Spotlight Exclusives

Deficit looms over anti-poverty policies for new administration and Congress

Scott Winship Scott Winship, posted on

Scott Winship, a resident scholar and director of Poverty Studies at the American Enterprise Institute, is the former director of the congressional Joint Economic Committee. Spotlight spoke to Winship recently about what to expect from a new Congress and a new administration on legislation focused on poverty and opportunity. The conversation has been lightly edited for length and clarity.

What’s the general outlook for legislation focused on poverty and opportunity with a new administration and closely balanced Congress, no matter who ultimately controls the Senate?

I think the scenarios will look very different if the Senate remains in Republican hands; in that case, I don’t think very much gets done at all. Now, I do think there will be a pretty big COVID bill and I think there will probably be some things for poverty that come out of that over the next four years. President-elect Biden has announced a 13-member testing team that he’s already put together and has signaled that he’s going to try to invest resources into expanding testing quite a bit. I think that’s a good thing, as the first five things on the anti-poverty agenda ought to be getting the coronavirus spread under control. So, I think he’s absolutely appropriately focused on that.

That will come as part of a much bigger COVID bill and that’s going to involve a lot of wrangling between the administration and a Republican Senate in particular, if indeed it ends up being a Republican Senate. The House has passed $2 trillion and $3 trillion versions of a COVID bill, the Heroes Act, that hasn’t gone anywhere in the Senate and I don’t anything on that scale will go far in the Senate next year either. If the Senate is in Republican hands, I think a $1 trillion to $2 trillion compromise has a much better chance. And that will include a lot of things, such as re-upping some of the unemployment and food stamp provisions that will expire at the end of the year. I think it will include some kind of replacement for the PPP program, the Paycheck Protection Program that helped keep small businesses afloat and which expired in July. There will be a lot more consternation, I think, around Economic Impact Payments, the $1,200 checks that went out in April. I don’t think there’s much appetite for that on the part of Republicans and I don’t think there’s much appetite for the $600 add-on payments for unemployment benefits that expired back in July as well.

Otherwise, the spectre looming overall will be the unprecedented size of the federal debt at this point. If the administration signs nothing else into law, the Congressional Budget Office estimates that in 2023, the debt to GDP ratio will exceed the previous record in the United States, which was in 1946 after World War II when debt was 106 percent of GDP. And that’s if nothing else happens. And that will go up to 195 precent by 2050, according to CBO. For Republicans, that’s a huge barrier to doing much else, I think.

Now, if there’s Democratic control of the Senate, they will still need to get 60 votes unless they can get something through via budget reconciliation – and there’s quite a bit they could get through reconciliation. I think it’s probably a much bigger stimulus bill at that point with tax increases at the top with a lot more relief payments while we keep the economy at least partly shut down, though they may blur that a little and call it a stimulus.

There’s a few other things at the margins that could happen. If I had to pick one thing that might have some bipartisan support besides doing something around COVID, it would probably be child allowances. Again, I think the broader fiscal situation is going to be tough for Republicans to get beyond but the Biden campaign definitely was signaling that it would make child allowances a priority and it would do it by various expansions of the child credit tax program – making it fully refundable, making it more generous for everybody. Essentially, what they are proposing would give everybody under $400,000 in income $3,000 per child and $3,600 for younger kids. That’s going to be expensive but there are Republicans who are concerned that it’s become too expensive for some families to have the number of kids that they want. You’ve seen support from people like Sen. Mike Lee (R-OK) and Sen. (Marco) Rubio (R-FL) in the past, who have been in favor of expanding the child tax credit. If they can figure out a way to pay for it, there’s at least a real possibility that could pass with at least some bipartisan support. I think it’s unlikely in a Republican-controlled Senate unless there’s some deal to pay for it.

The other place that I could maybe see some interesting things happening would be in the area of housing. If it’s a Democratic Senate, I think they’ll try to expand the Section 8 voucher program quite a bit. That was certainly a priority of the Biden campaign. I don’t think that’s in the cards if it’s a Republican-controlled Congress but there may be other, less expensive things that can be done, along the lines of attaching strings to transportation or community development grants to states that would discourage exclusionary zoning.  There’s this issue of localities that have land use regulations and zoning regulations that essentially keep affordable housing out of a lot of neighborhoods and municipalities. In theory, the federal government could attach strings to the benefits that it sends down to states and localities. There’s some support for that among Republicans – I think it’s pretty soft support, but it wouldn’t cost a lot of money, which means it would at least have something going for it.

