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Chart Book: Social Security Disability Insurance

July 22, 2014 Comments off

Chart Book: Social Security Disability Insurance
Source: Center on Budget and Policy Priorities

Disability Insurance (DI) is an integral part of Social Security. It provides modest but vital benefits to workers who can no longer support themselves on account of a serious and long-lasting medical impairment. The Social Security Administration (SSA) administers the DI program.

In December 2013, 8.9 million people received disabled-worker benefits from Social Security. Payments also went to some of their family members: 160,000 spouses and 1.9 million children.

DI benefits are financed primarily by a portion of the Social Security payroll tax and totaled about $140 billion in 2013. That’s 4 percent of the federal budget and less than 1 percent of the gross domestic product (GDP). Employers and employees each pay a DI tax of 0.9 percent on earnings up to a specified amount, currently $117,000. Financial transactions are handled through a DI trust fund, which receives payroll tax revenues and pays out benefits and which is legally separate from the much larger Social Security retirement fund. Under current projections, the DI trust fund will need replenishment in 2016.

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SNAP Error Rates at All-Time Lows; Steady Improvement in Payment Accuracy Reflects Program’s Extensive Quality Control System

July 21, 2014 Comments off

SNAP Error Rates at All-Time Lows; Steady Improvement in Payment Accuracy Reflects Program’s Extensive Quality Control System
Source: Center on Budget and Policy Priorities

The percentage of SNAP (formerly food stamp) benefit dollars issued to ineligible households or to eligible households in excessive amounts fell for the seventh consecutive year in 2013 to 2.61 percent, newly released U.S. Department of Agriculture (USDA) data show. That’s the lowest national overpayment rate since USDA began the current system of measuring error rates in 1981. The underpayment error rate fell to 0.6 percent, also the lowest on record. (See Figure 1.) The combined payment error rate — that is, the sum of the overpayment and underpayment error rates — fell to an all-time low of 3.2 percent.[1] Less than 1 percent of SNAP benefits go to households that are ineligible. In other words, more than 99 percent of SNAP benefits are issued to eligible households.

Congress Should End – Not Extend – the Ban on State and Local Taxation of Internet Access Subscriptions

July 16, 2014 Comments off

Congress Should End – Not Extend – the Ban on State and Local Taxation of Internet Access Subscriptions
Source: Center on Budget and Policy Priorities

The Internet Tax Freedom Act (ITFA), enacted in 1998 and temporarily renewed in 2001, 2004, and 2007, imposed a moratorium on new state and local taxes on monthly Internet access fees while preserving (“grandfathering”) existing Internet access taxes. The House Judiciary Committee recently approved a bill to eliminate the grandfather provision and permanently ban all state and local taxation of Internet access subscriptions. This represents the first time that Congress has seriously considered a permanent ban on taxing Internet service for all states, including those now using these taxes to help support public services. Rather than extend ITFA indefinitely, Congress should lift the ban and let states decide whether they and their local governments will impose their sales and telecommunications taxes on Internet access charges.

Repatriation Tax Holiday Would Lose Revenue And Is a Proven Policy Failure

July 9, 2014 Comments off

Repatriation Tax Holiday Would Lose Revenue And Is a Proven Policy Failure
Source: Center on Budget and Policy Priorities

Some policymakers are promoting another “repatriation tax holiday” to encourage multinational corporations to bring overseas profits back to the United States by offering them a temporary, very low tax rate on those profits. In particular, some have described a repatriation holiday as a “win-win” that would boost corporate investment and create jobs in the United States and also generate a tax windfall to help finance needed infrastructure spending. In reality, a repatriation tax holiday would accomplish neither goal and instead would worsen the nation’s fiscal and economic problems over time.

The Community Eligibility Provision: Alternatives to School Meal Applications

June 23, 2014 Comments off

The Community Eligibility Provision: Alternatives to School Meal Applications
Source: Center on Budget and Policy Priorities

“Community eligibility” is a powerful new tool to ensure that low-income children in high-poverty neighborhoods have access to healthy meals at school. Established in the Healthy, Hunger-Free Kids Act of 2010, community eligibility streamlines school meal operations and allows schools in high-poverty areas to offer nutritious breakfasts and lunches to all students at no charge.[1] One of the key simplifications of community eligibility is that participating schools no longer collect school meal applications. Eliminating applications reduces the administrative burden on school districts and reduces paperwork for parents struggling to put food on the table.

