How Many More Low-Income Households Will Be Left in the Cold?

November 26, 2013

On Sunday, a blast of cold air arrived in Washington, D.C. With the gusting winds, the feel temperature around mid-day was 21 degrees. So much for my plans to cut down the withered vines and sweep up the mounded leaves in our backyard.

Instead, I spent part of the afternoon cleaning out my inbox, where I found a press release that made me feel at once privileged and newly distressed about the hardships that sequestration is causing.

About 300,000 fewer low-income households received help with their home heating and cooling costs last fiscal year, reports the National Energy Assistance Directors’ Association, which represents the state directors of the federally-funded Low Income Home Energy Assistance Program.

This was a direct result of sequestration, NEADA says. But the cut came on top of other cuts that began in Fiscal Year 2010. The cumulative losses have reduced the number of households served by 17%, or 1.4 million.

At the same time, the average grant households received shrank from $520 to $406. And even during the baseline period, the average grant didn’t cover estimated heating costs.

The shortfall was greatest — and has remained so — for households that use heating oil. These are largely households in the Northeast, where, as you know, it can get bitter cold.

But even households like ours, which use natural gas, would have had to come up with about 40% of their heating costs last winter, assuming the estimated seasonal cost and average grant apply.

Prospects for the winter season that seems to have begun are worse. Home heating costs are expected to rise by an average of 6%, due mainly to a 13% spike for households using natural gas.

This translates into a further purchasing power loss for LIHEAP — from 52.5% of the average household’s home heating costs in 2010-11 to a projected 41.5%.

And this doesn’t factor in any additional funding cut for the current fiscal year. NEADA seems to think that another cut will occur unless Congress “takes action to reverse” sequestration — by which I assume it means the spending caps imposed by the Budget Control Act.

In point of fact, non-defense discretionary programs like LIHEAP, i.e. those that depend on annual appropriations, will collectively meet their Fiscal Year 2014 spending cap without further cuts because Congress tinkered with the BCA to give defense some one-year protection.

But that doesn’t mean there’s no reason to worry. Republicans generally — and some Democrats — want to shield the Pentagon from the $20 billion cut it faces.

At the same time, some leading Republicans insist that the total discretionary spending level the BCA imposes must remain the same. That’s not possible, of course, unless that $20 billion is shifted over to the non-defense side of the ledger.

It’s doubtful we’ll see this sort of deal. But a deal that preserves the existing NDD cap would still leave LIHEAP vulnerable because Congress could decide to trim it in order to boost spending on other programs, as the President’s proposed budget did.

Even if Congress can’t agree on anything more than a continuing resolution, more low-income households could be left without home energy assistance because, as the NEADA press release indicates, level funding won’t be enough to help even as many households as were helped last winter — unless grants are further reduced.

No (or less) energy assistance could mean no heat this winter — perhaps no indoor lighting or ability to cook either. The loss would affect some of the most vulnerable people in the country, according to a survey NEADA conducted several years ago.

Seventy-two percent of the households served then had a family member with a serious medical condition. Of these, 26% relied on medical equipment that used electricity. Even with a LIHEAP grant — or perhaps before they received it — 19% got sick because their homes were too cold.

Merely restoring LIHEAP to its Fiscal 2010 level would leave more than 99.8% of the estimated budget for other purposes.*

Something I would hope members of Congress think about as they sit snug and warm in their homes this weekend.

* This figure reflects the result yielded by the Center for Economic and Policy Research responsible budget calculator.


Drilling Down on the Debt Ceiling Crisis

October 15, 2013

I’ve been trying (unsuccessfully) to ignore the steady stream of reports and commentary on the debt ceiling crisis. And I’d no intention of writing about it until I noted a disturbing shift in the conversation.

I’m not talking here about the statements welcoming a default from a couple of the House Tea Party types — Congressman Ted Yoho (R-FL), for example, who claims “it would bring stability to world markets.”

My concern is rather that some are saying the crisis isn’t all that bad because the government could still pay bondholders — and thus, there’d be no default.

Moody’s Investor Services gave this narrow definition credibility with a widely-reported memo that implicitly defined “default” as only failure to pay interest and principal on publicly-held debt.

