How Many More Low-Income Households Will Be Left in the Cold?

November 26, 2013

On Sunday, a blast of cold air arrived in Washington, D.C. With the gusting winds, the feel temperature around mid-day was 21 degrees. So much for my plans to cut down the withered vines and sweep up the mounded leaves in our backyard.

Instead, I spent part of the afternoon cleaning out my inbox, where I found a press release that made me feel at once privileged and newly distressed about the hardships that sequestration is causing.

About 300,000 fewer low-income households received help with their home heating and cooling costs last fiscal year, reports the National Energy Assistance Directors’ Association, which represents the state directors of the federally-funded Low Income Home Energy Assistance Program.

This was a direct result of sequestration, NEADA says. But the cut came on top of other cuts that began in Fiscal Year 2010. The cumulative losses have reduced the number of households served by 17%, or 1.4 million.

At the same time, the average grant households received shrank from $520 to $406. And even during the baseline period, the average grant didn’t cover estimated heating costs.

The shortfall was greatest — and has remained so — for households that use heating oil. These are largely households in the Northeast, where, as you know, it can get bitter cold.

But even households like ours, which use natural gas, would have had to come up with about 40% of their heating costs last winter, assuming the estimated seasonal cost and average grant apply.

Prospects for the winter season that seems to have begun are worse. Home heating costs are expected to rise by an average of 6%, due mainly to a 13% spike for households using natural gas.

This translates into a further purchasing power loss for LIHEAP — from 52.5% of the average household’s home heating costs in 2010-11 to a projected 41.5%.

And this doesn’t factor in any additional funding cut for the current fiscal year. NEADA seems to think that another cut will occur unless Congress “takes action to reverse” sequestration — by which I assume it means the spending caps imposed by the Budget Control Act.

In point of fact, non-defense discretionary programs like LIHEAP, i.e. those that depend on annual appropriations, will collectively meet their Fiscal Year 2014 spending cap without further cuts because Congress tinkered with the BCA to give defense some one-year protection.

But that doesn’t mean there’s no reason to worry. Republicans generally — and some Democrats — want to shield the Pentagon from the $20 billion cut it faces.

At the same time, some leading Republicans insist that the total discretionary spending level the BCA imposes must remain the same. That’s not possible, of course, unless that $20 billion is shifted over to the non-defense side of the ledger.

It’s doubtful we’ll see this sort of deal. But a deal that preserves the existing NDD cap would still leave LIHEAP vulnerable because Congress could decide to trim it in order to boost spending on other programs, as the President’s proposed budget did.

Even if Congress can’t agree on anything more than a continuing resolution, more low-income households could be left without home energy assistance because, as the NEADA press release indicates, level funding won’t be enough to help even as many households as were helped last winter — unless grants are further reduced.

No (or less) energy assistance could mean no heat this winter — perhaps no indoor lighting or ability to cook either. The loss would affect some of the most vulnerable people in the country, according to a survey NEADA conducted several years ago.

Seventy-two percent of the households served then had a family member with a serious medical condition. Of these, 26% relied on medical equipment that used electricity. Even with a LIHEAP grant — or perhaps before they received it — 19% got sick because their homes were too cold.

Merely restoring LIHEAP to its Fiscal 2010 level would leave more than 99.8% of the estimated budget for other purposes.*

Something I would hope members of Congress think about as they sit snug and warm in their homes this weekend.

* This figure reflects the result yielded by the Center for Economic and Policy Research responsible budget calculator.


More Fixes Won’t Fix Sequestration’s Harms

May 2, 2013

Never let it be said that Congress can’t get anything done because bipartisanship is dead. Look at how swiftly Republicans and Democrats jointly acted when the air traffic controller furloughs started inconveniencing frequent flyers.

This isn’t the first time Congress has created a loophole in the law that mandates across-the-board cuts.

When the Agriculture Department announced that it would have to furlough the inspectors who must be in meat, poultry and egg processing plants, Congress found funding to keep the inspectors on the job.