Without applications, schools need an alternative method to determine meal reimbursements. Under community eligibility, reimbursements are determined by a formula based on the percentage of “Identified Students” who are approved to receive free meals by means other than a household application, primarily children in households participating in the Supplemental Nutrition Assistance Program (SNAP) who are “directly certified” through data matching. This simplification eliminates the numerous hours that school administrators spend processing and verifying school meal applications. When school districts implement community eligibility, however, they no longer have the individual income data from those meal applications for the students attending community eligibility schools — data that programs outside of the school meal programs often use.

What Do OECD Data Really Show About U.S. Taxes and Reducing Inequality?

June 19, 2014 Comments off

What Do OECD Data Really Show About U.S. Taxes and Reducing Inequality?
Source: Center on Budget and Policy Priorities

Critics of proposals to make the tax system more progressive or to take other steps to help lessen widening income inequality[2] sometimes cite a 2008 Organisation for Economic Co-Operation and Development (OECD) report stating that the United States has the most progressive tax system among developed countries.[3] The implication is that, with a progressive tax system, the United States is already taking very substantial steps to address income inequality.

But to cite the report’s finding on the progressivity of the U.S. tax system while ignoring its other findings amounts to cherry picking and distorts the report’s overall findings. The report also shows that the United States does less to reduce income inequality than every other OECD country examined except Korea, when one considers both various taxes and cash transfer programs such as Social Security, unemployment insurance, and means-tested assistance programs.

Updated Resources Illustrate SNAP’s Important Role

June 11, 2014 Comments off

Updated Resources Illustrate SNAP’s Important Role
Source: Center on Budget and Policy Priorities

We’ve updated a trio of SNAP resources — our Chart Book, Policy Basic, and state fact sheets — that explain the program’s essential details, including who receives SNAP (formerly food stamps), how much it costs, how it responds to need, and how it encourages work.

These resources highlight SNAP’s role in providing essential food support to low-income households and local economies, which was particularly important during the economic downturn.

In fact, as our Chart Book illustrates, a CBPP analysis using the Supplemental Poverty Measure, which counts SNAP as income, found that SNAP kept about 4.9 million people out of poverty in 2012, including about 2.2 million children. National Poverty Center researchers found that counting SNAP benefits as income cuts the number of extremely poor households with children in 2011 by nearly half (see chart) and cuts the number of extremely poor children by two-thirds (from 3.6 million to 1.2 million).

Mapping Higher Ed Funding Cuts and Tuition Hikes

June 6, 2014 Comments off

Mapping Higher Ed Funding Cuts and Tuition Hikes
Source: Center on Budget and Policy Priorities

Most states in the past year have begun to restore some of the cuts they made to higher education funding after the recession hit. In almost all states, however, higher education funding remains well below pre-recession levels, as we explained in a recent paper. The large state funding cuts have led to both steep college tuition increases and spending cuts that may diminish the quality of education for students.

Consider that, nationwide, after adjusting for inflation:

  • The average state is spending $2,026, or 23 percent, less per student than before the recession; and
  • Annual published tuition — the “sticker price” — at four-year public colleges has risen by $1,936, or 28 percent, since the 2007-08 school year.

Click on the map below to learn more about how higher education funding and tuition have changed in each state since the recession.

State Taxes Have a Negligible Impact on Americans’ Interstate Moves

May 8, 2014 Comments off

State Taxes Have a Negligible Impact on Americans’ Interstate Moves
Source: Center on Budget and Policy Priorities

Differences in tax levels among states have little to no effect on whether and where people move, contrary to claims by some conservative economists and elected officials. For decades, Americans have been moving away from the Northeast, the industrial Midwest, and the Great Plains to most of the southern and southwestern states, regardless of overall tax levels or the presence of an income tax in any of these states. They’ve moved in large part for employment opportunities in the Sunbelt states and, secondarily, for less expensive housing, and, for many retirees, a warmer, snow-free climate.

