Marco Rubio: Flex Fund Half Right

First, the part that Marco Rubio gets right, the Flex Fund. Announced in a speech, Rubio’s Flex Fund plan will be “the most fundamental change to how the federal government fights poverty and encourages income mobility since President Johnson first conceived of the War on Poverty fifty years ago.” Under Flex Fund, the federal government would place all existing federal anti-poverty funding into one agency, and transfer the money to the states so they could design and fund initiatives more creatively than the federal government. Not only are the circumstances of poverty unique to regions and require unique responses, but also the states have shown themselves much more able to run programs efficiently and effectively without the interference of politics.

I will take a pass on the second element of Rubio’s plan, that of replacing the earned income tax credit with a wage subsidy. As much as I agree that our society, our nation, and our economy depend on the health of our businesses and corporations and the talented individuals who run them, I still am leery of using income taxes of American taxpayers to fund a program so that corporations can lower their wages, in effect, having taxpayers subsidize corporations.

But on Flex Fund, I’m all in, as long as transfers to states come with no strings attached. Marco Rubio tells a moving story of his parents and the hardships they endured in a country which was not amenable to individuals reaching their potential and achieving success, how they migrated to America with nothing and how through sacrifice and hard work improved their lives and passed on an improved standard of living and opportunities for success to their children. It is our freedom and our adherence to the American free enterprise system which makes this possible.

Since the War on Poverty began the breakdown of our the American free enterprise system, and a breakdown of our society and culture leading to more out-of-wedlock births and one-parent families, social mobility has declined. The key to improving the lives of the worthy in America is, then, to strengthen the American free enterprise system by getting government out of the way, and strengthen society and culture by having government promote values which lead to marriage for those who can have children.

Here’s where the no-strings-attached part of the Flex Fund comes in. SInce we know that an improving economy improves the circumstances of all citizens able to take advantage of our great system, and we know that an improving economy comes with a free enterprise system increasingly free of regulations and increasingly in the hands of the capable who make it work, the best use of anti-poverty money in many states will be in lowering taxes for the business leaders and their corporations so they can be freed from restraint and do what they do best: improve the economy for all Americans.

As long as the Flex Fund has the flexibility to spend where spending will most help the poor, likely on providing more incentives for economic leaders to start new businesses free of onerous taxes and regulations, I think it will be a winner.