Took part of it out of the department’s fund for grants to help more schools serve breakfast to low-income students.

I’m hardly the first to note that Congress has evinced no significant concern about other delays sequestration seems likely to cause — or those that will worsen.

Nor about other harms the cuts will cause — not merely furloughs that will create hardships for some as-yet unknown number of federal employees, but as many as 750,000 actual job losses in both the public and private sectors.

And lost benefits for jobless workers who’ve been unemployed long enough to qualify for federally-funded unemployment insurance benefits. Nineteen states have already rolled out cuts averaging $120 a week. The longer states wait, the bigger the cuts will have to be.

Some of the other cuts have also gotten considerable press coverage.

So you probably know that Head Start programs have begun paring back enrollment. Some of them already have waiting lists — a far more consequential sort of delay than some extra hours in an airport.

The U.S. Secretary of Education says that about 70,000 children won’t have the early learning opportunities and other benefitse.g., health services, that Head Start provides.

One Head Start director warns that parents may have to quit their jobs to tend to their children — not unlikely, since unsubsidized child care can cost more than they earn.

And sequestration has taken a bite out of the block grant that helps pay for subsidized care.

Also out of federal programs that fund subsidized housing. Long waiting lists for housing assistance are already common. And the number of years applicants wait are often far longer than the number of hours fussed airline travelers waited.

The Center on Budget and Policy Priorities estimates that 140,000 fewer households will have housing vouchers by early next year. Others, it says, may face rent increases — perhaps beyond their ability to pay.

Yet funds for homeless services will be cut too.

But I’m cherry-picking here, just as many say Congress just did. Those interested can find many other examples in the weekly reports the Coalition on Human Needs is publishing.

No one, I think, would doubt that Congress hasn’t acted to avert impacts like the aforementioned because the people affected don’t have the political clout that frequent fliers and agribusinesses do.

I think we’re looking at something more difficult to deal with than a power imbalance, however.

The air traffic controller and food safety inspector furloughs caused — or were about to cause — large, clear, nationwide impacts. In many other cases, the proverbial is only beginning to hit the fan — or more precisely, a vast number of fans.

Most of the genuine news we have about the impacts on low-income people and the programs that serve them are local — and often likelihoods rather than sure things.

This is partly because program directors, in many cases, don’t yet know what their share of the cut will be. Even those who do are mostly still figuring out how they’ll manage — and give various answers when asked.

We also don’t get a whole picture because stories tend to get written when some advocates have gotten reporters interested. And, face it, some programs have more heart-tug appeal than others.

In one respect, it’s good that we’re getting stories. In fact, this is a welcome — if unintended — side effect of the air traffic controller save.

Yet, in another respect, it’s dangerous. Because the more major media focus on a handful of programs — and the more grassroots campaigns call on Congress to save one or another — the more likely other FAA-type fixes become.

And most federal agencies, unlike FAA, don’t have a pot of money they can tap that they didn’t need to spend this year anyway.

So a reprieve for some programs will mean deeper cuts for others. Like as not they’ll be programs that benefit low-income people — especially those that don’t have an effective public voice or lend themselves so well to poignant individual stories.

House Republicans seem open to this. “The main thing,” says Congressman Tom Cole (R-OK), “is to secure $85 billion in savings. We are not wedded to where the savings come from.”

But the fundamental issue is the savings, a.k.a spending cuts. Sequestration is a singularly dumb way to address a problem that’s been blown out of all proportion, i.e., the federal deficit.

Yet, as Federal Reserve Chairman Ben Bernanke has testified, deep cuts at this point — even if not across-the-board — are likely to lead to less deficit reduction.

And the whole approach is unbalanced, since sequestration comes on top of $1.5 trillion in cuts and a mere $620 billion or so in additional revenues.

Congress ought to get rid of sequestration, which none of its members wanted — or thought would come to pass. And some, who will remain nameless, should back off their cuts-only/cuts-now solution to the long-term deficit.