Accordingly, policymakers in states like Kansas, Michigan, Nebraska, Ohio, and Wisconsin that have already cut or are considering cutting their income taxes should harbor no illusions that such a move will stem — let alone reverse — their states’ longstanding net out-migration trends. To the contrary; if deep tax cuts result in significant deterioration in education, public safety, parks, roads, and other critical services and infrastructure, these states will render themselves less — not more — desirable places to live and raise a family.

States Are Still Funding Higher Education Below Pre-Recession Levels

May 2, 2014 Comments off

States Are Still Funding Higher Education Below Pre-Recession Levels
Source: Center of Budget and Policy Priorities

Most states have begun in the past year to restore some of the cuts they made to higher education funding after the recession hit. Eight states, though, are still cutting, and in almost all states — including those that are have boosted their support — higher education funding remains well below pre-recession levels. The large funding cuts have led to both steep tuition increases and spending cuts that may diminish the quality of education available to students at a time when a highly educated workforce is more crucial than ever to the nation’s economic future.

Reducing Overpayments in the Earned Income Tax Credit

April 25, 2014 Comments off

Reducing Overpayments in the Earned Income Tax Credit
Source: Center on Budget and Policy Priorities

Both the debate over the minimum wage and the recent 50th anniversary of President Johnson’s War on Poverty have focused more attention on the Earned Income Tax Credit (EITC) for low- and moderate-income workers, which has been shown to increase work, reduce poverty, and lower welfare receipt. In addition, some leading experts from across the political spectrum, as well as President Obama, have recommended expanding the EITC for adults not raising children, who currently are eligible for only a very small credit. These developments have brought renewed attention to the EITC’s error rate. As policymakers consider whether to improve the EITC for childless workers, they can also take additional steps to reduce the error rate, taking account of these basic facts:

  • EITC errors occur primarily because of the complexity of the rules surrounding the credit. Most of them thus reflect unintentional errors, not fraud. What the Internal Revenue Service (IRS) refers to as the EITC’s “improper payment rate” is not a “fraud” rate and shouldn’t be characterized as such.
  • IRS studies of EITC overpayments suffer from methodological problems that likely cause them to overstate the actual EITC overpayment rate, as analysis by the IRS National Taxpayer Advocate has shown.
  • As the Treasury Department’s Inspector General for Tax Administration has noted, EITC administrative costs are very low, at less than 1 percent of the benefits provided. The Inspector General has commented that “this is quite different from other non-tax benefits in which administrative costs related to determining eligibility can range as high as 20% of program expenditures.” Testimony from the IRS National Taxpayer Advocate, Nina Olson, suggests that if EITC payments had been delivered by another agency that spent 20 percent of program expenditures verifying eligibility, little or no net savings would accrue.

Worksharing and Long-Term Unemployment

April 17, 2014 Comments off

Worksharing and Long-Term Unemployment (PDF)
Source: Center on Budget and Policy Priorities

The Great Recession was especially deep and especially long. The sustained departure of output from its trend path was accompanied by a large drop in employment, which stayed low relative to trend for an extended period as well. As this occurred, the percentage of workers who were long-term unemployed increased sharply. Even as the U.S. economy recovers, the painful legacy of the Great Recession lives on as these long-term unemployed workers continue to struggle to reconnect to society.

In light of this, policymakers and economists must ask whether smart policy could have mitigated large employment losses and the high incidence of long-term unemployment. We believe the answer is yes, and that worksharing is such a policy. Under worksharing, a firm can reduce the hours of its workforce in lieu of a layoff, and workers whose hours have been reduced are eligible for a prorated unemployment insurance (UI) benefit. In this way, a firm can weather a temporary lull in demand by reducing its payroll costs without laying off large number of workers.

In this paper we make three points. First, the impact of long-term unemployment on the lives of those affected is so significantly negative that addressing the issue should be a top priority for policymakers. Second, extended unemployment insurance benefits are an insufficient way to deal with unemployment, and additional policies are needed. Finally, an alternative reform of unemployment insurance could reduce the risk that the next recession might lead to another surge in long-term unemployment, help keep some of the millions of workers who are laid off every year in their jobs, and in so doing help avoid the problem of “hysteresis” associated with long-term unemployment.

