How Much Does Single-Mother Poverty Cost Our Nation?

February 24, 2011

My posting on the plight of single-mother families prompted commenter Glenda to ask a really good question: “Do you have any data … on our total public costs to continue to support single mothers living in poverty rather than investing in helping them to get educated and become self-sufficient?”

I replied as best I could at the time. But I’ve decided the issue is worth a deeper dive, especially because the whole matter of government spending on programs for low-income people has become a major focus in many states — and, of course, on Capitol Hill as well.

The short answer to the question is that I don’t know of any study that has compared the relative costs of the benefits that, to a limited extent, sustain poor single mothers with the costs that would be involved in enabling them to fully support themselves and their children.

There are, however, some studies that can help us look at one side of the cost question.

For example, we have some data on what the federal government spends to help support single-mother families. Two sociology professors report that, in 2006, federal expenditures due to “father absence” totaled $98.9 billion. A quick look at the expenditures shows that “father absence” is another way of characterizing single-mother families.

As the authors note, the estimate is actually a fraction of total costs. It doesn’t include costs borne by state and local governments, e.g., what states spend on federal-state “partnership” programs like Temporary Assistance for Needy Families, Medicaid and subsidized child care.

Nor do the estimates include the long-term indirect costs due to the negative effects of growing up fatherless. Many, though probably not all of these are the same as the long-term costs of child poverty.

A team of economists produced a report on these in 2008. Basically, they reviewed the research on the relationships between child poverty and three major cost areas — earnings, propensity to crime and quality of health in adulthood. They put these together with estimated costs of the latter two and projected all the figures out over the total number of poor children in the U.S.

Bottom line was an estimated $500 billion per year cost — nearly 4% of what was then our entire gross domestic product, i.e., the total value of all the goods and services produced in the U.S. This too was explicitly a conservative estimate.

Though the team didn’t assess the cost-effectiveness of specific anti-poverty policies, they did conclude that “investing significant resources in poverty reduction might be more cost-effective over time than [they] previously thought.”

Note the use of the term “investing” here. The same word Glenda used. The thought behind the word seems to me clear and appropriate. Pay some money now because you expect it will yield returns beyond what you spent.

In this case, you put funds into programs that will lift as many children as possible out of poverty — thus, in the long run, increase productivity and reduce public costs.

I flag the word because Senate Minority Leader Mitch McConnell (R-KY) preemptively trashed on the President’s use of it in his recent State of the Union address. “With all due respect to our Democratic friends, any time they want to spend, they call it investment,” he told the anchor on Sunday Fox News.

Seems to me that it’s possible to distinguish smart investments from spending that won’t be offset by benefits to our economy and the well-being of the American people. I should think that policymakers of all stripes would concur on some of the basics.

A review of the spending cuts proposed by the Republican-dominated House Appropriations Committee suggests otherwise. One seems especially relevant here — the large cut in funding for state and local employment training programs. This, along with the other major cuts, passed in the House last Saturday.

Under the just-passed bill, total funding for these programs would be just 53% of what Congress approved for Fiscal Year 2010 — and again as part of the current continuing resolution. It would be just 49% of the President’s proposed budget for Fiscal Year 2011 because he requested an increase.

So we would “save” about $1.4 billion or $1.6 billion, depending on which measure you want to use. (The former is more accurate, though Republicans understandably prefer the latter.)

The National Skills Coalition says we should factor in appropriations customarily made in advance of the new fiscal year. These would bring the total cut to somewhat over $2.97 billion. Some smaller, more narrowly-targeted workforce development programs would be totally defunded — or nearly so.

Consider what McConnell favors instead of these investments — a permanent extension of all the Bush-era tax cuts. This, according to the nonpartisan Congressional Research Service, would cost an estimated $3,402 billion for the first 10 years.

The permanent extension bill just proposed by self-proclaimed deficit hawks Mike Pence (R-IN) and Senator Jim DeMint (R-SC) would presumably cost even more because it would wholly eliminate the estate tax.

