distracted. And wouldn’t end up finishing my PhD until 2009 because I took jobs in DC, first running an online magazine called The Democratic Strategists — so that sort of tells you, politically, I was still a Clinton Democrat — and that led to a job with a think tank that’s still around doing great work called Third Way. From there, I went to The Pew Charitable Trusts and was the research manager of something called the Economic Mobility Project. That led to a job at The Brookings Institution. From there, I ended up running something called the Social Capital Project at the Joint Economic Committee, working for Senator Mike Lee, who was eventually the chair of the committee. And now I’m here at AEI.

There’s
lots of give and take around the president’s proposals to expand the child tax
credit and other mechanisms for getting more resources to low-income families.
I’d like you to back up and give people the context for how this debate is
unfolding.

From the mid-1960s onward, the biggest
anti-poverty program that we had was something called Aid to Families with
Dependent Children (AFDC), which was primarily cash assistance in the form of a
monthly check mostly to single mothers and their kids, single fathers as well,
to some extent, and a very small number of married couples. But mostly, this
was a program with roots in the New Deal when it was really intended for widows
and their kids. At the time, there wasn’t a lot of divorce, so single-parent
families tended to be families where one of the spouses had actually died or
occasionally deserted.

But AFDC was expanded over decades.
And by the time we get to 1990, a sizeable share of kids are being raised by
parents who are getting AFDC benefits. There’s a lot of concern about whether the
program constitutes a poverty trap. If you’re receiving benefits and then you
take a job, your AFDC benefits would be reduced. And so there were these real
disincentives to going off of the program, especially when you combined it with
other benefits — with food stamps and with Medicaid and things like that. The
total benefit package often compared reasonably well against what the expense
would be of taking a low-wage job, having to pay for childcare, potentially
losing your Medicaid and not having employer-provided coverage.

There were bipartisan calls for
reforming the program. Bill Clinton ran in 1992 on, among many other things, “ending
welfare as we know it.” He, from the start of his presidential term, was
working on an ambitious proposal to reform AFDC. President Clinton decided to
put healthcare reform first and the rest of the sort of history with Republicans
taking control of Congress in ‘94 and pursuing their own vision of welfare reform.

The bipartisan welfare reform essentially
gave states a big block grant and a lot of flexibility as to how they would
spend it, instituted time limits for families that were on what was now called Temporary
Assistance for Needy Families (TANF) and work requirements as well. After two
decades of TANF, I think the research has been pretty consistent in showing
that on that it’s been a real benefit in terms of reducing poverty and hardship
for single mothers and their families.

That was kind of the conventional wisdom up until 2016 or so. Kathy Edin and Luke Shaefer put out a book called “$2.00 a Day” which argued that welfare reform had actually left behind this group that was extremely poor, subsisting on no more than $2 a day. In 2017 or so, policymakers and academics started working on proposals for a child allowance, and with the American Rescue Plan Act in March 2021, they finally passed this child allowance.

So
give us the pro and con on that question of whether these types of subsidies
discourage work?

So the two sort of incentives that I
and others are worried about are, one, is it going to cause people to work less
because it provides more income, which allows them to buy more stuff, including
more leisure? Secondly, will it reduce the incentive to work?

A child tax credit that you can get
without working changes that equation. So, will it cause people to work less
and will it cause people to marry less and to choose raising kids as single
parents rather than form marriages?

This has been very controversial.
There was research even before that suggesting the negative income tax
experiments of the 1970s that found that this negative income tax would
actually cause people to work more versus the old AFDC program. And in fact,
they found that it actually discouraged work even more than the old AFDC
program. I’ve tried to be pretty clear in what I’ve written that most of these
are concerns that may not come to pass, but there’s enough evidence to make
them reasonable concerns.

So
that’s a good transition to another topic I wanted to cover, which is the
discussion about the relative weight of cultural factors or sociological
factors versus the economics of marriage.

That is one piece with a broad range
of changes in what I would call associational life, what we do together basically
as humans. So we haven’t just seen declines in family cohesion or stability. We’ve
seen declines in the extent to which people do things with their neighbors.
We’ve seen declining trust in institutions.

I do think that the increase in single
parenthood, for instance, is part of something much bigger than changes in
safety net policy. But do I think changes in safety net policy have influenced
things on the margin?

Again, the research is not a slam dunk
on this question. It’s not hard to find anecdotal stories from people who are
receiving safety net benefits, who are well aware of what would change were
they to take a job or to get married. There are a lot of couples who are
cohabiting who would like to marry, but that financially, it just doesn’t make
much sense to do that. How much weight to put on that versus these other
changes, really hard to say. But I do think, especially for folks who have had
less formal education, for instance, as having more formal education has become
more important over time, they have been especially sensitive to these changes
in whether it makes sense to work, whether or not it makes sense to marry.

In a paper that I wrote we had a nice
chart that sort of showed the trend in the typical safety net package available
to a single parent versus the trend for out-of-wedlock births. It would take a
lot better evidence than our chart to establish that. But the chart’s pretty
striking. And so I think it is the case that it’s more feasible today, which is
not to say that it’s easy, but it’s more feasible today to choose to raise kids
alone than it was in even 1970, 1960, for sure.

If
you had absolute control over federal anti-poverty policy, what would you do?

I would point to a couple of things
that I’ve proposed in the past. The first would be, I think we should have an
office of opportunity in the White House that would be generously funded and
that would essentially provide seed funding for an array of experiments at the
local level to figure out how to close early childhood learning gaps. You know,
there are pretty large gaps in school readiness when kids come to kindergarten and
first grade. We don’t do a good job of closing those right now. We have Head
Start, which honestly the research doesn’t provide a lot of reason to expand it
significantly. So we need to discover ways to close these gaps. But the federal
government ought to be massively funding innovation to uncover effective ways
to do that.

The report I’ve written recently is
related to the child tax credit and the earned income tax credit. You know, we
have this contrast where, over time, we’ve done really well reducing the child
poverty rate. People don’t really realize this, but it’s a small fraction of
what it used to be. And in part, that’s because we have these safety net
programs that provide resources to people. But a lot of those programs as we’ve
talked about may have disincentives that while they might reduce point-in-time
poverty, in the long run, they might actually impede upward mobility as well.
And to the extent that African-American families are disproportionately
beneficiaries of some of these programs, then expanding opportunity for them would
be well-served by reforming some of these programs to expand opportunity more.

So what I proposed is increasing the
earned income tax credit for married couples. And I propose going back to the
old child tax credit, more or less: more generously funded, but not anything
like what Democrats would like to do. I would like to see us giving kids whose
families don’t receive the full child tax credit a “baby bond,” essentially a
contribution to a savings account that they can’t touch until they’re 18. And
then, in my version you could only spend it on certain things that were related
to upward mobility: post-secondary schooling, training, a wedding. And then if
you sort of follow a certain sequence that’s been called the success sequence,
which is to say that you avoid long-term joblessness, you avoid multiple years
of single parenthood as a young adult, then you could also use these baby bonds
to pay for things like buying a house, starting a small business, putting it in
a retirement account, that sort of thing.

So the use of the baby bonds would be towards things that ought to expand opportunity and the incentives to behave in ways that will also expand opportunity would also sort of be built in as well. So those are just sort of two examples. I think conservatives ought to devote a lot more attention than we do to upward mobility and crafting a distinctively conservative policy agenda around upward mobility that looks very different than what the left would offer because it worries a lot about incentives and unintended consequences. But that also focuses a lot on racial inequality and the fact that there are a lot of poor white kids, too, who, because of their circumstances, are disadvantaged in terms of getting ahead.

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