Bipartisan “Jobs” Bill Won’t Create Jobs

So a jobs bill of sorts actually managed to pass in the Senate — overwhelmingly, in fact. I’m referring here to the veterans hiring credits  — a small piece of the President’s American Jobs Act.

A fine patriotic gesture just in time for Veterans Day. And perhaps they’ll help some veterans get hired.

Those who’ve recently returned from fighting our wars have had a hard time. The unemployment rate for them is now 12.1% — higher than the overall rate. Also higher than a year ago, though the overall rate has fallen.

The credits, however, aren’t for new veterans only. And veterans as a whole have a lower unemployment rate than working-age people who were never in the military.

Still, it seems reasonable to help those who chose to put themselves in danger — even for our dubious ventures in the Gulf. They’ve come home to a very bad job market and face some unique re-entry challenges.

Certainly reasonable to offer a premium tax credit to employers who hire long-term unemployed veterans with a service-related disability.

But, as The Atlantic‘s Daniel Indiviglio says, the hiring credits will hardly boost hiring in general. At most, they “may create a few jobs on the margins.”

I rather doubt it so far as long-term jobs are concerned. The credits aren’t nearly large enough to induce any company to hire a worker it doesn’t need.

They may, however, get more veterans hired for jobs that would otherwise have gone to non-vets. How many is questionable.

We’ve had hiring credits for disadvantaged workers since 1996. A new paper by Elizabeth Lower-Basch at CLASP convincingly argues that they’ve mainly created “windfalls” for large companies in low-wage, high-turnover industries, e.g., fast food chains, temporary help agencies.

No evidence employers hired anyone they wouldn’t have hired anyway. Surely not many veterans covered by the new tax credit bill.

The program that Lower-Basch reviews — the Work Opportunity Tax Credit — already offers tax credits for hiring both those who have a service-related disability and those who’ve been unemployed for at least six months.

The Recovery Act temporarily expanded the WOTC to include those discharged within the last five years who’d been receiving unemployment benefits for at least a month.

Yet here we are with the unemployment rate the President and a bunch of Senators are deploring.

I don’t want to rain on the rally ’round the troops — or the unique display of bipartisanship. But the fact the credits are being billed as a jobs measure tees me off.

Not as much as the bill they’re attached to, however. It’s supposedly to help businesses create jobs too — remove uncertainties, burdens on small businesses, etc.

Will certainly remove some burdens, though not those publicly acknowledged. Because it repeals a law, not yet implemented, that Congress passed to keep many thousands of government contractors from continuing to evade their tax liabilities.

Cost of the repeal is estimated at $11 billion. You could make a down payment on some real job creation with that.

What Does The New “Jobs Bill” Mean For DC?

I’ve been asked how the new job-saving measure will affect the District. Here’s what I’ve come up with thus far.

First a brief overview. The amendment will deliver an estimated $16.1 billion of fiscal relief to the states in the form of a phased-down extension of the higher federal match on state Medicaid costs (FMAP). An additional $10 billion will be apportioned among states to preserve jobs in elementary and secondary education. In both cases, states include the District of Columbia.

About 45% of the total costs — $11.9 billion — will be paid for by terminating the 13.6% boost in food stamps that was part of the economic recovery act. End date will be April 2014. As I previously wrote, the boost was expected to end in 2018 and with no benefits loss.

Now for the District.

FMAP Extension. The District’s Fiscal Year 2011 budget assumes a straightforward extension of FMAP, worth an estimated $77.6 million. According to recent estimates by the Center on Budget and Policy Priorities, the District will actually get $54 million. So there could be a budget gap to close, though much smaller than it would have been without the extension.

Public Education. According to estimates developed for the House Labor and Education Committee, the District stands to gain somewhat over $18 million. The funds are said to support an estimated 200 jobs.

As the DC Fiscal Policy Institute reports, the District will lose considerably more in stimulus funding that was part of the economic recovery act. The Fiscal Year 2011 budget will use local funds to make up part of the loss, but some staff reductions could have been in the offing. The new stimulus infusion might avert them. The amendment strictly limits, if not altogether precludes all other uses of the funds.

Food Stamp Benefits. It’s hard to come up with hard numbers for the impact of the premature end of the food stamp boost. What we know is that, in May 2010, about 119,260 District residents were receiving food stamps — nearly 20% of our total population.

Participation in the food stamp program has been steadily increasing. The annual May-to-May increase for the District was 15.5%. So barring some economic miracle, at least 200,000 or so residents will see their benefits drop.