You can pay for a lot of job training and education for all those billions — and have plenty left over for other endangered programs that would also help single moms become fully self-sufficient.


Deficit Double-Talk

February 1, 2011

About 10 years ago, arch-conservative Grover Norquist revealed the impetus behind the Bush tax cuts. “My goal,” he said, “is to cut government … down to the size where we can drag it into the bathroom and drown it in the bathtub.

I cite this fine display of candor because it’s notably absent from what Congressional Republicans are saying now. But it’s nonetheless applicable to the course they claim reflects the will of the American voters

First, they adamantly insist that all the Bush tax cuts must be extended. Also that even more wealth must be exempted from the estate tax. These measures, of course, increase the deficit — though the “middle class” tax cut extensions the President also wanted made up the largest part of the impact.

Then the Republican-controlled House adopts new rules that will exempt further tax cuts from budget discipline. At the same time, it subjects all spending increases to new constraints, requiring that they be offset only by spending cuts.

A good way to “cut the government down to size,” but no way to reduce the deficit.

The House Republican leadership also reaffirms its pledge to roll back federal spending to the pre-Recovery Act level. At this point, that  would seem to entail $60 billion in immediate cuts, plus an additional $40 billion beginning in October — assuming Congress passes a Fiscal Year 2012 budget on time.

Not good enough, says the Republican Study Committee, representing a majority of Republican House members. We want discretionary spending, i.e., the spending Congress annually approves, rolled back to the 2006 level and frozen there until 2021. Except for Defense — the single biggest chunk of discretionary spending.

The Center on Budget and Policy Priorities reports that the RSC plan would ultimately cut non-defense appropriations 42% below what the Congressional Budget Office says would be needed to maintain the Fiscal Year 2010 funding level, with adjustments for inflation.

No way this much could be cut without decimating key government programs — especially because it’s a sure bet that not all programs would get hit with that 42%.

Such drastic spending cuts aren’t needed to address the long-term deficit. Nor would they do so. As this nifty interactive pie chart shows, all non-defense discretionary spending accounted for just 15% of the Fiscal Year 2010 budget.

Nearly 60% was mandatory spending, i.e., spending that Congress doesn’t vote on each year. And nearly 70% of that was for Social Security, Medicare and Medicaid.

Enter Congressman Paul Ryan’s Roadmap for America’s Future. As the Economic Policy Institute explains, the Roadmap aims to “dismantle Medicare and Medicaid,” replacing them with vouchers that would increasingly fall short of health care costs.

Also cut Social Security benefits while partially privatizing the system. This, says EPI, would mainly benefit wealthier Americans, who would also gain from drastic shifts in the tax burden — so drastic that millionaires would pay taxes at lower rates than middle-class families.

Death knell for what’s historically been our progressive federal income tax system.

These are not deficit-driven conservative proposals. They’re as revolutionary as the Tea Party’s name. Because they would radically define what we the people — well, most of us people — have come to understand as the federal government’s responsibility “to promote the general Welfare.”

The depth of the cuts, combined with the re-engineering of social insurance programs would shift that responsibility to state and local governments. But they have neither the resources nor the budgetary flexibility to assume it — even if they want to. And current evidence suggests some don’t.

Bottom line is that the House Republican majority, seconded by Republican leaders in the Senate, would roll up the safety net and roll back the clock to the nineteenth century, when poverty, education, public health and the like just weren’t any of the federal government’s business.

Republican House Leadership Aims For More Tax Cuts, Not Deficit Reduction

January 4, 2011

Just before Christmas, the House Republican leadership announced new procedural rules to govern tax and spending legislation when it takes control. They confirmed big time two of the lessons Washington Post blogger Ezra Klein found in last month’s tax cut deal.

  • No one really cares about the deficit.
  • The Republicans really, really, really care about tax cuts for rich people.

As the Center on Budget and Policy Priorities explains, the new House procedural rules pave the way for more tax cuts — and possibly big increases in the deficit.

