Next Round in Battle to Renew Long-Term Unemployment Benefits

March 10, 2014

Last Friday, the Bureau of Labor Statistics reported a sharp increase in the number of long-term jobless workers — 203,000 more who’d been unemployed and actively looking than in January.

This brought the average number of weeks jobless workers had been looking up to 37.1 — about 11 weeks more than most state unemployment insurance programs cover.

At least two million jobless workers have no UI benefits now, but would if Congress renewed Emergency Unemployment Compensation — and back-dated it to the end of December, when the program expired.

As I’m sure you know, Senate Democrats have been trying to pass an EUC extension since mid-December. Republicans haven’t delivered the five votes needed for the Senate to vote on the extension itself.

The ostensible hang-up is the offset, i.e., the source or sources of funds that would keep the extension from adding to the near-term deficit. But some of the potentially persuadable Republicans have further complicated matters by insisting on amendments to reform UI.

And as if that weren’t enough, they wanted the package to include a repeal of the temporary, modified cost-of-living adjustment for military pensions that was part of the December budget deal.

Well, the Senate took care of the repeal in mid-February, using a pay-for Republicans wouldn’t accept for the EUC extension. Now it’s going back to EUC again.

Majority Leader Harry Reid is calling for a six-month extension — five months shorter than the paid-for version he’d earlier proposed. He’d use savings already achieved in the new Farm Bill as the offset. Politico reports the cost at about $12 billion. That would leave about $11 billion for deficit reduction.

Seven Republicans have countered with a five-month extension. They’ve got an altogether different pay-for. And they fold in program “improvements,” including one that has little or nothing to do with unemployment compensation.

Too much to cram into one post. So I’ll deal with the pay-for here. As you’ll see, the Gang of Seven seems to have moved toward the Democratic majority. This, alas, is not an altogether good thing.

The pay-for has three parts. The first would extend so-called pension smoothing provisions that Congress earlier used to help pay for the highway bill.

Basically, pension smoothing allows employers to temporarily reduce their contributions to employee pension plans. This raises revenues for awhile because the contributions are tax-deductible.

But it then loses revenues because employers have to make up what they didn’t contribute earlier. The losses, however, fall outside the 10-year period used to estimate what federal laws will cost.

In short, it’s what the Center on Budget and Policy Priorities calls a “timing gimmick.” It also, as the Committee for a Responsible Federal Budget says, raises the risk that pension funds will need a bailout, thus further increasing federal costs.

Senate Republicans shot down pension smoothing when Reid tried to use it for a three-month EUC extension — or at any rate, they blocked the bill, claiming (rightly) that he limited their chances to amend it.

A second part of the pay-for is a modified version of an amendment Senator Rob Portman wanted to offer. In its new iteration, severely disabled workers who receive UI benefits would lose the same amount from their SSDI (Supplemental Security Disability Insurance) benefits.

This too was a pay-for Reid earlier offered — and borrowed from the President’s proposed budget. But it still “uniquely burdens” disabled workers, as Los Angeles Times columnist Michael Hiltzig says.

It also undermines the work incentive in SSDI. And it establishes a terrible precedent of raiding Social Security to fund other benefits programs, as the Consortium for Citizens with Disabilities warned several months ago.

The last part of the pay-for extends customs users fees through 2024. These are charges imposed for certain activities of the U.S. Customs Service, e.g., clearing merchandise for import.

So for better and worse, the Gang of Seven seems to have come round to a pay-for the Democratic majority could accept. But, as I said, it’s paired with some problematic “reforms” to the EUC program.

Politico reports that Reid may take another stab at passing an EUC bill this week. How far he’ll move to pick up the Republican votes he needs remains to be seen.

How far he should move is a daunting question.


House GOP Wants Poor Kids to Pay for Tax Cut Package

February 6, 2012

As you all know, the employee payroll tax cut and long-term unemployment insurance benefits will expire at the end of the month unless Congress extends them.

The Republican leadership doesn’t want a replay of the stalemate last December — very bad for the brand going into an elections season. Democrats also want an extension bill passed.

Yet the members of the bipartisan committee that’s supposed to come up with a bill are still reportedly far apart. The big sticking point is how to pay for the extensions — in other words, what budget changes should be made to offset the costs.

House Republicans tucked a nasty pay-for into their original extensions bill — a change in the Child Tax Credit that would deny refunds to taxpayers who don’t have a Social Security number.

These are mostly immigrants who aren’t authorized to work in this country. They file using an Individual Taxpayer Identification Number issued by the Treasury Department.

And file they surely do. In 2010, they collectively paid $870 million in income taxes, plus some $3.7 billion in payroll taxes* they’ll never benefit from unless they gain legal status.

Under current law, ITIN filers may claim the Child Tax Credit just as filers with Social Security numbers can.

The maximum per child credit they can get is $1,000. If the credit, plus other deductions reduces their tax liability to less than zero, they can get a portion refunded.

No big windfalls here. According to a Treasury Department audit, ITIN filers received, on average, $1,800 in 2010.

Yet the refunds made a real difference to somewhat over two million immigrant families, whose average household income was just $21,240.

A family of four with an income that low falls below the very low poverty line — hence the importance of the refunds.

