Living within the annual caps for appropriations means that “non-security” appropriations drop from $373.6 billion in FY 2012 to $356.8 billion in the President’s FY 2013 request (a 4.5 percent cut, not counting inflation).  These include education, labor, health, many services for children and seniors, housing, transportation, the environment, and many other areas.  “Security” spending, including the Pentagon, international funding, and veterans’ services, bumps up from $684 billion in FY 2012 to $686 billion in FY 2013.

The federal budget includes programs that require annual appropriations by Congress (called “discretionary”) and mandatory programs, such as Social Security, Medicaid, Medicare, and SNAP/food stamps, that spend money based on the laws authorizing those programs without needing Congress’ yearly okay.  The budget also projects revenue levels, and recommends tax cuts and increases to meet its ten-year revenue estimates.  President Obama’s $3.8 trillion budget for FY 2013 projects only $2.9 trillion in revenues, for a deficit of $900 billion, or 5.5 percent of Gross Domestic Product (GDP, or all economic activity).  Below 3 percent is considered a more sustainable level.  The President predicts that the deficit will decline substantially between now and FY 2022, reaching 2.7 percent of GDP in 2018, and then remaining at 2.8 percent over the next few years.

A Focus on Job Creation. The Obama Administration budget calls for $350 billion in new up-front investments to create or save jobs, to be carried out mostly between now and FY 2015.  These include $50 billion in road and transit rebuilding, $30 billion to modernize at least 35,000 schools, $25 billion to hire and retain teachers and $5 billion for first responder jobs.  Another initiative is Pathways Back to Work, funded at $12.5 billion ($8.4 billion in FY 2013) to provide subsidized jobs and training for low-income, low-skilled workers and summer and year-round jobs and training for youth.  A new community college initiative would invest $2.1 billion in FY 2013 and nearly $7.5 billion over 5 years in education/training aimed at helping people get jobs.
In addition, Project Rebuild will hire workers in low-income communities to rehab or renew residential and commercial properties.  The budget also proposes an infrastructure bank (at $9.8 billion over 10 years), the National Affordable Housing Trust Fund ($1 billion, expected to result in production of more than 10,000 units of low-income housing), and various incentives for innovation in manufacturing, including tax credits.

Economic Security Protections. The Administration recognizes that the safety net must be protected, especially during hard times.  It reverses a cut in SNAP/food stamp benefits scheduled to take effect starting in 2013, and assumes the continuation of federal unemployment benefits (without the cutbacks in weeks just adopted for the rest of 2012 (see article in this issue).  The budget also would make permanent the improvements in the Child Tax Credit and Earned Income Tax Credit.  These make the Child Tax Credit available starting with earnings over $3,000 (previously the first $8,500 in earnings was excluded in calculating the CTC) and provide a higher Earned Income Tax Credit for working families with three or more children.  Both these credits are “refundable” – that is, available to families as a refund check even if their earnings are too low to owe federal income tax.

The Administration proposes $2.2 billion over 10 years to modernize child support collections, and provides incentives to states to reduce the loss of income to states when they turn over all child support collected to the families owed, instead of keeping some of it to defray the costs of public assistance.

More modest but important, the Administration also proposes $5 million in new grants to assist states wishing to implement their own paid leave programs.

Under the Appropriations Caps:  Some Gains. Even within the constraints imposed by the caps, the President’s budget manages to invest in certain human needs priorities.  Some of the winners include annual appropriations for Head Start (up $494 million since FY 2011) and child care (up $380 million since FY 2011 and $325 million since FY 2012).  Race to the Top, the Administration’s incentive program for improving K-12 education, is increased by $301 million, or 55 percent above its FY 2011 level.  The maximum Pell grant award rises from $5,550 in FY 2012 to $5,635 in FY 2013; college work-study funding rises 15 percent, from $977 million to $1.127 billion.  Nutrition funding for Women, Infants and Children (the WIC program) grows to $7.04 billion in FY 2013, a one-year increase of $423 million, to support a caseload of 9.1 million.  Programs to assist the homeless are increased from $1.9 billion to $2.23 billion from FY 2012 to FY 2013.  According to the Department of Housing and Urban Development, 1.6 million people were homeless at some point between October 1, 2009 and September 30, 2010.  The Administration requests $75 million to fund affordable units for 10,000 veterans, who are homeless at levels very disproportionate to their numbers.

But Some Losses. However, cabinet departments that include many of the discretionary programs of importance to low-income people are cut substantially.   The Department of Health and Human Services’ funding declines from $84.4 billion in FY 2010 to $76.7 billion in FY 2013, as requested by the President.  Taking inflation into account over that period, HHS funding would decline nearly 15 percent.  The Department of Labor drops from $13.5 billion in FY 2010 to $12.0 billion in the President’s FY 2013 request, although $448 million of that loss is from the movement of Community Service Employment for Older Americans to the Administration on Aging at HHS.  Adjusting for that change and for inflation, the DOL cut would be just under 14 percent from FY 2010 to FY 2013.  The Department of Housing and Urban Development drops from $42.8 billion in FY 2010 to $35.3 billion in the President’s FY 2013 budget, although some of the drop is offset by an anticipated $4.4 billion in increased receipts from increased fees from borrowers and others.  With reductions like these, services needed by low-income people do not escape painful cuts.  Within HHS, the Low Income Home Energy Assistance Program (LIHEAP) drops from $3.472 billion in FY 2012 to $3.02 billion in the President’s plan.

