What Do Our Federal Income Taxes Pay For?

April 24, 2017

We who didn’t request an extension (gloat) have filed our federal income tax returns. There’s a lot of chatter about where our taxpayer dollars go — even a Congressman who tells his constituents that they don’t pay his salary.

We do, of course. But more generally, what do we pay for? The National Priorities Project answers again this year. So I put what I owed into its online tool and converted the dollars into shares, since these would be the same for everyone.

Here’s what I learned.

The same shares would be true for everyone who owed income taxes. Only the actual dollars would differ.

The single largest share of my income taxes went for healthcare programs29%. About 80% of this helped pay for Medicaid and Medicare (one of its three funding streams).

Next largest share to the military — roughly 24%. Only about 20% of this went for personnel costs of any sort.

NPP also itemizes, for the interested, what the Pentagon pays for nuclear weapons and to Lockheed Martin, whose trouble-plagued F-35 fighter plane has cost us nearly $4 billion. An email from NPP tells me that we pay over six times more to Lockheed than what we spend on all foreign aid.

Third share went for interest on the debt — 13%. You may recall that Congressional Republicans used the government’s urgent need to borrow more so it could pay what it owed as a lever to force down spending through sequestration and the budget caps. And that they later actually shut down the government in hopes of defunding Obamacare.

Doubtful they’ll access their tax receipts. But the bill that simply suspended the debt ceiling expired a little over a month ago. And some are warning of another skirmish.

My fourth largest share paid for unemployment and labor programs — 7.5%, presumably everything federal agencies spend to get people into — or back into—the workforce.

This same share supports what the Labor Department contributes to unemployment insurance benefits when times are especially hard and the rules it issues and enforces to protect workers from workplace health hazards and wage theft. The latter now include updated overtime pay requirements, but may no longer, coming sometime next year.

Then veterans benefits — about 6%. This includes, among other things, payments veterans receive when they’re disabled while serving, the GI bill, home loans and pensions for low-income surviving spouses. Most of the rest of this share goes to the problem-riddled Veterans Health Administration.

Next come food and agriculture — nearly 5%. Here’s where we find, among other things, SNAP (the food stamp program) and the Agriculture Department’s other nutrition aid programs.

Also, in an altogether different mode, the subsidies Congress gives to farmers — mostly big agribusinesses — to cushion them against price drops, insure them against other business risks and more.

Government next — 4.2%. NPP breaks out only three pieces, all enforcement — and two clearly aimed at ramped-up actions against undocumented immigrants and would-be’s.

But we’ve got to assume, I think, that this line item includes spending for all non-military personnel and activities, including Congress members’ salaries — $174,000 this year, plus benefits.

Transportation gets a 3.2% share. Everything the Transportation Department does gets some share of this share. including controlling air traffic and, as all flyers know, vigilantly trying to keep us from hijacking or blowing up planes.

Education gets a 2.8% share, according to NPP’s analysis. I’d put it at 3.2% because NPP classifies Head Start and related programs as community spending.

It’s true that Head Start and Early Head Start for younger kids do more than ready them for kindergarten, e.g. screen them for health and developmental problems, link families to needed services. But their primary aim is starting low-income children off on as level a playing field as possible.

Wherever you put it, Head Start’s share is far from the largest NPP breaks out. That distinction goes to Pell grants, work-study and other forms of federal aid for lower-income college students. These rolled together receive a larger share than federal aid to elementary and secondary schools — 35 %, as compared to 27%.

And I’d be remiss not to note that the National Endowment for the Arts, which Trump wants to eliminate, gets less than .002% of education’s share, as NPP calculates it — and roughly a tenth of that for everything our federal government uses our income tax dollars for.

Shifting Head Start and EHS, as I have, leaves housing and community with a 1.7%, rather than a 2.1% share.

