On July 31, The House Budget Committee held a hearing anticipating the 50 year anniversary of the War on Poverty – the beginnings of Head Start, college prep programs, Work Study, and other programs for youth, and community action programs to seek community-wide economic development.  Food Stamps, Medicaid, and Medicare were also enacted in the mid-1960s.  Chairman Ryan (R-WI) framed the hearing in this way:  over the past 50 years, we’ve spent $15 trillion on anti-poverty programs.  But now 15 percent of our people are poor – 46 million people.  So evidently these programs have not worked.

In his opening statement, Chairman Ryan said “This isn’t about cutting spending.  This is about improving people’s lives.”  But some of the Committee members, including Ranking member Chris Van Hollen (D-MD), pointed out that Chairman Ryan’s budget (passed by the House) made extreme cuts in most anti-poverty programs.  Medicaid (not even counting the cuts proposed to eliminate the new health care law), was cut by $810 billion over 10 years, and the full Medicaid cut (including de-funding the health care law) would leave 40-50 million more poor-moderate income people uninsured.  SNAP/food stamps was cut by $135 billion over 10 years, resulting in millions of people losing food.  Cuts in domestic appropriations would leave them at their lowest share of the economy since before the War on Poverty’s start in 1964.

While Chairman Ryan’s track record suggests his enthusiasm for cutting spending on anti-poverty programs, his witnesses at the hearing did not for the most part propose cuts.  Witnesses including Jon Baron of the Coalition for Evidence-Based Policy and Douglas Besharov of the U. of Maryland’s School of Public Policy emphasized that we should be learning from what does and does not work, and re-directing funding towards improving programs.  Mr. Baron cited research that indicated the cognitive gains made by Head Start participants was short-lived, but then added that further research shows that some Head Start programs are more effective than others; he favored applying those lessons.

Professor Besharov also disagreed with the hearing’s main premise – that poverty hadn’t declined as a result of the War on Poverty.  He pointed out that major improvements in anti-poverty programs over the past decades have expanded food stamps, low-income tax credits, Medicaid and other programs that do not count in the official poverty measure.  By his calculation, when taking those expansions into account, poverty has really declined to 7.2 percent.

Opinions differ substantially among anti-poverty advocates as to how to measure poverty and hardship today (and many believe Besharov’s estimate is too low), but there is considerable agreement that the current measure is inadequate.  The Supplemental Poverty Measure has been developed by the U.S. Census Bureau as an experimental tool to take more income and expenditures into account in assessing the extent of poverty.  It shows fewer families with young children would be defined as poor and more seniors would be, after counting the benefits of SNAP and tax credits (helpful to families with children) and the costs of medical care (a hardship for a greater proportion of older people).

The thrust of recent analyses differ with the contention that anti-poverty programs have not worked, while still pointing out that poverty remains a problem in this country that must be addressed.  Sr. Simone Campbell, Executive Director of NETWORK, a National Catholic Social Justice Lobby, was the sole witness selected by Democrats on the Committee.  She described NETWORK’s “Nuns on the Bus” tours of many states, in which she met families with parents working at low wages, unable to make ends meet, other parents grappling with multiple problems including violence, depression, substance abuse and homelessness, and another woman who died of cancer for lack of health insurance.  She cited the value of SNAP and Medicaid expansions in these families’ lives, and made a strong case for raising the minimum wage and other work supports for low-wage workers.

The Coalition on Human Needs’ Executive Director Deborah Weinstein submitted written testimony at the request of Committee member Barbara Lee (D-CA).  She pointed out that even using just the official       poverty measure, poverty declined from 22.2 percent in 1960 to 11.1 percent in 1973.  Many factors contributed to cutting the poverty rate in half during that period, including more seniors benefiting from Social Security in their retirement (from 1965 to 1973, poverty among those 65 or older dropped by 43 percent).  Unemployment was generally low, and there were more manufacturing jobs with better (often union) pay.  Since 1973, erosion in the number of good-paying jobs and widening inequality has resulted in lost ground in wages and increased poverty.  But broadly shared economic growth has always been prompted by government actions – such as the building of the interstate highway system starting in the 1950s, increased funding for medical research and education, and worker protections such as raising the minimum wage.  Further progress in reducing poverty, especially in an era when corporations are not sharing their record-high profits through increased hiring or wages, will require more government investments, paid for in part by asking corporations and wealthy individuals to pay more of their share.

The hearing was an attempt to seize the terms of a national discussion about poverty expected as we head towards the January 2014 50-year anniversary of the War on Poverty.  But if the goal was to demonstrate that anti-poverty programs have not worked and were not worth the expenditure (about 12 percent of all government spending in the last 50 years, according to the Washington Post’s The Fact Checker column), the majority’s witnesses for the most part did not agree.

(For an excellent report on the hearing, see Greg Kaufmann’s This Week in Poverty blog for The Nation:  Chairman Ryan and the Real World.)        

The post War on Poverty Hearing in the House: Chairman Ryan’s Budget Committee Witnesses Don’t Quite Toe His Line appeared first on Coalition on Human Needs.

On July 1, student loan rates doubled because Congress failed to agree on legislation to avert the scheduled increase.  After a month of proposals and counter-proposals, Congress enacted a solution that would result in undergraduates paying 3.86 percent interest, close to the 3.4 percent students were paying before July 1, and much less than the 6.8 percent loan rates had risen to after the lower rate expired.

In May, the House approved the Smarter Solutions for Students Act (H.R. 1911) which pegged interest rates on student loans to the market and allowed those rates to change over the lifetime of the loan. Because this legislation would have let interest rates rise too much, President Obama announced that he would veto the legislation if it reached his office. On Wednesday July 24, the Senate amended H.R. 1911, tying interest rates to market rates, but with fixed rates for the lifetime of the loan. The Obama Administration supported the Senate’s version. On Wednesday July 31, the Senate’s amended version passed easily in the House by a vote of 392 to 31. With that vote on final passage, the bill was sent to President Obama on August 1.  The President, who has already expressed his support, is expected to sign the bill.

