Debt ceiling bill takes the wrong path to fiscal responsibility
Plus: Getting community-based care to veterans; improving outcomes for foster children; and how to fix the Low-Income Housing Tax Credit
Will adding work requirements to welfare programs make progress on the national debt? With the U.S. Treasury Department cautioning that the country could default if the debt ceiling isn’t raised by June 1, Congress and the White House are debating what—if any—limits on spending should be part of raising the cap on how much debt the federal government is allowed to accumulate. One proposal from congressional Republicans would preserve middle-class entitlements like Social Security and Medicare while, among other things, adding new and tougher work requirements for Medicaid and food stamps. FREOPP Senior Fellow Michael Tanner assesses that part of the GOP bill and notes that work requirements may be valuable for encouraging self-sufficiency and reducing the work disincentive built into most welfare programs, but they can be cumbersome and costly to enforce. There is also limited evidence that they increase employment or save much money. He concludes that, while reducing the national debt and reforming welfare are both important topics for congressional action, trying to shoehorn them together is unlikely to achieve any meaningful goal.
A step in the right direction for American veterans: Through the Veterans Community Care Program (VCCP), eligible veterans can receive care from health care providers in their local communities that meet certain requirements. The program especially benefits veterans in rural areas and has transformed the Veterans Health Administration (VHA), reducing strain on Veterans Affairs Medical Centers nationwide. But, as FREOPP Visiting Fellow Grant Rigney describes, the program could do more to provide veterans with the health care choices they deserve. Lawmakers can improve options for veterans by expanding the program, establishing consistent wait time metrics, and adjusting eligibility requirements so that more veterans can receive care in the community if they choose.
But is the VCCP driving increased VHA costs? Grant runs the numbers and argues that getting vets the community-based care they want is actually substantially less expensive than the cost of providing care directly through the VHA. A better explanation for rising costs are the VA’s many high-cost facilities that should be shut down and the increases in health care utilization by veterans—despite a 14 percent decline in their number since 2008.
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Foster children are struggling to graduate high school: According to U.S. Department of Education data, foster children are struggling to graduate from high school on time, with fewer than half graduating in four years in many states. This is a shameful failure of some of the most at-risk children in society. FREOPP Senior Fellow Dan Lips reviews the efforts in states that are working to improve outcomes and offers policy recommendations to help more foster children graduate high school and prosper. His suggestions include expanding education and training vouchers for younger children in foster care; opening and expanding charter schools that focus on serving foster children; and providing scholarships for extra assistance in tutoring, summer school, and other outside-of-school learning options.
The unintended consequences of the Low-Income Housing Tax Credit: The Low-Income Housing Tax Credit (LIHTC) is the largest affordable housing program in the U.S., designed to encourage private investment in housing for low-income families. The program is supposed to create rental housing units that lease for less than market prices. In practice, it fuels housing inflation, lacks measurable benchmarks for efficiency and accountability, and is so complex that the subsidies are consumed by process and transaction costs. As Americans continue to grapple with rising prices, preserving affordable housing options is increasingly important. FREOPP Research Fellow Roger Valdez recommends that policymakers improve the LIHTC’s ability to do that by simplifying the program and requiring reduced regulation and increased transparency. He also offers two straightforward policy alternatives: Make Section 8 housing vouchers more like cash, and consolidate housing funding to reduce overhead and increase accountability.
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