That, I hope, will be the message that all who care about the well-being of our nation’s children, seniors and everyone in between will deliver. Because if we don’t hang together … Well, you know the rest.


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.


Economic Recovery Leaves Low-Income Working Families Behind

February 4, 2013

By the end of 2011, the official unemployment rate had dropped to 8.5%. The stock market seemed on its way to recovering the huge losses of 2008-9. The housing industry showed signs of life.

But the number of low-income working families rose to 10.4 million — up by 200,000 from 2010, according to a new brief from the Working Poor Families Project.

This means that nearly a third — 32.1% — of all working families struggled to make do with incomes below 200% of the Census Bureau’s applicable poverty threshold.*

The percent of low-income working families has steadily increased since 2007, when the recession set in. In that year, 28% of working families were poor or near-poor.

So we now have about 47.5 million people — 23.5 million of them children — in the group WPFP has carved out, i.e., those in families with children where the members who were at least 15 years old collectively worked a minimum of 39 weeks during the prior 12-month period.

What this tells us, of course, is that high unemployment doesn’t sufficiently account for the high poverty rate — or the more realistic 200% of that rate.

It does account for some part of it. According to the brief, the share of low-income families working dropped a bit between 2009 and 2011 — from 73% to 71%.

A larger part of the story seems to be the types of jobs those low-income family members had. About a fourth of the adults in these families worked in just eight occupations — all of them characteristically low-wage, e.g., cashiers, health aides, restaurant wait servers.

The brief tells us that many were working part-time — not by choice — and often in multiple temporary jobs.

But the data in the source it cites are very old. So we really don’t know how much cobbled-together, on-and-off employment boosted the number of working families who, at best, had barely enough to make ends meet.

We do know, however, that these working arrangements made them even more economically insecure than they would have been otherwise.

The rise in working poor families, as WPFP defines them, is another indicator of growing income inequality in the U.S.

While the poorest fifth were getting 5% of all income earned, the top fifth were getting 48% — not, in many cases, only income earned by the (figurative) sweat of their brows.

Looking at average incomes by education level, WPFP concludes that increasing the portion of workers with at least some postsecondary education “would go a long way toward narrowing the income gap.”

As I’ve written before, I find this doubtful, though it would surely move some of the low-income workers up from the bottom fifth.

We’d still have growth in low-wage occupations that can’t be fully automated or shipped overseas.

Employers won’t pay more merely because they can’t find enough qualified workers who’ve got, at most, a high school diploma or the equivalent. They won’t recreate the mid-wage jobs they’ve eliminated either.

WPFP seems to recognize this, since it also addresses job quality — and in terms that would apply mainly to low-wage occupations.

On the policy front, it recommends raising and indexing the minimum wage, mandating comprehensive paid sick and family leave, enforcing fair labor and other workplace standards and “ensuring that if public job creation expenditures persist, they benefit workers and their communities.”

All but the last would be easier for workers to gain for themselves if we had full employment again, i.e., a labor market with relatively few job seekers for jobs employers want to fill.

Economist Jared Bernstein, who’s long championed full employment as a policy goal, cites, only half in jest, the advantages workers gained when the “black death” plague swept Western Europe in the 14th century.

Well, we’re far from full employment. And happily no one’s predicting a plague. But it doesn’t look like we’re going to get public job creation expenditures.

What looms instead are job losses — at least a million, maybe over twice that — if Congress can’t agree to stop the briefly-delayed across-the-board spending cuts.

Same result — or perhaps worse — if it replaces them with equivalent cuts that shield defense, as the House majority wants.

And undoubtedly a much larger number if the Republicans succeed in forcing additional cuts on top of the $1.2 trillion already enacted the last time they ginned up a debt ceiling crisis.

This, as the WPFP brief indicates, would be a double-whammy for working poor families — not only an even worse labor market, but spending cuts in programs that help them meet basic needs and and become card-carrying members of the working middle class.

* Double the threshold for a two-adult, two-child family is $45,622.