The dollar impact will depend on family size, income and whether the cost of the food plan used to calculate benefits increases before the boost ends. The Food Action and Research Center says that a family of four will lose $59 per month. I’m guessing this reflects a calculation based on some average.

At this point, the maximum monthly per person benefit for a family of four is $167. Many District residents get far less. In Fiscal Year 2009, with the boost in effect, the average monthly per person benefit for District residents was $128.66. Without the boost, it probably would have been $24 less. I believe the figure would be the same for this fiscal year.

It doesn’t mean that District residents will lose, on average, this amount. But it’s clear that the poorest among us will be paying, with a benefits loss they can’t afford, to save jobs they don’t have.

Senate Deals Double Blow To Food Stamp Recipients

Much has been written of late about the political and systemic ills that are plaguing the Senate. Most of the griping has come from Democrats who see good bills die or get woefully compromised.

But the Senate recently passed two otherwise good bills with very bad offsets that can’t be blamed on the Republican opposition.

In both cases, the offset reduces the duration of the 13.6% increase in food stamp benefits that was part of the economic recovery act.

According to the Food Research and Action Center, a family of four will stand to lose $59 per month. This at a time when more than 40.8 million people depend on food stamps to stave off hunger.

One of the bills — an amendment actually — is basically the surviving fragments of what began as a fairly robust jobs bill. It will, at long last, extend the higher federal match on state Medicaid costs (FMAP), though in a cost-cutting phased-down form rather than a straightforward extension. The amendment will also provide local education agencies with funds to minimize further teacher layoffs.

Total cost is estimated at $26.1 billion. About 45% of this is “paid for” by terminating the food stamp benefit boost in April 2014. Left alone, it would probably have ended, with no benefits loss, in 2018.

This is the single largest component of the pay-for — increased from $6.7 to $11.9 billion in part because some Senators objected to parts of the pay-for that would have kept multinational corporations from shielding foreign-earned income from U.S. taxes.

So instead an estimated 319,000 public-sector jobs are temporarily saved by sacrificing the stimulus measure that delivers the biggest economic bang for the buck. Some Democrats in the House didn’t like it, but they voted for it anyway. So it’s a done deal now and unlikely to be undone.

The other bill will reauthorize the Child Nutrition Act. As I earlier wrote, it will do some very good, if limited things to reduce child hunger and improve child health — the latter mainly by paving the way for more balanced food offerings in schools, daycare centers and after-school programs.

Total price tag $4.5 billion over 10 years. Nearly half — $2.2 billion — paid for by cutting an additional five months off the food stamp benefit increase. This is apparently a substitute for the Senate Agriculture Committee’s plan to tap a program that provides agricultural producers with financial support for their efforts to comply with environmental regulations.

“Highly and widely popular with farmers, ranchers and private forest landowners,” said five of the Republican committee members who objected to the environment incentives pay-for. Those interests obviously have more clout than the poor people who rely on food stamps — and, at least on the Senate side, the organizations that advocate for them.

The White House has thus far been cagily neutral. Michelle Obama, its spokesperson for the legislation,” said that “the Senate vote moves us one step closer to reaching [the] goal” of ending child obesity. Nothing about the pay-for.

Congressman David Obey (D-WI), Chairman of the House Appropriations Committee, says that the idea of cutting food stamp benefits to pay for the local school aid originated in the White House. Not a hopeful sign for its intervention to prevent a double whammy.

Congressman George Miller (D-CA), chairman of the committee that drafted the House bill reeauthorizing the Child Nutrition Act, is keeping his cards close to his chest. Publicly, he too just refers to the “important step” the Senate took and the bipartisan leadership behind it.

As might be expected, FRAC has launched a campaign against cutting food stamp benefits to fund other priorities. The Senate’s child nutrition bill, it rightly says, “will make children hungrier.”

It’s got a sign-on letter, endorsed by more than 1,400 organizations, that I assume will be revised to focus on the House.

The School Nutrition Association, which, of course, welcomes the prospective funding increase for healthier school meals, also urges the House to find a different offset. “In the effort to raise ‘Healthy, Hunger-Free Kids’ [the promise in the title of the Senate bill] we don’t want to risk compromising their dinner to improve their lunch.”

This, of course, assumes that poor parents will still be able to afford dinners. We know that, in the past, families regularly ran out of food stamps before the end of the month. We know that the current Child Nutrition Act falls far short of ensuring that poor children get three squares a day every day. Neither of the reauthorizing bills will come close.

And since when have we decided that only child hunger matters? According to FRAC’s letter, nearly half of all food stamp recipients are children. That leaves at least 20.8 million who aren’t.

