Next Act in the Congressional Fiscal Follies

February 6, 2013

When Congressional Republicans agreed to temporarily suspend the debt ceiling, they and their Democratic colleagues left chunks of the so-called fiscal cliff in place. Or rather, they left one in place and pushed the other ahead to March 1.

The deferred chunk is sequestration, i.e., the across-the-board cuts that were supposed to give the bipartisan Super Committee a compelling incentive to agree on a more sensible deficit reduction plan.

Supposed to, but as we all know, didn’t.

As I’ve said before, no one likes the across-the-board cuts — a genuine bipartisan sentiment here. But we also seem to have a bipartisan agreement that they’re more likely to happen than not.

When the Washington Post alerted us to this next act in the fiscal follies, it focused on the impacts on the national economy. So have most other news articles and commentaries.

Not so bad, the Post gave us to understand.

A nick in economic growth — earlier estimated by the Economic Policy Institute at 0.6%. But “the financial markets” — those barometers of investors’ hope and fears — aren’t sending up distress signals.

Defense contractors certainly are. Likewise governors and mayors — as well they might, since federal grants account for, on average, about a third of state revenues. Sequestration would cut many, though not all those grants.

States can expect further revenue losses — and more safety net spending pressures — because of the job losses the across-the-board cuts will cause, both directly and indirectly.

We don’t know how many jobs will be lost. The Bipartisan Policy Center has estimated a million over the next two years.

Another widely-cited study put the total at close to 2.1 million this fiscal year, based on the assumption the cuts would begin when originally scheduled, as was the Center’s estimate.

Well, the economy can’t afford even a nick, as the latest economic growth report reminds us. Or should I say, economic non-growth report?

Nor can we afford more job losses, when we’re still shy about 3.2 million of the jobs lost since the recession set in — and actually need to create an even larger number because we’ve got more working-age people now.

Republicans and Democrats agree that we need to create more jobs, though differ dramatically in their views on how to do that.

At this point, however, job losses are in the forecast because there’s a huge bipartisan gulf that would have to be bridged to stop them.

Leading Democrats say that any alternative to sequestration must balance spending cuts and revenue raisers — one of the President’s fundamental principles for deficit reduction.

Republicans say they’re done with tax increases, based on the relatively piddling $620 billion they agreed to as part of the partial January fiscal cliff deal.

And they clearly want to halt the across-the-board cuts for defense, while preserving the overall savings from sequestration — $85.3 billion for the current fiscal year.

That would mean shifting all the cuts to the non-defense side of the ledger, though not necessarily to the vast number of programs and activities now targeted for cuts.

The sequestration replacement bill the House passed in December folded in the $16.5 billion cut in the food stamp program that was part of the House Agriculture Committee’s Farm bill — and made it bigger.

It also adopted some earlier “savings” that came out of the House Ways and Means Committee — all detrimental to low and moderate-income people.

Other provisions undermine the Dodd-Frank financial services reform legislation and the Affordable Care Act — a stab in addition to what was already in the Ways and Means plan.

House Republicans know full well that the Democratic majority in the Senate won’t swallow all these “poison pills” — a term commonly used for provisions designed to kill a piece of legislation.

They also now seem to know that Democrats won’t agree to a cuts-only bill to replace sequestration.

So they’re inclined to take the sequestration savings and move on to the next episode in the fiscal cliff follies — the expiration of the continuing resolution that’s funding the federal government.

That will happen on March 27, unless both parties in Congress come to some kind of agreement. And they probably will.

But in the meantime, we’ll have what Matt Yglesias at Slate has aptly called “the idiocy of sequestration.”

Anyone who doubts this need only read what the President said yesterday in his call for a further sequestration delay and House Majority Leader John Boehner’s preemptive response.

NOTE: I’m indebted to Joan Entmacher, the Vice President of Family and Economic Security at the National Women’s Law Center, for the term “fiscal follies.” She used it in a very informative webinar co-sponsored by the Center and the Coalition on Human Needs.

You can view the webinar by clicking the link at the bottom of this page.


One Hand Clapping for Last-Minute Milk Price Save

January 7, 2013

No quick spike in milk prices after all. The “fiscal cliff” package the House and Senate passed includes an extension of most, though not all provisions in the 2008 Farm Bill, including the dairy price support programs.