This is something, it said, the Treasury Department could clearly do, even after it had exhausted the time it’s been buying through extraordinary measures.

Needless to say, right-wing sources seized on the memo to debunk Treasury’s warnings about the macroeconomic impacts of even a prospective default, e.g., a jittery stock market, higher borrowing costs.

It’s all a not-to-worry, said the Heritage Foundation, among others, because Treasury will take in enough revenues to satisfy its bond obligations and most of the government’s “non-debt obligations” over the course of the year.

In the meantime, it can “prioritize payments,” i.e., defer paying those “non-debt obligations” in order to keep current with bond interest and repayment of principal on dates due.

Some Republicans in Congress have been making this argument for awhile now. Others of various political persuasions have said it’s not that simple.

Treasury may not have the legal authority to pick and choose which bills to pay. Besides, its payment systems aren’t set up to prioritize, as its Inspector General reported to the top Republican on the Senate Finance Committee during the run-up to the last debt ceiling crisis.

Now we’re hearing more about what would happen if Treasury did prioritize — virtually all of it that I’ve seen on a macroeconomic scale.

Goldman Sachs economists estimated the impacts of the required pullback in spending at 4.2% less economic growth over the course of a year — enough to send us back into a recession.

New York Times columnist Paul Krugman argues that we could be looking at a 10% decline — and a 5% rise in the unemployment rate — because the government would have to make more spending cuts to offset the loss of tax revenues and rise in safety net spending that always occur during a downturn.

Still, we’re told, Treasury could perhaps postpone some payments — not interest on the debt, of course, but other big-ticket obligations, e.g., reimbursements to Medicare and Medicaid providers, Social Security and food stamp benefits, veterans benefits and military pay.

Wonkblogger Ezra Klein borrows a table from the Bipartisan Policy Center to show what that could look like over the short-term.

We see that the last round of Social Security payments for October would be two days late. The next round nearly two weeks late. And then …?

I single these out because a post by Dean Baker at the Center for Economic and Policy Research evoked a down-to-earth, personal response of the kind we haven’t heard enough of.

Baker was essentially pooh-poohing the alarm bells about higher interest rates. “Hitting the debt ceiling would undoubtedly be bad news, ” he said, “but an earth-shaking disaster is pretty unlikely. Everyone will get their money, with interest, even if it is a big late.”

Which prompted the following: “I don’t know about you, but I pretty much live from Social Security check to the next Social Security check, and toward the end of the month I go to cheaper brands of cat food (not from steak to chicken like those plutocrats advocating the Great Betrayal). To me, ‘a little bit late’ means ‘a little big hungry.’”

I suppose food stamp recipients, whose benefits could also be put into the pipeline to conserve cash for bond interest, would say the same. Likewise some veterans and families of active military servicemembers.

And what would happen to people who need health care from Medicare and Medicaid providers who’ve been told their reimbursements are on hold is anybody’s guess. We have a tiny window into the prospects here in the District of Columbia, where Medicaid payments are on hold until Congress approves our budget.

Sure, all these de-prioritized payments could have large-scale economic impacts — and these would surely have personal consequences. But let’s not forget the hardships that would set in swiftly for those who rely on social insurance and safety net benefits.

I understand that these concerns may seem irrelevant now, what with the deal the Senate leaders are reportedly putting the final touches on. But even if House Speaker John Boehner lets it pass without a majority of his caucus in favor (big if), we’ll be right back in the same place in February.

Everyday ordinary people pawns in political brinkmanship games — and under the radar of most economic prognosticators too.


Sequester Scarier Than Washington Post Claims

July 8, 2013

A catchy headline in a late-June issue of the Washington Post. “They said the sequester would be scary. Mostly they were wrong.”

“They” are the Obama administration, which, as the reporters say, “issued specific — and alarming — predictions” about what would happen when the across-the-board cuts began.

The article cites a half dozen, then says, “But none of these happened.” The casual reader would surely infer that the administration blew the whole sequester thing out of proportion.

In fact, it’s hard to read the piece as saying anything other than the sequester isn’t all that bad, though it does casually acknowledge “real hardship to many people.”