This year, with the new legislation in place, undergraduates would pay an interest rate of 3.86 percent, graduate students would pay a rate of 5.41 percent, and PLUS loan users – graduate students and parents of students  – would pay a rate of 6.41 percent. All of these rates are lower than the existing fixed rates of 6.8 percent for Stafford loans and 7.9 percent for PLUS loans.  The enacted bill will adjust the rate in future years based on changes in the 10 year Treasury note, but limits undergraduate loan rates to 8.25 percent, graduate loan rates to 9.5 percent, and PLUS loan rates to 10.5 percent.

A group of senators opposed the bill because of its market-based approach to student loans, which will lead to higher rates than students were paying before July.  Senators Warren (D-MA) and Reed (D-RI) sponsored an unsuccessful amendment to keep the flat rate of 3.4 percent for another year, leaving time for further negotiations on how to keep rates low.  After this amendment failed, 16 Democrats and one independent voted against final passage. Originally, Sen. Tom Harkin (D-Iowa), chair of the Health, Education, Labor and Pensions Committee, was in favor of this freeze, but eventually came to support the bipartisan compromise.

The Democratic opposition argues that the bill does not offer a permanent solution to fix the student loan crisis. The plan fails to address the existing $1 trillion student loan debt, the ever increasing tuition fees, and government’s profits from these loans. (The Congressional Budget Office estimated that the Senate bill would generate $715 million in federal revenue over 10 years, less than the original House version.)  Further, while the compromise may lower interest rates on student loans below 6.8 percent in the next two to three years, in the long run the new system may increase rates.

The bipartisan group of Senators that passed the compromise pleaded for the support of the Democratic opposition, claiming that any action is better than inaction and the discussion on student loans would continue, especially because the Higher Education Act is scheduled for reauthorization next year.

The post Student Loan Bill Enacted appeared first on Coalition on Human Needs.

The House was unable to pass a farm bill with a nutrition title because the $20 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP/food stamps) approved by the House Agriculture Committee was not deep enough for some of the most right-wing members.  That proposal would have eliminated SNAP for 2 million very low-income people.  Instead, the House passed a very partisan farm bill with the nutrition provisions left out.  (For details, see the July 22 Human Needs Report.)  Now, the House leadership is reported to have crafted a new stand-alone bill including massive SNAP cuts – doubling the cuts to $40 billion, with 4 million more people losing SNAP and millions more seeing their benefits reduced.  The new bill may make it to the House floor in September.

The bill would retain all the harsh SNAP cuts in the original bill plus those that passed on the House floor before the nutrition title was axed from the farm bill.  One successful amendment would provide an incentive for states to drop unemployed people from SNAP even if they are actively looking for work but cannot find a job.  After cutting off the jobless person, the state would receive federal dollars.  The new bill according to reports would make millions more unemployed people without children eligible for SNAP for only three months out of every three years.  For the rest of the time, they cannot receive benefits unless they are working at least half-time.  Under current law, those harsh limits can be waived if the locality has a high unemployment rate.  The new legislation would end this waiver provision, now utilized in at least 45 states.  No matter how high the local unemployment rate is, 18-50 year olds not raising children would be denied SNAP benefits for 33 out of 36 months.  According to the Center on Budget and Policy Priorities, 4 million people could be affected, among them at least 1.6 million women.  The average income of these childless people is 22 percent of the federal poverty line (that is, only a little over $2,500 a year in income).

The farm subsidy provisions that passed the House increased benefits for certain farmers, including a $9 billion increase in crop insurance subsidies over 10 years.  Farm subsidies overwhelmingly are received by large corporate farms.  Three-quarters of the $23 billion in farm subsidies went to the largest 15-20 percent of farms.  One beneficiary of farm subsidies is Representative Stephen Fincher (R-TN), who attracted attention by defending the original SNAP cuts in the farm bill in a Memphis speech, saying:  “The role of citizens, of Christians, of humanity is to take care of each other, but not for Washington to steal from those in the country and give to others in the country.”  In 2012 alone, Rep. Fincher received $70,000 in farm subsidies; between 1999 and 2012, he accumulated $3.48 million in subsidies, according to the Environmental Working Group.  It is not known whether Rep. Fincher would support the doubling of SNAP cuts, targeted to the poorest of the poor.

(For more details about the proposed new SNAP cuts, see the Statement by Robert Greenstein, Center on Budget and Policy Priorities.)

The post Willing to Deny Food to 4 Million More Poor People: Rumors of House Plans to Double SNAP Cuts appeared first on Coalition on Human Needs.

Advocacy organizations and many Democratic members of Congress plan to make the point during August recess that comprehensive immigration reform is badly needed and would be positive for the economy.  One proponent of reform, Representative Paul Ryan (R-WI), told his constituents that October could be the month when the House votes on a plan to provide probationary visas to undocumented immigrants.  Other reports suggest that the House is drafting a KIDS Act that could be voted on in the fall that would bear some similarity to the DREAM Act for immigrants brought to the United States as children that failed to pass the Senate by one vote in 2010.

Thus far the House has used a piecemeal approach to immigration reform. Four partisan bills were approved in the Judiciary Committee, some of whose members are openly hostile to immigration reform with a path to citizenship.  One bill passed 28-0 in the more immigration-friendly Homeland Security Committee in May, the Border Security Results Act of 2013 (H.R. 1417).  It provides an approach to border security, a key issue for many Republicans and some Democrats, that is favored by advocates over the approach that was inserted into the Senate bill to assure bipartisan passage.