Many dairy farmers are unhappy in part because they want the programs replaced with a voluntary program that would insure participants a formula-based profit margin.

This was part of the new Farm Bill the Senate passed and also in the new Farm Bill that languished in the House — reportedly because House Speaker John Boehner couldn’t count enough votes for it.

Not all dairy farmers wish the new Farm Bill had become law, however. Some are fine with the existing programs, assuming positions their associations have taken are a reliable indicator.

The milk and food manufacturers are also relieved because the insurance program would have conditioned full payouts on production cuts — thus presumably driving up the prices they would have to pay.

So we’ve still got dairy subsidies, but their costs aren’t offset as they would have been in the revamped Farm Bill. Congress instead took the money out of SNAP (the food stamp program).

Benefits are intact, for the time being. The $110 million needed to protect dairy farmers from profit losses came out of the portion of SNAP that funds nutrition education programs. (Anyone else see the irony here?)

Would that this were the end of SNAP cut issues. But it won’t be.

The current benefits provisions might seem protected through the end of this fiscal year, since Congress extended them along with the dairy price supports.

But it will be looking for significant savings to replace the briefly-suspended across-the-board cuts.

Perhaps even larger savings — and all on the spending side — since Republicans say they won’t raise the debt ceiling unless the additional borrowing authority is matched, at least dollar for dollar, with spending cuts.

And they’ve got their eyes set on entitlements, e.g., programs that guarantee benefits to everyone who meets the eligibility criteria. Though their pronouncements often name Social Security and Medicare, SNAP falls into that category too.

Whether SNAP cuts become part of the next “fiscal cliff” deal remains to be seen. So does what happens when the extended provisions of the Farm Bill expire at the end of September — whether SNAP falls under the spending-cut knife before or not.

What we see already, however, is that the Farm Bill picks winners and losers — not only among dairy farmers, but within the agriculture industry as a whole.

We consumers win and lose also — mostly the latter, I think.

In the narrowest sense, we were winners in the last-minute milk price fix, since without it, milk prices could have more than doubled.

In the larger sense, however, we’re losers because we pay for the dairy subsidies twice over — both with our taxpayer dollars and in the prices we pay at the grocery store, though the latter are also jacked up by other price-manipulating mechanisms.

Maybe not a big deal for those of us who can afford a bit extra for milk, yogurt, cheese and a variety of other processed foods, e.g., bread, soups, lunch meats.

But for SNAP recipients trying to get along on a per-person average of about $4.46 a day, those extra pennies make a difference.

Learning how to eat healthfully on the cheap too, but Congress picked them as losers on that.

A Happy New Year to You and Two Million Jobless Workers

January 2, 2013

Before I knew Jesse, I thought that New Year’s Day was mainly for recovering from hangovers — and for making resolutions. Nothing like a headache to make you resolve to lead a better life.

Now I know the day is also for eating greens (for money), black-eyed peas (for luck), some sort of pork (we’re not sure for what, though I’ve read it represents progress) and cornbread (for nothing, so far as I know, except that it goes well with the mandatory dishes).

I’ve made the usual resolutions — eat less, exercise more, etc. For the blog, I’ve resolved not to be so persistently gloomy and angry. Surely there’s some unequivocally good news to impart, even in these troublesome days.

I know from past experience that the new leaves I vow to turn over usually wilt before the crocuses sprout. But it’s surprisingly easy to begin the new year with a cheerful post.

Because more than two million jobless workers who were about to lose their unemployment insurance benefits will get them after all, thanks to the last-minute, barebones bill Congress passed to pull us back from the so-called fiscal cliff.

The workers, as you probably know, are those who’ve been actively looking for new jobs for more than 26 weeks — the period that most regular state UI programs will cover.

They’ve been getting federally-funded benefits under the Emergency Unemployment Compensation program that was originally part of the Recovery Act.

The last extension of the program kept it alive, though in shrunken form, through December.

So all those jobless workers faced a hard cut-off of their EUC benefits — this at a time when there are still more than three job seekers for every job available.

Another million or so workers would have had no UI benefits by April — and by the end of the year, about three-quarters of all jobless workers.

The belated, but welcome action by Congress will be good not only for many of these workers, but for our slowly recovering economy, which will surely need all the help it can get in the months to come.

