Long-Term Unemployment Benefits Saved, But Scaled Back

February 17, 2012

So the Republicans and Democrats agreed on a deal to extend long-term unemployment insurance benefits — defying predictions of another cliffhanger or worse.

Also extended, as you’ve probably read, were the employee payroll tax cut and the “doc fix” to avert huge cuts in Medicare reimbursements. As you may not have read, some programs for low-income people got a new, temporary lease on life as well.

The UI benefits extension is surely good news for the million or so jobless workers who’d otherwise have lost their benefits in March. Also good news for jobless workers who’d have run through their regular state benefits by year’s end.

No extension would have meant benefits losses for nearly 4.5 million by December — 12,600 in the District of Columbia alone.

Add to the good news column some changes in the UI program that didn’t get into the deal — or survived only in more palatable forms.

The most problematic would have denied benefits to jobless workers without a high school diploma or the equivalent unless they were enrolled in classes leading to same. There’s no such barrier in the final bill.

But (why is there always a but?) the well-known 99 maximum weeks will soon be a thing of the past.

As I wrote awhile ago, the Extended Benefits program kicks in only when states’ unemployment rates are higher than they were during a comparable period in a prior year — and kicks off when they aren’t.

Because Congress didn’t change the law to let states shift their comparison period back, more and more states will “trigger off” EB. The expectation now is that no state — or the District — will be able to offer the final 10 or 20 weeks of benefits by December.

Because Congress did change the law, fewer weeks of benefits will be available under the other federally-funded program — Emergency Unemployment Compensation.

EUC benefits kick in directly after workers have exhausted their regular state unemployment benefits. They’re structured in tiers.

At this point, the first two are available to all jobless workers, giving them a maximum of 34 weeks — less only if they find employment.

Workers qualify for the next tier only if they live in states where the unemployment rate is at least 6%. That nets them 13 more weeks.

If they live in states where the unemployment rate is at least 8.5%, they can move to a fourth tier and get another 6 weeks.

The total then for workers in most states has been 79 weeks — counting the weeks available in their regular state program, but not EB.

The extensions legislation cuts the maximum number of weeks to 73, beginning in September. From June through August, the maximum will remain 79 weeks, but only in states where the unemployment rate is at least 9%.

At the same time, the legislation establishes a minimum 6% unemployment rate for the second tier. And it raises the minimum unemployment rates by half a percent for the remaining tiers.

As of September, the third tier becomes four weeks shorter and the fourth, final tier four weeks longer.

Bottom line is that, as of September, only 63 weeks will be available in most states. At this point, jobless workers have more weeks available in all but seven.

I suppose we should be grateful. The Republicans reportedly wanted to cap benefits at 59 weeks, as the original House bill would have.

So the Democrats got more than a strict split-the-difference deal, though only because they’d already followed the Obama administration’s lead in letting states trigger off while their unemployment rates remain abnormally high.

Even here, they negotiated a temporary fix, giving states with unemployment rates of at least 8.5% an additional 10 weeks of EUC if they’ve no EB weeks to provide. The boost is good only through May, however.

Huffington Post blogger Arthur Delaney reports that it will benefit jobless workers in at least 10 states.

I’d be remiss if I didn’t note another Democrat victory here. The estimated $30 billion the UI benefits extension will cost won’t be offset by any tampering with the Child Tax Credit.

If House Republicans had had their way, refunds that help support more than five million low-income children would have been part of the pay-for.

So it’s not a perfect deal. But a deal got made. And it’s a whole lot better than the extension the House passed in December.

UPDATE: After I (hastily) posted this, I found that the Center on Budget and Policy Priorities had created two tables that lay out the changes in the EUC program and the total weeks of benefits that will be available, with and without EB. A clearer picture of the complex end results than my prose could manage.


McConnell Tax Cut Bill Forgets Low-Income Workers

September 23, 2010

As expected, Senate Minority Leader Mitch McConnell (R-KY) has introduced a bill that would permanently extend all the Bush-era tax cuts.

He’s vowed to block the President’s alternative, which would extend only those that benefit the “middle class,” i.e., individuals earning less than $200,000 and married couples with incomes below $250,000.

The debate has understandably focused on the benefits high-income filers would reap, what would happen if they expired and how much they’d add to the deficit.

A partner in a big accounting firm has crunched some numbers for a hypothetical millionaire in New York City. If we flip them from how much more this fellow would pay if the Bush tax cuts expire to what he’d gain under the McConnell bill, we see that he’d have at least $46,130 more next year — and, barring serious financial mishaps, every year thereafter. Enough to keep him in new BMWs for the rest of his life and then some.

