Lessons From the Ryan Budget Plan

April 7, 2014

I feel I ought to say something about Congressman Paul Ryan’s latest budget plan. Yet, as the ferocious overview by the Center for American Progress indicates, there’ not much that’s new — not even the title.

It’s again The Path to Prosperity, which is true if you’re already prosperous. A path to more desperate circumstances if you’re poor or near-poor.

Not a path you’d like the country to go down if you care about the safety net or many other things the federal government supports, e.g., education, workplace safety, healthcare and other scientific research.

Or if you’re counting on having affordable health care in your golden years — or even next year, if your employer doesn’t provide it.

Far too much for a blog post. So here instead are a couple of ways of looking at the plan.

The Devil Isn’t Just in the Details

Congressman Ryan, as we know, has a long-standing hostility to federal safety net programs — except Temporary Assistance for Needy Families, which the plan again endorses as the model for others.

So it’s no surprise that he again wants SNAP (the food stamp program) converted to a block grant that would, in some unspecified way, expand the already-existing work requirements.

The block grant clearly wouldn’t enable states to sustain current eligibility standards and benefit levels, since it would save an estimated $125 billion over 10 years. (More savings from other changes discussed below.)

It’s also no surprise that the Path would again make a block grant out of Medicaid and the Children’s Health Insurance Program. Funding increases would be based on inflation and population growth, rather than healthcare costs and the number of people eligible.

So the federal government would save $732 billion over 10 years. And states would have the “flexibility” to cope with the loss.

Many other programs that benefit low-income people would get cut in different ways — Pell grants, for example, and Supplemental Security Income for severely disabled children. There’d be no funds at all for the Social Services Block Grant because the plan would kill it.

But here’s the devil lurking behind such details. Ryan made safety-net slashing inevitable by building his plan on certain basic principles. These are all, I hasten to add, cherished by the right-wing House majority.

First, the budget must balance within 10 years. In other words, what the federal government spends in any given year can be no greater than what it receives in tax revenues.

At the same time, the tax code can’t be changed to increase revenues. Any savings achieved by closing loopholes and the like would have to be used to offset tax cuts.

So the federal government would have to spend a great deal less — even less than seemed the case last year because the Congressional Budget Office now takes a dimmer view of prospects for economy growth and thus of revenue collections.

But — another principle here — the federal government must spend more on defense than what the Budget Control Act allows.

So what the plan giveth to defense, it must taketh away from non-defense — even more so because Ryan aims to bring total spending under the cap.

Defense would thus get $483 billion more than the sequestration levels in the BCA. Non-defense programs subject to annual appropriations would get $791 billion less.

Add cuts to the so-called mandatory programs like Medicaid and SNAP and the total non-defense loss soars to $4.8 trillion.

If At First You Don’t Succeed

This, of course, applies to the SNAP and Medicaid block grants, as well as to the fuzzily-described premium support option for Medicare — essentially, a choice of private insurance plans, with costs partially subsidized. But less over time, according to both CAP and Families USA.

As in the past, the Ryan plan would raise the Medicare eligibility age to the already-increased eligibility age for full Social Security retirement benefits.

This would leave a lot of low-income seniors in the lurch because — you knew this was coming — the plan would repeal the Affordable Care Act, including the federal funding for states that expand their Medicaid programs.

Seniors are far from the only people who’d be affected, of course. Everyone who became newly-eligible for Medicaid and everyone who’s purchased — or intends to purchase — subsidized health insurance on an exchange would be back where they were before.

At least 40 million people — one in eight Americans — would become uninsured by 2024, when the 10-year budget window closes, according to the Center on Budget and Policy Priorities’ also ferocious response to the plan.

The plan would also undo compromises reflected in the new Farm Bill. For SNAP, it reverts to what the House Republicans put on the table.

Specifically, states could no longer use receipt of a TANF benefit as a basis for determining eligibility. At least 1.8 million and perhaps as many as 3 million low-income people in 40 states and the District of Columbia would lose their SNAP benefits, according to earlier estimates.

Every year, another 1 million or so would lose them because the plan resurrects another provision that didn’t survive the negotiations. This one eliminates the waivers states can get to exempt able-bodied workers without dependents from the usual work requirements when meeting them would be extraordinarily difficult.

