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

August 23, 2010

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.

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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?


Is The Jobs Bill Dead?

June 26, 2010

You’ve probably already read that the jobs/tax bill the House sent over to the Senate in late May is dead — at least for the time being.

On Thursday, the Democratic leadership failed, for the third time, to get the 60 votes need to end debate and proceed to a substantive vote. Senate Majority Leader Harry Reid (D-NV) says he’s going to move on to other things unless/until a couple of Republicans come round.

Still, it’s too soon to order a tombstone.

The tax break extenders part will probably rise again. Can’t have those NASCAR race track owners and rum producers contributing more to the federal treasury that we’re given to understand is in such desperate straits.

Perhaps we’ll also see a revival of some of the changes in the tax code that were supposed to pay for the extenders. Wall Street isn’t so popular these days. So maybe the Democrats will try resurrect the weakened version of their proposal to narrow a loophole that hedge fund managers use to pay the lower capital gains tax rate on a substantial portion of their income.

A bigger question mark is the provision that would have closed a loophole used by owners of professional services companies — doctors, lawyers, accountants, etc. — to shield their income from Social Security and Medicare payroll taxes. Billions a year in underpayments, according to the General Accounting Office.

But those deficit-minded Republicans heeded the outcry about harming small businesses that generate jobs. Lawyers are going to put a lot of unemployed people to work? Senator Olympia Snowe (R-ME) must think so. She previously voted for the jobs/tax bill, but wouldn’t support the latest version because the loophole closer was there.

On the other hand, many, if not all, of the real jobs parts of the bill may truly be as dead as the proverbial doornail. They didn’t die of a thousand cuts. But what the Democratic leadership couldn’t get the magic 60 votes for had been whittled down to a sad remnant of what the Senate had previously passed.

The House had already lopped off a month of extended unemployment benefits. By last Thursday, the extra $25 a week that eligible jobless workers had gotten since the economic recovery act was passed had been eliminated. This would have reduced the average weekly benefit to $284 — not enough to lift a family of three above the federal poverty line.

The extension of the enhanced federal match on state Medicaid costs (FMAP) had also fallen victim to price tag concerns. Instead of a straightforward six-month extension of the 6.2% base rate, the bill would have provided states with 3.2% for three months and 1.2% for the remaining three.

About $8 billion sacrificed on the altar of the deficit. No heed to the impacts on the deficit of the job losses ahead as states make further cuts to rebalance their budgets.

As if that weren’t enough, funds the economic recovery act had provided for a modest increase in food stamp benefits were tapped to partially offset the costs of the rest. I understand that somewhere around $9.5 billion was shifted out of the safety net here.

And all for naught. The Republican leadership claimed concern about “job-killing taxes and adding to the national debt.” Fellow traveler Senate Ben Nelson (D?-NE) wanted the whole thing paid for too.

But this may all be a shuck. Los Angeles Times reporter Janet Hook says that the tax breaks the bill would have extended are worth $32 billion. Nearly enough to cover the unpaid-for part of the jobs bill. Did any Republican suggest they be allowed to die?

More likely, as Washington Post blogger Ezra Klein argues, the Republicans are betting that voters will view the adverse impacts on the economy — and, I would add, their personal situation — as evidence that the Democrats have failed.

But will all Senate Republicans actually stand firm on the issue of unemployment benefits? According to U.S. Department of Labor estimates, more than 1.2 million people have just lost the extended unemployment benefits they presumably were counting on. They’re by no means all in “blue” states.

By the time Senators go home for the July Fourth recess, the number will have swelled to more than 2 million. These people aren’t going to be happy. And I think Republicans are going to have a hard time blaming the Democrats. An even harder time persuading them that restoring their benefits would be fiscally irresponsible — a debt we shouldn’t be leaving their now-poor children.

Senator Snowe has suggested a standalone bill extending unemployment benefits as emergency spending, i.e., without an offset. The Democratic leadership has reportedly said no dice. But I doubt this is the last word.