Health Reform: Designing a Marketplace — A state-by-state comparison of Marketplace Implementation

April 16, 2014 Comments off

Health Reform: Designing a Marketplace — A state-by-state comparison of Marketplace Implementation
Source: Center on Budget and Policy Priorities

The Affordable Care Act (ACA) creates a Health Insurance Marketplace (Marketplace) in every state, which offers individuals and small businesses the opportunity to shop from an array of affordable, comprehensive health insurance plans. A state can either create and operate the Marketplace itself as a State-based Marketplace (SBM), partner with the federal government under a State Partnership Marketplace (SPM), or defer to the U.S. Department of Health and Human Services to manage a Federally-facilitated Marketplace (FFM) in the state.

In 2014, 16 states and the District of Columbia have established a State-based Marketplace for both individuals and small businesses, six states have a State Partnership Marketplace, and one state is administering a State-based SHOP Marketplace just for small businesses (with an FFM serving individuals).

The ACA provides states with significant flexibility in the design and structure of their Marketplace; hundreds of policy and operational decisions had to be addressed during the Marketplace implementation process. CBPP has evaluated SBM and SPM states across a number of these Marketplace design questions and compiled the information in this interactive tool.

How Much of the Growth in Disability Insurance Stems From Demographic Changes?

March 4, 2014 Comments off

How Much of the Growth in Disability Insurance Stems From Demographic Changes?
Source: Center on Budget and Policy Priorities

The Disability Insurance (DI) program — a vital part of Social Security that pays modest benefits to people who can no longer support themselves by working due to severe medical impairments — has grown rapidly in recent decades. The program’s chief actuary has consistently stated that demographic changes account for the bulk of the program’s growth, while some other analyses appear to tell a different story. These differences largely reflect variations in the measure of DI growth that the studies use, the factors considered, and the time period analyzed. Thus, there is no single correct answer to “how much of DI’s growth stems from demographic factors?”

Budgeting for the Future: Fiscal Planning Tools Can Show the Way

February 24, 2014 Comments off

Budgeting for the Future: Fiscal Planning Tools Can Show the Way
Source: Center on Budget and Policy Priorities

When state policymakers are writing a budget, they should be mindful of the future, not just the present. The state budget is the single most important document that a state government produces each year, and it receives close public scrutiny. It serves as both a financial plan and a policy document — that is, a description of the policies the state intends to pursue in the future. The spending, tax, and other policy decisions that comprise the budget have consequences for a state’s fiscal and economic security that last long beyond the budget year.

Often, however, policymakers focus on the immediate effects of policy decisions and fail to account for their longer-term consequences. Many states, for instance, fail to produce multi-year spending plans, fail to establish sound “rainy day funds,” and/or fail to follow best practices for forecasting revenues, spending commitments, pension obligations and the like. These are proven methods to improve long-term planning, yet they are underutilized.

This report describes the ten key tools that can help states chart their fiscal course accurately and make corrections when needed; it also surveys the 50 states and the District of Columbia on the degree to which they use these tools. It finds that the use of these tools cuts across regional and partisan divides. For instance, Connecticut, Maryland, and Tennessee incorporate most of the ten tools into their budget processes. New Jersey, Oklahoma, and South Dakota incorporate the fewest.

Summary of the 2014 Farm Bill Nutrition Title: Includes Bipartisan Improvements to SNAP While Excluding Harsh House Provisions

January 29, 2014 Comments off

Summary of the 2014 Farm Bill Nutrition Title: Includes Bipartisan Improvements to SNAP While Excluding Harsh House Provisions
Source: Center on Budget and Policy Priorities

The nutrition title of the farm bill that House and Senate negotiators unveiled yesterday represents a solid outcome after a difficult two-year congressional effort. While it unfortunately doesn’t make progress in addressing hunger and poverty by investing new resources in SNAP (or by reinvesting the SNAP savings that it generates), it includes sound reforms that should strengthen SNAP over time. Most important, it rejects the harsh eligibility cuts in the House-passed version of the farm bill.