According to the National Energy Assistance Directors’ Association, this cut will deny heating or cooling assistance to 1 million low-income households.   The Administration continues its attack on the Community Services Block Grant, once again recommending that its funding be cut in half (from $677 million in FY 2012 to $350 million in FY 2013).  CSBG provides funding to about 1,100 community action agencies nationwide, which administer programs such as Head Start, emergency food, LIHEAP, and job training, and provide an entry point for low-income people to receive a broad range of anti-poverty services.   Congress did not go along with this request last year; with stringent deficit reduction targets to meet, it is not clear what will happen this time.

Also within HHS, there are reductions in mental health and substance abuse funding.  Mental health funds decline from $1.022 billion in FY 2011 to $952 million in the President’s FY 2013 request.  Substance abuse treatment and prevention decline by $117 million over the same two year period, a nearly 10 percent cut, not counting inflation.  The Administration hopes to maximize effectiveness despite reduced funding both through competitive grants and because the gradual implementation of the Affordable Care Act will provide additional funding for these services.  Still, on top of substantial recent cuts made in state funding, it is hard to be confident that no loss in services will occur, at least in the short run.

Within HUD, although finding adequate funding to cover existing households in subsidized rental housing was a top priority, the Administration does so in part by increasing the minimum rents paid by very low-income tenants to a mandatory $75 a month.  Now, Public Housing Authorities may charge a minimum rent of $50, but many do not choose to do so.  For families or disabled or elderly individuals with extremely low incomes, paying the $75 will prove very difficult.  The Community Development Block Grant is level-funded at $2.95 billion, a disappointment to many community agencies who make use of its funds for diverse services including child care and help for victims of family violence.  Housing for low-income elderly (Section 202) is up from a low $375 million in FY2012 to $475 million in FY 2013, but well below its $825 million in FY 2010 funding.  Housing for persons with disabilities (Section 811) is down from $165 million in FY 2012 to $150 million in the President’s proposal; it was funded at $300 million in FY 2010.  Still, these combined funding levels are estimated by HUD to allow 5,300 new supportive housing units as compared to the current year.

With the Department of Labor, the Job Corps program is reduced from $1.7 billion in FY 2012 to $1.65 billion in the President’s request.  In FY 2012, the total appeared larger (nearly $2.4 billion total) because all of the program costs were paid for within the fiscal year; more typically, a substantial portion is “advance-funded” into the next fiscal year.  The Administration has apparently returned to the use of advance funding, but even taking that into account, Job Corps loses about $50 million. DOL plans to close sites it does not believe are effective, but will open new sites in New Hampshire and Wyoming.  Unemployment Insurance Administration is also cut by $245 million (down to $2.93 billion in the President’s FY 2013 request).  The Administration judges that the amount will serve 13.7 million beneficiaries.  There is a contingency reserve requested in case the workload grows beyond these expectations.

Most training programs are funded at about the same level as FY 2012, but the proposed addition of $8.4 billion in FY 2013 Pathways Back to Work funding, as well as investments in community colleges, would provide more job training and employment opportunities for low-income workers than have been available since the economic recovery act legislation funding ran out.

Options for Savings. The 1,600+ groups that signed the original Strengthening America’s Values and Economy for All Statement of Principles called for deficit reduction that protects low-income people and that invests in job creation, while reducing the deficit substantially through fair revenue increases and cuts in military spending. The President’s budget is in agreement with these basic principles, although some tax and military experts argue that more savings in both these areas are possible, and would leave more room for meeting needs as well as reducing the deficit.  The President proposes $525 billion in base Pentagon spending, plus another $88 billion for war costs in FY 2013.  The non-war funding Defense Department funding declines by a little over 1 percent; counting related expenditures, such as defense nuclear capacity under the Department of Energy, the reduction is about 2.6 percent.  Either way, this is a much smaller reduction than the overall cuts to domestic spending.   The Obama Administration has committed to making 10 years of cuts to discretionary programs called for in the deficit reduction plan that passed Congress, including defense, international, and domestic programs.  The Administration shows $487 billion in defense savings over ten years as a result of the reductions imposed in the FY 2013 budget (these savings do not count reductions in the Iraq and Afghanistan war efforts).  However, respected analysts have pointed to about a trillion dollars in Pentagon savings that can be made without jeopardizing national security.  Lawrence Korb, a former Reagan Administration defense official, has estimated over $100 billion in defense cuts that could take effect in FY 2015 alone.

In addition, many revenue increases have been proposed beyond the $1.5 trillion the President recommends over the next 10 years.  If capital gains were taxed at the same rate as other income, it would bring in hundreds of billions over the next decade.  The Obama budget modestly raises the tax on capital gains for upper-income taxpayers, but only raises $36 billion for the same time period.  The Obama budget captures $147 billion from reforming U.S. treatment of companies with overseas profits.  Ending the rule allowing U.S. corporations to “defer” U.S. taxes on foreign profits would save well over $500 billion.  There are many other examples of revenue options greater than those proposed in the Obama budget – for example, the President previously had proposed $90 billion in higher taxes on the financial industry.  His FY 2013 budget proposes $19 billion in new finance industry taxes.  The provisions that are included in the President’s budget are welcome, and are a marked contrast to the intransigence of Republicans and a few Democrats in Congress in opposing any tax increases.  So far, no tax increases have been enacted either to reduce the deficit or to contribute to economic recovery.  Continuing on this course will result in harsh cuts that will stall economic growth – and hurt vulnerable people.