The plan would also eliminate a provision that House Republicans got into the Farm Bill. No more so-called “heat and eat” option at all because what they hoped to achieve, i.e., SNAP benefits cuts for some 850,000 households, hasn’t altogether succeeded.

A Big So What

Well, this is the fourth Path we’ve been treated to. The last proved so problematic that House Republicans themselves couldn’t face some of the cuts required.

In any event, Congress has already passed bills setting defense and non-defense spending caps through 2021. House Republicans can’t change them. They can’t unilaterally make the far-reaching program changes either.

The plan is, however, a clear indication of Republican priorities — a “campaign manifesto,” as The New York Times calls it. Something to bear in mind as we read nervously about the upcoming Senate elections — and look beyond to 2016.

 

 


Where Will the House Budget Committee Go From Its War on the War on Poverty?

March 6, 2014

House Republican Budget Committee staff have been very busy. They’ve produced a 240-page report that summarizes — and provides snippets of research on — 92 programs creatively attributed to the War on Poverty.

“Creatively” because some of the programs have little or no bearing on efforts to reduce poverty, e.g., homeownership assistance, the fresh fruit and vegetable promotion program for elementary school children.

By and large, the research snippets are more balanced than one might expect — a triumph of low expectations, I suppose.

Ron Garver at The Fiscal Times cites four researchers who claim the report misrepresents or manipulates their findings. We get other examples of cherry-picking and misrepresentation in the Center on Budget and Policy Priorities’ commentary on the report.

There’s notable bias in presentation too — for example, the bolded conclusion that “Head Start does not improve student outcomes,” though the research cited shows it sometimes does, as Jonathan Cohn at New Republic notes.

And a HUGE exception to balance for Medicaid, as one might expect from a Committee that’s likely to again propose block-granting the program and slowly starving it. “Zombie Medicaid arguments,” proclaims the Incidental Economist‘s headline.

As this indicates, policy wonks of a progressive persuasion have already weighed in on the report — mostly, though not exclusively trying to set the record straight on what the research actually tells us.

I want instead to focus on a couple of the major messages, explicit and otherwise.

The report stretches to sweep in as many programs as possible in part because one of its messages is that there are far too many of them. Congress created them “to solve different problems — and at different times,” it says. As a result, “there is little coordination among them.”

Overall, this seems to me a reasonable assessment. Where it might take us is another matter.

The House SKILLS Act, for example, blows away 18 job training programs and rolls the surviving 17 into one big block grant. It also freezes funding for seven years — virtually ensuring that some of the formerly-targeted populations lose out to the more readily employable.

The larger problem, the report says, is that many programs are “a poverty trap” because they’re means-tested, i.e., provide benefits only to people below a certain income level.

They’re thus a disincentive to work — or at least to doing your best to get ahead because if you do, you face a “high marginal tax rate.” In other words, what you lose in benefits partially offsets what you gain in earnings.

No one, so far as I know, disputes the fact of marginal tax rates. They’re an inherent feature of programs that limit eligibility to people below a certain income level.

How big they are depends on who’s estimating and for what programs. Whether they actually “discourage … [people] from making more money,” as the report says, is less certain.

The Congressional Budget Office is inclined to think they do, though only for some people already in the workforce. Economist-blogger Jared Bernstein says that leading research has found the impact to be negligible.

Again, the question is where does this take us? Not, I trust, to the elimination of all means-tested programs. But like as not, to more expansive work requirements — and to time limits, since these would override any long-term disincentive.

Welfare “reform” is thus again pronounced a rip-roaring success — one of the instances of research misuse cited in the Garver article and by CBPP.

The report is surely a set-up for further spending cuts. Casting a wide net enables the Budget Committee to come up with a total anti-poverty bill of $799 billion in 2012 — and “trillions” over the last 50 years.

Ironically, as Cohn observes, the defects the report finds in a number of anti-poverty programs imply the need to spend more money.

But Budget Committee Chairman Paul Ryan seems to have something more grandiose in mind than fixing fixable problems, even when that might yield some savings — and something more grandiose than slashing here, slashing there.

In his view, federal anti-poverty programs need to be “entirely reimagined,” according to an indirect quote in the Washington Post.

We get a whiff of where he might be tending in a key test the report imposes whenever remotely feasible: Does the program encourage or discourage labor force participation?