The Senate agreed to an amendment sponsored by Senators Corker (R-TN) and Hoeven (R-ND), the so-called ‘border surge,’ that calls for 20,000 more border agents, hundreds of miles of additional fencing, more surveillance equipment including additional aerial drones, and biometric tracking systems at all international ports and airports to detect people who have overstayed visas. The amendment authorizes the Border Patrol to search without warrant 100 miles from the southern border, compared to 25 miles on the northern border, and ignores the pleas of many local authorities along the border who have developed positive relationships with their neighbors in Mexico. The cost of border enforcement in the bill is $46 billion. Although the amendment was adopted in the Senate, there is bipartisan sentiment that the expenditure is unwarranted.

H.R. 1417 does not set a price nor mandate a number for security hires or miles of fence. Rather, it instructs the Department of Homeland Security to write a plan that Congress would approve that ensures apprehension of 90 percent of undocumented border crossers using existing methods including cameras, radar and unmanned drones within 5 years.   If H.R. 1417 were brought to the floor and passed it could form the basis for a conference with the Senate.  Senator Corker, architect of the Senate plan, has indicated openness to supporting the bill.

The House Republican strategy for dealing with the issue will likely not be clear until September. There are a number of options: leadership could still introduce their own comprehensive bill; combine a package of individual bills into one bill; pass a single bill and take it to conference with the Senate; amend the Senate bill; or simply take no action. A number of conservative Republicans clearly do not support a path to citizenship for immigrants, a position that is unacceptable for Democrats. Speaker John Boehner (R-OH) has repeatedly said that he will not bring a bill to the floor without the support of the majority of the Republican caucus.  It is likely a bipartisan majority for immigration reform could be achieved in the House, but less clear how it could be done if the Speaker continues to insist on a bill with a majority of House Republicans on board.

The post Immigration Reform: Ball is in House’s Court When Congress Returns appeared first on Coalition on Human Needs.

The last major comprehensive federal tax reform legislation was passed in 1986.  Since then, the federal tax code has been filled with changes making it more complicated and, for individuals and corporations who can afford tax lawyers, easier to find legal ways to avoid paying taxes.  Chairmen of both the House and Senate tax-writing committees say they are preparing to introduce major tax reform bills this year.  To emphasize their point, Senate Finance Committee Chairman Senator Max Baucus (D-MT) and House Ways and Means Committee Chairman Representative Dave Camp (R-MI) embarked on a joint tax reform tour.  The first stop was on July 8 in Minneapolis to seek ideas from large businesses.  The focus of their July 29 trip to Philadelphia was to talk with small businesses.  The tour followed months of meetings with committee members and staff discussing various options for tax reform.  Both chairmen are determined to forward legislation during their remaining time in the driver’s seat – at the end of 2014 Senator Baucus will retire and Representative Camp’s tenure as Ways and Means chairman will end.  Enacting reform will be a heavy lift, and advocates are concerned about the nature of tax reform under their leadership.

While in past decades tax reform plans have been designed to be revenue-neutral (that is, any revenues gained by eliminating tax loopholes would be plowed back into other tax reductions), that is far more problematic at a time when deficit reduction legislation has initiated ten years of cuts in government programs and investments.  Since 2011 Congress has enacted nearly $2.8 trillion in deficit reduction, including interest savings.  The ratio of spending cuts to revenue increases has been approximately 3:1.

Many economists and advocates including the Coalition on Human Needs believe that tax reform should result in more revenues and should be at least as progressive as the current system.  That is also the view of Senate Majority Leader Harry Reid (D-NV) and others in the Democratic leadership.  President Obama’s FY 2014 budget proposed to raise $851 billion in revenue over 10 years from individuals, but has in the past supported corporate tax changes that do not result in increased revenues.  In a modest departure from his stance on corporate taxation, the President on July 31 called for investing short-term revenue increases from his corporate plan in job creation initiatives.  Most Republicans in Congress either want revenue-neutral tax reform or favor additional tax cuts.

Corporate Tax Reform

In the 1950s and ’60s U.S. corporations’ share of federal revenue collected averaged over 20 percent annually.  According to a Citizens for Tax Justice presentation, corporations are projected to contribute only about 10 percent of federal revenues in 2013.  This precipitous drop has occurred despite soaring corporate profits but has not prevented complaints by corporations that their tax rate is too high, making them less competitive in the global market. Regarding the U.S. corporate tax rate, the highest statutory rate  is 35 percent. However, the effective rate (the amount actually paid as a proportion of income after credits, deductions, and other loopholes are exploited) is significantly less.  According to a Government Accounting Office report, in tax year 2010 the average effective rate for profitable U.S. corporations was 12.6 percent, increasing to 16.6 percent when foreign, state and local income taxes are included.

Many large U.S.-based multinational corporations avoid paying taxes by parking their profits offshore in countries known as tax havens (places with very low or no taxes).  In so doing they avoid paying taxes until or unless those profits are brought back to the United States.  A newly-released report from U.S. PIRG (the federation of state Public Interest Research Groups) documents the extensive use of offshore tax havens by the top 100 U.S. publicly traded companies.  They have a total of approximately $1.17 trillion sheltered in foreign countries that are known tax havens.  Two-thirds, or $776 billion, is stashed away by 15 companies – General Electric, Apple, Pfizer, Microsoft, Merck, Johnson & Johnson, I.B.M., Exxon Mobil, Citigroup, Cisco Systems, Abbott Laboratories, Procter & Gamble, Hewlett-Packard, Google and Pepsi Co.  The companies often set up shell subsidiaries in the haven countries with few employees, if any, and little or no business activity.  Of the top 100 companies, 21 reported what they would expect to pay in U.S. taxes if they did not keep the profits offshore.  Collectively they would owe over $93 billion in additional federal taxes.  Repealing the rule that allows corporations to defer paying taxes on their profits could raise approximately $600 billion over ten years.

There are also significant cross-cutting breaks that apply to both multinational and domestic companies in the tax code.  One of the largest is the ability of companies to deduct from their taxable income capital investments (in equipment, software, buildings…) at a rate more quickly than the items wear out.  In addition, some sectors of the economy benefit from subsidies particular to that industry.  Often mentioned are the subsidies for oil and gas companies.  Citizens for Tax Justice has a report outlining policy options to raise more revenue by closing tax loopholes and reducing subsidies that benefit companies.

