Bills
| 3.23.22

Should States be Allowed to Use Federal Funds for Poverty Alleviation Pilot Programs? (S. 2416)

Do you support or oppose this bill?

What is S. 2416?

(Updated August 18, 2021)

This bill — the EMPOWERS Act of 2019 — would give states the flexibility to pursue pilot programs to address the challenges faced by low-income families and individuals by promoting employment, savings, financial literacy, family stability, and self-sufficiency. The pilot programs would have to meet certain criteria described below.

Specifically, this bill would: 

  • Allow states to apply for four-year temporary waivers to integrate and reform two or more covered federal programs that assist folks in need.
  • Require states to submit a proposal for a cost-neutral demonstration project designed to reduce poverty and promote employment, savings, financial literacy, family stability, and self-sufficiency for participants in order to receive a temporary waiver.
  • Give states that obtain waivers the same level of funding that people in their state would otherwise receive for the covered programs and require them to reinvest any savings into helping low-income families and individuals.
  • Require states to contract with an independent, third party evaluator, tasked with rigorously testing projects.
  • Establish the Interagency Board for Empowering Low-Income Families to oversee the waiver process and ensure projects don’t have benefit cliffs or steep phase-out rates that can result in a net loss of a low-income household’s resources once wages or hours are increased at work.

This bill’s full title is the Economic Mobility, Prosperity, and Opportunity with Waivers that Enable Reforms for States Act of 2019.

Argument in favor

Federally administered poverty alleviation programs aren’t flexible or tailored enough to address the unique challenges that face poor families and individuals at the state or local level. Giving states flexibility to use federal funds for pilot poverty alleviation programs could help them design programs that effectively reduce poverty and respond to local needs.

Argument opposed

The claim that poverty rates haven’t gone down since the start of the war on poverty is nonsense. On many measures, social safety net programs have reduced deep poverty and helped the working poor. Allowing states to divert funds from existing federal poverty relief programs through this bill could hurt the neediest and most vulnerable Americans.

Impact

Poverty; families and individuals living in poverty; poverty alleviation programs; federal poverty alleviation programs; state administration of poverty alleviation programs; state-level poverty alleviation programs using federal resources; and federal waivers allowing states to use federal funds for state-level poverty alleviation pilot programs.

Cost of S. 2416

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sponsoring Sen. Joni Ernst (R-IA) introduced this bill to give states the flexibility to modernize programs to help families and individuals find long-term success through pilot programs: 

“I’ve heard from Iowans struggling to make ends meet that due to current federal programs in place, taking one step forward often means taking two steps back. Worse yet, these programs sometimes punish self-sufficiency through stiff phase out rates, or ‘cliff effects’ which inadvertently penalize individuals when they gain employment or are awarded a raise. The EMPOWERS Act encourages states to develop solutions that utilize federal resources to remove barriers to self-sufficiency and help families and individuals find long-term success.”

Original cosponsor Sen. Marco Rubio (R-FL) adds: 

“The EMPOWERS Act recognizes what Americans already know: Washington doesn’t have all the answers. More than 50 years after President Lyndon Johnson declared war on poverty, it’s clear our social safety net programs are in desperate need of innovation and modernization. I’m proud to join my friend Senator Ernst in introducing this bill, which will empower states to develop new ways to help the most vulnerable Americans and reduce poverty.”

In an August 2019 op-ed in the , Sens. Ernst, Rubio, Tim Scott (R-SC), and David Perdue (R-GA) contended that federal programs aren’t effective at helping people escape poverty: 

“While federal programs might be well-intentioned, they are not well-designed to actually help folks escape poverty. That’s why we need common-sense legislation — such as our Economic Mobility, Prosperity, and Opportunity with Waivers that Enable Reforms for States (EMPOWERS) Act — that gives states the ability to develop solutions to best utilize federal resources in order to empower families and individuals to find long-term success. Our bill would allow states… to submit a proposal, or request for a waiver, for a cost-neutral pilot program designed to reduce poverty and promote employment, financial literacy, family stability, and self-sufficiency for participants… This legislation would allow state and local organizations to tailor anti-poverty programs to the particular needs of these Americans, ensuring that they can realize their full potential.”

Iowa Governor Kim Reynolds, a Republican, supports this bill, which she says gives states opportunities to create more effective programs: 

"The EMPOWERS Act takes a bold step in granting states flexibility to partner with those looking for long-term success. The act offers a chance for states to create pathways of new opportunity for families and individuals and breaks down some of the barriers currently preventing many from leading more stable and fulfilling lives. I want to thank Sen. Ernst for placing confidence in states to carry out this important work. Iowa is excited and able to readily accept this challenge."