I say “possibly,” as CBPP doesn’t, because the Republicans may well use the potential deficit increases to justify even more drastic spending cuts than they’ve already promised.

These spending cuts would almost certainly focus on programs that benefit moderate and low-income people because large spending areas, e.g., defense and security, would probably be exempt, as they are in the spending pledge for next fiscal year.

One rule embodies something Senate Minority Leader Mitch McConnell said awhile ago. The deficit “isn’t because we are taxing too little…. [I]t’s because we’re spending too much.”

Incoming House Majority Leader John Boehner obviously agrees, since instead of the existing “pay as you go rule,” the House will operate under a “cut as you go rule.”

Under the so-called PAYGO rule, any spending increase had to be offset by a spending cut, a revenue increase or a combination of both. Henceforward, spending increases will have to be offset only by spending reductions. And tax cuts will require no offset at all.

This rule will inevitably erode a wide range of federal programs their costs rise, even if they’re not expanded.

Consider Section 8 housing choice vouchers, for example. They cover rental costs over 30% of the voucher holders’ incomes. Rents go up. So vouchers cost the federal government more. This is why President Obama’s proposed budgets would have provided just about enough to renew all existing vouchers, even though the proposed funding levels were higher.

Another new rule changes the reconciliation process. Basically, this process creates a bundle of budget-related measures, which are then subject to a single up-or-down vote, with limited opportunities for amendment.

In the good old days, before the Bush administration and the Republican Congressional majority decided to push through their tax cuts, the process could be used only for legislation that reduced the deficit.

Going forward, the House can use the reconciliation process to fast-track deficit-increasing packages, so long as they’re tax cuts. The process can’t be used for legislation that results in even a minimal net spending increase.

At this point, the reconciliation rule may not make much difference. The Senate still has a deficit reduction-only rule. And the process is more important there because reconciliation packages can’t be filibustered. But the new rule still shows which way the wind is blowing.

Lest there be any doubt, another new rule authorizes the Chairman of the Budget Committee to ignore rules for enforcing budget cost limits when dealing with measures to extend or make permanent all the Bush-era tax cuts — including, of course, the top tax brackets and the egregious estate tax giveaway.

Budget discipline could also be waived for a hefty new tax cut for small businesses — or rather for individuals who file tax forms indicating business income. Howard Gleckman at the Tax Policy Center explains the difference.

If past is prologue, the tax break in the offing would benefit a lot of high-earning filers we generally don’t think of as small businesses, e.g., doctors, lawyers, partners in investment firms, movie stars, major league athletes and owners of large local retail chains.

New York Times columnist/blogger Paul Krugman says the new House rules show that Republicans who claim to be deficit hawks are “frauds” — that their “self-styled … deficit hawkery is just a stick to beat down social programs.”

Strong words, but hard to disagree, I think.

Congress Cuts TANF Funding To Struggling States

December 29, 2010

About four weeks ago, Congress extended the Temporary Assistance for Needy Families program till the end of this fiscal year.

I breathed a sigh of relief because technically TANF had already expired. So if Congress hadn’t acted, the U.S. Department of Health and Human Services couldn’t have spent one more thin dime in support of states’ TANF programs.

Turns out I should have sighed differently. Because, as the Center on Budget and Policy Priorities reports, the reauthorizing legislation will mean nearly $3 billion less in federal funding for TANF this fiscal year.

States will get, on average, 15% less than in Fiscal Years 2009-10. Twenty-four states will probably lose more. The District of Columbia will lose an estimated 16% — about $92 million.

These figures include loss of the funds states received from the TANF Emergency Contingency Fund. Congress had already let this temporary program expire by the time it acted on the basic reauthorizing legislation.

It could have retroactively extended the program, but decided instead to save a couple of billion dollars. Or rather, Republicans in the Senate decided. Gotta attack that deficit, you know — except when the issue is tax cuts.

States will incur further losses due to a cutback in the Fiscal Year 2011 appropriation for the regular TANF Contingency Fund. This fund has been part of TANF ever since Congress created the program. Basically, it provides a pool of money states can claim when their costs increase during economic downturns.