Individual Tax Reform

In 2001, President Bush proposed and Congress agreed to the Economic Growth and Tax Relief Reconciliation Act, which reduced income tax rates for most taxpayers by a few points and created a new 10 percent bracket. The American Taxpayer Relief Act of 2012 made permanent the rate reductions for every tax bracket except the top rate of 35 percent, which it returned to its pre-2001 level of 39.6 percent.  (Income over $450,000 is subject to the highest rate.)  The result was estimated as a $600 billion tax increase over 10 years.  This represents the first contribution revenues made to deficit reduction during the current economic recovery.  By historic standards the top rate is still low; it has been over 60 percent for more than half the time since the income tax was adopted a century ago.

The tax code is filled with tax expenditures (subsidies provided through the tax code).  These tax breaks lose approximately the same amount of annual revenue ($1.3 trillion) as is brought into the Treasury through personal income taxes.  There are expenditures on both the corporate and individual side of the tax code, but the bulk of them are on the individual side in the form of exclusions (an item not taxed), deductions (a reduction in income not subject to tax) or credits (a sum deducted from the total amount of tax owed).  The largest tax expenditures for individual taxpayers include the exclusion of employer-sponsored health insurance, preferential rates on capital gains and dividends, the exclusion of pension contributions and earnings, the exclusion for state and local taxes, and the deduction for mortgage interest.  As Congress looks at tax reform, Citizens for Tax Justice suggests that it should evaluate whether the expenditure should be repealed, reformed or preserved based on three criteria: cost, progressivity and effectiveness in achieving policy goals, such as subsidizing home ownership, encouraging charitable giving, or encouraging work.

Advocates believe that one of the expenditures hardest to justify and most expensive (a predicted $161 billion in lost revenue in 2013) is the lower tax rate on capital gains (profits made from selling assets above their purchase price) and dividends.   The richest one percent of taxpayers receives 68 percent of the benefit from this expenditure and the richest five percent receive 82 percent of the benefit.  While the maximum tax rate for earnings is 39.6 percent, the tax rate for capital gains and dividends is capped at 20 percent.

For more detail on reforming individual income tax expenditures see the Citizens for Tax Justice report.

Low-Income Tax Credits

Top priorities for advocates in tax reform is preserving the refundable Earned Income Tax Credit (EITC), the Child Tax Credit (CTC), and the American Opportunity Tax Credit.  A refundable tax credit is one that results in a “refund check” payment even if the credit exceeds what a person or family owes in taxes. The EITC is calculated on a sliding scale, with the maximum credit of $5,372 available for  a family with two children in 2013 with earnings up to approximately $18,000; the credit then gradually decreases as earnings rise, and phases out for married couples at a little over $48,000.  The EITC is considered the most beneficial anti-poverty program in the federal government, lifting millions out of poverty.  The CTC is partially refundable for low-income working families up to the maximum of $1,000 per child.  The American Opportunity Tax Credit helps students and their families pay for college, and is also refundable.

Senate

After multiple Finance Committee hearings, bipartisan meetings with members and staff, and numerous option papers over the last few years, Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) sent a letter to all members on June 27 asking for their feedback starting with a “blank slate” approach – that is, a tax code without all of the tax expenditures – asking them to make the case for retaining, eliminating, or changing them in the code.  Most important to advocates is that the letter calls for “maintaining the current level of progressivity” in the tax code.  A footnote in the letter says, “The current level of progressivity means the level of progressivity in 2017.  Certain tax expenditures are excluded from the analysis where doing so is necessary to maintain the current level of progressivity.” This is especially important because it essentially assumes that improvements to the refundable credits including EITC and CTC which were extended through 2017 will continue in any tax reform plan.

The letter has been met with mixed reviews. Some members have responded by the July 26 deadline with letters to the chairman and ranking member that talk mostly about principles that should be adhered to in tax reform.  Others discuss specific provisions in the code that should be retained.  Initially some members expressed concern about whether the letters would remain secret.  Some decided to make their letters public themselves.

Leader Harry Reid (D-NV) has said that ‘significant’ revenue must be generated from both the corporate and individual sides of the tax code, and has questioned the value of tax reform plans that do not start with an agreed-upon goal of increased revenue.  The third ranking Democratic leader, Senator Charles Schumer (D- NY), and other Democrats say that the process should result in $975 billion in net revenue over 10 years, the amount they voted for in the Senate-passed budget resolution earlier this year.  Chairman Baucus voted against that budget resolution.  Senator Hatch and many Republicans say tax reform must be budget-neutral.

House

Similar to the Senate, the House Ways and Means Committee has been working on a bipartisan basis to discuss and analyze proposals to reform the corporate and individual tax codes.  Ways and Means Chairman David Camp (R-MI) says that the end result should not raise more revenue.  In a recent meeting with members of the Committee, the Chairman said he plans to bring a bill to the Committee this fall that follows the framework of the tax plan in this year’s House-passed budget.  The plan would reduce the 7 brackets in the individual code to two – 10 and 25 percent – and would drop the top corporate rate from 35 to 25 percent.  In July 30 letters to Ways and Means Ranking Member Sander Levin (D-MI), the Joint Committee on Taxation (JCT) scored the 10-year cost of lowering the rates to 25 percent at a cost of $5 trillion in lost revenue over 10 years.  Chairman Camp will press JCT to use a scoring method speculates about the impact on the economy of lowering the rates.  This so-called ‘dynamic’ scoring method has not been used to make such projections because it is not possible to reliably estimate the effect that the changes would have.    Although the House budget plan claimed to be revenue-neutral, an analysis of a similar plan by the Brookings-Urban Institute Tax Policy Center found that the only way that could be achieved would be by shifting the tax burden massively from upper-income to low- and middle-class taxpayers.