The post CHN: The President’s FY 2013 Budget: Despite Tight Funding Caps, Some Human Needs Priorities Maintained appeared first on Coalition on Human Needs.

The legislation calls for phasing in a reduction in the number of weeks of UI available to unemployed workers. Currently in states with unemployment rates of 9 percent and above a worker can receive a maximum of 99 weeks of UI. By September those workers will receive a maximum of 73 weeks of UI. Workers in states that have from 7 to 9 percent unemployment rates will receive a maximum of 63 weeks of UI. Workers in states whose unemployment is in the 6-7 percent range will see their maximum number of weeks shrink to 54 weeks, and for states with rates under 6 percent the maximum will be 40 weeks. In each category between 19 and 36 weeks of UI are lost.

Some of the onerous provisions in the original House-passed bill are not in the final agreement. The final bill does not require UI recipients to have completed high school or be in a GED program. Nor does it allow states to require drug testing for all UI applicants. The bill does allow states to drug screen and test anyone who lost their job because they failed or refused an employer drug test or is seeking a job that requires a drug test. This provision overturns a decades-long Department of Labor law banning states from screening and testing UI applicants for drugs. Recipients of federal UI benefits are required to participate in reemployment assessments to determine what services and activities they need to return to work and they, like recipients of state UI benefits, must engage in job search. H.R. 3630 also contains a waiver which allows up to 10 states to operate programs that provide subsidies to employers who hire UI beneficiaries and provide them with training. The subsidies would offset the cost of the wage provided which must be greater than the UI benefit. Advocates are concerned that this could set a precedent for diverting UI funds to subsidize low-wage work, undermining the social insurance quality of the program and potentially opening the door to mandatory work requirements for UI recipients.

The payroll tax cut extension means that workers will pay 4.2 percent instead of 6.2 percent of their income under $110,100 in Social Security tax. For the average family this represents an annual savings of about $1,000. Revenue lost to the Social Security Trust Fund is reimbursed through general Treasury funds.

Other provisions in H.R. 3630 include extensions of the Transitional Medical Assistance for low-income families moving into employment through the end of the year and the Temporary Assistance for Needy Families (TANF) program through September 30. No funding is provided for TANF supplemental grants which provide additional funding to poorer states. A provision was added that blocks access to TANF funds on electronic benefit transfer cards at ATMs in liquor stores, strip clubs and casinos.

Conferees struggled to reach agreement on how to find $60 billion to pay for the non-payroll tax provisions in the bill. A leading source of offsets comes from requiring federal workers hired beginning next year to contribute more to their pension benefits. Other sources of funding will come from auctioning broadband spectrum now controlled by television broadcasters for high speed internet, reducing payments to Medicare providers and reducing funding for prevention activities in the Affordable Care Act. Advocates were pleased that a cut in the refundable Child Tax Credit for low-income working families was dropped as an offset.

There is ongoing and growing concern among some members of Congress and advocates that as legislation passes requiring offsets, wealthy individuals and corporations have not been asked to contribute. One outcome of this legislation is that the nearly $100 billion cost of the payroll tax cut will be added to the debt, likely moving up the vote on raising the debt ceiling to the end of this year rather than next year.

The post CHN: Congress Passes an Extension of Unemployment Insurance and the Payroll Tax Cut appeared first on Coalition on Human Needs.

Initially the House refused to accept the Senate short-term extension, insisting that the Senate acquiesce to their version.  With no deal, it appeared that with the new year, the unemployed would lose jobless benefits and those with paychecks would lose the payroll tax holiday.  But after receiving backlash from constituents and the media as soon as they went home for Christmas break, the House relented and on December 20th agreed to the Senate’s short-term extension.  The $40 billion cost  of this extension was almost entirely paid for by increasing the fees charged by Fannie Mae and Freddie Mac for guaranteeing loans for mortgages. The President signed the two-month extension into law (PL 112-78) on December 23.

Having lost the fight in December, early indications were that House Republicans would work for a quick resolution and the programs would be extended to the end of 2012.  Those hopes seem to be fading.  As in December, sticking points include how to pay for the bill and what, if any, changes to make to the UI program.  Last year a maximum of 99 weeks of UI benefits were available to unemployed workers in states with high unemployment rates.  The Extended Benefits program which provides the last 20 weeks in states with high and rising unemployment was not renewed in December so currently the maximum number of weeks of UI eligibility is 79.  The original House bill called for slashing the number of weeks to 59.  Advocates stringently opposed cutting below 79 weeks and would instead like the full 99 weeks restored.  House Republicans are pushing to include in the long-term extension provisions in their original bill to limit eligibility to UI by requiring drug testing and a high school diploma or GED or enrollment in classes as conditions for receiving benefits.  They are also pressing to allow states to request waivers that would surely result in fewer benefits for recipients.  These provisions comprise a particularly harsh affront to unemployed workers who have become unemployed through no fault of their own.  (For more information about the House UI provisions, see the National Employment Law Project report, “Sticking to Principles: Congress Should Oppose Barriers to Unemployment Insurance and Instead Provide Meaningful Reemployment Tools.”)

