New Technology Can Help Get Aid to Low-Income Americans: UMD Expert

Public Policy's Besharov Testifies on Hill on 'Tantalizing' Promise

COLLEGE PARK, Md. - Since 2000, federal and state governments have dramatically increased the amount of food assistance provided to low-income Americans, partly because eligibility rules are being interpreted differently around the country, says Douglas J. Besharov, a poverty expert at the University of Maryland School of Public Policy, in testimony to a U.S. House of Representatives subcommittee recently.

While Americans have different opinions about whether the increase in aid is a necessary step, especially during the recent recession, Besharov says using technology along the lines of a program being tested in the United Kingdom, could help ensure that eligibility rules are "not the result of piecemeal, unexamined decisions" as can be the case in the United States now.

"Senior policy makers should have more control over such significant benefit allocation decisions," Besharov argues in prepared testimony for the U.S. House Ways and Means Human Resources Subcommittee. "The use of modern technology could enable us to do better."

Technology could reduce the temptation to stretch eligibility rules, and it could be used to get a much more comprehensive look at the budget and policy impact of changes to programs, he adds.

Besharov, who directs the Welfare Reform Academy and the Center for International Policy Exchanges, has studied the development of a pilot program in the United Kingdom that he says opens "tantalizing" possibilities if something similar could be developed in the United States. Called "Universal Credit," the program is designed to simplify income reporting, which determines a person's eligibility for assistance.

Besharov says it could also help address unintended problems plaguing the U.S. system, such as complications in the rules that actually create disincentives for low-income Americans to work. For example, under the system now, a working mother who increases her hours at a job from part-time to full-time, might still make just $13,000 a year - and, because her benefits are tied to her income, she would see little improvement to her financial situation because her new income would trigger a disproportionate decrease in her government assistance.

"As the UK's new Universal Credit program illustrates, modern technology holds the key to untangling and rationalizing marginal tax rates - so that they are less of an obstacle to encouraging recipients to work," Besharov says.

EXCERPTS FROM BESHAROV'S TESTIMONY

• Many see these expansions [in government assistance] as long overdue increases in aid to low-income Americans, but I do not think that is the point....Senior policy makers should have more control over such significant benefit allocation decisions. The use of modern technology could enable us to do better.
  
• First, a fully automated system of income reporting and eligibility calculation would reduce (although not eliminate) the discretion that "street-level bureaucrats" have to stretch the rules. Second, such automated systems contain the program modeling tools that would have enabled us to predict the individual and collective impact of the various legislative and administrative changes that so expanded enrollment on programs like SNAP, WIC, and SSDI/SSI.
  
• The UK's "Universal Credit"...illustrates the promise of harnessing technology to eligibility and award-setting determinations.... The model, of course, is not directly transplantable to the much larger and diverse U.S. economy, but the possibilities opened by this kind of technology are tantalizing.
  
• A not-so-secondary benefit of the "Universal Credit" is that it will combine tax credits, social assistance (including benefits for the low-income unemployed), disability benefits, and housing credits into a single benefit. This will create a single phase-out rate for benefits, reduce the high marginal tax rate for low-income workers, and eliminate the duplication and complexity of previously existing benefit programs.
  
• The U.S. has a similar problem with high marginal tax rates under many means-tested government benefits (especially as they interact) - which create substantial disincentives for low-income Americans to work. SSI recipients, for example, have their first $65 in earnings disregarded but then lose 50 cents in benefits for each additional dollar earned until their earnings exceed the maximum allowed amount.
  
• [According to] Urban Institute researchers, if a mother working 20 hours a week increased her hours to 35 hours a week (to an annual income of around $13,000), her income would increase by only 20 percent because of corresponding declines in government benefits.
  
• As the UK's new Universal Credit program illustrates, modern technology holds the key to untangling and rationalizing marginal tax rates - so that they are less of an obstacle to encouraging recipients to work.

Besharov's complete testimony is available online: http://ter.ps/139

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