Some of them are disabled people dependent on Supplemental Social Security. This year’s maximum monthly benefit for an individual is $674. Some are retired workers, about a quarter of whom depend solely on Social Security. Average monthly retirement benefit is just under $1,170.

These are people for whom every penny matters — as indeed it does for everyone in the nearly 90% of food stamp households whose incomes are below the federal poverty line.

Do we throw these people, children included, under the bus because it’s an easy way to pay for some of the long-overdue improvements in the child nutrition program?

What They Said About Losing Unemployment Benefits

When the jobs/tax bill again ran into a brick wall in the Senate, I wrote a recap for the Poverty in America blog on Change.org, as well as the somewhat different, but equally angry review here.

The PIA posting triggered an outpouring of comments, virtually all from people who are unemployed and have been for some time. They tell us a couple of things.

First, the Tea Partiers aren’t the only people out there who are as mad as hell and not going to take it anymore.

Some portion of the jobless population is furious. And they’re ready to throw the Republicans out — every last one of them. No way to know whether the hostile energy represents a critical mass or whether it will make any political difference.

Second, sheer desperation and something close to despair are even more pervasive than outrage.

Here are some extracts from the comments:

“I have already lost my home and my car is going next week…. None of us will even have food to eat so what [Fourth of July] Holiday will we have? … I have had to sell anything of value at all for pennies on the dollar and have no food…. I wonder if we will even survive.”

“I just lost my unemployment benefits at 79 weeks…. I’ve applied for literally EVERYTHING, and no jobs are forthcoming. Have college degree and graphic design skills, but NO JOBS! Most people think, ‘oh just go to Mickey D’s or something’ but I tell you those places won’t hire you if they see you have a degree and used to make good money (trust me, I’ve applied at all of them by now). I have a stack of bills that would have been paid this month, but now I will have to default on them all because no more UI.”

“I have been unemployed for the past year and a half, and I too am a college graduate…. At 37, for the first time in my life, I am facing an eviction…. I can’t tell you how scared I am right now. It is very tough being homeless in Los Angeles, especially if you are a single woman.

“I have been unemployed in northern Nevada for 1 1/2 years and my fiance is a master carpenter and has been unemployed for 2 years. WE HAVE NO MORE UNEMPLOYMENT [BENEFITS]!!! …. I had to get welfare last week (which I always swore to myself I would NEVER take a dime of) so my kids could eat. Still don’t know how we will keep a roof over our heads.”

“My July 4th ‘holiday’ is me coming up with a plan to avoid being homeless the end of July.”

“I’m 57 years old and was laid off through no fault of my own. I am not an IT professional, I am not trained in finance, and I have no experience in health care. I can’t even get a job in fast food because employers want young people who can ‘hustle.’ That’s most of the jobs that are available. I can’t get ‘retraining’ because I have no one to support me while I do it. And a 57 year old with no experience in a new field isn’t exactly in demand.”

These and countless similar stories give the lie to some major arguments against extending unemployment benefits.

We’re told, for example, that people don’t look for work so long as they’re getting their UI checks. The benefits are a “disincentive to seek new work,” said Senator Jon Kyle (R-AZ) on the Senate floor. They “turn the ‘safety net’ into a hammock,” opined Congressman Steve King (R-IA).

They’re one of the ways “we have really spoiled our citizenry,” said Sharron Angle, who’s running for Senate Majority Leader Harry Reid’s seat in Nevada. “You can make more money on unemployment than you can going down and getting one of those … honest jobs,” like the clean-up chores she and her sibs once did in her family’s hotel.

But what the comments tell us is that a goodly number of unemployed people have been diligently looking — and would take those honest jobs if they could get them — because they can barely make do on UI benefits.

And then there’s the more popular deficit argument. We can’t extend unemployment benefits unless they’re totally paid for, e.g., by using stimulus funds intended to create jobs.  Think, after all, of the additional debt we’d be leaving our children.

No need, I trust, to rehash the arguments that UI benefits save and create jobs –  and thus, at the very least, help control the deficit. Also, I trust, no need to note how the proposed pay-for would rob Peter to pay Paul.

Let’s think instead about those children who will grow up with all the disadvantages of poverty if we cut their parents’ lifeline now.

Here’s what one of the jobless commenters has to say:

“The Republicans say that they want the extensions to be fully funded so our children and grandchildren do not take on such debt. What about NOW when we need to feed, clothe and house them … ?” How will they live right NOW?”

How, I wonder, would an opponent of the just-quashed emergency UI extension answer.