The cost of extending the programs in the bill to the end of 2012 is approximately $160B.  Advocates and many Democrats believe that if Republicans insist on paying for the extensions – typically unemployment insurance was considered ‘emergency’ spending and has not been paid for– new tax revenues ought to be in the mix.  While Republicans remain uncompromisingly opposed to the Democratic proposal to increase taxes on millionaires, they did propose one offset in December that would restrict eligibility for the refundable Child Tax Credit, targeting low-income children in immigrant families.   The typical taxpayer harmed by this proposal earns $21,240 per year and would experience an 8 percent increase in their taxes owed, amounting to a loss of $1,800 in the family’s income.

If Congress does not act on a full extension or another short-term extension by February 29, the programs will expire.  According to the Department of Labor nearly 1.3 million unemployed workers would lose their benefits by the end of March. It will also put in jeopardy TANF and TMA. If they do not finish their work on this bill before February 17th they will have only three days after returning from a February 20-26 recess to pass a short-term extension or year-long bill.

The post CHN: Congress Up Against Deadline to Extend Unemployment Insurance and Payroll Tax Cut appeared first on Coalition on Human Needs.

The House passed a bill Tuesday, December 13, extending the current payroll tax cut for a year, continuing unemployment insurance (UI) but cutting it back by 40 weeks and making other restrictive changes, and preventing the drop in Medicare physician payments.  The House bill (H.R. 3630) passed 234-193, with 14 Republicans voting no and 10 Democrats voting yes.  It was opposed by most Democrats because it offset the bill’s costs in part by cutting funding under the new health care law and freezing federal worker pay for another year, and also because of environmental concerns over building the Keystone oil pipeline and reducing the Environmental Protection Agency’s authority.  Many Democrats also opposed the substantial reductions in unemployment insurance called for in the bill.

The President and many Democrats had favored paying for expanded payroll tax cuts and continued unemployment insurance by increasing taxes on incomes over a million dollars.  That was a non-starter for Republicans, who also favored continuing the existing payroll tax cut for workers but did not want to expand it.

A year-long payroll tax cut and UI extension, plus the Medicare “doc fix” and preventing some business tax cuts from expiring would cost over $210 billion; a temporary 2-month bill would cost $40 billion.  It seems likely at this writing that Congress will take the short-term option if all the differences cannot be resolved in time.

The Senate has scheduled a vote on the House bill on Saturday, December 17, the earliest possible time under Senate rules without bipartisan agreement to speed things up.  If that vote is held, it will fail.  At that point, some negotiated alternative is expected to emerge that will prevent a sudden loss of tax cuts, unemployment benefits, or Medicare payments to doctors.

House makes many UI cuts.  It was not clear how many of the unemployment insurance provisions in the House bill would make it into a final deal.   H.R. 3630 slashed the maximum number of weeks of UI by 40 (instead of a maximum 99 weeks of state and federal benefits, the jobless would not receive assistance for more than 59 weeks; in states with unemployment rates less than 6 percent the total would be smaller ), with states with the highest unemployment rates hit the hardest.  In addition, the House bill included many other restrictive measures.  It would allow states to require drug testing of every UI applicant, even though most states do not approve payment of benefits for workers let go because of drug use on the job.  The bill requires high school completion (or participation in a GED program) as a condition of receiving benefits, even though there is a nationwide waiting list of about 160,000 to get into GED programs.   H.R. 3630 gives states the authority to divert federal UI funds to pay for employment counselors or other employment programs, even though the clear mission of the federal UI program is to provide cash benefits while jobless individuals are looking for work.  The bill even charges UI recipients $5 a week (out of their meager UI benefits, which average $300 a week) to pay for reemployment services, whether or not the recipient is actually receiving these services.  In another attack on benefit levels, the bill removes the current prohibition against reducing the size of state benefits as a condition of states’ utilizing federal UI payments.  (For more information about the House UI provisions, see analyses by the National Employment Law Project and the Center on Budget and Policy Priorities).

The National Employment Law Project had estimated that if UI were allowed to expire, nearly 2 million of the unemployed would lose benefits in January alone, with more left out in each succeeding month.  UI has multiple good outcomes.  The spending by families who have assistance creates about $2 of economic activity for every dollar spent.  Failure to continue federal benefits would pull $22 billion out of the economy, costing 140,000 jobs.  Unemployment compensation also lifted nearly 8 million people out of poverty between 2007 and 2010, of whom more than 2.3 million were children.  (See National Employment Law Project analysis).

Senator Tom Harkin (D-IA) was quoted in CQ.com as saying that some of the House UI provisions were “off the table” as the final deal-making progressed.  Allowing states to divert UI money away from financial assistance was on that list; so was drug-testing.  But Harkin pointedly did not reject the notion of reducing the number of weeks of benefits.  However, a final agreement might include waivers to allow the 10 states with unemployment rates currently above 10 percent to have more weeks of benefits than other states.

