American Idea Foundation

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Speaker Paul Ryan details advances in Evidence-Based Policymaking

Speaker Paul Ryan details advances in Evidence-Based Policymaking

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By: AIF Staff

This week, as part of a conversation hosted by the University of Notre Dame’s Keough School of Global Affairs, AIF President and former Speaker of the House Paul Ryan and former Obama Administration Chief of Staff Dennis McDonough discussed the stakes of the 2020 elections, the importance of promoting evidence-based policymaking, and tackling tough policy issues in a polarized environment.

During the dialogue, Speaker Ryan talked about how the American Idea Foundation is collaborating with the University of Notre Dame’s Lab of Economic Opportunity to identify solutions that expand economic opportunities and that successfully address issues like poverty, addiction, and recidivism.

Excerpts of Speaker Ryan’s responses, which have been edited for clarity, follow and the full discussion is accessible here  

Reaching consensus in a polarized time:

“When Dennis and I worked together in our last few leadership positions, we did a lot of things together and put together plenty of deals. We had to accept things from the other side that we didn’t want, but we did it to get things done. In my last term as Speaker of the House, which was 2017 and 2018, we passed over 1,323 bills out of the House of Representatives. It was about double what the House usually produces and more than half those bills made it into law so, give or take, 600 bills went into law and 80% of those bills were bipartisan.

“So, even in 2017 and 2018, 80% of the laws we wrote were bipartisan bills. When Dennis was there in 2015 and 2016, we had to have bipartisan bills because we had divided government and we got a lot of things done. We did the Cures Act in the lame duck; we worked on opioids; we did so many different things even in these partisan, polarized times….

“The system and the institutions still do work and bipartisan things still get done. It would be much nicer and much better for everybody in the country for sure if we could try to depolarize the environment and just get the better of our angels coming more closely together, but I just want to say, even in these hyperpolarized times, the system works and bipartisanship still does occur.”

Expanding the use of data and evidence by the Federal Government:

“I actually got the idea for this [Evidence Based Policymaking] Commission years ago from Jim Sullivan at LEO. To back up for a moment, I got a little tired of the fact that we were trying to solve some problems in the poverty space and we kept having just these ideological battles and fights. We would get into stalemates, so nothing would get done because the Left and the Right would just fight each other to a draw, because we basically used ideological arguments to try and prosecute our point. As a result, we could not reach consensus.

“So, I tried to take a step back and I witnessed that only 1% of the programs that the federal government had were designed using data and evidence. And so, I spoke with an economist named Raj Chetty at Harvard who walked me through this amazing study that he did on upward mobility using data from the Internal Revenue Service. He produced a really path-breaking study in my opinion. I went to Notre Dame and I spoke with Jim Sullivan and Bill Evans and some others saying: Why don’t we have more studies like this? What they basically walked me through was because nobody can get this data. This was when I decided there ought to be a commission to potentially release all this government data in a privacy-compliant way so that researchers can measure the effectiveness of our public policies. So, I called my friend Patty Murray who I had done a budget agreement with a year or two earlier.

“I called Patty and I said: Look, here’s what I want to do. I want to do a commission and release all of this data and we should just agree that you’re a progressive and I’m a conservative but this is nothing but good because we can actually find out if these policies are succeeding or not. Then we can basically affect policymaking without the ideology and take the partisanship out of it and just go where the data tells us to go. So, she agreed and we did a commission.

“The commission met and it gave us these findings and [recommendations on] how to release this data. We took those findings, put it in legislation, and passed into law. It just became law last year and it has now helped create what I would call a new scope of social, political science and evidence-based policymaking. Our theory and hope here is — and Notre Dame and LEO in particular, is really the leader in this — we can now move toward evidence-based policymaking, data and analytics, random clinical trials to see what works and what doesn’t. Then we can go with what works in and leave what doesn’t work and I really believe it’s going to help bridge ideological and partisan gaps and bring solutions.

“I’d like to think this is a new version of political science that will help get us toward consensus and so, that was our entire motivation in the first place. It’s just taking root. Lots of universities are doing it, so I’m very optimistic and it’s what my Foundation, the American Idea Foundation, is basically dedicated to doing.”

The next Administration should prioritize economic growth and focus on the future:

“You have to have economic growth. There is no two ways about it. You have to start with strong economic growth, then you’re going to need to have education reform and a focus on upward mobility. I think there are a lot of good things that we’ve done lately on issues like criminal justice reform and there’s more work to do there. So, economic growth, education reform, and then, in the poverty space, I’m a big believer in what they call sort of navigation, wrap-around benefits. There is a particular strategy and Catholic Charities really does a good job on this of getting people up and out of poverty and attacking poverty at its root causes. There’s a lot of evidence on how best to do that.”