I do, however, fear that it is for the FMAP extension and the other jobs-related parts of the bill. I hope I’m proved wrong.


Worse State, DC Budget Woes To Come If Extra Medicaid Funding Dies

June 14, 2010

Recent weeks have brought us several important updates on state-level budget woes and their impacts on our still-struggling economy and anemic job market.

First came the Commerce Department’s quarterly report on the gross domestic product–a common measure of the country’s economic health. Cuts in state and local government spending reduced the GDP increase rate by half a percent. This translates into a loss of about $72 billion in economic growth.

Then the National Governors Association and the National Association of State Budget Officers issued the results of their latest fiscal survey of the states. Bottom line here is that Fiscal Year 2010 “presented the most difficult challenge for states’ financial management since the Great Depression.” More of the same is expected in FY 2011.

States spent an estimated $74.4 billion less in FY 2010 than in FY 2008. But they would have had to make even larger cuts if they hadn’t received emergency fiscal assistance through the economic recovery act. The single largest part of this was a higher-than-usual federal match on states’ Medicaid costs (FMAP).

Then we got the Bureau of Labor Statistics’ employment figures for May. While nonfarm payrolls showed on increase of 431,000 employees, but all but 20,000 of them were temporary workers hired by the Census Bureau.

State and local government payrolls shrank by 22,000 jobs. The Center on Budget and Policy Priorities reports that this brings the total to 231,000 jobs shed since August 2008, including 100,000 in education.

The American Association of School Administrators estimates that an additional 275,000 education jobs will be lost in the upcoming school year–unless the federal government steps in with more emergency aid.

And here’s the kicker. According to a lengthier CBPP analysis, 29 states and the District of Columbia developed their FY 2011 budgets on the assumption that FMAP would be extended. Without the assumption, projected shortfalls–and, therefore, cuts–would have been even greater.

It was a reasonable assumption. After all, both the House and Senate had passed bills including a FMAP extension. But, as I recently ranted, the House leadership dropped the extension to garner the votes needed to pass its version of the Senate’s jobs/tax cut extender bill.

Now the Senate leadership has put the extension back into the bill, encouraged by outcries from governors and the National Conference of State Legislators.

It’s trying to corral the magic 60 votes needed for a substantive vote on the bill by easing the tax rates applied to hedge fund managers’ incomes and raising more revenues from oil companies.

Hard to tell whether this will work–or, if it does, whether Blue Dogs will again push back when the bill cycles back to the House.

If the FMAP extension fails, the District will have an estimated $77.6 million budget gap to close. Shortfalls identified in CBPP’s analysis range from $85 million in Maine to a whopping $480 million in Washington state.

No way these and other impending shortfalls will be resolved without larger public service job losses. Mark Zandi, an expert in the economics of economic recovery, says they could be at least as large as those we’ve already seen–“in all likelihood measurably larger.”

Do our business-friendly, deficit-minded members of Congress have a grasp on the impacts? We’ll find out soon, when the Senate votes on whether to proceed to a final vote on the jobs/tax bill.


Quick Ways To Help Get The Missing Pieces Of The Jobs/Tax Bill Restored

June 4, 2010

I’ve written elsewhere about the frustration of having no voting representation in Congress. Part of it is writing about pending federal legislation without being able to suggest that my fellow District residents weigh in.

So here’s a brief piece for those of you lucky enough to have Senators–and those of you who live in the District and can pass the word along to fully-enfranchised friends, family and other contacts.

As I recently wrote, the jobs/tax cut extender bill the House passed last Friday was stripped of two important provisions–an extension of COBRA health insurance subsidies and an extension of the enhanced federal match for state Medicaid programs (FMAP).

I’ve created an editable form letter on Change.org that urges Senators to restore these two provisions and also to pass an extension of expanded unemployment insurance benefits ASAP. It’s a quick and easy way to voice your support. And support for the endangered provisions is sorely needed.