No millionaires’ surtax; tapping the poorest children instead.  It is highly unlikely that a surtax on income above $1 million will be used as a source of funds to pay for extending the payroll tax cut, UI, or the Medicare “doc fix,” since most Republicans remain intransigently opposed.  (One exception is Senator Susan Collins (R-ME), who has co-sponsored legislation that would include such a surtax.)  A partial replacement of that income put forward by the House bill would restrict payment of the Child Tax Credit only to families in which a working parent supplies a Social Security Number, rather than an Individual Taxpayer Identification Number (ITIN).  Immigrant families make use of the ITIN.  Children of immigrants now make up one-quarter of all U.S. children; nearly 30 percent of children with foreign born parents are poor.  Eliminating ITIN eligibility for the refundable portion of the Child Tax Credit would take an average of $1,800 from very low-income working families, according to the U.S. Treasury.  Denying this income to low-income children in immigrant families would save $9.4 billion.

Other ways to pay for the package.  While the House bill included $31 billion in cuts to health care reform provisions to offset some of the costs, Democrats are unlikely to agree.  They are also expected to remain opposed to another year of frozen salaries for federal workers, estimated by the Congressional Budget Office as saving $1.8 billion in the House bill.  Other funding sources more likely to be agreed to include $16.5 billion from the auction and use of broadband spectrum and $35.7 billion in guarantee fees from Fannie Mae and Freddie Mac.  Those are not enough to pay for a full year of the spending and tax cut provisions.  There were reports that the negotiators may tap other sources of savings identified by the deficit reduction “super committee” to get the rest of the way.  If the package once again pays for its provisions with other spending cuts and no fair tax increases, human needs advocates will wonder under what circumstances the Administration and Senate leadership will ever be able to negotiate a deal that increases revenues.

The post CHN: Congress Not Anxious to Raise Working Families’ Taxes in January appeared first on Coalition on Human Needs.

Most of the bill’s details were agreed to five days ago but Democrats delayed signing off on the bill’s conference report with concerns over several ‘riders’ (policy issues not related to funding) and to give more time for negotiations to work out a deal extending the payroll tax and unemployment insurance and addressing the reimbursement rate for Medicare doctors.  (See related article in this Human Needs Report.)

The largest of the non-defense appropriations bill is the one that funds Labor, Health & Human Services (HHS), and Education programs.  It will provide $156.3 billion for FY 2012, $1.1 billion below the FY 2011 level.  Programs critical to low-income families that received additional funding include the Community Services Block Grant, funded at $714 million, an increase of $12 million above last year’s level, Head Start, funded at $8 billion, up $424 million over last year’s level, and the Child Care and Development Block Grant which receives a $60 million increase to $2.3 billion.

Job Training
The final package rejects the deep cuts proposed to job training and education programs in a House draft of the L-HHS-Ed bill released in October that made $2.2 billion in cuts to training, including $1.9 billion to Workforce Investment Act (WIA) formula grant programs.  The final bill includes $150 million in cuts to job training programs in the Department of Labor (DOL), with the bulk coming from reducing funding for the WIA  Dislocated Worker program ($55 million below FY 2011 level) and the Workforce Innovative Fund ($75 million below FY 2011 levels). The bill does not include the proposal in the House draft to eliminate advance appropriations for DOL training programs, which facilitates longer-term planning.

Pell Grants
The news on Pell Grants is not as bad as some had expected.  The maximum Pell Grant award is maintained at $5,550.  The income threshold at which students automatically qualify for the maximum Pell Grant without a more detailed needs analysis (referred to as the “auto-zero”) has been reduced from a $30,000 limit per year to $23,000, which will make it harder for working students to protect income needed for living expenses.  The lifetime eligibility for Pell Grants was reduced from 18 to 12 semesters.

Low-Income Home Energy Assistance LIHEAP
The LIHEAP program received a deep cut in funding, down from $4.7 billion in FY 2011 to $3.48 billion in FY 2012, a 26 percent reduction.  The President’s budget slashed the program even more deeply, requesting only $2.57 billion for the program.  LIHEAP helps low-income families pay their heating and cooling bills.  Currently only a fraction of those eligible for assistance receive it.  Cuts to this program will be devastating for families struggling to balance the need to put food on the table, pay for medicines, and heat their homes.

H.R. 2005 contains an additional 0.189 percent cut to all discretionary accounts.  The House and Senate will also vote on a separate bill, the Disaster Relief Appropriations Act of 2012 (H.R. 3672), which provides $8.6 billion in disaster aid financing.  Republicans want to pay for the aid with another across-the-board cut to most discretionary accounts.  The Senate will likely not adopt the offsetting cut.  By setting up separate votes for the Disaster Relief spending and the offset, the House is allowing the Members to have their chance to show their support for spending cuts to pay for emergency relief, without jeopardizing final enactment of the legislation.

The post CHN: Congress Poised to Pass Omnibus Fiscal Year 2012 Appropriation Bill appeared first on Coalition on Human Needs.