Congress had appropriated $506 million for the Contingency Fund as part of the continuing resolution it passed in September, i.e., its short-term substitute for the regular appropriations it hadn’t passed. The reauthorizing legislation took back all the funds HHS hadn’t already committed.

At the same time, it took a whack at supplemental grants that certain states have always received to compensate for inequities in the statutory block grant funding formula.

It extended these grants only through June instead of for the whole fiscal year and without a separate line item. So they have to be funded out of the same pot as the contingency fund.

HHS has already committed well over half the appropriate funds to states with contingency claims. This means that states entitled to supplemental grants will get only two-thirds of what they’ve previously received. These states include some of the poorest and some with extraordinarily high unemployment rates, e.g., Louisiana, Mississippi, Nevada and Florida.

Bottom line is that most states and the District will have no federal funding beyond the basic block grant for the remainder of this fiscal year. And they’re hardly prepared to fill in with their own funds.

CBPP tells us that at least 46 states have already closed Fiscal Year 2011 budget gaps totaling $130 billion. Like the District, 11 have already identified mid-year gaps. These, I take it, do not factor in the newest losses in federal TANF funding.

No jurisdiction will have anything close to what it needs to provide a reasonable level of cash assistance, meaningful job training and other supports for the rising number of families that qualify under its existing rules.

At the very least, we can expect long-term program deficiencies to continue. But cuts of one sort or another are likely.

As many of you know, the District has decided to phase out benefits for poor families that haven’t achieved sustained self-sufficiency by the end of five years in its TANF program.

Some states have taken similar and even more drastic actions. For example:

  • South Carolina has decided to cut all cash benefits by 20%, leaving a family of three with a maximum of $216 per month.
  • Washington state will reduce cash income for single-parent TANF families, i.e., a large majority of all TANF families, by holding on to the portion of child support it’s been passing through to them.
  • California has, at least temporarily, eliminated child care subsidies, effectively denying many TANF “graduates” the ability to continue working.

These, I fear, are portents of things to come — unless Congress does an about-face when it gets down to the business of actually reauthorizing TANF. If you think that’s likely, I’ve got a bridge I’d like to sell you.

The federal “partner” has scrimped on what should be its share of TANF funding for a long time. But it’s never before failed to fully fund the supplemental grants.

It’s never before cut off appropriated funds to help states cope with rising family poverty during hard economic times. Indeed, it established the Emergency Contingency Fund specifically to keep assistance flowing when the regular Contingency Fund ran dry.

Now states and the District are left to preserve the frayed safety net when they’re least able to do so.

My Blog Turns Two

December 6, 2010

Today is my blog’s second birthday. An occasion for me to thank all of you who’ve been reading what I write. Special thanks to the many of you who’ve contributed — through your comments, your analyses and your generous responses to my many questions.

In some ways, it’s also an occasion for me to celebrate. When I started this blog, I was plunging into the unknown. Had no idea whether I could sustain it, no clear plan beyond the next posting and no knowledge whatever about some of the issues I’ve addressed.

And now I’m writing my 250th posting, with some sense of presence, purpose and place in the interlocking advocacy communities I so admire.

In another way, it’s not an occasion to celebrate. My first posting was about how the DC Council had rebalanced the Fiscal Year 2009 budget with spending cuts that disproportionately affected low-income residents.

And here we are two years later with the Council considering a plan that would achieve nearly 40% of its savings by cuts in programs that serve them.

That first posting focused on a couple of issues — affordable housing and cash benefits for participants in the District’s Temporary Assistance for Needy Families program. The cuts on the table now would be worse.

The Local Rent Supplement Program would lose $3 million. Once again, a small approved increase would be rescinded. No new housing vouchers for any of the 26,000 households on the waiting list. No additional support for new affordable housing development.

Funds in reserve would also be cut. So some who have vouchers might lose them as housing costs rise and/or the incomes of beneficiaries drop.