For the FMAP extension, AFSCME has established a toll-free hotline–888-340-6521. You could use it to support the COBRA subsidies extension as well.

When you punch in your zip code, you’ll be automatically routed to one of your Senators’ offices. So you’ll need to make two calls. Most critical calls are to Senators who’ve been voicing concerns about deficit spending.


House Jobs/Tax Bill Spells Trouble

May 30, 2010

As many of you probably know by now, the House passed the latest version of the jobs/tax cut extender bill just before it broke for the Memorial Day recess.

The Senate had already packed up. So, once again, jobless workers dependent on expanded unemployment benefits will, at least temporarily, be without checks.

But that’s hardly¬† the worst of it. The bill that passed had suffered several surgical excisions to satisfy the requisite number of deficit-obsessed Blue Dog Democrats.

First, a month was lopped off the UI benefit and COBRA health insurance subsidy extensions. Blue Dogs still hung back. So the COBRA subsidy extension was dropped altogether, along with the extension of the enhanced federal match for state Medicaid programs (FMAP).

I don’t know whether I’m more angry, frustrated or alarmed.

I’m angry about the values the package reflects. The price tag on the bill didn’t have to be reduced by tossing out the COBRA subsidy and FMAP extensions. Lead Democrats could have pared back those tax break extensions–if what Blue Dogs wanted was a smaller bill.

Do we really care more about helping NASCAR race tracks, restaurants and rum producers or about making sure that jobless workers and their families can afford health insurance? Didn’t we just go through the agonies of health care reform to make benefits affordable for more low-income people?

I’m frustrated because anyone concerned about the short-term deficit ought to know that it results from depressed tax revenues as well as spending, including the financing of two costly wars.

The American Institute for Economic Research reports that April 2010 federal tax collections were the lowest for which it could find monthly data. Individual income tax revenues down 44% since just last year. Corporate income taxes down 64%.

It doesn’t take an advanced degree in economics to know that unemployed people typically don’t owe much, if any income tax. Also that they cut back on spending, thus depressing business revenues. They apply for benefits, including entitlements like food stamps. Up goes federal spending.

So how does the House leadership placate some of the deficit hawks? It takes out of the bill further urgently-needed fiscal aid to the states.

Virtually every state has already cut way back on spending to balance its budget. The cuts have imposed pressures on local governments, which were already struggling with their own budget shortfalls. So they’ve reduced spending too–or soon will.

In March, the Center on Budget and Policy Priorities reported that state and local governments have eliminated 192,000 public sectors jobs since last August. They’ve also undoubtedly cut spending on contracts for goods and services. More job losses there.

We’ll see still more job losses in the months to come–an estimated 275,000 in education alone. The ripple effect of these could result in the loss of an additional 82,000 jobs.

But job losses thus far have been somewhat mitigated by FMAP, which has helped states cope with their rising Medicaid rolls and freed up funds for other core programs.

Without an extension, FMAP will expire at the end of the year–halfway through most states’ fiscal years. Both the House and Senate earlier passed FMAP extensions to carry states through their entire fiscal years. So many states budgeted on the assumption they’d have the funds.

Now, as the CBPP’s President says, Congress “may pull the rug out from under them.” As many as 900,000 more jobs are at risk.

Set aside for a moment the human costs–something clearly not top-of-mind for a number of House members. Does saving $24 billion on a six-month FMAP extension make any sense from a deficit control perspective? Sure looks like penny wise, pound foolish to me.

I’m alarmed because the House bill seems a foretaste of things to come. The Senate, after all, needs 60 votes to pass even what got through the House. Over there, the top-ranking Republican on the Budget Committee has already said that we must stop extending unemployment benefits “right now.”

Consider too that emergency funding to avert the impending teacher layoffs has stalled–maybe died–because neither the House nor the Senate sponsor could round up the votes.

What more can we expect as Congress dives into the Fiscal Year 2011 budget? I shudder to think.