Here we have everything the Department of Housing and Urban Development spends to help make housing affordable for lower-income people, shelter and temporarily house those who are homeless and make lower-income neighborhoods better places to live, e.g., by attracting businesses and thus job opportunities, providing needed services.

The money goes to local communities as grants. The largest of these is the Community Development Block Grant — another program on the Trump hit list because it’s “not well-targeted to the poorest populations and “has not demonstrated results.”

Followers already know what I — and many others — think of that line of argument.

Energy and environment get a 1.6% share of our income taxes. Seems it’s likely to shrink to an even smaller fraction, what with Trump’s seeking a 31% cut in the Environmental Protection Agency’s budget, crippling its ability to fulfill its legal responsibilities for protecting us from range of environmental health hazards, including climate change.

Lastly, we have, in rank order international affairs and science. These together get about 2.8% of the total.

Say you don’t like the way the budget apportions your federal income tax dollars. NPP has a tool that lets you reallocate them — and gives you trade-offs.

These are mostly shifts from the $528.5 billion Defense Department budget, which NPP has long viewed as excessive. Interesting to see what even small nicks could do for lower-income people.

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How Many More Families Will Have No Affordable Housing?

February 9, 2017

We all, I think, know at least a few things about affordable housing. First, there isn’t enough of it. Second, not everyone who talks about affordable housing means the same thing. Nor do all affordable housing policies aim to help the same type(s) of people.

Third, an effective strategy requires multiple programs, some potentially funded by multiple sources. Which brings us to what we don’t know — impending budget decisions at federal, state and local levels.

Uncertainty at the Source

So far as federal funding’s concerned, we don’t know yet what Congress will do — only that it must do something to avert a government shutdown in late April and that there’s no consensus on what it should do, even among the Republican majority.

Nor, one must always add, what the President will ask it to do. He campaigned on a promise to actively support a repeal of the current ceiling on defense spending — currently $32.5 billion higher than the ceiling on non-defense spending that depends on annual appropriations..

Both the White House and Congress have already done a workaround for defense, but not so as to force a larger cut in non-defense. Trump, however, said he planned to reduce non-defense spending by a penny on the dollar each year, while holding Social Security, Medicare and Medicaid harmless.

That would slash funding for the already shrunken non-defense, discretionary part of the budget by roughly 26% in real dollars over the next nine years. No hint yet how he would parcel out the cuts — or even whether he will now go ahead and try.

Spillover to the States

All but three states must have budgets for the upcoming fiscal year by July 1. So they may or may not have a good fix on what to expect for affordable housing programs. All but one must balance its budget, though laws differ on what that means.

A large majority must end the year with no more spent than received in tax revenues, fees and federal funds, including grants like those for affordable housing programs.

So what may have seemed to balance when a governor signs a budget may turn out not to be — even if some of Trump’s recent and promised actions don’t throw the economy into a recession. As in the past, shortfalls will force unplanned, disruptive cuts.

Impacts at Community Level

Some affordable housing funds from the U.S. Department of Housing and Urban Development go to states, which then parcel them out. But others that make housing affordable for the lowest-income people go instead directly to local housing authorities or to a designated organization within a network HUD calls a continuum of care.

The latter, however, is only to house particular groups of the lowest-income people — those who’ve been homeless for a long time or recurrently and have at least one disability and others chosen for time-limited subsidized housing.

These funds are iffy, as all HUD’s affordable housing funds are. So we’ve got, at best, a funding range for housing vouchers — the heftiest tool to make housing affordable for the lowest-income people.

These vouchers come in two flavors. One enables people to rent units at market rate by limiting their share to 30% of their income. The other subsidizes rents on certain units in housing projects — a needed support for operating expenses, since tenants are paying only the same limited share of their income.

The voucher programs got whacked by the across-the-board cuts required by the same law that gave us the spending ceilings. Housing authorities held onto vouchers freed up when tenants no longer qualified for them. Some also yanked vouchers from people who’d finally made it to the top of the waiting list.

