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Edward L. Glaeser

Gaffe gives Romney chance to redesign safety net

chris carlson/associated press

LAST WEEK, as he attempted to emphasize his focus on middle-class America, Mitt Romney uttered these unfortunate words: “I’m not concerned about the very poor.’’ That statement may have nicked Romney’s aura of inevitability and contributed to his triple drubbing Tuesday by Rick Santorum - whom no less than Bono has described as “a defender of the most vulnerable.’’

In the awkward aftermath of his comments, Romney insisted that if the safety net “needs repair, I’ll fix it.’’ But he has said next to nothing about what that might entail. It’s entirely possible to make the safety net more effective and less expensive - by consolidating programs, improving incentives, and rethinking our current combination of cash support and in-kind transfers - and it’s high time for Romney to articulate a Republican master plan to do so.

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Time and again, Republican presidential candidates have argued that fiscal probity is not mere heartlessness. The last President Bush advocated “compassionate conservatism,’’ and his father saw “a thousand points of light’’ created by socially active community organizations. Richard Nixon responded to Johnson’s War on Poverty by emphasizing markets and a new federalism. Under Nixon, the nation began to move toward housing vouchers, an alternative to vast public housing complexes. This shift in emphasis was implemented by Romney’s own father, the first Republican secretary of the Department of Housing and Urban Development (HUD).

Even a cursory application of Romney’s well-honed managerial intellect would tell him that, today, our anti-poverty programs are spread across too many distinct departments, with too much bureaucracy and too little coordination. The Temporary Aid for Needy Families program, which cost $17 billion in 2010, resides at Health and Human Services. So does Medicaid, which cost $290 billion. At HUD, we spent $18 billion dollars on tenant housing vouchers. At the Department of Agriculture, we spent about $70 billion on Supplemental Nutrition Assistance Program - food stamps - and another $17 billion on child nutrition. The Internal Revenue Service, meanwhile, oversees the Earned Income Tax Credit or EITC.

While many current programs, including the EITC, represent a tremendous improvement over past ones, the efficiency expert deep in Romney’s psyche should question the duplication of effort inherent in these separate bureaucracies. Republicans and Democrats share a common social welfare goal: improving the lives of poorer Americans without inducing generations of poverty. The problem and the level of resources are reasonably well-defined, which makes this a perfect job for a former management consultant, who should be asking about coordination and seeking to cut redundant public employees.

The consultant-candidate should start by wondering whether we now offer the right mix of different kinds of support. Economics 101 typically argues against in-kind transfers, like food stamps, since recipients would presumably prefer to make their own choices. Then again, if food stamps and housing vouchers ensure that kids aren’t penalized for parents’ bad choices, then perhaps targeted aid makes sense. In fact, the answers to such questions are knowable, thanks to data from randomized trials. Romney of all candidates should be eager to adjust the safety net to take account of hard information. If we combined now-separate programs, we could fit the assistance to the situation, providing more housing assistance in high-cost areas and more cash support elsewhere.

Welfare reform in 1996 and the Earned Income Tax Credit fought against unfortunate incentives - to work less and have out-of-wedlock children - but consolidation of programs would also allow us to think coherently about incentives system-wide. But Romney has offered no such broad vision. Even his more specific proposal is incomplete; he would turn Medicaid into a block grant, which would contain its costs - but doesn’t explain how he would make the program better.

He should show that he cares about the very poor, by attacking the status quo.

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In the GOP primary campaign, there may be less interest in improving the social safety net than in cutting it back. But in the general-election, the GOP nominee will have to pivot toward the center, and for Romney a reputation for being wealthy and heartless will be, at the least, quite dangerous politically.

Romney should show that he cares about the very poor, by attacking the status quo. He should follow his father’s path by offering a safety net that does more with less, by increasing flexibility, reducing bureaucracy, and creating better incentives for healthy families.

Edward L. Glaeser, a professor of economics at Harvard University, is author of “The Triumph of the City.’’ His column appears regularly in the Globe.
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