When this bill was under consideration in the 115th Congress, the Center on Budget and Policy Priorities (CBPP) argued that it “would facilitate the unraveling of major federal programs that help low-income people meet basic needs.” The CBPP wrote: 

“Under the EMPOWERS bill, the Trump Administration could allow states, with approval only from a board made up mainly of federal Cabinet officials, to make far-reaching changes, via waivers, that could substantially alter and weaken many federal low-income programs. The bill would allow waivers in some 25 federally funded programs that provide over $150 billion annually in benefits and services to help low-income individuals and families. As a result, important federal policies and protections that Congress has set could be undermined for a wide swath of programs, including nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), federal housing programs, and child welfare, job training, and child care programs, among others.  The waivers that the bill would allow could lead to significant cuts in assistance for poor families and individuals, with the most vulnerable at greatest risk of being harmed.”

Furthermore, the CBPP observed that this bill would give states flexibility to redirect federal funds that currently give families direct assistance to help meet their basic needs. This could include redirecting basic food aid from SNAP toward other services, such as case management, which might help some families but be unnecessary for many others, and which won’t help them put food on the table or pay rent. More specifically on SNAP, the CBPP warned that this bill would allow states to impose unlimited benefit cuts, could cause many current SNAP recipients to become ineligible for SNAP benefits, allow states to redirect unlimited SNAP funds to non-food assistance uses, and allow the federal government to cap a state’s SNAP funding in return for granting a waiver (which the CBPP called “tantamount to converting the program to a block grant”).

The CBPP also warned that this bill could allow states to shift resources away from those with the greatest needs to less-needy individuals, which would “deepen poverty, increase hardship, and make it harder for many struggling families to move toward self-sufficiency” for the poorest families. The experience under the Temporary Assistance for Needy Families (TANF) block grant — whose broad state flexibility has allowed states to take federal funds originally intended to help people meet basic needs and use them to substitute for other state spending — is a cautionary tale in this regard. 

Finally, the CBPP argued that this bill “wouldn’t address one of the very concerns its proponents say it is intended to deal with — that various assistance programs phase out quickly as earnings rise.” The CBPP observed that addressing phase-down rates without making poorer families even poorer requires additional resources — which this bill doesn’t provide.

This legislation has four Republican cosponsors in the 116th Congress. Last Congress, it had three Republican cosponsors and didn’t receive a committee vote.


Of Note: Since President Lyndon Johnson declared a war on poverty in 1964, the federal government has spent $23 trillion on poverty alleviation efforts. Today, the federal government spends almost $1 trillion annually on over 80 poverty alleviation programs. 

However, Sens. Ernst, Rubio, Tim Scott (R-SC), and David Perdue (R-GA) noted in their Washington Examiner op-ed, very little progress has been made in reducing poverty despite this significant investment. In 2017, 12.3% of Americans lived in poverty — only slightly less than the 14.7% poverty rate in 1966. The senators argue that this proves that the federal government is “failing to address the barriers to self-sufficiency trapping those living in poverty.”

The claim that poverty in the U.S. hasn’t been reduced is disputed even amongst conservatives. In 2018, the White House’s Council of Economic Advisors argued that the official poverty measure has “serious conceptual flaws that make it an inaccurate indicator of material hardship.” The Council of Economic Advisors argues that a consumption-based poverty measure which overcomes the official poverty measure’s flaws shows a 77% reduction in the poverty rate since 1980, and a 90% decline since 1961. 

Additionally, in a 2018 paper, University of Chicago researchers used administrative statistics from six major programs — Social Security, Supplemental Security Income (SSI), Temporary Assistance for Needy Families (TANF), housing assistance, SNAP, and the Earned Income Tax Credit (EITC) — to assess those programs’ effectiveness. They found that the first five programs “sharply reduce deep poverty” (defined as income below 50% of the federal poverty line). They also found that the sixth, the EITC, has a “pronounced” impact among the working poor (defined as families earning around 150% of the poverty line, or around $25,100 in annual income for a family of four). 

One of the UChicago researchers, Bruce Meyer, concluded that poverty alleviation programs “have had huge effects in reducing poverty”: 

“The claim that poverty hasn’t gone down since the start of the war on poverty is nonsense You can see there were big reductions in poverty over time due mainly to two things — all the transfer programs we’ve added such as SNAP, TANF, SSI, expanded Social Security, and housing benefits — and because the economy has grown.”


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / jetcityimage)