President

The President, in a July 31 speech in Tennessee attempting to re-focus the nation and Congress on job creation, called for a corporate tax plan that would lower the corporate tax rate to 28 percent, while closing loopholes and creating one-time savings that he proposed to invest in a short-term job creation package. His proposal does not spell out enough offsets on the corporate side of the ledger to pay for the rate reduction.  Advocates are concerned that support for lowering corporate tax rates without any agreement in Congress for a plan to raise revenues and to invest in job creation will ultimately make revenue losses more likely.

During his presidential run, former Governor Mitt Romney revealed that his federal tax liability was less than 14 percent.  More recently a much-publicized Senate investigation exposed the techniques Apple uses to pay little in taxes by sheltering $102 billion in tax havens. Small businesses and moderate-income individuals who pay a higher effective tax rate than many wealthy individuals and large corporations resent the fact that the tax burden falls more heavily on them.  Their resentment seems to be shifting the debate in Washington about changes that should be made to make the tax system fairer.

Given the insistence of many Republicans that tax reform not increase revenue, and the stance of many Democrats that such a position is a non-starter, it is hard to see comprehensive tax reform becoming a reality anytime soon.

The post Tax Reform Primer: Differing Goals Make Action Elusive appeared first on Coalition on Human Needs.

Once upon a time, the House and Senate Appropriations Committees sent 12 separate spending bills to the floor of each body, after the full Congress agreed on the total funding they had to divide up.  Conference committees would resolve the differences, and bills would be enacted and sent to the President.  That was then.

This year, the House and Senate are $91 billion apart on their FY 2014 appropriations totals, with the House assuming that spending will not exceed the limits set by another year of sequestration cuts, and the Senate assuming sequestration will not take place.  The gap is made even larger by the fact that the House violates the Budget Control Act’s requirement that defense and “non-defense” are cut equally.  Instead, the House spares defense and cuts domestic programs more deeply.

On the House side, the domestic cuts are so deep that there may not be a majority to pass them.  That was the case when the House leadership had to pull the Transportation-Housing and Urban Development bill from the floor for lack of votes.  In the Senate, the leadership sought to bring big domestic bills to the floor, to show the funding they were willing to provide and contrast it with the deep cuts the House is making.  (See the July 22 Human Needs Report  for more detail about the Senate Transportation-HUD bill.)  However, while a large bipartisan majority in the Senate was at first willing to end debate on the Transportation-HUD spending bill, the bill was stymied later when only one Republican, Senator Susan Collins (R-ME) would join in voting to advance the bill towards final consideration on the floor.  So Congress left for its August recess with neither body able to pass the T-HUD bill.

While it was always a safe bet to assume that Congress would not be able to enact many individual appropriations bills, by the time Congress left town it seemed clear that they would be hard-pressed to pass any.  So in order to keep programs running after the October 1 beginning of FY 2014, Congress will have to agree upon a temporary spending measure, a.k.a. a Continuing Resolution, for as long as they choose, as they continue to work on spending choices for the rest of the fiscal year.

Ordinarily, that would not be too difficult.  Congress would continue spending with each program at this year’s level for a temporary period.  But this year, continuing at this year’s level would run afoul of the deficit reduction law (the Budget Control Act).  If Congress cannot agree on ways to stop the sequestration cuts by changing the law, it must appropriate about $20 billion less in FY 2014 than this year’s spending, and complying with the law means that the full $20 billion must be cut from defense (the domestic programs will have already taken their share of the hit).  That would not be very popular, but if Congress refused to make that cut or to enact changes in the Budget Control Act, the $20 billion Pentagon cut would be triggered automatically across each defense account 10 days after Congress adjourned at the end of 2013.

So Congress has to decide something before the end of 2013, at least if they want to avoid those Pentagon cuts.  And if they do not approve some form of spending bill by September 30, great swaths of federal programs will shut down – also not popular.   They don’t have much time to do it.  The House calendar for September includes only 9 days in session.  They will be out the week of September 23-27, and will return on the very last day of the fiscal year, September 30.

Forestalling the Crunch.  When Congress is at home in August, they will hear from constituents and gauge how much people object to the current sequester cuts and the additional ones looming for FY 2014.  Some, including House Appropriations Committee Chair Harold Rogers (R-KY), saw the failure to take up the Transportation-HUD bill as proof that sequestration has to go.  “With this action, the House has declined to proceed on the implementation of the very budget it adopted just three months ago. Thus, I believe that the House has made its choice: Sequestration — and its unrealistic and ill-conceived discretionary cuts — must be brought to an end,” Rogers said.  But for Rogers, the preferred approach would replace the appropriations cuts (also called cuts to “discretionary” programs) with cuts to mandatory programs such as SNAP/food stamps, Medicaid, Medicare, or Social Security.  The Transportation-HUD implosion did illuminate divisions among House Republicans.  Some of the most right-wing members are willing to make deep cuts in discretionary as well as mandatory programs, while other members are more supportive of funding programs (including the Pentagon). The Senate-passed budget resolution took a different approach, getting rid of most discretionary cuts by a combination of nearly a trillion dollars of new revenue over ten years plus some mandatory savings (generally attempting to avoid service reductions).  The President has also opposed achieving all the deficit reduction through domestic cuts, either discretionary or mandatory.

Out of this mix, it is hard to predict whether some may push so far in the direction of cuts that others simply cannot agree, leading to an impasse that forces a government shutdown.  Funding will stop for federal employees, nutrition aid, housing and home energy assistance, Head Start, education, environmental protection, public health, justice, children’s services, and many other areas.

