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TheStreet Open House

Paul Ryan’s Entitlement Reforms Offer an Elixir for the Poor

NEW YORK (TheStreet) -- Poverty is as endemic today as it was when President Lyndon Johnson inaugurated the War on Poverty, and Rep. Paul Ryan (R-Wi.) is offering sensible proposals to change things for the better.

He would offer states block grants to create programs that both directly aid the poor and remove disincentives to work and create jobs. That would reduce dependence on federal handouts and launch a frontal assault on the declining work ethic and unemployment in America.

During the Great Recession, unemployment peaked at 10%. It has since fallen to 6.1%, but virtually all that progress has been accomplished by encouraging more people to quit looking for a job and hence not be counted in the jobless data.

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The burden of a depressed labor market and stagnant wages has fallen most heavily on workers at the bottom -- those earning the minimum wage or a bit more.

Long ago, liberals gave up on creating an economy that puts less skilled Americans into decent paying jobs. Instead, they view poverty and the alleged exploitation of the working poor as an endemic condition of capitalism that must be corrected by government intervention.

For example, the government requires businesses to pay minimum wages higher than worker productivity justifies and ladles on all kinds of means-tested social programs.

Food stamps, cash-welfare, rent and mortgage assistance and the rest generally phase down as family incomes rise, and together impose an effective marginal tax rate up to 40% to 50% as the working poor pull themselves up and earn more money.

And many programs encourage single mothers and one partner in two-adult households not to work, or work only part time, rather than lose benefits.

Undocumented immigrants have much more difficulty qualifying for the full range of benefits and have more incentive to take lower-paying jobs and work long hours.

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