Initial Assessments Show Promise & Potential of Opportunity Zones

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By: AIF Staff

Last month at the Republican National Convention, South Carolina Senator Tim Scott laid out a clear vision for expanding economic opportunities so more Americans have the chance to realize their full potential. In recounting his upbringing and humble roots, Senator Scott remarked: “Our family went from cotton to Congress in one lifetime. And that’s why I believe the next American century can be better than the last. There are millions of families like mine across this nation, full of potential, seeking to live the American Dream.”

Senator Scott and his family are emblematic of the transformative change that can occur if Americans are simply given the chance to succeed. Policymakers have an important role to play in creating the conditions for transformations like these to occur and Senator Scott and former Speaker Paul Ryan have been leading by example in this regard.

As part of his speech, Senator Scott, who was instrumental in passing the Tax Cuts and Jobs Act, highlighted how Opportunity Zones in particular could yield tremendous benefits for distressed communities and produce positive changes for individuals. Scott characterized these 8,800 areas as:

“The first new, major effort to tackle poverty in a generation — Opportunity Zones. We put hard earned tax dollars back in people’s pockets by cutting their taxes, especially for single parent households like the one I grew up in – cutting single mother’s taxes 70% on average. President Trump supported these tax cuts for those single moms, and other working families, and signed these policies into law…and our nation is better off for it.”

Senator Scott’s optimism about Opportunity Zones is justified, particularly given some of the findings by the White House’s Council of Economic Advisers (CEA) in a report entitled: The Impact of Opportunity Zones: An Initial Assessment.

The White House’s report aimed to quantify the early benefits of Opportunity Zones to investors, residents, and the nation as a whole. It also provided additional details on the nearly 9,000 communities that have been designated to receive specific tax incentives and compared the impact of Opportunity Zones to other federal poverty-fighting programs. The whole report is accessible here.

The CEA noted that the Tax Cuts and Jobs Act provided a number of benefits to investors operating in Opportunity Zones. Specifically:

“The first benefit of investing in these funds is that the investor can defer paying taxes on capital gains rolled into OZs until potentially as late as 2026.  Second, when these taxes are paid, the investor may omit 10 percent (15 percent) of the original gain if the investment is held there for at least five (seven) years. Finally, and most important, any capital gains that accrue to investments in a Qualified Opportunity Fund are tax free if the investment is held for at least 10 years.”

Ultimately, the CEA found that these benefits have resulted in positive economic developments and the CEA’s findings underscore the potential power of Opportunity Zones to be forces of good for communities in need of revitalization and rejuvenation. Among the top takeaways, the CEA found that:

  • The tax changes in Opportunity Zones has resulted in significant investments in high-poverty areas, particularly from qualified investment funds. “The report estimates that Qualified Opportunity Funds raised $75 billion in private capital by the end of 2019, most of which would not have entered OZs without the incentive. This new capital represents 21 percent of total annual investment in OZs.”
  • The designation of Opportunity Zones is resulting in an increase in housing values, which benefit home-owners in these areas. The CEA estimated the 1.1% increase in housing values due the Opportunity Zone designation and the resulting investment provided an “estimated $11 billion in new wealth” for home-owners in these areas.
  • Based on the $75 billion in private capital raised, per the CEA’s projections, 1 million people could be lifted out of poverty and the investment in these Opportunity Zones could reduce poverty by 11%.

The goal of Opportunity Zones is to spur private-sector investment, ideally long-term investment, in areas that need it most and revitalize these communities from the ground-up. As these investments take hold, job creation should follow because, as the CEA noted, Opportunity Zones stimulate demand for labor and do not create a disincentive to work that can sometimes accompany other federal anti-poverty programs.

As the CEA concluded, its initial assessment of Opportunity Zones shows this model “can help spur economic recovery in thousands of distressed communities across the United States. It has the power to mobilize investors, engage State and local stakeholders, and improve the outlook for low-income communities—all with limited prescription from the Federal Government.”

While the CEA’s findings are no doubt encouraging to those who want to see the federal government achieve better results in its ongoing War on Poverty, a June 2020 Urban Institute report makes clear that more work must be done to ensure that Opportunity Zones achieve their full potential and truly revitalize communities.

In a report entitled, An Early Assessment of Opportunity Zones for Equitable Development Projects, the authors note that while investment is flowing to these communities, it is not yet translating to optimal levels of “equitable community development.”

Of particular importance, the Urban Institute’s report finds that Opportunity Zones are currently providing the “biggest benefits to projects with the highest returns, which are rarely aligned with equitable development.”

Though investment is coming into these distressed areas, projects that do not have an immediate return on investment and that are more geared toward community development are struggling to attract capital. The report noted: “OZs are helping spur the evolution of a new community development ecosystem, engaging both project developers and investors who have limited historical engagement in community development work. Despite this catalytic effect, however, we also see that many mission-oriented actors are struggling to access capital.”