For example, the average 2010 Child Tax Credit refund would pay for the family’s meals for three months, according to the U.S. Department of Agriculture’s lowest-cost meal plan. Or a couple of months rent on a two-bedroom apartment in a low-cost area.

Congressman Sam Johnson (R-TX), who introduced the bill that’s now part of the House Republicans’ pay-for, doesn’t care about any of this. “Illegal immigrants,” he says, are “bilking taxpayers … by fraudulently claiming the child tax credit.”

This is flagrant immigrant-bashing — and patently false. Parents with ITINs are claiming a credit they’re legally entitled to.

Congress chose to make them eligible because the refundable part of the Child Tax Credit — technically a separate Additional Child Tax Credit — was intended to relieve lower-income parents of some portion of their tax burden.

In this respect, we could reasonably view it as a measure to ensure some modicum of child well-being. And, as the Center on Budget and Policy Priorities reports, it does exactly that.

As many as 5.5 million children may be affected if parents with ITIN numbers can’t claim the ACTC.

All but about a million of them are U.S. citizens — though I don’t think we should start getting technical about place of birth when it comes to child poverty.

And what’s the trade-off for putting all these children at risk of poverty — or deeper poverty than they’re already in?

The estimated savings reaped by Johnson’s proposal total at most $24 billion over 10 years. This is about 16.7% of the estimated costs of the payroll tax cut and unemployment benefits extensions.

We could get to the same place, says the Center for American Progress, by imposing a paltry 0.2% surtax on the adjusted gross incomes of millionaires.

Better, I think, this minimal nick than what the New York Times rightly calls “a harder squeeze on the poor.”

* This is based on an estimate of the payroll taxes ITIN filers generated. I’ve factored out the amount that employers paid.


Between the Rock and the Hard Place on the Child Nutrition Bill

September 30, 2010

The New York Times has come out in favor of the Senate’s bill to reauthorize the Child Nutrition Act. It acknowledges that the House bill is considerably better — in part because it doesn’t make further cuts in the food stamp program to help offset the costs.

But, it says, “effective lawmakers know when it makes sense to stand and fight for principle and when the time comes to accept a decent compromise.” And that time for the House is now because unless it passes the Senate bill as-is, there won’t be a reauthorized Child Nutrition Act this year.

What it doesn’t say is that any expansion of the Child Nutrition Act could be up against more formidable barriers next year. What’s the hope for new spending on child hunger when Congressman John Boehner, possibly the next House Speaker, wants to roll back federal spending (except for defense, veterans and seniors) to the 2008 level?

Secretary of Agriculture Tom Vilsack seems to be of the mind that the administration ought to accept a bill that, in some manner, addresses the general priorities he sketched back in February. “What we don’t want to do,” he recently said, “is compromise what we can get today for what may or may not be available in 2013.”

Unclear whether the pay-for troubles him. After all, it originated in the White House, though not as an offset for the Child Nutrition Act. Certainly seems not to be troubling the First Lady.

Some major advocacy organizations are apparently also looking at the clock — and the elections polls. For example, Margo Wootan, Director of Nutrition Policy at the Center for Science in the Public Interest, now says the Senate bill is “terrific.” She’d earlier praised the stronger House bill as the best she’d ever seen.

Echoing Senator Blanche Lincoln, the primary author of the Senate bill, Wootan argues that if Congress doesn’t use food stamps to pay for it, it will use the money for something totally unrelated to better school meals for low-income kids. I would add better access as well.

I don’t know where to come out on this tough issue, though I know how I’m leaning.

On the one side, the House has had more than two months to come up with an offset package for its reauthorization bill and has thus far produced nothing — or at any rate, nothing final enough to be made public.

The Child Nutrition Act will technically expire at the end of the month. The House will recess then, and it will face must-do appropriations tasks when it reconvenes in November, as will the Senate. So if it doesn’t do something PDQ, we’re likely to have another extension of the current legislation.

Even if the Democrats retain control, passing the stronger House bill will be an uphill battle next year. And though the Senate bill falls short of what’s needed to make even a majority of children “healthy and hunger-free,” it’s considerably better than what we’ve got now.

On the other side, I’ve no doubt that the Food Research and Action Center is right when it says that using food stamp benefits to pay for the child nutrition bill “will make children hungrier.” And, as I’ve previously noted, food stamps aren’t for children only. The Senate bill will take food out of the mouths of poor adults too.

Looking beyond the hunger issues, the new Census poverty/income report tells us that 2.2 million fewer people would have been counted as poor if it had factored in the cash value of food stamps.

Mark Zandi, the Chief Economist at Moody’s Analytics, recently reconfirmed his firm’s earlier finding that food stamps deliver more “bang for the buck” than any other form of stimulus considered. Do we believe that the economy will improve so much in the next two years that a cutback in consumer demand won’t matter?

Maybe Lincoln and Wootan are right. If Congress doesn’t use the $2.2 billion food stamp reduction for the Child Nutrition bill, it will use it for something else.

But, as we’ve already seen, dipping into the food stamp budget can become as habit forming as, well, eating. If Congress does it twice, won’t it just be that much easier to do it again?


Senate Deals Double Blow To Food Stamp Recipients

August 11, 2010

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?


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