As go-to economist Mark Zandi has testified, extending UI benefits will deliver a bigger bang-for-the-buck boost to the economy than virtually any other measure in the stimulus arsenal.

The Congressional Budget Office recently reported that the spending will save and/or create 300,000 jobs — or looked at another way, that 300,000 jobs would have been lost if Congress had refused to invest in EUC benefits.

But economists didn’t save the EUC program. We’ve got to give the President credit for insisting on the extension.

More credit, I think, is due to the advocacy organizations that kept the issue on the front burner — and to 134,000 of us in the grassroots who joined the effort.

This in itself is good news because it tends to suggest our voices matter — and, of course, in some cases our votes.

Worth recalling in the months ahead because we who care about poor, near-poor and about-to-be-poor people have our work cut out for us.

UPDATE: I should also have acknowledged the majority of Democrats in the Senate and the House Democrats who urged their colleagues to extend the UI benefits.

Mixed News on Progress Toward Poverty Reduction and Shared Prosperity

November 26, 2012

A year ago, the Half in Ten campaign restarted the clock for cutting poverty in half in 10 years.

As I wrote at the time, it also expanded the goal to include growing a more inclusive and economically secure middle class. It set three top priorities for achieving this — each fleshed out in specific strategies.

Half in Ten established indicators to measure progress (or lack thereof) toward both the poverty reduction and new priority goals.

The first set of figures — mostly 2010 data — were the baseline. Now we’ve got a first year’s worth of updates.

So how are we doing? Not easy to answer within the compass of a blog post.

The full report includes 21 indicators — some new and some reflecting fairly old data because sources either haven’t been updated or lag behind even Half in Ten’s base year.

Half in Ten has a summary of the full set. Also a handful of indicators online.

I’d planned to plow through the online set, using last year’s report for baselines.* But I felt I was losing the forest in the trees. Some of the more interesting indicators too.

A different approach, therefore.

Poverty Reduction

No progress here, as you probably already know. Both the official poverty rate and the somewhat higher rate based on the Census Bureau’s Supplemental Poverty Measure were essentially flat for the two-year period.

Meanwhile, income inequality increased. In 2011, the richest 5% of households got 22.3% of all earnings. The bottom two-fifths got just over half as much — 11.6%.

Good Jobs

Some of the indicators in this group don’t speak to the goodness of jobs, but rather to the issue of whether people have jobs at all.

Generally progress there — except for people with disabilities, whose employment rate dropped from 28.6% to 27%.

More consistent progress on indicators reflecting the employment prospects of young people. For example, the percent of high school freshmen who graduated in four years had increased, as of the 2008-9 school year.

But when we turn to workers in low-wage occupations, we see a partial explanation for the widening income gap.

For full-time workers in service occupations, median annual earnings were just $24,300 — less than $2,000 over the poverty line for a family of four. There’s been no real dollar increase for them since 2000.

Lack of paid sick leave is one — though far from the only — factor depressing yearly earnings for low-wage workers.

In 2011, only 36% of workers earning no more than $11.13 per hour, i.e., slightly below the median or less, had any paid sick leave benefit. This is 4% less than in 2010, suggesting that a lot of not-good jobs got worse.

Strong Families and Communities

Most indicators in this group relate to the current and prospective well-being of children and young adults. And they all moved in the right direction in 2011.

We see, for example, that the teen birth rate continued its downward slide, reaching a record low of 31.3 births for every thousand women in the 15-19 age bracket.

And the percent of people without health insurance dropped from 16.3% to 15.7%. We can credit this to the initial impacts of the Affordable Care Act, Half in Ten says.

Economic Security

End of moderately good news. Only one indicator — food insecurity — remained relatively flat. And even that increased from 14.5% of households in 2010 to 14.9% in 2011.

The percent of jobless workers who received unemployment benefits dropped by 10% to just over half.

Low-wage workers faced a growing affordable housing shortage. In 2010, there were only 58 affordable units available for every 100 very low-income renter households. This is four fewer than in 2009.

No relatively current figures for asset poverty, i.e., less in savings and other cash sources than a family would need to live at or above the poverty line if it had no income stream for three months.

