November 23, 2014

How a GOP Senate Can Help the Poor

Veronique de Rugy

George Gibbs Chair in Political Economy
Summary

Republicans have a rare opportunity to implement policies that are truly compassionate and transcend toxic identity politics. Whether they will seize the moment, or play the same old politics as usual, remains to be seen.

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Right now, the Republicans are riding high due. But if they want to stay in power and help Americans in the process, they need to change their priorities.

Emboldened and energized by their triumphant midterm victories, Republicans are eager to repeat their winning formula in the next presidential election. They have one big problem: Republican midterm gains had more to do with a sagging Democrat brand than an attractive GOP platform. Voters are simply tired of the left’s divisive political tactics, like the mythical “War on women,” cynical race-baiting, and indecent partisanship. Exit polls suggest that Republicans made surprising inroads with rural, young, and Hispanic voters who were hurt or disappointed by the president.

But Republicans can’t sustainably coast on merely being slightly less terrible than the Democrats for too long. To expand their relative appeal, the GOP should embrace compassionate issues that help Americans of all demographics and interest groups who fall through the cracks of Washington’s bad policies.

First, Republicans should become the champions of liberalizing our education system. Education is a major key to income mobility. Unfortunately, our outdated, rigid, and centralized public school system keeps too many American children stuck in poorly-performing schools that hinder their future opportunities. The traditional “solution” of throwing money at the problem simply isn’t cutting it.

And it isn’t for lack of funding. Over the last fifty years, the federal government spent an astounding $2 trillion on education. Total elementary and secondary education spending per pupil has tripled in real terms, from an average of $56,903 in 1970 to $164,426 in 2010. At the same time, the number of students per teacher in U.S. public schools fell throughout the 1990s until 2012. But these dramatic increases in spending and teachers have not yielded a notable change in overall student outcomes. Data provided by education analyst Andrew Coulson shows that the National Assessment of Educational Progress scores of 17-year-olds in reading, math, and science have stagnated while per pupil spending and employment growth skyrocketed.

Why have educational outcomes so stubbornly flat-lined in the face of this wealth of educational resources? Simple: our educational system provides few incentives for schools to improve. School districts are still based largely on residency; students remain tied to the neighborhood school regardless of how bad its performance may be. U.S. schools will receive funding and “customers” regardless of their merits (or lack thereof).

This structure is particularly destructive for children in low-income families. Privileged children tend to live in higher-performing school districts. If parents are unhappy with their assigned school, they can send their children to private schools or choose move to a better district—which provides another incentive for their district schools to compete to retain students. Less fortunate parents should not be deprived of the ability to remove their children from poor performing schools simply because they lack the resources of their wealthier neighbors.

Republicans should push for reforms to tie educational spending to students rather than schools. The school choice movement formed around these ideas is helping a growing number of low-income children secure access to a high-quality education. Improving our education system by applying successfully-tested school choice reforms is good for everyone, regardless of creed, color, or gender but it is particularly good for low income kids. Republicans should get behind it.

Second, Republicans should use their political capital to end the War on Drugs once and for all. Marijuana legalization initiatives were incredibly successful in the midterm election, demonstrating that the pro-legalization trend is well on its way. Republicans should naturally oppose Big Government policies that dictate what individuals can or cannot choose to consume: whether that is sodas, salt, or sativa. What’s more, the decades-long War on Drugs has failed miserably. Despite spending over $1 trillion dollars to stop the stoner scourge, overall drug consumption has barely changed, some drug prices are falling due to technology and increasing supply, and drug addiction has gone up while seeking treatment has become more risky.

In addition, incarceration rates for drug offenses have skyrocketed since the 1980’s due to mandatory sentencing laws, which rigidly determine who goes to prison and for how long. Nonviolent drug offenders no account for about one-fourth of all inmates in the United States, up from less than 10 percent in 1980. It destroys families and leaves children to be raised in single-family households. This is particular true for low-income African American families. Despite generally higher usage rates among white Americans, African Americans are three times more likely to be arrested for possession.

Third, Republicans should commit to compassion in action rather than compassion in appearance. While it is tempting to embrace a federal minimum wage increase from a position of compassion, economists have long known that imposing legal price floors tends to create a surplus in markets. The same is true in the labor market.

Research by economists David Neumark of the University of California, Irvine, William Wascher of the Federal Reserve Board, and Mark Schweitzer of the Cleveland Fed shows that minimum wage policies can increase poverty (PDF), so poverty reduction certainly shouldn’t be expected as a benefit of raising the minimum wage. That’s because while a minimum wage increase raises the wages of some people, it also reduces employment of young, low-skilled people. The Congressional Budget Office (CBO) for instance, calculated that an increase from its current $7.25 level to $10.10 per hour would cost about 500,000 jobs. This is likely a lowball number but it has the merit to illustrate the tradeoff that raising the minimum wage requires.

Additionally, the people whose wages are lifted by the minimum wage aren’t all at the lowest end of the income spectrum. As Nick Gillespie wrote over at Time, “About 50 percent of all people earning the federal minimum wage live in households where total income is $40,000 or more. In fact, about 14 percent of minimum wage earners live in households that bring in six figures or more a year.” A better way to help the poor is to just give them cold-hard cash—and stop lecturing them about how to spend their money!

Republicans have a rare opportunity to implement policies that are truly compassionate and transcend toxic identity politics. Whether they will seize the moment, or play the same old politics as usual, remains to be seen.