And then I think the Biden administration, without a lot of Republican support, could and probably will expand Obama-era rules that would tie the generosity of housing vouchers to the typical rent in a zip code rather than in a broader metropolitan area or in a county. The reason that would be important, for the purposes of poverty reduction, is if rents are more expensive in a broader area, like a country or a metropolitan area, it makes more sense for landlords to accept housing vouchers in low-income neighborhoods where the rents are actually lower but the landlord will get a more generous amount because the broader area has higher rents. If instead you tie the value of these vouchers to smaller geographic areas, it will tend to promote more landlords offering vouchers in the somewhat more expensive parts of cities and will serve to encourage low-income people to move to those relatively better-off parts of cities.  And that would probably be a good thing for poverty and a good thing for kids’ opportunities, to grow up in less poor neighborhoods. And that’s something Biden has a fair amount of ability to do just through executive policymaking, without Congress having to weigh in.

So, those would be my best bets. If there’s a Democratic Congress, there’s a lot more on the table potentially around health care benefits expansion, more expansive housing policy, potentially things in K through 12 and higher ed. But none of that is likely going to be on the table unless the Democrats control the Senate and even then, only in so far as they can push it through a reconciliation package which doesn’t require 60 votes to pass.

What about two issues that have been underscored during the pandemic: child care and paid leave? Do you see any possibility of bipartisan compromise there, on either of those?

I don’t.  I would imagine if we didn’t have this huge deficit problem, there being some support among Republicans for more generous tax credits for child care. Republicans tend to prefer the child tax credit for that kind of thing rather than tax credits that can only be used for paid child care because they feel, frankly, that the latter encourages out-of-home child care while Republicans want to help more families that prefer to have a stay-at-home parent to take care of their kids. Child allowances is one way of getting to that, but otherwise I think the budget situation is too ugly for them to support too much of anything.

On paid leave, any proposal that imposes high burdens on employers is going to face a lot of challenges in winning Republican support. And so even a proposal such as Sen. Lee has suggested, which would fund paid leave out of future Social Security benefits, even that imposes a pretty strong cost on employers, who after all would lose quite a few more parents, at least for a few weeks, to child care responsibilities. That’s going to face quite a lot of opposition from employers and I think will be a hard sell for Republicans.

There seems to be some expectation that there might be a Nutrition reauthorization next year. Are there some of the changes that have been allowed during the pandemic, particularly for child nutrition and SNAP, that might be less contentious to make permanent? I’m thinking of online access and registration, as an example.

I think in a Democratically controlled Senate, that potentially could be the case. Benefits have been made much more generous during the pandemic; everyone who gets SNAP has been bumped up to the maximum possible level for their family size. That would be a pretty expensive permanent change, I think. Maybe more likely would be greater support for the program that essentially gives poor kids benefits during the summer in recognition of the fact that they don’t have summer breakfasts and lunches to rely on. There’s something called the pandemic EBT which essentially boosts SNAP benefits in recognition of the fact that they aren’t getting school lunches and school breakfasts. If there’s a Democratic Senate, I can imagine something like that expanding. But probably not if there’s a Republican Senate.

And what about just on access to those programs. Programs like SNAP and WIC have greater digital access during the pandemic. Do you see a chance of those changes being kept if there’s a Republican Senate?

Not really. Again, just the overriding fiscal situation is such that it would be a tough sell. They were not inclined to see access as too much of a problem before the pandemic, so I think they’re probably not going to be inclined to extend any of the emergency policies that were enacted into permanent law.

Anything else you would expect the new White House to try to do by executive order?

I think there are things they’ll likely do on immigration, for instance, potentially K-12 schooling. The Obama administration tried to do a fair amount administratively and I think we’ll see that with a Biden administration. Those probably won’t be big enough to make a huge difference and a lot of them will be more along the lines of almost culture war fronts, in terms of what should be taught and what can be done to kids who are getting in trouble. I think a lot of the Black Lives Matters influence will be felt in those areas. But there’s not really much in terms of pedagogical changes or accountability or anything like that that can happen without congressional support.

On immigration, we probably will see that the DACA kids essentially get a pass to citizenship, which would obviously expand opportunity for a whole lot of people.

What about opportunity zones? Do you see a future for that program with a Democratic administration?

I think there’s actually more support among Democrats than Republicans, even though it was initially a fairly bipartisan initiative. But I think everyone is going to wait and see what happens with the existing sites before expanding them too much. There’s a lot of conventional wisdom that a lot of this money isn’t going to the people it was supposed to help and it’s just going to developers and big projects that would have happened anyway. I think that conventional wisdom is pretty unfair and we ought to wait a little bit longer and see the results come in.

Finally, do you expect to see any kind of COVID bill during the lame duck period? 

I hope we do, but I don’t see it happening, mainly because I don’t imagine that President Trump will want to prioritize one of his last acts as president being signing a multi-trillion-dollar bill. And he’s been so stubborn about combatting the coronavirus to date that I think he would see it as losing face somehow. And I think the Democratic House is likely to want to wait and see if they can get a better deal under a President Biden.

« Back to Spotlight Exclusives