It rightly points out that Congress averted some of the predicted harms. In a couple of cases, it provided some additional funds. In others, it let agencies move money around, rather than cut every program and activity equally, as the law initially required.

But none of this means we should breathe a sigh of relief. Even the Post‘s research shows this, though we have to burrow into the details elliptically offered via a graphics box on the front page.

Here we find that the Post generally began with predictions that federal agencies had made in response to a request from the chair of the Senate Appropriations Committee.

It then apparently contacted the agencies to find out whether 48 of the predictions had come true. No explanation of why it chose these. My best guess is that it picked only potential impacts the agencies had quantified — and only those that might already have come to pass.

Thus, for example, the Post checked the Labor Department’s dire (and accurate) prediction of impending federal unemployment benefits cuts, but not what it said about lost employment and training services or weaker enforcement of worker protections.

And it checked none of the Education Department’s predictions because most of them address the upcoming school year. Dire, but unverifiable. So we’re not even told what they are.

Predictions agencies confirmed were said to have “come true.” And, of course, predicted impacts that Congress and/or the agencies had altogether averted were counted as not coming true.

But the Post also counted predictions in the “did not come true” category merely because a numerical estimated proved too high — at least for now.

The federal judicial system, for example, did — or will — furlough public defenders, but not initially for as many days as it earlier thought it would.

So there will be an impact. And pretty scary, I think, for low-income defendants who are behind bars, possible denied their right to a speedy trial and relying on lawyers who’ll have less time to prepare their cases.

The Post‘s approach also minimizes sequester damages because it takes no account of the impacts of cuts agencies made to avert — or partly avert — the impacts they’d predicted.

I note, for example, that the Social Security Administration has reduced the hours its field offices are open. Hard to believe this hasn’t affected frail seniors and people with disabilities, who already had long waits for help with benefits — and subsequent red-tape tangles.

The Defense Department will preserve health services for eligible beneficiaries who aren’t on active duty by furloughing 650,000 civilian employees.

How many of them and their families can easily get along on less income than they were counting on? What will happen to our economy as they cut back spending?

More importantly, over a quarter of the selected predictions couldn’t yet be verified, including those for major programs that serve low-income people’s needs.

The Department of Housing and Urban Development, for example, reportedly “declined to provide” new estimates for the number of formerly homeless people who’ve lost their housing or their beds in emergency shelters.

Ditto for the number of households who won’t have federally-subsidized housing vouchers.

The Health and Human Services Department says it doesn’t yet know how many children won’t have access to Head Start services — or how many teachers and aides will lose their jobs.

Nor does it know how many seniors will get fewer — or perhaps no — meals home-delivered or served in a group setting, e.g., at a church or community center.

Yet we already have considerable, if fragmentary evidence that the sequester is, in fact, shrinking access to these and other critical services.

The Coalition on Human Needs has been publishing weekly collections of news reports on sequester impacts since early March.

I don’t recall a week without several on Head Start programs that will be serving fewer children — and few weeks without an item on cutbacks in Meals on Wheels and related food-service programs.

The Center for American Progress has also been publishing a weekly series on sequester impacts. Again, we see contractions in Head Start programs, as well as other heterogeneous impacts.

Economist/blogger Jared Bernstein posts still another weekly set of sequester impact news clips.

Some of the reported impacts are prospective because local agencies and nonprofits are still figuring out how they will handle the funding losses. But some aren’t.

Federal agencies can’t yet compile totals to verify all their earlier predictions. Nor can advocates pull together reliable, nationwide numbers. But that doesn’t mean the sequester really isn’t all that bad.

This is especially true because the cuts aren’t a one-time thing. Congress is supposed to cut next year’s appropriations for non-defense programs by $37 billion — this on top of the cuts already in effect.

And, as Bernstein points out, agencies won’t have the same opportunities to blunt the effects, e.g., by counting leftover funds they couldn’t spend.

What the Post had done is okay so far as it goes. But its framing of the results strongly suggests that we can discount what the administration will say when it “seek[s] to make the threat reappear” in an effort to mitigate the next round of cuts.

Need I say that would be a big mistake — even if it turns out that fewer than 70,000 low-income children have thus far been denied access to Head Start and Early Start?