Whether or not that occurs, some kind of temporary Continuing Resolution will probably pass.  If it keeps government going for about two months, the search for a longer-term solution will bump right into the next deadline to extend the U.S. Treasury’s authority to borrow (the “debt ceiling”).  Treasury’s capacity to borrow is likely to be exhausted by sometime in November (the exact date is uncertain).  It could be that Congress will be trying to work out spending options when the debt ceiling is reached – a kind of double crunch that those most opposed to spending may want to use to force cuts.   But with the public strongly opposed to self-inflicted crises, and with Republicans divided about how far to go with cuts, such brinksmanship may not work.

FY 2014 Appropriations box score:

The full House has passed the following appropriations bills:
Defense, Energy-Water, Homeland Security, and Military Construction-VA .
The full House Appropriations Committee has passed all appropriations bills except Interior-Environment and Labor-HHS-Education.

The full Senate has not passed any appropriations bills.
The full Senate Appropriations Committee has passed all appropriations bills except Interior-Environment.

The post The Approaching Crunch: Agreement on Spending Nowhere Near as Deadlines Loom appeared first on Coalition on Human Needs.

The Senate leadership will illustrate those differences by making the Transportation-Housing and Urban Development Appropriations bill (S. 1243) the first it takes to the floor.  Majority Leader Reid (D-NV) filed a motion to cut off debate on July 18; that cloture vote will take place on Tuesday, July 23.  The leadership expects to be able to get 60 votes so that the bill can be considered.   Six Republicans voted for the Transportation-HUD bill in committee; if they join with all the Democrats and Independents to cut off debate, there will be enough votes.

The Senate Transportation-HUD bill is $10 billion or 20 percent larger than the House version.  With both the House and Senate Appropriations Committees having acted on this bill, the differences to specific programs are clear.  For example, the Community Development Fund is funded at $3.295 billion in the Senate bill, but at only $1.697 billion in the House.  The Senate bill has nearly $1 billion more than the House for the rental voucher program.  While even the House bill has more funding than this year’s $17.9 billion (including sequester cuts), its funding level is not adequate to reverse more than about one-quarter of this year’s lost vouchers, and so would continue the elimination of 100,000 rental vouchers, according to the Center on Budget and Policy Priorities.  The Senate bill provides enough funds to undo most of the up to 140,000 vouchers lost this year.

The House cuts funding for public housing by 16 percent below this year’s spending (including sequestration cuts).  Coming on top of several rounds of cuts affecting public housing programs over the past few years, maintenance and repairs will fall farther behind, with more units lost due to disrepair and families forced to live in substandard conditions.  The Senate provides $838 million more for public housing capital and operations than the House.  While the Senate’s funding does not undo all the losses of the past, it comes closer to meeting current needs.

Almost every program receives less in funding in the House bill than the Senate’s, unsurprisingly, including Homeless Assistance Grants (the House is 7.6 percent lower than the Senate)and lead hazard abatement (the House is 58 percent lower than the Senate and 56 percent lower than current year spending).  (For more comparisons of House and Senate Appropriations Committee funding levels for housing programs, see the Center on Budget and Policy Priorities and the National Low Income Housing Coalition.)

In the transportation side of the bill, the Senate increases TIGER infrastructure grants to localities by $50 million (for a total of $550 million).  The House zeroes out this popular program, and rescinds $237 million previously appropriated but as yet unspent.

The Senate leadership wants to take up the Transportation-HUD bill in order to show the harmfulness of continuing the sequestration cuts, to try to build support for a negotiation with the House to replace the new round of cuts in FY 2014 with new revenues and other savings, mostly but not exclusively in Medicare.

The Senate leaders may also wish to bring the Labor-HHS-Education bill to the floor.  There the differences between House and Senate funding are particularly gaping.  The Senate bill is funded at $164.3 billion, about $43 billion more than the House (or 35 percent above House spending).  While neither the House Labor-HHS-Education Subcommittee nor the full Committee has taken up the bill so far, the full Senate Appropriations Committee has completed work on appropriations for these departments.  The House agreed-upon spending total for Labor-HHS-Education is 18.6 percent lower than this year’s levels, counting the sequester cuts.  The Senate bill is higher than this year’s spending, allowing for some of this year’s cuts to be reversed.

While a handful of appropriations bills may make it to the Senate or House floor, the prospects for the House and Senate resolving their differences and sending separate funding bills to the President for signing are dim.  Instead, Congress is likely to roll up most if not all of the appropriations bills into one stopgap spending measure (called a Continuing Resolution, or CR).  Agreeing even on such a temporary spending bill will be difficult.  The existing deficit reduction legislation, the Budget Control Act, requires that Department of Defense spending be reduced by $20 billion below current levels, so a temporary spending measure that simply continues this year’s funding will not be possible without changing the law.  (Domestic appropriations bills do not have to be immediately reduced; most of the required domestic reductions can be achieved by automatic cuts in Medicare and other mandatory programs.)

Reluctance to cut Pentagon programs, if nothing else, may force negotiators to the bargaining table to stop the sequestration cuts.  The President has threatened to veto legislation that continues sequestration.  Both he and the Senate leadership are calling for increased revenues to be part of a replacement package.  How close Congress will come to allowing a government shutdown when the fiscal year ends on September 30 is not knowable at this point; all that is sure now is that bridging the gaps between House and Senate will not be easy.   (See House  and Senate funding totals for each appropriations bill.)

The post CHN: Senate to Show the Cost of Continuing Sequester Cuts: Will Bring Transportation-Housing Appropriations to the Floor appeared first on Coalition on Human Needs.

Earlier this year, the Senate passed a bipartisan farm bill (S. 954), which created savings of $24 billion and cut $4.1 billion from SNAP over ten years. The House subsequently tried to push through their version, H.R. 1947, a bill that cut $20.5 billion from SNAP and included contentious provisions such as the Southerland Amendment, which mandated work for SNAP recipients.  The bill lost most Democratic support as well as 62 Republican House members, and failed 195-234.  Most of the Republican opponents wanted more cuts to SNAP; for Democrats, the SNAP cuts were too harsh. (For more information about recent action on the farm bill and SNAP, see this article from the June 1, 2013 edition of the Human Needs Report.)