In September President Obama offered the Jobs for America Act, with specific proposals to boost hiring, build infrastructure, preserve jobs and assist the unemployed.  Senate Democrats introduced the President’s legislation with their own proposal to pay for it through a surtax on income exceeding one million dollars.  When that bill failed for lack of 60 votes, Senate Democrats decided to break the package into smaller bills, each paid for by a very small surtax on millionaires’ income. The first two attempts at passing job-creating bills were an infrastructure bill to improve highways, transit, rail and aviation facilities and a bill to hire new teachers, police officers and firefighters and prevent layoffs.  They failed predominately along party lines, over mainly Republican objections to the millionaires’ surtax as well as opposition to direct federal action to spur job creation.

H.R. 674 was passed after the surcharge on millionaires was dropped in favor of other offsets.   The bill provides new tax credits to companies for hiring long-term unemployed veterans and veterans with service-connected disabilities, extends existing credits for hiring veterans through 2012, and requires the Department of Veterans Affairs (VA) to establish a retraining program by July 1, 2012.  The $8 billion cost is paid for by postponing scheduled decreases in fees charged to veterans obtaining VA-guaranteed mortgages until FY 2017.

The bill also repeals a requirement in the tax code not yet in effect that would have required local, state and federal government agencies to withhold federal taxes from payments to contractors.  The provision was intended to improve tax compliance.  The estimated 10-year cost of $11.2 billion is paid for by changing the income formula to include Social Security when calculating eligibility for Medicaid and for subsidies for the purchase of health insurance in the new state-run exchanges.  The bill unanimously passed the House 422-0 and it passed the Senate with the only dissenting vote cast by Sen. DeMint (R-SC).

Unless Congress acts in December, the payroll tax cut and federal Unemployment Insurance program will both expire.  Last year the employees’ share of the Social Security payroll tax was reduced from 6.2 to 4.2 percent, adding $1,000 to the incomes of middle-class families and costing $120 billion.  The President’s jobs bill calls for cutting the rate down to 3.1 percent at a cost of $175 billion.

The federal Unemployment Insurance (UI) program extends benefits to long-term unemployed workers who have exhausted 26 weeks of state benefits.  Extending UI faces opposition from conservatives and could prove challenging.  According to the Economic Policy Institute failure to extend the program would result in slowing economic growth and the loss of 560,000 jobs.  It would also result in extreme hardship for families of unemployed workers.

Senate leaders are contemplating the best way to proceed on both UI and the payroll tax cut, either moving free-standing bills or attaching either or both to other legislation.  Finding offsets to pay for these extensions will be a challenge.

The post CHN: Congress Passes Provision in President’s Jobs Bill appeared first on Coalition on Human Needs.

Future pieces of the jobs bill will be taken up, including employee (and perhaps employer) payroll tax cuts, continuation of federal unemployment insurance for the long-term unemployed, and investment in infrastructure projects to provide jobs.  Timing of these votes is not known, but the clock is running on federal unemployment insurance, which will be expire altogether by the end of December.  Millions of the jobless will suddenly lose unemployment checks if Congress refuses to continue the program, a real blow to them and to the fragile economy, nearly two million in January 2012 alone, according to the National Employment Law Project.

Some of these provisions were probably included in the Democrats’ deficit reduction plan (see article in this issue of HNR), which was said to include job creation measures.  The enactment of any of these proposals at this point seems captive to unified Republican opposition, but that may change, especially if public outrage over the unfair advantages of the top one percent over the other 99 percent of Americans continues to grow.

The post CHN: Republicans – and a Few Democrats – Block the President’s Jobs Package appeared first on Coalition on Human Needs.

House and Senate appropriators hope to avoid passing another short-term appropriations bill and instead come to agreement by November 18 on a final omnibus bill for FY 2012 that includes funding for all discretionary programs.  Both House and Senate leaders have agreed to accept the total $1.043 trillion overall cap on funding passed in the Budget Control Act on August 2. This represents a $7 billion (non-inflation adjusted) cut from the FY 2011 total, an inflation-adjusted 1.8 percent cut. While working with the same total spending cap will make an agreement easier, still there are differences in the House and Senate bills that could prove difficult to resolve – starting with whether to include offsets for FEMA funding, something that has never happened because of its emergency nature. In addition to differences in funding levels for certain programs, policy riders also loom large.

Negotiators will use the 12 bills as they have been developed to negotiate the final package.  The Senate has passed 11 of the 12 bills in the Appropriations Committee – the Interior-Environment bill has not been taken up.  Senate leadership hopes to take a number of the bills to the floor before omnibus negotiations, hoping to get more leverage in the process.  The House has passed 9 of the 12 bills within the Appropriations Committee and 6 of those have passed the full House.

Labor-HHS-Education:  One of the bills the House has not considered in either the Appropriations full or subcommittee is Labor-HHS-Education.  However, Subcommittee Chairman Rehberg (R-MT) took the unprecedented step of posting on the Committee’s website a draft bill representing his proposals for FY 2012. He does not plan to convene the subcommittee to consider the bill.  The largest bill next to Defense, the Labor-HHS-Education bill, will be one of the most difficult to resolve. The House draft bill for FY 2012 is funded at $153.4 billion, $4 billion below its FY 2011 level and below the Senate bill.  The House draft makes particularly deep cuts to job training programs, decreasing aggregate funding by $2.4 billion or 75 percent while the Senate maintains current funding for the programs.  The House draft also cuts nearly 30 education grant programs.  As controversial as the cuts are the new policy riders in the House bill: prohibiting the use of funds to implement almost any part of the Affordable Care Act; overturning protections of the National Labor Relations Act for workers in many companies now covered; and blocking Education Department rules designed to protect students and taxpayers from for-profit colleges with the worst default records.