But what about workers at the bottom of the income scale? Seems that McConnell has overlooked them — or simply doesn’t care. Because his bill would wipe out expansions in the Child Tax Credit and the Earned Income Tax Credit that were part of the economic recovery act.

The National Women’s Law Center forecasts the results. Here’s what its brief says, with some fleshing out of my own.

Child Tax Credit. The earned income threshold for claiming the partially-refundable Child Tax Credit would rise from $3,000 to $12,750. As in the past, the threshold would then be annually adjusted to rise with the rate of inflation.

This would not only make the credit unavailable for very low-income families. It would reduce the amount of the credit for numerous still-qualifying families. NWLC says that 12.9 million taxpayers would lose a total of $8.4 billion — all but 2% of them in the bottom two-fifths of the income scale.

The Center on Budget and Policy Priorities has also analyzed the impacts of a return to the 2001 version of the tax credit. Based on what were then current Census data, it figured that families with about 18.1 million children would either lose the whole credit or see it significantly reduced.

A family with one full-time minimum wage worker and two children would immediately lose nearly $1,500 — more than a month of wages. Some 600,000 children would fall into poverty.

Earned Income Tax Credit. The fully-refundable Earned Income Tax Credit would no longer provide any additional amount for workers with more than two children. At the same time, the so-called marriage penalty would return to its pre-2009 level. This means that the credit for a married couple would begin to phase out at close to $2,000 less than it does now.

NWLC says that 11.7 million taxpayers — 91% of them in the bottom two-fifths of the income scale — would lose nearly $3.2 billion.

Impacts on Single Mothers. According to NLWC, more than 30% of single mothers would no longer get any benefit from these tax credits. The new Census figures give us some perspective on what this would mean.

In 2009, more than 4.4 million households headed by women lived below the poverty threshold. For a mother with two children, the threshold was just $17,285. But a great many of these woman-headed households had incomes way below the applicable threshold. The average gap between their incomes and this threshold was $9,218.

A shocking 54.3% of children in woman-headed households lived below the poverty threshold. At least some of their mothers — or other women they were living with — gained cash benefits from the Child Tax Credit and/or the EITC.

Clearly, the McConnell bill would make their hardships even worse.

But would it be okay if the tax credit provisions were fixed? Not by me. Surely we have better things to do with $1 trillion than help the wealthiest 2% or so of Americans gain a greater share of the nation’s income.

But if we’re going to have all the tax cuts extended, even temporarily, let’s make sure we’re not financing the purchase of new BMWs at the expense of low-income workers.


Code Blue For TANF Emergency Contingency Fund

September 12, 2010

Back in March, I wrote about the need to extend the TANF Emergency Contingency Fund. It seemed at the time that the extension stood a good chance of passing as part of the then-latest version of the jobs/tax break extender bill — the American Jobs and Tax Loopholes Closing Act (H.R. 4213).

The House had twice passed an extension — once in March as part of the Small Business Jobs and Infrastructure Act (H.R. 4849) and again in May as part of H.R. 4213. But the small business bill is still hung up in the Senate. And the big jobs/tax break bill was ultimately whittled down to just a temporary extension of expanded unemployment benefits.

So here we are nearing the third week of September, with the Fund due to expire at the end of the month.

Republicans seem dead set against more stimulus spending. The Obama administration seems reluctant to step up to the plate, though Jared Bernstein, the Vice President’s Chief Economic Advisor, has blogged in support of an extension.

Hard to know whether the Democratic leadership in Congress will tee up the extension again or focus on high-stakes fights, e.g., the expiring Bush tax cuts, the energy/oil spill legislation, must-pass appropriations and maybe (given the egg recall) the long-pending bill to strengthen the federal food safety system.

Some of the major liberal research and advocacy organizations are trying to get the extension on the agenda — notably, CLASP, the Center on Budget and Policy Priorities and the Center for American Progress. But this is not a typical liberals versus conservatives issue.

Kevin Hassett, an economist at the quite conservative American Enterprise Institute, told the Senate Finance Committee that a major expansion of at least the subsidized employment provisions of the Fund would be a good idea, if focused “as much as possible” on private-sector jobs.

Beyond the Beltway, the bipartisan National Governors Association, National Conference of State Legislators and National Association of Counties have all come out in favor of an extension. Governor Haley Barbour of Mississippi, former Chairman of the Republican National Committee and now  Chairman of the Republican Governors Association, wants an extension too.

At least two West Coast nonprofits are drumming up grassroots support. One — Mission Neighborhood Centers — is a social services provider in San Francisco. The other — Internet Archives — offers free access to digitized books and other resources.

What’s brought these strange bedfellows together are the subsidized jobs programs that state and local agencies have created or expanded using Emergency Contingency Funds.