What we know from the indicator is that the percent of asset-poor households increased by 4% between 2006 and 2009, leaving somewhat over 27% of all households at high risk of poverty.

What Will Next Year’s Indicators Show?

Congress has already decided that the unemployment benefits indicator will worsen — unless prospects for long-term job seekers dramatically improve.

It seems on the brink of deciding to let the food insecurity rate rise, since both the House and Senate Farm Bills would cut benefits for half a million households.

But the fate of most indicators — and the people whose lives underlie them — depend on what sort of bargain Republicans and Democrats strike to address the misnamed fiscal cliff.

Half in Ten offers “the right choices” for them — which, of course, are very different from the choices of the right.

* The 2010 figures are supposed to be accessible online. They weren’t when I published this, but I’m told the web tech team is working on a fix.

The Fiscal Cliff No One Is Talking About

August 6, 2012

Well, not no one. But no one with the political clout — and determination — to keep many millions of Americans from falling off a cliff.

And it really is a fiscal cliff — unlike the convergence of action-forcing events that everyone is talking about, i.e., the expiration of the Bush tax cuts and the onset of the across-the-board spending cuts triggered by the Super Committee’s failure to agree on a more sensible way to reduce the deficit.

In late December, the Emergency Unemployment Compensation program will expire, unless Congress extends it.

This, recall, is one of two federal programs that provide benefits for a limited period of time after jobless workers have collected as many weeks of benefits as their regular state programs allow — generally 26 weeks, though fewer in some states now.

Congress has already retrenched both programs.

As a result, the Extended Benefits program — the last phase in the benefits sequence — will shut down by mid-August because the law funds benefits only in states where unemployment rates are higher than they were in the recent past.

That leaves the EUC program. It’s already shrinking, such that jobless workers will soon get, at most, 73 weeks of benefits, counting the 26 most states offer.

The latest state-level unemployment figures suggest that benefits will end sooner in all but seven states and the District of Columbia.

But as things stand now, workers who lose their jobs this month will be on their own if they don’t find work before their state benefits end because the EUC program won’t be there for them.

Nor for workers who’ve already been jobless long to be getting EUC benefits. They’ll face what the National Employment Law Project calls “a hard cut-off.”

Hard indeed, especially when we see that nearly 5.2 million jobless workers have been actively looking for employment for more than 27 weeks — many for much longer.

Those who find work at all look, on average, for about 40 weeks, according to NELP. No wonder when there three and a half times as many job seekers as job openings.

The Congressional Budget Office expects the nationwide unemployment rate to remain over 8% through 2013. Congress has never let federally-funded unemployment benefits expire when the rate was this high.

But it’s a new day on Capitol Hill. Senator Max Baucus, Chairman of the Senate Finance Committee, says the issue isn’t on the radar screen — yet. Not a peep from his counterpart in the House, Congressman Dave Camp.

And President Obama doesn’t seem to be jawboning the issue, though he played a key role in getting the benefits extended last time the Bush tax cuts were due to expire.

This may just be a replay of the last two extensions. Wait till the last minute before enacting some sort of save.

A good strategy for Republicans, who had the leverage to scale back EUC — and for all we know, may have another cutback up their sleeve.

But I wouldn’t bet on it. The price tag of the last extension was about $30.1 billion over 10 years. Another extension would presumably cost less because it wouldn’t have to include funding for the EB program, even for part of the year.

But Congress — and the President — are anxious to come up with a way to halt the across-the-board cuts and still hit the agreed-on deficit reduction target.

They’re for sure going to extend the Bush tax cuts — though when and for whom remains to be seen. Many economists believe they should — at least for all but the wealthiest 2% — because a broad-based tax spike now could set back our sluggish economy recovery.

But the tax cuts will increase the deficit — unless they’re offset by deeper spending cuts or a revenue-raising overhaul of the tax code, i.e., a massive clean-out of the deductions, credits and the like.

I’ve got a hard time seeing Democrats and Republicans come together on the “grand bargain” we’re told could emerge. But ultimately they’ll agree on something.

With all the complex, divisive priorities in play, it’s not hard to imagine the EUC program falling by the wayside.

Party leader will say the answer is more job creation. Jobless workers would no doubt agree.

But in the meantime, those who’ve been looking hard and finding nothing could fall off a cliff and into poverty — if they’re not there already.