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U.S. Republican Paul Ryan wants choice in delivering aid to poor

By David Lawder

WASHINGTON (Reuters) - Republican U.S. Representative Paul Ryan proposed a plan to help poor Americans on Thursday that would allow charities, community groups and even for-profit firms to compete with the government for federal money to fight poverty.

The plan from Ryan, a potential Republican presidential contender in 2016, would allow states to replace 11 programs ranging from food stamps to housing vouchers with "opportunity grants" to tailor aid to individual needs.

That would shift the federal government's anti-poverty role largely to one of vetting state programs to distribute aid, and they would have to give the poor a choice of providers.

"There wouldn't just be a federal agency or a state agency," said Ryan, chairman of the House of Representatives Budget Committee. "Instead, they could choose from a list of certified providers. We're talking non-profits, or for-profits, or even community groups unique to your neighborhood."

Ryan's plan comes at a time when Democrats have made growing income inequality a major campaign issue before November congressional elections, promoting proposals such as raising the federal minimum wage. The Republican vice presidential candidate in 2012, Ryan is best known for his budget blueprints marked by deep domestic spending cuts. But this time, he said his "discussion draft" would keep overall social safety net funding unchanged.

Should the Wisconsin congressman seek the Republican presidential nomination in two years, his ideas are likely to find their way into a campaign platform.

And they share some key principles with those of a potential rival, Senator Marco Rubio, who also has proposed shifting most federal anti-poverty funds to state grants.

Illustrating his plan in a speech at the American Enterprise Institute, Ryan said a 24-year-old single mother of two with a high school education and dreams of one day being a teacher could go to a local social services provider for help. Instead of applying for food stamps, housing vouchers and welfare checks, she would meet with a case manager and draft an "opportunity plan" to achieve her goals, targeting money where it is needed most, such as transportation or child-care costs.

The catch: she would have to sign a contract and meet certain benchmarks for success, such as learning new skills or seeking work. Failure would mean a cut in aid while exceeding expectations would earn her a bonus.

There would be a time limit on assistance, and Ryan said the plan would need to show strong evidence of positive outcomes and poverty reduction, arguing such data is lacking in current programs.

House Democrats charged the ideas could not be taken seriously because Ryan's budgets have consistently prescribed trillions of dollars in cuts to safety net programs over 10 years to eliminate deficits - a goal they say he is not likely to give up.

Representative Chris Van Hollen, the top Democrat on the House Budget Committee, called the plan a "gussied-up" version of a block grant to turn federal programs over to states.

"Once you've turned something into a block grant, it makes it a lot easier to cut," Van Hollen told reporters.

Ryan's plan contains some ideas that Democrats have advocated, including expanding the Earned Income Tax Credit for childless earners, although they differ in how to pay for this. The credit provides a tax refund check to the working poor to supplement their incomes.

But Democrats chided Ryan for supporting legislation that would allow child tax credits to expire for millions of working poor families while increasing eligibility for those earning more than $150,000 a year. A House floor vote on the bill was scheduled on Friday.

(Reporting by David Lawder; Editing by Doina Chiacu, Bill Trott, Chizu Nomiyama and Lisa Shumaker)

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