Those who follow this blog know that I’ve got serious reservations about the District’s use of these funds for its Summer Youth Employment Program. I’ve none at all about programs like San Francisco’s Jobs Now!, which has placed more than 3,600 unemployed and underemployed low-income parents in temporary jobs that build workplace skills and experience.

Or Mississippi’s STEPS, which also focuses on low-income parents and provides phased-out wage reimbursements intended to promote regular hires. Or Tennessee’s program, which has focused on a rural county where the unemployment rate shot up to 25% after an auto plant closed.

All-told, 36 states are operating subsidized jobs programs. A new CBPP brief indicates that they’ve placed more than 250,000 parents and teens.

Only four states will indefinitely continue their year-round programs at the current level if the Emergency Contingency Fund isn’t extended. Twelve will immediately terminate their programs, and three will continue operations only till their current funding runs out.

This will be bad for the many thousands of people who will be thrown out of work and for those who would be eligible for future placements. It will be bad for small businesses that have managed to stay afloat and, in some cases, expand because they’ve had subsidized workers. It will be bad for our economy as a whole, which, as we know, needs more consumer spending.

Close to home, the District could claim nearly $27.8 million if Congress passes the extension that’s been under consideration. It could use the funds for a broad range of purposes, including support and training for its TANF participants, homeless services for families and (dare one hope?) a robust, well-targeted subsidized jobs program.

So if you live outside the District, I urge you to sign my petition (a new one) in support of an extension of the Emergency Contingency Fund. And if you’re disenfranchised like me, please pass the word along.


More Light And A Lot More Heat On DC Summer Youth Employment Program

August 5, 2010

Monday’s hearing on the District’s troublesome Summer Youth Employment Program lasted more than eight hours. Many witnesses — most of them SYEP participants who, I gather, had been rounded up and possibly coached. Also invited government witnesses and some top-flight advocates for homeless and other poor D.C. residents.

Many pleas for the requested seven-day extension — a chance to earn more, learn more and have something to do besides hang out on the streets and get into trouble.

Cogent opposition from the Brookings Institution’s Martha Ross and the advocates, whose principal concern was the diversion of funds from homeless services, cash assistance and better job training for TANF participants and a swifter, more accurate case management system.

A blast from the DC auditor on the administration’s chronic practice of ignoring SYEP budget constraints. “Irresponsible … a threat to other vital District programs and the District’s fiscal stability.” Violations of the federal and District anti-deficiency laws, which, among other things, prohibit agencies from authorizing spending in excess of approved budgets.

An account of the run-up to this year’s raid on the TANF Emergency Contingency Fund from the Associate Chief Financial Officer. A raking over the coals for keeping the Council in the dark.

A strong defense of the SYEP from Joe Walsh, Director of Employment Services. The largest program in two decades. The largest in the country, in fact. Most participants from the three wards with the highest unemployment rates. About 30% of them from families who receive public assistance. The usual enumeration of benefits to participants. Diverse administrative improvements.

Considerable distress and frustration on the part of Councilmembers, who rightly felt jammed by the last-minute extension request and, more importantly, the administration’s utter disregard for the budget process.

Seems they thought the $22.7 million appropriated for the SYEP was what the administration was supposed to spend, not a minimum that could be freely augmented from other accounts without so much as a heads-up to the oversight committee.

Seems that Councilmember Tommy Wells, Chairman of the Human Services Committee, believed that the Department of Human Services would spend the TANF Emergency Contingency funds according to the allocations submitted during this year’s budget deliberations. Blindsided by the department’s transfer of $8.4 million to DOES.

But there really wasn’t much the committee could do — or the full Council either. Back in May, DOES had met with CFO staff about the costs of a program enrolling 21,000 participants for seven and a half weeks, rather than the authorized six. CFO staff told DOES it had funds for at most four weeks of wages. DOES then identified the TANF funds as the way to close the gap.

It assured CFO staff that the Emergency Contingency funds could be used because 80% of participants had addresses indicating they were eligible for TANF. Apparently no one in the CFO’s office questioned this dubious methodology.

So now SYEP participants are owed about two weeks of wages that can only be paid by tapping a source outside the approved budget. And since the Council found out about this only days ago, it hardly had time to go back through the budget and find another way to cover the overrun.

But it did what it could. It soundly defeated the proposed extension. This reportedly leaves $4.3 million in TANF funds that ought to go back to DHS.

It also leaves some big issues on the table. Where will DHS find the additional funds to provide shelter or other housing for the District’s many homeless families? Will it use any of the funds passed back to provide emergency relief to the families who’ve got no place to stay? What will happen with its TANF job training and other initiatives?

And what can the Council do to ensure that whoever directs the SYEP doesn’t again commit to a larger, longer program than the budget can cover?