Mike

By: AIF Staff

—

Janesville, WI – Earlier this week, American Idea Foundation President and former Speaker of the House Paul Ryan joined the Wisconsin Institute for Law & Liberty’s (WILL) “If You Can Keep It” podcast for an in-depth conversation on the newly launched RISE Pilot Program.

The RISE (Resources for Independence, Stability, and Employment) Pilots, initially detailed earlier this month in a comprehensive white paper by Les Ford and a Wall Street Journal op-ed co-authored by Ryan and Ford, offer states an innovative blueprint to modernize social safety net assistance by utilizing programmable blockchain technology alongside personalized case management.

During the long-form discussion with WILL’s Rick Esenberg and Pat Garrett, Speaker Ryan outlined how the RISE Pilots provide a powerful alternative to failed Universal Basic Income (UBI) models. He explained how the pilots are designed to eliminate benefit cliffs, eradicate marriage penalties, and drastically reduce bureaucratic fraud, all while restoring the dignity of work and promoting upward mobility.

Excerpts of Speaker Ryan’s interview follow below, and the full episode can be accessed here.

Universal Basic Income is Not a Solution

“The reason universal basic income doesn’t work—well, I guess you have to define what you think success looks like. There have been many studies and many experimentations on universal basic income, so it’s not a new idea. It’s an idea that’s been tested a lot. What it does is layer unconditional cash on top of whatever other benefits people have, and it effectively pays people not to work. The biggest reason not to do it is that it pays people not to work. What happens is people have less healthy lives. They don’t reach their fulfillment, they don’t flourish, and they don’t reach the best version of themselves. They have lower behavioral statistics, lower health statistics, and lower mental health outcomes. Their kids are worse off. So, it lowers work.”

The Macroeconomic Danger: UBI Shrinks the Economy

“Universal basic income lowers societal participation. Not only is it bad for the people themselves who become supplicants, but it also pulls those people out of the labor force, and the overall economy shrinks as a result. Everyone loses. The person on universal basic income isn’t just trapped in poverty, but society loses because that worker doesn’t contribute to the economy, which would raise our gross domestic product, raise our living standards, and give us faster economic growth. The last thing we want to do is pull able-bodied people out of the workforce, because that’s bad for everybody, including the entire macroeconomy. Paying people not to work is not a very good idea because it doesn’t give them flourishing lives, and the data is pretty darn clear on this.”

The Conservative Imperative: We Must Offer a Better Alternative

“Beyond having better policy, my motivation is that as conservatives, if we don’t agree with universal basic income, then we have an obligation to offer a better alternative. This issue is coming fast. To me, we have to prepare that better alternative as quickly as possible so we can show that there’s a better way to do better for people in poverty.”

A Real-Life Example of a Benefit Cliff

“To give you a real-life example of a benefit cliff: say you’re a single mom with two kids making $15 an hour. You’re on SNAP, which is food stamps, you have a housing voucher, and you’re getting some cash assistance. You are working hard, and your boss comes to you and says, ‘Hey, you’re doing a fantastic job. I want to promote you to supervisor and raise your wage to $19 an hour.’ Normally, in a free market capitalist society, you would say, ‘Fantastic! Thank you. I want that promotion.’ But under our current welfare system, that single mom has to go back to her apartment, sit at her kitchen table with a calculator, and look at the math. She will realize that by making four more dollars an hour, she crosses a federal income threshold where she suddenly loses her housing voucher entirely, and her food stamps get cut in half. When you add up the value of the benefits she just lost and compare it to the extra money she makes from her raise, she is actually worse off financially by taking the promotion. In economics, we call that a high marginal effective tax rate. In reality, it means she would have to pay a 100% or even a 150% tax on those extra four dollars. The system punishes her for trying to better herself. So, she has to tell her boss, ‘No thank you, I can’t take the promotion. I need to stay at $15 an hour so I don’t lose my healthcare or my housing.’ That is a benefit cliff. It is a trap that blocks upward mobility.”

The Broken Incentives of the Status Quo Safety Net

“What typically happens is a person or a family has a stack of different benefits. They have SNAP benefits, housing assistance, the Earned Income Tax Credit, cash assistance, childcare, and job training. All these benefits are combined with different, nationally set cutoff periods. If you make a certain dollar of income more, you lose a lot of benefits. So, what do you do? You don’t take that pay raise. You don’t take that additional job. You don’t climb out of poverty; you stay where you are because you lose more than you gain due to these artificial benefit cliffs. It has always been a problem, and every economist acknowledges this. It is a tax on upward mobility. It stops people from raising themselves out of poverty because it is risky. Today, the incentive is the opposite: stay where you are, don’t rise, don’t take a raise, don’t get an additional job, and don’t make more money, because you’ll lose more than you gain if you do so. That’s the current incentive of the poverty system we have today. You can flip that with these RISE pilots and the kind of technology we have today.”

Welfare Reform in the AI Age

“What is exciting to me, and the reason we’re doing these RISE pilots, is that finally the technology is there to operate the way we always wished and hoped it would operate. It didn’t exist when we were trying to do welfare reform 5, 10, 15, or 20 years ago. I used to spend a lot of time on this issue when I chaired the Budget Committee and the Ways and Means Committee. We had a lot of technological barriers to putting together the kind of welfare reform we wanted. With Digital Asset and the Canton Network, we can build conditional, programmable, flexible benefits that are electronic and digital. You don’t have to go to a bunch of government agencies, have an EBT card, have a voucher, or have cash assistance. You can have it all delivered on one programmable benefit stack, like an Apple Wallet.”