SNAP Costs Leveling Off, Almost Certain to Fall Next Year

November 21, 2013 Comments off

SNAP Costs Leveling Off, Almost Certain to Fall Next Year
Source: Center on Budget and Policy Priorities

Recent government data show that SNAP spending, which doubled as a share of the economy (gross domestic product or GDP) in the wake of the Great Recession, fell slightly as a share of GDP in fiscal year 2013, which ended September 30. Moreover, CBPP projects that, in fiscal year 2014, SNAP spending will not only continue to decline as a share of GDP but will fall 5 percent in nominal (non-inflation-adjusted) terms, largely because of the expiration this month of the 2009 Recovery Act’s benefit increase. As the economic recovery continues and fewer low-income people qualify for SNAP, the Congressional Budget Office (CBO) expects SNAP spending to fall further in future years, returning to its 1995 levels by 2019.

As a House-Senate conference committee considers changes to SNAP as part of the Farm Bill, some critics have called for large SNAP cuts in part on the grounds that SNAP is growing out of control. But these recent data show that that the spending growth has ended and that SNAP is following the pattern of previous recessions, as CBO and other experts expected.

November 1 SNAP Cuts Will Affect Millions of Children, Seniors, and People With Disabilities; State-by-State Figures Highlight the Impacts Across the Country

October 29, 2013 Comments off

November 1 SNAP Cuts Will Affect Millions of Children, Seniors, and People With Disabilities; State-by-State Figures Highlight the Impacts Across the Country
Source: Center on Budget and Policy Priorities

The 2009 Recovery Act’s temporary boost in Supplemental Nutrition Assistance Program (SNAP) benefits ends on November 1, 2013, which will mean a benefit cut for each of the nearly 48 million SNAP recipients — 87 percent of whom live in households with children, seniors, or people with disabilities. House and Senate members who are now beginning to negotiate a final Farm Bill should keep this benefit cut in mind as they consider, in reauthorizing the SNAP program, whether to make even deeper cuts.

The November 1 benefit cut will be substantial. A household of three, such as a mother with two children, will lose $29 a month — a total of $319 for November 2013 through September 2014, the remaining 11 months of fiscal year 2014. (See Figure 1.) The cut is equivalent to about 16 meals a month for a family of three based on the cost of the U.S. Agriculture Department’s “Thrifty Food Plan.” Without the Recovery Act’s boost, SNAP benefits in fiscal year 2014 will average less than $1.40 per person per meal. Nationally, the cut totals about $5 billion in 2014 and a total of $11 billion over the fiscal year 2014 to 2016 period.

Policy Basics: How Many Weeks of Unemployment Compensation Are Available?

October 10, 2013 Comments off

Policy Basics: How Many Weeks of Unemployment Compensation Are Available?
Source: Center on Budget and Policy Priorities

The unemployment insurance (UI) system helps many people who have lost their jobs by temporarily replacing part of their wages. (See “Introduction to Unemployment Insurance.”) The total number of weeks of benefits available in any particular state depends on the unemployment rate and unemployment insurance laws in the state where the person worked. The map below shows the maximum number of weeks of benefits currently available in each state.

Policy Basics: Social Security Disability Insurance

October 9, 2013 Comments off

Policy Basics: Social Security Disability Insurance
Source: Center on Budget and Policy Priorities

Disability Insurance (DI) is an integral part of Social Security. It provides modest but vital benefits to workers who can no longer support themselves on account of a serious and long-lasting medical impairment. The Social Security Administration (SSA) administers the DI program.

In December 2012, 8.8 million people received disabled-worker benefits from Social Security. Payments also went to some of their family members: 160,000 spouses and 1.9 million children.

DI benefits are financed primarily by a portion of the Social Security payroll tax and will total about $140 billion in 2013. That’s 4 percent of the federal budget and less than 1 percent of the gross domestic product (GDP). Employers and employees each pay a DI tax of 0.9 percent on earnings up to a specified amount, currently $113,700. Financial transactions are handled through a DI trust fund, which receives payroll-tax revenues and pays out benefits and which is legally separate from the much larger Social Security retirement fund. Under current projections, the DI trust fund will need replenishment in 2016.

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