My Two Cents on the DC Council’s $50 Million Spend

July 1, 2013

I had every intention of publishing a post last Thursday on what the DC Council finally decided to do with the Budget Support Act.

But I hadn’t planned on having no internet connection during the debate — and for a l-o-n-g time thereafter.

So I’ll confine myself here to some thoughts on one of the big issues the Council dealt with: How to spend $50 million more than it had already appropriated.

As you may already know, the Chief Financial Officer released a new set of revenue estimates last Monday. The estimate for the upcoming fiscal year was $92.3 million higher than the one the budget was built on.

The Council had already decided it would decide how to spend up to $50 million more if the new estimates permitted — this instead of accepting (or modifying) the “wish list” for uses of higher estimated revenues that the Mayor had included in his proposed BSA.

The Mayor had a new, quite different “wish list” anyway, based on the Council’s $50 million cap.

The same three top priorities as before, but others high on the original list had been dropped in favor of a brand new $23 million extra for the D.C. public and charter schools.

Council Chairman Phil Mendelson clearly had his own ideas. So, as you might imagine, did other Councilmembers.

The governing principle behind the final package seems to have been getting as many Councilmembers on board as possible.

Distribution of the new-found wealth was part of this. So was a reduction in the sales tax, plus a set-aside to offset prospective tax cuts — near and dear to the heart of Councilmember Jack Evans, among others.

The plan worked. Only Councilmember David Catania voted against the final bill.

In a fit of pique because his colleagues wouldn’t agree to an amendment that would have used virtually all the additional revenues to fund one of his initiatives aimed at boosting academic performance among the District’s lower-income students.

The DC Fiscal Policy Institute provides an item-by-item account of how the $50 million was allocated.

As you can see, the Council generally tried to spread the money around — and to include diverse pet projects, e.g., a boost for the film incentive fund that Councilmember Vince Orange has championed.

It did, however, approve the entire $11 million the Mayor had asked for to provide more subsidized childcare slots for infants and toddlers and, at long last, do something about the woefully inadequate provider reimbursement rates.

Two other especially noteworthy items for those of us concerned about the well-being and future prospects of low-income District residents.

First, the Council allocated an additional $4 million for adult literacy and career and technology education programs. This had been quite high on the Mayor’s original “wish list,” but totally eliminated in the final.

The increase should give the Office of the State Superintendent of Education most, if not all of what it asked for to support local nonprofits so that they can help prepare their students for the soon-to-be-tougher GED and National External Diploma exams.

Second, the Council provided an additional $3 million for the Local Rent Supplement Program, the District’s locally-funded housing voucher program. This brings the total increase for next fiscal year to $9.75 million.

The infusion is especially timely because the District stands to lose even more federal funding for housing vouchers unless the House and Senate agree to scrap sequestration (unlikely).

So LRSP seems the best hope now for homeless families and others who need more than just a short-shot form of housing assistance.

But some of the District’s poorest and most vulnerable residents got left out of the windfall allocations.

These are families headed by a parent with an infant to care for — one of the groups the Council previously agreed should be exempt from the five-year time limit it had hastily established for those in the Temporary Assistance for Needy Families program.

According to DCFPI’s own wish list, the one-time exemption for these families would have cost $1.5 million.

Doesn’t seem like a lot to me to temporarily stop the time clock for new mothers and their children, especially when we’ve no assurance there will be enough childcare slots for babies.

Two hundred more slots for infants and toddlers won’t make much of a dent in the waiting list for the former — reportedly more than 3,500 last year.

But the families will be subject to the benefits phase-out leading up to a final cut-off anyway.

And the Council did nothing about the shortage of job training slots for TANF parents, who are now — and will be — on waiting lists while the cut-off clock keeps ticking for them.

Nevertheless, a supplemental spending plan that addresses some critical human needs. And when we look at what the Council had already agreed to, we should feel pretty good, I think.

Even more so when we consider the enormous improvements made in the Mayor’s proposed amendments to the Homeless Services Reform Act.

Politics is, after all, the art of the possible. And the possible, in this case, meant making a majority of Councilmembers happy enough to vote for the BSA — and the Mayor happy enough to indicate he’ll sign it.

See how mellow being off the ‘net can make one?


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