Thus, for example, all the “evidence” cited to evaluate Supplemental Security Income relates to employment. Recall that adult SSI recipients under 65 are, by definition, blind or unable “to do any substantial gainful activity.”

SNAP (the food stamp program) is also viewed through the lens of labor force participation, as well as poverty reduction, based on the cash value of the benefit. “Evidence” for its effects on reducing hunger is apparently irrelevant.

But maybe there’s no real reimagining behind the words. As The New York Times editorial board observes, the report provides a “high-minded excuse” for Congressional Republicans “to eviscerate” major safety-net programs, as they’re already hell bent on doing.

Some also seem to cherish the notion that the reforms Ryan says it’s a precursor to will persuade us that they truly care about “people who’ve fallen through the cracks.”

Not, I think, if the report foreshadows what we’ll soon see in the House budget plan.


Why Are Most Poor Families Disconnected From TANF?

February 17, 2014

We’ve had briefs, policy proposals and programs for disconnected youth. We’ve had research on disconnected low-income men. And now we have new research on an overlapping group — disconnected families. They’re the subject of a recent Child Trends post, which previews a forthcoming brief.

Disconnected families, as Child Trends defines them, are families with children that lived at or below the federal poverty line last year and included no adult who worked more than 50 weeks or received cash assistance from the Temporary Assistance for Needy Families program.

Yet when we look at the findings, we see the families aren’t all that disconnected. The parents aren’t necessarily disconnected from the labor force, though, by definition, they don’t have long-term jobs.

More than 90% of the children in the families were enrolled in Medicaid or the Children’s Health Insurance Program. More than 75% received free school meals. And a slightly lower percent of the families received SNAP (food stamp) benefits.

So there are relatively few poor families with children that are altogether disconnected from major safety net programs.

Some who are might be disconnected because of their immigration status. Federal law denies major safety net benefits to undocumented immigrants, except for free and reduced-price school meals, WIC (the Special Supplemental Nutrition Program for Women, Infants and Children) and emergency Medicaid.

It also generally bars families who’ve lived in the country legally for less than five years, though there’s a child-only exception for SNAP and, if states choose, for CHIP and Medicaid for pregnant women and children.

What all the families are disconnected from is TANF — and not, in most cases, because of the restrictions on immigrant eligibility. It’s largely because of the ways states have used their much-touted flexibility to restrict participation.

One is the extraordinarily low income ceilings that states have established for income eligibility. The rules are complex and various.

But to give you an example, the earned income maximum for a family of three is below 50% of the federal poverty line in 28 states and the District of Columbia. In 2012, it was a mere $269 a month in Alabama and only $10 more in Arkansas.

Another major restriction is the time limit during which a family may receive TANF benefits. Most states and the District use a 60-month lifetime limit because federal law sets this limit on their use of block grant funds to pay benefits, except when only children receive them.

States may exempt up to 20% of families from this time limit. Only about half do, however. And 11 states set shorter time limits — only 24 months in four.

Families may also become disconnected from TANF before their time limit expires. Some are “sanctioned off,” i.e., denied all benefits, because the parents failed to comply with the work activity plans developed for them or with other requirements their caseworkers impose.

At least, they’ve allegedly failed. As Legal Momentum has persuasively shown, some TANF agencies hand out sanctions very enthusiastically — and often when the parent has done nothing she should be punished for.

Now, I don’t want to let any state off the hook here — or the District either, for that matter. But our federal government provides incentives for keeping families out of TANF and disconnecting those in it.

One is increasingly inadequate funding. The block grant that constitutes most of what states and the District receive is the same in nominal dollars as when TANF was created — and thus worth nearly a third less.

So states would have to plow more and more of their own funds into their programs just to sustain what they’d established.

Another incentive is the credit states can get for reducing their caseloads. This protects them from penalties for failing to have enough parents engaged for enough hours in authorized work activities.

Still another is that they can use both their block grant funds and the funds they must spend to receive them — their so-called Maintenance of Effort — on a wide variety of programs.

These needn’t be exclusively for TANF families — or even families in poverty. Some clearly aren’t, as the Center on Budget and Policy Priorities has reported. They include, for example, child welfare services and refunds from the states’ Earned Income Tax Credit.

The less states spend on cash benefits and work-related activities, e.g., education, training, job support services, the more they can spend on things that command more political support than welfare.