As lawmakers consider modifications to the tax treatment of Opportunity Zones to ensure that communities are effectively developed, the creation of jobs and operating businesses must be front and center. Access to good-paying, stable jobs is vital to the long-term health and well-being of people living in these communities. As the report highlights, this is an area that needs to improve as Opportunity Zones germinate. The authors noted that “the vast majority of OZ capital appears to be flowing into real estate, not into operating businesses, because of various program design constraints and the undesirability of selling equity from both the business owners’ and the investors’ perspective.”

As Opportunity Zones develop, lawmakers, investors, and community leaders need to make sure that operating businesses are prioritized, as these specific types of investments – more so than real estate – will increase economic prospects for local residents and have a noticeable impact on their quality of life.

The Urban Institute report also recommended a number of other principles that policymakers should consider when viewing Opportunity Zones from a community-development perspective. The authors’ recommended policymakers pursue changes that:  

  • “Better support investment in small businesses.” As just mentioned, legislators and leaders in Opportunity Zones need to ensure that incentives are aligned to generate support and investment for small businesses as these types of businesses will be critical to revitalizing these communities in the long-run.   
  • “Size the incentive based on the impact.” If Opportunity Zones are going to support and stimulate community development, lawmakers should look at creating benefits for projects that have a deep community impact, rather than just a high return on investment. By prioritizing the impact of a project on the surrounding area, as opposed to just prioritizing a rate of return, Opportunity Zones could see an influx of investment dollars to a different set of organizations which help communities thrive.
  • “Broaden who can invest.” As Opportunity Zones mature, policymakers should consider expanding those who can benefit from the unique tax treatment in these areas. Currently, the universe of Opportunity Zone investors is somewhat limited to those with capital gains and as the authors’ note, creating a refundable tax credit might increase the pool of potential Opportunity Zone investors.
  • “Support mission-driven funds that are accountable to the community.” The authors also encourage policymakers to look at ways to encourage “equity investments in groups such as community development financial institutions (CDFIs), which have a long track record of making substantial investments in low-income communities.”

Senator Scott’s speech at the Republican National Convention made clear that expanding economic opportunities can change not just one person’s life, but an entire family’s life. If policymakers get laws right, reforms can improve the trajectory of entire communities.

The White House’s initial assessment of Opportunity Zones makes clear that even in the short-term, this law is making a tangible difference by spurring investment in distressed areas of the country, increasing home values, and reducing poverty. The Urban Institute’s analysis makes clear that more must be done for Opportunity Zones to live up to their true potential and to help communities grow and thrive.

The American Idea Foundation will continue to work with policymakers, investors, and stakeholders in communities to ensure that Opportunity Zones deliver on their promise and serve as a catalyst to allow more people to realize their version of the American Dream.

Catholic Charities Fort Worth Provides Proven Model for Helping Individuals Out of Poverty

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By: AIF Staff

The economic impact of COVID-19 is still reverberating across the country, but thus far, the pandemic has already caused tens of millions of hard-working Americans to be unemployed and a host of families to need basic services like food and shelter for the first time. As more and more Americans find themselves in economic distress, local organizations and civil society — which occupies the space between people and their government, have become more important than ever.

The American Idea Foundation believes that even as legislators in Washington, DC get bogged down in partisan fights and gridlock, there are people and organizations doing amazing work in communities around the country. At this time of hardship, policymakers should find inspiration and a sense of optimism from those individuals and groups that are helping their communities rebound and rebuild.

This stark contrast between lawmakers mired in ideological battles and organizations persevering for people in need has reaffirmed the American Idea Foundation’s mission and approach. The Foundation is motivated to identify these organizations that are assisting people in meaningful ways, to validate their efforts through the support of data and evidence, and to encourage leaders to view these problem-solvers as examples that could be replicated elsewhere.

One group that is making a huge impact in Texas is Catholic Charities Fort Worth. For decades, Catholic Charities Fort Worth has lifted families and individuals out of poverty using a comprehensive approach that treats people with the dignity and respect they deserve. Their case management model is relationship-based and Catholic Charities assists its clients through an array of support services ranging from navigating the green card process to vocational skills development; from reducing homelessness to securing employment. Most recently, Catholic Charities partnered with other local organizations in Fort Worth to provide food to families who were dealing with hunger and economic insecurity amid the COVID-19 pandemic.

American Idea Foundation President and former Speaker of the House Paul Ryan has long been a proponent of the approach that Catholic Charities Fort Worth takes to helping those in their community. In April 2018, he visited the organization to hear and see firsthand how they are making a difference. You can view Speaker Ryan’s thoughts here.

