Paul Ryan's Trojan Horse for the Welfare State

Paul Ryan

President Donald Trump has successfully turned the tide on the federal government’s “regulatory industry”, with more than 860 pending regulations either terminated or suspended. Even though this is only a scratch on the regulatory surface, it will have noticeable economic effects.

His fellow Republicans in Congress, however, have not been nearly as helpful in reducing the burden of government. After their Obamacare debacle, the best they seem to be able to do on taxes is a token reform designed primarily to be passed, not to improve the economy.

Since the welfare state is even costlier than the federal government’s body of regulations, the GOP should prioritize rolling back the welfare state. Unfortunately, it looks like they are moving in the opposite direction. Their ambitions are revealed in a seemingly inconspicuous bill, HR 4174.

Superficially, HR 4174, sponsored by House Speaker Paul Ryan (R-WI), improves the federal government’s production and maintenance of statistical databases. In reality, HR 4174 begins the construction of the statistical infrastructure that the federal government would need if it were to build big, new entitlement programs.

In a manner of speaking, HR 4174 is the Trojan horse for single-payer medical care, general income security (we know it as "paid family leave"), and universal child care.

The key term in HR 4174 is “evidence-based policy making.” By scrapping duplicative statistical products, the bill seems to be an efficiency-improving measure. In reality, it is the first step toward large collection of new “evidence” for entirely new “policy making” purposes.

The bill begins this expansion, creating the foundation for a new, federal statistical agency: the National Secure Data Service (NSDS).

HR 4174 does not specifically mention this agency, but its policy foundation sure does, a report from the Commission on Evidence-Based Policy Making. There, the purpose behind HR 4174 is laid out in detail. On pages two and three the report explains exactly how Congress should implement the NSDS. HR 4174 carefully follows the report’s implementation manual.

But what is wrong with creating a one-stop shop for the federal government’s statistics production and database management?

Even if we disregard the new statistical products that the NSDS is supposed to produce and maintain (such as detailed household income data), HR 4174 goes well beyond what is needed for its purported purpose. On the one hand, the federal government’s production of statistics could use some improvement, primarily in the maintenance and update of time-series data. On the other hand, between the Bureau of Economic Analysis, the Bureau of Labor Statistics, the Census Bureau, the Office of Management and Budget, the Internal Revenue Service, and other agencies, our government already has an abundance of statistical products.

In short: there is no need for a massive, new statistical agency. For research or for improved “evidence-based policy making,” all the federal government needs is a little bit more money toward faster updates and improved configurability of existing databases.

This should have been clear to frugally minded members of Congress, yet there has been no debate over this aspect of HR 4174. This in itself is puzzling, until the deeper purpose of the bill is considered. The commission report explains how the new statistical agency is going to expand government data collection:

Ensure state-collected quarterly earnings data are available for statistical purposes, including to support the many evidence-building activities for which earnings are an important outcome. Make additional state-collected data about Federal programs available for evidence building. Where appropriate, states that administer programs with substantial Federal investment should in return provide the data necessary for evidence building.

It would be easy to misread this purpose paragraph as saying that the government needs more data for entitlement programs where “earnings” are an “outcome.” That, however, is not what the paragraph says. Furthermore, there is no need for additional earnings data as evidence for existing entitlement programs, such as Medicaid, SNAP, WIC, or TANF. Congress can improve maintenance and reduce the cost of those programs simply by more vigorous enforcement of existing eligibility criteria.

So what is this new data going to be used for? The formulation “evidence-building activities for which earnings are an important outcome” says that the NSDS is going to engage in data collection activities about income (earnings); the “outcome” is a new federal database on income.

Here is where it gets really interesting. The federal government already produces statistics on personal income. Updated quarterly or even monthly, this data on wages and salaries, dividends, and rent, etc., already tells us how much Americans make by what state they live in and what industries they work in.

The one income-statistics product that the federal government does not have, on a continuously updated basis, is household income. The IRS produces such data, but in aggregate form and with a lag of a couple of years.

What use could the federal government possibly have for a detailed, currently updated database over household earnings?

The answer is simple: not-yet-created entitlement programs for which we qualify based on our incomes. To see if we are eligible for a general income-security program — paid family leave on steroids — the federal government needs to be able to tap into a database where our income from the last quarter is readily available. To see if we qualify for subsidized rates in a federally funded and run child-care program, a government agency needs instant information about our incomes.

Depending on design, the same data is needed for a single-payer medical system. 

So far, HR 4174 has passed out of the House of Representatives and is currently dwelling in the Homeland Security and Government Affairs Committee in the Senate. As soon as it makes it through the senatorial grinds, it will very likely be signed into law by Trump.

How many of the people involved in passing this bill to the president’s desk are aware of what they are about to create?

Image: European External Action Service.

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