So it’s hardly surprising that roughly 75% of poor families are disconnected from TANF. Or that children raised in these families are far more likely than their better-off peers to join the ranks of disconnected youth.


Who Should Pay for Extended Unemployment Benefits?

February 3, 2014

Politico reports progress in the Senate toward renewing Emergency Unemployment Compensation. The “biggest sticking point” may again be amendments, it notes.

As I said last week, the effort to renew EUC broke down because Republicans wanted to offer amendments to the short-term, stopgap bill that was one of the options Majority Leader Harry Reid proposed.

Some of those amendments would have offset the costs in ways that many, if not all Democrats would have found too objectionable to vote for, even though defeating them could have led Republicans to again block a vote on the bill itself — and blame them for the harm.

Here, as promised, are how two of them would pay for the short-term extension. Each answers the question in the title above differently, but both deny safety net benefits to vulnerable low-income people.

Low-Income Children Should Pay for It

Senator Kelly Ayottte (R-NH) fished an old proposal out of a file and put some gloss on it. Her amendment, as originally proposed, would deny the refundable part of the Child Tax Credit to immigrants who don’t have Social Security numbers — even if their children are U.S. citizens, as an estimated four million are.

Well over two million families would have to pay, on average, $1,800 more in taxes a year, according to figures in a 2011 report by the Treasury Department’s Inspector General. That’s a big bite, since they reportedly earn, on average, $21,000 a year.

The money saved by denying the credit to immigrants who dutifully pay their taxes would far exceed the costs of the three-month extension Senator Ayotte wanted to attach it to.

Her amendment would commit nearly as much to restoring the full cost-of-living adjustment to pension benefits for some former members of the military services. The COLA took a nick in December’s budget deal.

As you might imagine, there have been howls from diverse quarters. So Ayotte cleverly aims to put Democrats in a bind, since a vote to protect low-income children, most of them Hispanic, would be a vote against our veterans.

Now she’s amended her amendment to single out only immigrants whose children aren’t citizens — and styled it solely as a way of righting a wrong “against our men and women in uniform.”

It’s nonetheless a punitive pay-for, affecting a million or so children who had no say in where they were born or where they live now.

Severely Disabled Workers Should Pay for It

Senator Reid found some of his pay-for in the President’s last budget, which proposed a dollar-for-dollar reduction in SSDI (Social Security Disability Insurance) benefits when recipients receive unemployment benefits.

Senator Rob Portman (R-OH) took this dubious cost-saving idea and made it far worse, as the Center on Budget and Policy Priorities explains.

Basically, his amendment would define eligibility for unemployment benefits as proof that the laid-off disabled worker was engaged in substantial gainful activity — and ineligible for SSDI.

This would wholly redefine SGA, which under current rules, means earning more than $1,070 for nine months within a five-year period. Part-time work that pays less — or any work that’s been engaged in for less time — has no immediate effect on SSDI eligibility.

It does enable some recipients to supplement their far from generous monthly benefits — on average, $1,146 last month. And it gives them an opportunity to see if they can return to self-supporting work.

You’d think that a member of a party that believes in giving people a hand up out of the safety net would avoid anything that discouraged work.

But Portman’s amendment surely would because SSDI recipients who ventured back into the workforce could be dropped from the program if they were laid off, even if they didn’t claim the unemployment benefits they were entitled to.

They’d have to wait five months to reapply, just as newly-disabled workers do. And once they’d managed to get reapproved, they’d have to wait two years to qualify for Medicare, even if they’d been enrolled before.

I think it’s only fair to note that the Obama administration opened the door to this pay-for and that the Senate Democratic leadership kept it open. It’s an awful idea in principle, as Los Angeles Times columnist Michael Hiltzig says.

But it’s also true that Portman hasn’t, as he claims, taken a proposal from the President’s own budget — or that unemployment insurance and SSDI are “mutually exclusive.”

“We should never be forced to meet the needs of one vulnerable population by robbing another,” as Senator Tom Harkin (D-IA) told his colleagues a few weeks ago.

Both the SSDI and the Child Tax Credit pay-fors would do this. And they’d make permanent changes in the laws. A lot of harm to offset costs that would represent less than 0.014% of the federal budget.*

* This is the 10-year figure produced by the Center for Economic and Policy Research’s responsible budget calculator.


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