The decision to remove nutrition programs from H.R. 2642 enabled House leadership to garner enough Republican votes for the bill’s passage, but has been heavily condemned by nutrition advocates, who fear that SNAP will be at risk of higher cuts if it is forced to stand on its own.  House leaders have promised that a separate nutrition bill will be forthcoming, which may have even deeper SNAP cuts than those included in the farm bill originally reported out of the House Agriculture Committee.  A working group convened by House Majority Leader Eric Cantor (R-VA) is trying to come up with a nutrition bill.  House Nutrition Subcommittee Chair Steve King (R-IA) is expected to propose ending SNAP’s permanent authorization and replacing it with authorization that sunsets after 5 years unless Congress acts to extend it.

Opposition to SNAP for some in the House is very intense, often because it is seen as an illegitimate form of redistribution of wealth.  Representative Stephen Fincher (R-TN), speaking in Memphis after the vote, said “The role of citizens, of Christians, of humanity is to take care of each other, but not for Washington to steal from those in the country and give to others in the country.”  The Environmental Working Group, however, has identified Rep. Fincher as receiving more than $70,000 in direct farm subsidy payments in 2012, and $3.48 million from 1999 to 2012.

Rep. Jim McGovern (D-MA) and 27 other Democrats, including Ranking Nutrition Subcommittee member Marcia Fudge (D-OH), have sent a letter calling for a hearing about SNAP before voting on nutrition legislation.

The House sent its farm-only bill over to the Senate so that conferees can eventually be appointed to work out the large differences with the Senate bill.  The Senate and the White House are firm in rejecting the idea of a farm bill without a nutrition title.  As quoted in CQ, Senate Agriculture Chairwoman Debbie Stabenow (D – MI) has promised to work with the House on coming to an agreement on the farm bill, but has also stated that the new House bill “is not a real Farm Bill and is an insult to rural America.” Senate Majority Whip Dick Durbin (D – IL) has also stated that the Senate will not pass a farm bill without the nutrition title included, while Obama issued a veto threat for an agriculture-only farm bill earlier this month.

On Thursday, July 18 Stabenow sent the Senate farm bill back to the House.  The House has to decide whether it will pass a separate nutrition bill and take that and its farm legislation to a conference with the Senate, or negotiate off the Senate bill.

Because SNAP is permanently authorized, it continues unchanged if it is left out of the final farm bill.  But if no bill is agreed to by September 30, the farm provisions will expire and subsidies will revert to much lower amounts under decades-old legislation.

The challenges to SNAP illustrate the importance of SNAP’s current permanent authorization.  However, the program does require Congress to continue its funding through annual appropriations bills.  In the past, bipartisan support for this essential safety net program has always meant that funding has always been approved, even during the government shutdown triggered by appropriations brinksmanship under former Speaker Newt Gingrich in the 1990’s.  Advocates are hopeful that support for this essential nutrition program would prevent any disruption this time too.

The post CHN: House Removes SNAP and Other Nutrition Programs from Farm Bill to Enable Passage; Senate Sends Its Bill to House to Try to Force Conference Committee Action appeared first on Coalition on Human Needs.

The compromise ties student loan interest rates to changes in Treasury note rates.  This approach is favored by President Obama and a bipartisan group in Congress.  Others, notably Senators Harkin (D-IA), Reed (D-RI) and Warren (D-MA), support maintaining a flat rate.  They backed a two-year extension of the recently expired 3.4 percent rate, to allow time to build support for an alternative to letting student loan interest rates fluctuate with market forces.  An extension of the current rate was unacceptable to Republicans, who blocked its consideration in the Senate.

Senator Harkin worked with the bipartisan group seeking a resolution, insisting that front-end caps be included, to limit the amount that rates can rise. The compromise legislation (S. 1334), would cap undergraduate loans at 8.5 percent, graduate loans at 9.5 percent, and PLUS loans (for parents of undergrads and for graduate/professional degree loans) at 10.5 percent.  Despite his preference for lower rates, Senator Harkin is expected to vote for this bill.

The bipartisan group of Senators includes Joe Manchin III (D-WV.), Jack Reed (D-RI), Tom Harkin (D-IA), Tom Carper (D-DE), Angus King (I-ME), Lamar Alexander (R-TN), and Richard M. Burr (R-NC).  An earlier plan devised by the group would have cost the Treasury $22 billion over the next ten years, according to an estimate by the Congressional Budget Office (CBO), a number too high to earn Republican support. The House’s version of the bill (H.R. 1911, passed last May) will ultimately raise money for the government, and Republicans have emphasized that they do not want a bill that increases the deficit.  The new compromise, S. 1334, is said to save $715 million over 10 years.  That is not far from the bipartisan group’s goal of making the legislation deficit neutral.

Senator Harkin and the other senators who oppose rates as high as would be allowed under this bill do not see this as necessarily the final student loans outcome, since the Senate will take up the reauthorization of the Higher Education Act in the fall.  But there is considerable pressure on Congress to prevent 6.8 percent loan rates from affecting students as the new academic year starts.

The Senate proposal would tie the student loan interest rates to the auction rate for 10-year Treasury notes, which this year is 1.81 percent.  Added to that would be specific percentage points for undergraduates, graduate students and PLUS loans.  This year, the undergraduate loan interest would be 3.86 percent; graduate loans would be 5.41 percent, and PLUS loans would be 6.41 percent.  The caps on maximum interest would offer protection if Treasury note rates start to rise.

If the Senate passes the bill, conferees will still have to work out the differences between the House and Senate versions.  However, the differences are not very large, and the President supports the Senate plan.

The post CHN: Student Loans Update: Deal on Compromise Bill Reached; Vote Expected This Week appeared first on Coalition on Human Needs.