Singling out the daily difference that Catholic Charities Fort Worth is making, Speaker Ryan described their impact at the 2018 National Catholic Prayer Breakfast in Washington, DC, saying in part:

“We believe every person has a role and a voice in the community of concern and protection. No one is written off.
  
“The good news—the great news—is that there are new evangelizers living out this doctrine all around us. One of them is a woman named Heather Reynolds. Heather runs Catholic Charities Fort Worth.
 
“For years, I had been hearing about all the great work they were doing down there. Last month, I finally had the chance to see it firsthand. We sat down with some of their clients and case workers. That’s how they do everything: case management, a customized approach.
  
“One gentleman, his name was Chris. Chris grew up in a big family, and he watched his older siblings get into all kinds of trouble. His fate was the farm or the oil field. That was it. No way out.
  
“One day Chris told his wife, he wanted to go to nursing school. He reached out to Catholic Charities They helped him navigate the system, figure out how to make it work. Even after he graduated, they are still there for him and his family.
  
“What stands out for Chris is not any one thing Catholic Charities did to help him. It is, he said, ‘the feeling that you have an out, that you don’t have to settle.’”

Speaker Ryan went on to say: “Organizations like Catholic Charities are doing heroic work in our communities to fight poverty. This is among the keys to breaking the cycle and getting more people into good-paying jobs…. The case management system is the best possible system. It’s individual, it’s focused, it’s customized. The cookie-cutter, one-size-fits-all approach doesn’t work.”

Interviewing a client of Catholic Charities who attended Ryan’s visit, the North Texas Catholic provided some valuable perspective on the case-management approach:

“Tonita Burbage, a Catholic Charities client who attended the town hall, was laid off in 2014 and struggled with unemployment and underemployment for two years. She credited Catholic Charities’ assistance in helping her find a full-time job with benefits so she could support her two daughters without government assistance. The organization helped her with job training, developing a resume, and providing interview outfits. However, Burbage said what helped the most was ‘to have someone support everything that I want to do and having that open door where I could call anytime or email — to have someone listening.’”

The model used by Catholic Charities Fort Worth puts an emphasis on results, rather than on dollars spent. It’s a view that Speaker Ryan has long embraced, saying in a 2018 interview with Margaret Hoover on PBS’ Firing Line, that:

“[People] have defined success in the war on poverty based on how much money are you throwing at a problem. How many programs are you creating? How many people are on the federal programs? Not defining success based on results. Are there fewer people in poverty?

“I mean what ought to happen if we are successful, is fewer and fewer and fewer people are using the program because they aren’t poor anymore, and that is how we think success ought to be defined, so I think the metrics had been distorted for a long time, and now we finally can get to a conversation where what works is what we ought to do.”

One pilot program, undertaken by Catholic Charities Forth Worth and Notre Dame’s Lab for Economic Opportunities (where Ryan serves on the Board), called the Padua Project has taken this evidence-based approach and utilized a network of specialists to support individuals as they get back on their feet. As Notre Dame’s Lab for Economic Opportunities detailed in a Case Study evaluating the project:

“The Padua Pilot is a “supercharged” case management program developed by Catholic Charities Fort Worth to help families experiencing poverty achieve long-term self-sufficiency. The program combines wrap-around case management with low caseloads, detailed needs assessments, customized action plans, and financial assistance. Stakeholders commissioned the study to learn more about the program’s impact on outcomes such as income, employment, and health.”

As WAMU detailed in a 2016 article on the Padua Project, Catholic Charities Fort Worth “started small: 100 clients the first year. The goal? In three years, each person will be financially self-sufficient. Each person will have three months of savings. And each person will be off government assistance.”

Because of this individualized, hands-on, comprehensive approach, people like Keith Collins are benefitting. As Cynthia Allen summarized in a Fort Worth Star Telegram op-ed:

“According to CCFW, participants in the Padua Pilot on average increased their liquid assets by over $5,000, reduced their debt by over $2,000, and experienced a 23 percent increase in full-time employment. In two years’ time, 73 percent of those who entered the program not housed were stably housed and working toward self-sufficiency, and those who came into case management stably housed had a 36 percent increase in full-time work and a 34 percent increase in monthly earnings.”

As Speaker Ryan said when working on reforms to federal poverty-fighting programs: “This is about saving souls, not dollars. The federal government should monitor supply lines, provide resources, but they shouldn’t micro-manage the front lines in fighting poverty. The people and the groups on the ground, eye-to-eye, soul-to-soul, person-to-person, they are the ones best equipped to solve these problems and help people.” 

Catholic Charities Fort Worth is one of these groups, helping people eye-to-eye and soul-to-soul and having a profound impact as they do. Their Padua Project provides a prime example of how the case management model can work and policymakers would be smart to take note of the lives that they are changing on a daily basis.