The first TANF benefits cut I wrote about rescinded a small just-approved increase. This time, maximum benefits, which have remained level ever since, would be reduced by 20% for all families who’ve participated for a total of more than five years.

Perhaps the Council will reject these proposed cuts. But it’s sad that we’re once again fighting the same battles. Sadder that victory would mean significantly less funding, in real terms, for these and other programs that serve low-income people.

Even so, there’s something to celebrate.

Local service and advocacy organizations have risen to the challenge. They’ve expanded their reach, developed new messaging and organizing capacities and perhaps most importantly advanced well beyond a “just say no” defense of the diverse programs that affect them and their clients.

The very fact that they’ve coalesced around a new top income tax bracket and gotten it into the gap-closing dialogue — both within the Council and beyond — indicates how far they’ve come in the last two years. If only we could say the same for our low-income neighbors.

New Hopes For DC Tax Reforms

November 18, 2010

Local listservs are buzzing. Advocacy groups are huddling. We’re all concerned about how the DC Council will close the $175 million gap in the current budget.

We know that spending cuts will be at least part of the answer. What they’ll be and how big are open questions. But if past is prologue, programs that serve the needs of low-income residents will be highly vulnerable.

Last year, funding for human services and other programs for low-income people took at $49 million hit — the second largest after public education. And it could have been worse if the District hadn’t still had unused federal stimulus funds for our schools.

It would have been better if Mayor Fenty and the DC Council had focused more on the revenue side of the ledger. What we got were a couple of sales and excise tax increases, plus freezes in the homestead property deduction and the standard exemption and personal deduction in the income tax — all disproportionately costly for low-income residents.

This year a similar story. Some fee increases, a couple of highly targeted taxes and one regressive expansion in the sales tax, which now covers soft drinks, but not various services used mostly by higher-income residents.

But maybe the day for a serious look at the local tax structure has dawned. Soon-to-be-mayor Vincent Gray has remarked that services have been cut to the bone. “Actually, we’ve cut down to the bone marrow,” he’s said.

More importantly, he’s reportedly told attendees at two successive ward meetings that he’s ready to consider new or expanded revenue raisers.

As you may recall, the Save Our Safety Net coalition championed two news brackets last spring — a 9% rate for residents with incomes over $200,000 and a 9.4% rate for those with incomes over $1 million.

SOS-DC is back on the case — hopeful that it can help shift Gray and a couple of other Councilmembers to the “yea” column. How many have to shift depends on when the Council gets around to voting.

SOS is still working as the grassroots arm of the Fair Budget Coalition and an overlapping coalition including FBC members, local labor organizations and some faith-based and other community groups.

They’re now focusing on one new tax bracket — 1% higher for residents earning over $200,000. This, I assume, is after the adjustments the federal tax code permits.

Gray has said that he thinks District residents will at least be open to tax increases if they understand how damaging a cuts-only approach to budget balancing will be. “If we can make the case that the vulnerable are going to be imperiled, I think there are going to be a lot of people who are going to entertain some sort of tax increase.”

“Some sort,” of course, covers a lot of territory. But a new top tax bracket certainly could be there, along with some other measures that would increase both revenues and fairness. I’m still hopeful eliminating the District’s almost unique exemption for interest paid on out-of-state bonds.

Gray has reportedly challenged advocates to make the case to the public. Originally, I thought this was shifting the burden where it didn’t belong. Now, however, it appears that what he actually wants are the facts, figures and, very importantly, the stories to help him make the case.

He’s planning to work with fellow Councilmembers on a list of potential budget cuts and then seek public input on whether taxes should be raised instead. So look for announcements of public hearings — or maybe just one of those all-nighters the Council sometimes perpetrates.

In the meantime, there’s a need to show that we, like Gray, wouldn’t mind paying more if the trade-off were protecting investments in our safety net and other key programs that can give low-income residents a better chance at finding full-time, living-wage work.

SOS-DC has an editable letter we can send to our representatives on the Council. A quick, easy way to voice our support for a balanced approach to budget balancing.