Additional funds have enabled the agencies to put the withheld vouchers back in use. But merely sustaining them will require more funding because, as we all know, rental rates are rising — in some communities, soaring. Utility rates are rising too, and they’re included in covered costs.

Meanwhile, incomes for the lowest fifths of the scale have, on average, actually shrunk. This is due partly to real-dollar wage losses for the lowest-paid workers and partly to the absent or miniscule cost-of-living adjustments in the social insurance benefits that nearly half the households with vouchers depend on.

So vouchers must pick up a greater share. This means that level-funding won’t cover all vouchers in use. A year-long continuing resolution would cause a nationwide loss of roughly 108,500 vouchers, the Center on Budget and Policy Priorities estimates.

The bill that the Senate has already passed would bump up funding for both the so-called tenant-based vouchers and those attached to units in housing projects. The House bill, which still awaits an all-member vote, would also increase both, but give give less to the former.

If both chambers agree to go with the Senate bill (big if), housing authorities would still be shy about 26,575 vouchers. No way that state and local investments in affordable housing development can produce that many more units within six or so months.

Nor can the states and cities that use their own revenues to fund vouchers plow that much more into their programs. In fact, some of the affordable units they now have may disappear because the contracts with project owners are time-limited.

But the people who need those vouchers will still be homeless or potentially so because they’re paying at least half their income for rent. So what state and local budgets lose in federal funding for vouchers, will drive up needs for other resources.

These include, obviously, homeless services, including shelters. Don’t look to the federal government to supply what’s needed. Neither the House nor Senate bill would provide even a quarter of a million more for homeless assistance grants.

Other budget pressures are many and various. For example, more children will come within the purview of child welfare agencies because they’ll be living in homes unsafe for them due to domestic violence, unintended, but still harmful neglect and/or egregiously unhealthful physical conditions.

Healthcare costs themselves will rise. Schools will face needs for more remedial education and other services to compensate for the effects of hunger, parental stress and just plain moving around from place to place because their parents or other caregivers can’t afford rent.

So that’s a bird’s-eye view of the uncertainties — and partial certainties — that state and local policymakers and the people they were elected to serve face now. Members of Congress were elected to serve them too. But you’d be hard put to see that in the agendas the majority leaders have put front and center.


More Grim News About The Affordable Housing Crunch

September 26, 2010

Shortly before the Census Bureau issued its new poverty/income report, the Bureau and the U.S. Department of Housing and Urban Development released figures from their latest housing survey. Bad news about the affordability of rental housing, especially for households below the federal poverty line.

In 2009, about 18.6 million renter households paid 30% or more of their current income for rent,* i.e., at or above the HUD cutoff for affordability. That’s 52.6% of all renter households. Close to a third paid at least half their current income for rent, aptly characterized by HUD as a “severe rent burden.”

As we’d expect, housing costs were a greater challenge for low-income households. About 73% of them — 6.8 million households — paid at least 30% of their current income for rent. Rent consumed half or more of all current income for 5.6 million households — just under 60%.

The Center on Budget and Policy Priorities reports that the severe rent burden figure for low-income households represents a 17% increase since 2007 — 800,000 more households in just two years. Compared to 2003, the increase is a whopping 45% or 1.7 million more households.

These figures reflect at least four converging factors.

One is the continuing shrinkage of affordable housing stock. Earlier this year, the National Low Income Housing Coalition reported that 6.3% of affordable units had been lost between 2001 and 2007.

Shrinkage in the District of Columbia has been more dramatic — more than a third of low-cost rental units lost during about the same time period.

Two other factors are both impacts of the recession. One, of course, is the prodigious number of jobs losses, which have left many households with less or no current income. What might have been affordable for them a couple of years ago now leaves them without enough ready cash for basic needs.

The other, related impact is foreclosures, which have increased competition for the limited number of moderate and low-cost rental units available. CBPP reports a nationwide 11.3% increase in rental costs since 2006. The old law of supply and demand at work.