Defense:  Funding in the two Defense bills are far apart. The Senate freezes defense spending at its current level of $513 billion and the House increases spending by $17 billion to $530 billion.  Both assume additional spending of $118 billion for the wars in Afghanistan and Iraq.

Agriculture/Nutrition:  The Senate would provide $2.699 billion more in Agriculture Appropriations with significantly more for nutrition programs in the bill; $60 million more for The Emergency Food Assistance Program (TEFAP), $10.5 million more for TEFAP administration funding, $38.3 million more for the Commodity Supplemental Food Program, and $581 million more for the Special Supplemental Nutrition Program for Women, Infants and Children (WIC).  According to appropriators, the $6.582 billion for WIC in the Senate bill would fully fund participation in the program.

Housing:  Advocates are deeply concerned about cuts in several programs that serve extremely low-income households in both the House draft and Senate bills providing funding for the Department of Housing and Urban Development (HUD). Funding for contract renewals for tenant-based rental assistance in the House bill is $17.04 billion and in the Senate bill is $17.14 billion.  The Center on Budget and Policy Priorities estimates that a minimum of $17.37 billion would be needed to prevent households from losing vouchers they are now using to enable them to afford their rent.  Under the House bill an estimated 42,000 vouchers would be lost, with the likely outcome that many would be forced out of their homes. Both bills are well below the President’s request of $2.4 billion for the Public Housing Capital Fund which is barely sufficient to meet accumulating maintenance needs of public housing units. This bill is one reflection of the impact of that cuts to domestic discretionary programs in the name of “deficit reduction” are having.

Another challenge to reaching agreement on final funding for FY 2012 will be pressure from the 53 House Republicans who voted on October 4 against the CR, many of whom are unhappy that the total spending is $24 billion more than adopted in the April House-passed budget resolution.

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The net growth of 103,000 jobs in September is not nearly enough to make a dent in the disturbing levels of joblessness.  President Obama has continued to stump for his American Jobs Act (for a description, see the September 16, 2011 Human Needs Report, The President’s Job Creation Package), and is urging people across the country to exert pressure on Congress to act.

The first chance of action will take place in the Senate.   The President’s package was introduced by Majority Leader Harry Reid (D-NV) (S. 1660) and it is scheduled to be taken up on the Senate floor late Tuesday, October 11.  This first vote is on limiting debate (cloture).  It will require 60 votes, which means it will not be possible to move the bill forward without some Republican support as well as near unanimity among Democrats.  Neither of these is certain.  Congressional Quarterly (CQ) reports that some Republicans including Senators John McCain (R-AZ) and Lindsay Graham (R-SC) might vote to limit debate if they were promised the opportunity to offer amendments to the President’s package.  On the other hand, Senator Joseph Lieberman (I-CT) voiced opposition to the cost of the President’s bill.  That does not preclude him from voting to move the bill forward.

The bill that will be considered in the Senate on Tuesday differs from the President’s original legislation in that it is paid for by a 5.6 percent surtax on income over $1 million, starting in 2013.  The President’s version would limit the value of income tax deductions to 28 percent for those with incomes over $200,000 – $250,000, would repeal oil and gas subsidies, reduce tax breaks for those sheltering off-shore income and flying corporate jets, and tax carried interest (for example, income for hedge fund managers) at regular income tax rates (not the lower capital gains tax rate).    Some Democratic senators objected to one or another of these provisions; the millionaires’ surtax seems to be more popular.

The Coalition on Human Needs sent a letter of support for the Senate version of the American Jobs Act to every senator on Friday, October 7.  Whether or not the legislation has enough votes to move forward now, if Congress sees that many constituencies want this kind of action on jobs, the chance that substantial parts of the bill will be adopted improves.

There is likely to be bipartisan support for extending the payroll tax cut now in place and for cutting the employer share of the payroll tax as well.  Advocates are concerned that if the package is picked apart, some of the elements most beneficial to low-income people would be dropped (such as summer and year-round jobs for youth, subsidized jobs, and other targeted aid for the long-term unemployed, including the continuation of the federal unemployment insurance program).  The new unemployment data shows how important these provisions are.

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The American Jobs Act was pointedly compiled from proposals that have at one time or another garnered bipartisan support.  For example, $65 billion in the package will pay for cutting employer payroll taxes in half, limited to businesses with payrolls less than $5 million.  Another $5 billion would provide a temporary tax credit offsetting the full cost of employer payroll taxes for increased wages or new hires.  Such proposals have in the past attracted Republican and Democratic support, as has the proposal to continue and expand the payroll tax cut for employees.  Congress returned from its August recess chastened by loud cries for action on jobs in constituent meetings across the nation.  That expression of public will made it more difficult for partisans to offer an immediate categorical rejection of the President’s plan.  But once the Administration supplied the details of its proposal to pay for it through increased revenues from high-income individuals and profitable corporations, opposition started to surface.  House Speaker Boehner’s September 15 speech about jobs, in which he retreated to former intransigence in opposing any net revenue increases, signaled a tough road ahead.