Provisions in this historic legislation include a minimum 13-year path to citizenship for many of the 11 million immigrants currently without lawful status, an expedited 5-year path for DREAMers brought to the United States before age 16 and an accelerated path for some agriculture workers.  The bill also establishes new categories of visas, provides access to some federal student loans for DREAMers and to federal housing assistance for qualified survivors of domestic violence, incorporates worker protections including due process for those misclassified under the electronic employment eligibility verification (E-Verify) system and implements training for Border Patrol agents.  Advocates successfully fought off attempts to include in the bill provisions to deny low-income tax credits to immigrants currently eligible to claim them.

While the Coalition on Human Needs, many key civil rights, labor, faith, and other groups supported passage of S. 744, there is realization that it is far from a perfect bill. The path to citizenship laid out in S. 744 will not be easy.  Many families will find the fines and penalties onerous, and in some cases, insurmountable.  Once they reach registered provisional immigrant (RPI) status, all immigrants will be paying taxes to help support a safety net system for which they will not be eligible until they attain citizenship years later.  Nor will they be eligible to receive health insurance premium subsidies through the new health care law, putting them at risk of harmful health consequences.  Some immigrants who have already been paying taxes will be denied Social Security credit for the quarters of coverage earned between 2004 and 2014 before getting on the road to citizenship, forcing them to work an additional decade to earn back those credits. Potential for employer abuse or errors in the E-Verify system and exploitation of workers still exists.  S. 744 does not address state and local laws and policies that have resulted in profiling. (For more details and analysis of S. 744 see the National Immigration Law Center website.)

It became evident when the Senate began the 3-week floor debate on S. 744 that in order to garner enough support from Republicans even more stringent border security provisions would need to be incorporated.  This demand seemed to ignore the realities that since 2004 the number of Border Patrol agents have more than doubled to over 21,000; that the number of undocumented immigrants attempting to enter the United States from the southern border is at a 40-year low; and that the base bill already required that the Department of Homeland Security hire 3,500 more agents by the end of 2013, authorized the National Guard to construct more fencing, and increased mobile surveillance.

Ultimately, the Senate agreed to an amendment sponsored by Senators Corker (R-TN) and Hoeven (R-ND).  The so-called ‘border surge’ provisions call for 20,000 more border agents, hundreds of miles of additional fencing, more surveillance equipment including additional aerial drones, and biometric tracking systems at all international ports and airports to detect people who have overstayed visas.  The amendment authorizes the Border Patrol to search without warrant 100 miles from the southern border, compared to 25 miles on the northern border, and ignores the pleas of many local authorities along the border who have developed positive relationships with their neighbors in Mexico.  The cost of border enforcement in the bill is $46 billion. There is bi-partisan sentiment that the expenditure is unwarranted.  Senator Leahy (D-VT) said the amendment “reads like a Christmas wish list for Halliburton, the military contractor likely to sell equipment or services to carry out the enforcement “surge.” Senator Collins (R-ME) said, “This unprecedented surge is excessive, wasteful, and would be enormously expensive.”  Even amendment sponsor Corker commented that the new border provisions are “almost overkill.”  The additional $30 billion expenditure in the Corker-Hoeven amendment was viewed as more plausible after the Congressional Budget Office released a report on June 18, stating that enactment of S. 744 would decrease the federal deficit by net savings of $175 billion over the first 10 years of enactment and by $700 billion in the second decade, from increased economic activity and tax payments by immigrants with legal status.  That happy outcome made it possible to pay the cost of the Corker-Hoeven amendment.  The only member who voted for the amendment but did not vote for final passage of the bill was Senator Wicker (R-MS).

House:  Attention now turns to the House where the bi-partisan group working on comprehensive reform has repeatedly missed self-imposed deadlines to introduce its bill. Their work has been kept secret, but it seems that they have failed to reach agreement on how to treat health care for immigrants in their initial registered provisional immigrant (RPI) status as well as finalizing other details in the bill.  In the meantime, House Judiciary Committee Chairman Robert Goodlatte (R-VA), with the blessing of Republican leadership, is pursuing a piecemeal approach, having marked up in his Committee four separate bills within the last two weeks.  None of the bills deal with a path to citizenship. H.R. 1772 would establish an E-Verify system without some of the same worker protections in S. 744.  H.R. 2278 would give state and local law authorities greater power over immigration enforcement.  H.R. 1773 would create a new agricultural guest worker program.  H.R. 2131 would increase visas for high-skilled workers from 65,000 to 155,000 and add visas for immigrants with advanced degrees in science, technology, engineering and mathematics. All four bills passed the Judiciary Committee on party-line votes.  Democrats voiced objections to the content of the bills and to the fact that none would establish a path to citizenship for the 11 million immigrants.

It is unclear how the House will proceed.  There are a number of options: leadership could still introduce their own comprehensive bill; combine a package of individual bills into one bill; amend the Senate bill; or simply take no action.  A number of conservative Republicans clearly do not support a path to citizenship for immigrants, a position that is a non-starter for Democrats.  Speaker John Boehner (R-OH) has repeatedly said that he will not bring a bill to the floor without the support of the majority of the Republican caucus.  House Republicans have scheduled a meeting for July 10 to determine their strategy.

Economic Benefits of Immigration Reform:  The Congressional Budget Office report cited earlier documents that passage of S. 744 will result in a stronger U.S. economy based on fuller participation by an estimated net increase of 10.4 million permanent residents and an increase in temporary workers.  Provisions in the bill will lead to a growth in the U.S. gross domestic product (GDP) of 3.3 percent by 2023 and 5.4 percent by 2033.

Advocates are hopeful that comprehensive immigration reform that provides a path to citizenship for the 11 million immigrants who are in our country will be passed into law.  For too long immigrants have been working hard in often difficult jobs to support their families while fearing deportation that would separate them from those they love.  Now is the time to end this injustice.

The post CHN: Comprehensive Immigration Reform Passes the Senate, Now It’s the House’s Turn appeared first on Coalition on Human Needs.