Smoothing Benefit Cliffs so Work Always Pays

“Instead of a sudden drop where you lose all your benefits at once, the technology allows us to phase them out gradually. For every extra dollar you earn at work, your benefits only decrease by, say, 20 or 30 cents. This ensures that you are always financially better off by working more or taking that promotion. Work will always pay… In this digital asset wallet, you can phase out the benefit cliff so that you’re always making more than 50 cents on the dollar every time you get an opportunity. It fractionally reduces your benefits because they are integrated on your phone.”

Combining Tech with Real-World Case Management

“We also propose attaching case management to it. We do a lot of case management in Wisconsin through nonprofit, for-profit, and government assistance avenues. Catholic Charities has a great system of case management. What that means is you have a social worker helping a family navigate their way through poverty, building a plan for benefits, childcare, education, and job retraining to get up and out of poverty. That can be integrated into the technology so the person in a RISE pilot has someone helping them set everything up, understand how it works, and build their plan. We want to make sure that every incentive they experience in life is an incentive to get out of poverty.”

Utilizing Blockchain Data to Learn and Adapt across States

“The great thing about the technology is you literally can measure it in real time. That’s the way this technology works, which is super interesting. So we can measure it in one state, see how it’s working, and maybe we can tweak something. We can learn as we go. In another state, we can try a different approach—try a different way, try this benefit stack versus that benefit stack, or have the benefit offset feature work this way instead of that way. That’s what’s great about doing this with the states.”

States as the Laboratories of Democracy

“I’ve always believed in states as the laboratories of democracy. I believe in federalism and that good ideas come from great places like states. When those ideas get proven, like we did in 1996, we can take them national and have a better alternative. Honestly, it is a conservative idea, but a lot of center-left Democrats totally agree with what I am talking about here. This doesn’t need to be a red-versus-blue thing.”

Taking on the Entrenched Status Quo

“I have spent my entire adult life in public policy, and I’ve been attacked constantly for proposing ideas. It’s just the way it goes; you get thick skin and get used to it. You just identified what we call the ‘poverty industrial complex.’ The poverty industrial complex is based on the status quo. My old buddy Bob Woodson, who just passed away a few months ago—God rest his soul—was one of my mentors in the poverty-fighting space, and he called it the poverty industrial complex. When you collapse all of these benefits—if you read our white paper, it shows all the different benefit stacks—you are collapsing a lot of separate benefits into a single stack that your case manager helps you assemble. It is digital, on your phone or on a chip card. When you do that, all the vendors, the agencies, and the people who work within those separate benefits get disrupted. The upside as a government reformer is that this really helps you get rid of waste, fraud, and abuse. There is currently a massive error rate. We call them program integrity numbers. With digitization and provenance, the way the Canton Network works, you can’t commit fraud. You can massively streamline government benefit agencies.”

Claiming the Moral High Ground on Employment

“When you propose that welfare should be temporary and conditional, making it temporary and making it conditional is cast as a heartless act. It is cast as being unkind to people in poverty, whereas universal basic income—just giving people money—is viewed as a much higher, moral thing to do. I think it is the exact opposite. I think the moral high ground belongs to those of us who want people to live the best versions of their lives, to flourish, to reach their potential, and to have the meaning, dignity, and self-sufficiency that comes with work. That allows them to chart their own lives and lead a good example for their children. To me, that is the moral high ground. But make no mistake, it gets attacked viciously. Every time I spend time on this issue, I get attacked. I hate to say it, not to be ideological or partisan, but it comes from the left. You get attacked for what they call heartless welfare reform that kicks people off of welfare. We’re not kicking people off of welfare. We are helping people get themselves off of welfare so they have better lives and are not dependent on someone else for their well-being.”

The Compounding Societal Value of Work

“Getting people trained, establishing good habits, and working is good for people. Work does more than just get a paycheck; it provides meaning and fulfillment. It sets great examples for kids. It brings better mental health, better physical health, and better longevity. All of those things come with work, but we have a real, challenging opportunity coming to society, so it’s a perfect time to roll out new ideas with the kind of technology that we now finally have to wire our social insurance and safety net systems to the kind of world that we’re going to.”

Reviving Governor Tommy Thompson’s Legacy of Reform:

“I’m saying this as a Wisconsinite. This is what Tommy Thompson, John Engler, and a couple of other governors did in the early 1990s when they got waivers from the federal government. We called it W2, and it’s what led to the 1996 welfare reform, which was phenomenally successful. It massively dropped child poverty rates and massively increased female employment. Women who were on welfare saw a 20-point increase in employment over the period of measurement. We got women from welfare to work, and we got kids out of poverty… Those early Wisconsin and Michigan reforms that worked really well where they were applied have been sort of overcome by other things, and therefore we’re back to where we started. These RISE pilots are our solution to this problem—to finally and fundamentally reform the welfare system to wire it toward upward mobility, independence, stabilization, and getting people up and out of poverty.”

The Ultimate Goal: Launching the RISE Pilots in Wisconsin:

“I haven’t been talking to our current governor about this, but I would love to see this come to Wisconsin. We are the ones who started welfare reform back in the early ’90s. I am talking to other states, and there are Democrats around the country who want to do things like this. Regrettably, we just don’t have that happening here in Wisconsin right now. I haven’t talked to Tony Evers, and he’s leaving office soon, but it would be really nice to see this take place here in Wisconsin.”