A fourth major factor is government housing policies. At the federal level, rental assistance for low-income families has failed to keep pace with rising needs. Last year, CBPP reported that total funding for low-income housing programs in 2008 was $2 billion (5%) less than in 2004.

For 2009, Congress appropriated several hundred million dollars less for housing vouchers than agencies would have been eligible for if allocations been based on use and costs — this notwithstanding enormous waiting lists and rising rents.

CBPP estimates that funding for the current fiscal year is just about enough to renew all the vouchers families were using in 2009. The same is true for the President’s proposed Fiscal Year 2011 budget, though it would also provide funding for about 10,000 new vouchers for people with disabilities and families who are homeless or at risk of homelessness.

So we’re looking here at about 2.2 million vouchers, assuming (as we shouldn’t) that Congress goes along. That would leave an enormous gap between families in need of housing assistance and the help the federal government will provide.

Here in the District, the waiting list for affordable housing has reportedly grown to more than 26,000 households. The Fiscal Year 2011 budget will provide local funding for about 80 more units. Not a penny more for the tenant-based vouchers that allow households to live in apartments with market-based rents.

Even in better times, the District never came close to the targets or funding levels recommended by the Comprehensive Housing Task Force — a diverse group of experts commissioned to produce a long-range housing strategy for “an inclusive city.”

So the Census/HUD figures aren’t just a recession-caused blip. They’re the cumulative results of long-standing failures to give affordable housing the priority it deserves.

* The survey figures include households that reported paying 100% or more of current income for rent. The spreadsheets note that these may reflect a temporary situation, living off savings or a response error. I have followed CBPP in including them in my calculations.


Will Deficit Reduction Trump Investments In Economic Recovery?

May 19, 2010

It seems that conservatives have scored a big win. They’ve got the federal deficit in the bull’s eye. The debt we’re supposedly leaving to our children has become the unimpeachable reason for curtailing, if not altogether ditching, further investments to cushion the impacts of this prolonged recession and jump-start growth in the labor market.

Consider that Congress still hasn’t extended the expanded unemployment benefits and COBRA subsidies created by the economic recovery act beyond early June.

Nor has it acted on the looming crises resulting from the shortfalls in state and local budgets. The House is scheduled to vote on an extension of the enhanced federal match for state Medicaid programs tomorrow, but the outcome is uncertain because Members are queasy about the cost. This  is also the case with key provisions in Congressman George Miller’s Local Jobs for America bill.

The Center on Budget and Policy Priorities reports that at least 45 states and the District of Columbia have cut back spending in core areas like public health, elementary and secondary education and services for elderly and disabled people.

Virtually all these will cause further job losses–not only in the programs themselves, but in businesses that supply the programs with goods and services. Thirty states and the District have also instituted hiring freezes and/or layoffs in their own workforces.

All these and a host of other cuts will feed a vicious cycle. More unemployed people exerting pressures on the safety net, spending less and, of course, paying less in taxes. Perhaps, in fact, eligible for more in refundable tax credits than they pay into the states’ coffers. Retailers buying less from their suppliers, and all of them paying less in taxes too.

But, we’re told, the federal government has to address the rising deficit and related level of federal debt. No doubt about that. If we just keep on keepin’ on, spending will outpace revenues, even after the economy fully recovers.

So we’ll borrow more. The Congressional Budget Office says that the ratio of federal debt to the nation’s gross domestic product (the total value of all goods and services produced) will rise from somewhat below 60% during the coming decade to 79% by 2035. Looking ahead to 2050, CBPP projects a debt level in excess of 300% of GDP.

The consensus view is that sustained high levels of government borrowing drive up inflation and interest rates, making borrowing more expensive for individuals and businesses, as well as the government itself. And revenues that could otherwise be spent on domestic investments must be diverted to paying interest on the debt.

Economic growth slows. And ultimately, some say, investors will lose confidence and shift their funds out of investments based on the U.S. dollar. Today Greece. Tomorrow America.