The President is hoping that the concerns about jobs evident in town meetings over the summer continue through the fall, to push Congress to act.  For those concerned about joblessness in low-income communities, the long-term unemployed, saving education and public safety jobs, and modernizing our infrastructure, there are important provisions attracting support.

Help for the Long-Term Unemployed.  First, the American Jobs Act includes the continuation of federal Unemployment Insurance for those out of work six months or more through 2012 (at a cost of $49 billion).  The federal UI program is scheduled to expire at the end of this year if no action is taken.  With 6 million people out of work for six months or more, the consequences of failing to extend these benefits would be grave.  In addition to continuing the current number of weeks of federal UI, the President proposes a number of changes, some controversial.  The legislation would require states to provide reemployment services to long-term unemployed people receiving UI benefits, would allow states to create plans to provide UI to workers trying to start their own businesses, and would allow states to design “Bridge to Work” programs in which people receiving federal UI benefits could volunteer with private sector businesses in hopes of securing paying jobs.  While voluntary, concerns have been expressed that this proposal is a source of free labor to private businesses with no requirement that they hire the volunteers after their 8-week temporary stint is concluded.  Unlike the similar Georgia Works program, this version would require that compensation be no less than the minimum wage and that workers were covered by Fair Labor Standards Act provisions.

In other strategies aimed at reducing long-term unemployment, the bill allows states to develop voluntary wage insurance plans, in which UI funds could be used to supplement wages if the jobless find jobs at pay lower than they had previously received.

In addition, the legislation includes an $8 billion tax credit for businesses hiring the long-term unemployed (a $4,000 credit per worker) and a separate initiative to encourage hiring of veterans.  The bill also prohibits discrimination against the unemployed in hiring.

Included within its initiatives to broaden the use of unemployment compensation funds is a work-sharing proposal that would prevent joblessness by allowing federal unemployment funds to be used to make up lost wages if employers choose to cut back hours rather than eliminate positions.  Such programs are in operation in 20 states and have been used successfully in other countries.

Pathways Back to Work:  targeted low-income employment programs.    These $5 billion initiatives include summer and year-round jobs and/or training for low-income youth, and subsidized jobs and other forms of training or job preparation for low-income adults.  $2 billion of these funds would support subsidized temporary jobs, similar to the successful (but expired) TANF emergency fund program.  The youth employment programs would be funded at $1.5 billion; another $1.5 billion would support competitive grants to local entities for work-based training.

Education and Public Safety Jobs.  The bill includes $35 billion to hire teachers, police and firefighters.  The bulk of the funding ($30 billion) will support education jobs, including early childhood education.  The American Jobs Act also provides $30 billion to modernize at least 35,000 school buildings.

Infrastructure.  In addition to school renovations, the legislation calls for a $10 billion infrastructure bank and investments in transportation and wireless initiatives adding up to at least $60 billion.    The bill also would establish Project Rebuild ($15 billion) to renovate foreclosed and blighted residential and commercial properties in low-income communities, hiring workers from those communities.

Payroll Tax Cut for Employees.  The biggest single expense in the package ($179 billion) is extending and expanding the payroll tax cut for workers now in place.  If no action is taken, the current payroll tax reduction will expire at the end of 2012; workers would then see a tax increase starting in January of 2013, which would not be desirable when the economy is still in such trouble.  A household with earnings of $50,000 would get a $1,500 tax reduction under this plan (lowering the payroll tax paid from 6.2 percent to 3.1 percent).  The funding that would be lost to the Social Security Trust Fund will be replaced.

Paying for the Jobs Package.  The legislation includes revenue increases to offset the cost of the job creation provisions.  Most of the funding would come from limiting the value of tax deductions to 28 percent ($400 billion over 10 years).  This would affect couples with incomes over $250,000, or individuals with incomes of above $200,000; others with lower income would not see a change.  Smaller amounts would be raised from taxing carried interest as ordinary income, rather than as capital gains (this would close a loophole providing a break for hedge fund managers and some others), closing a loophole over depreciation of corporate jets, repealing oil and gas subsidies, and reducing tax breaks for taxpayers with offshore income.

Scenario for Enacting the Jobs Bill.  While it seems plausible that Congress might pass some or all of the tax cuts in the jobs bill, there would be clear opposition to the other provisions, even though many would be well-targeted to create jobs in low-income communities where they are desperately needed.  The strategy with a chance of holding the various parts of the package together would be to incorporate the jobs bill within the work of the Joint Select Committee on Deficit Reduction.  The American Jobs Act explicitly calls upon the Joint Committee to add revenue raisers such as the bill proposes to the deficit reduction total, in order to pay for the job creation measures.  It would be appropriate for the “super committee” to include job creation in its plan to reduce the deficit, since millions more workers would be paying taxes and generating more economic activity.  If the super committee can agree on a deficit reduction plan, it would proceed to votes in Congress on a fast track with no possibility of amendment or filibuster.  With 6 Republicans and 6 Democrats on the committee, it is not at all clear that a jobs package resembling the American Jobs Act could be included; but including it as part of the price of the overall deal is one of the only strategies with any chance of creating jobs in the next few months.

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