But that tomorrow is a hypothetical long way off. Right now, we’ve got a jobs crisis and a lot of collateral damage. So it’s very disturbing to see concerns about the long-term, structural deficit override concerns about the here and now.

In February, Lawrence Mishel, president of the left-leaning Economic Policy Institute, and David Walker, CEO of the fiscally-conservative Peterson Foundation, co-authored an answer to the President’s quandary on the deficit. Address jobs now and the deficit later, they said.

CBPP seems to come from the same place. It recommends that Congress allow the 2001/3 tax cuts for high-income filers to expire and, in the short term, use the revenues generated to fund policies that will stimulate economic growth and job creation.

But any proposed tax increases, even those that would affect only the top 2% of the wealthiest households, stir up a maelstrom of opposition–as, in fact, has the President’s entire Fiscal Year 2011 budget, notwithstanding its selective freeze on discretionary domestic spending.

Perhaps the President’s new fiscal commission will come up with a balanced plan to control the long-term deficit. But the need for that shouldn’t be used to block spending needed now to keep the devastating impacts of this recession from getting worse.


WIC Works

April 9, 2009

Last Thursday, Children’s HealthWatch hosted a policy briefing on WIC, aka the Special Supplemental Nutrition Program for Women Infants and Children. What a ray of sunshine in the midst of so much gloomy news! Because here’s a cost-effective program that’s been shown to work.

WIC provides coupons for food purchases tailored to the individual nutrition needs of eligible pregnant women and children up to the age of five. Eligibility here means at or below 185% of the federal poverty level, plus a determination of “nutrition risk.” Many conditions qualify as nutrition risks, including being underweight, overweight, anemic or just plain “food insecure,” i.e., not having ongoing access to enough of the right kinds of foods for a healthy life.

WIC also provides various kinds of nutrition education and, very importantly, links to local health services. It helps ensure prenatal care, childhood immunizations and regular checkups. So it’s a linchpin among our safety net programs.

And a cost-saver. According to a report by the Partnership for America’s Economic Success, every $1.00 spent on WIC saves as much as $3.13 in Medicaid costs, plus significant other costs linked to the impacts of food insecurity.

WIC has a 34-year track record of improving the health, growth and development of poor children in their critical early years. And it will soon–in some states already does–offer a much improved food package. Many more choices, including (finally!) fruits and vegetables, whole grain and soy products and other foods that reflect up-to-date research on healthy eating.

WIC is up for reauthorization this year. That’s what occasioned the briefing. Panelists had some recommendations for additional improvements. Most of these would preserve and strengthen the program’s capacity to do what it’s already authorized to do.

But there’s also a need to require some further improvements in the food package–notably an increase in the allotment for fruits and vegetables. USDA doesn’t need authorization to do this. It needs a mandate that will supersede an arbitrary cost-control decision made during the last Administration.

A bigger issue is funding because, like most federal programs, WIC depends on annual appropriations. The Obama administration has proposed a $1 billion per year increase for child nutrition programs, including WIC. This, the budget says, would enable WIC to serve more than 9.8 million mothers and young children. That’s about 1.1 million more than the program served in 2008.

Would the increase be enough to serve the growing number of pregnant women and young children who are at risk of malnutrition due to the depression? Would it enable states to offer a wide variety of healthful, culturally-appropriate food choices, as federal regulations now permit? That’s hard to say.

But what’s clear is that investments in WIC pay off in healthier children and, ultimately, healthier, more productive adults. Among other things, as one briefing panelist said, WIC is “the best obesity prevention program we have.”

What’s also clear is that poor children can’t wait until our economy improves or until we get better control of the projected budget deficit. The first three years of life are the most critical period for brain development. That’s when the neural connections related to hearing, vision and language are made. So we can’t decide to save money now and save at-risk children later.

Something for Congress to bear in mind as it looks for ways to trim spending.