Archive for the ‘Center on Budget and Policy Priorities’ Category

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.

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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.

Argument for One-Year Delay of Health Reform Riddled with Flaws

September 30, 2013 Comments off

Argument for One-Year Delay of Health Reform Riddled with Flaws
Source: Center on Budget and Policy Priorities

In the latest effort by health reform’s opponents to defund, unravel, or delay the law, House Republicans announced today that they will attach, to a Senate-passed bill to fund the government in fiscal year 2014, a one-year delay in health reform. To support the defund, unravel, or delay efforts, health reform’s opponents over many months have produced a long list of exaggerated claims, misleading complaints, glaring omissions, and blatantly false arguments. Unfortunately, syndicated columnist Kathleen Parker echoed many of them in a recent Washington Post op-ed, and we should expect to hear more of them as part of the government funding fight. Not only are most of Parker’s points inaccurate, but some of them are wrapped in heated rhetoric that’s more likely to inflame rather than inform the public debate.

Parker’s bottom line is that, as House Republicans now propose, health reform should be delayed a year. But no one should think the result of such an action would simply be a one-year postponement. A year from now, opponents would demand another delay and then another or outright repeal. Indeed, House Republicans have said they are designing their new debt-limit bill so that we hit the debt limit again at the end of 2014 at the same time that the one-year health reform delay would end — so they can be tied together again a year from now. A one-year delay would be a mortal blow to health reform, with tens of millions of Americans who otherwise would gain coverage instead remaining uninsured, possibly for many years.

Parker, herself, may not share that more sweeping goal. But we should see the push for a one-year delay, buttressed by misleading and inaccurate arguments and the selective use or omission of relevant data, for what it is: a core element of an effort to impede and ultimately dismember health reform so that it never comes to pass.

Correcting Five Myths About Medicaid

September 26, 2013 Comments off

Correcting Five Myths About Medicaid
Source: Center on Budget and Policy Priorities

As states consider whether to adopt health reform’s Medicaid expansion and some federal policymakers promote radical structural changes in the program (such as converting it to a block grant or establishing a per capita cap), critics have circulated a number of myths about Medicaid. This brief report corrects five of these myths by providing the corresponding reality for each.

Four Steps to Moving State Sales Taxes Into the 21st Century

July 17, 2013 Comments off

Four Steps to Moving State Sales Taxes Into the 21st Century
Source: Center on Budget and Policy Priorities

Antiquated sales taxes are hindering states’ ability to strengthen their economies. As they emerge from the recession and look to compete in a 21st century economy, many states are recognizing the urgent need to invest in highly competitive education systems, modern transportation networks, and a range of other innovative public initiatives that will form a strong foundation for future economic growth. But states won’t be able to make these investments and sustain them over time without modern revenue systems that can raise adequate revenue as today’s economy expands. A key step to doing so is to modernize their sales taxes, which account for nearly a third of the tax revenue states collect.

Most state sales taxes are ill-suited to raising adequate revenue in a 21st century economy because states have not kept pace with trends such as the growth of the service sector and of e-commerce. To keep revenue steady as a share of income, states have raised sales tax rates repeatedly. The median state sales tax rate is almost twice as high now as it was in 1970.

States can modernize their sales taxes by:

  • Broadening the tax base to include more services. Household spending has been shifting from goods to services for decades, yet most states haven’t updated their sales taxes to reflect this fact. This failure costs states tens of billions of dollars each year. Every state with a sales tax except Hawaii, New Mexico, and South Dakota — states where the sales tax already is very broad — could extend the tax to include more services (see Table 1).
  • Enacting an “Amazon law” to require large online retailers to collect sales taxes. States and localities lose more than $20 billion a year in uncollected sales taxes that are legally due on online purchases but that retailers aren’t required to collect. Thirty-four states could enact a law requiring large online retailers such as Amazon and Overstock to collect taxes on sales in the state.
  • Extending the sales tax to Internet downloads. Twenty-three states don’t tax the sale of computer software, music, movies, and various other goods delivered on the Internet — even though they tax the same items when sold in physical stores. The resulting revenue loss is roughly $300 million a year.
  • Closing the online hotel tax loophole. Forty-two states have failed to close a loophole that allows online travel companies like Expedia, Orbitz, and Priceline to collect taxes on only part of the sales taxes due on hotel room bookings. This costs states and localities roughly $275 million to $400 million each year.

A Quick Guide to SNAP Eligibility and Benefits

February 16, 2013 Comments off

A Quick Guide to SNAP Eligibility and Benefits</strong>
Source: Center on Budget and Policy Priorities

Most families and individuals who meet the program’s income guidelines are eligible for the Supplemental Nutrition Assistance Program (SNAP — formerly the Food Stamp Program). The size of a family’s SNAP benefit is based on its income and certain expenses. This paper provides a short summary of SNAP eligibility and benefit calculation rules.

New School Year Brings Steep Cuts in State Funding for Schools

October 12, 2011 Comments off

New School Year Brings Steep Cuts in State Funding for Schools
Source: Center on Budget and Policy Priorities

Elementary and high schools are receiving less state funding than last year in at least 37 states, and in at least 30 states school funding now stands below 2008 levels – often far below. These cuts are attributable, in part, to the failure of the federal government to extend emergency fiscal aid to states and school districts and the failure of most states to enact needed revenue increases and instead to balance their budgets solely through spending cuts. The cuts have significant consequences, both now and in the future: They are causing immediate public- and private-sector job loss, and in the long term are likely to reduce student achievement and economic growth.

Our review of budget documents finds that, of 46 states that publish education budget data in a way that allows historic comparisons:

  • 37 states are providing less funding per student to local school districts in the new school year than they provided last year.
  • 30 states are providing less than they did four years ago..
  • 17 states have cut per-student funding by more than 10 percent from pre-recession levels.
  • Four states— South Carolina, Arizona, California, and Hawaii — each have reduced per student funding to K-12 schools by more than 20 percent. (These figures, like all the comparisons in this paper, are in inflation-adjusted dollars and focus on the primary form of state aid to local schools.)

State-level K-12 spending cuts of this magnitude have serious consequences for the nation.

Six Ways that States and School Districts Can Make It Easier for Children in Foster Care to Get Free Meals at School

August 20, 2011 Comments off

Six Ways that States and School Districts Can Make It Easier for Children in Foster Care to Get Free Meals at School
Source: Center on Budget and Policy Priorities

The Healthy, Hunger-Free Kids Act of 2010 has made it easier for school districts to enroll children who are in foster care for free school meals. [1] Children in foster care are now automatically eligible for free meals regardless of their income (a policy known as “categorical eligibility”).[2] As a result of this change, school districts no longer have to consider the personal income of children in foster care when determining their eligibility for free school meals. [3] Once enrolled based on their foster status, children remain eligible for the full school year even if they leave foster care during the course of the year.

This change will not make many children in foster care newly eligible for free school meals because so few of them have any personal income. But the change in law and the resulting policy changes create new opportunities for states and school districts to enroll children in foster care for free meals more simply and expeditiously.[4] This paper describes six ways that states and school districts can take advantage of those opportunities to better serve children in foster care and their families:

  • Directly certify children in foster care for free school meals by matching data from foster care agencies or a court with student data.
  • Use the notification that schools receive from child welfare caseworkers or a court of a child’s foster status to certify the child for free school meals.
  • Revise school meals applications to reflect the categorical eligibility of children in foster care for free school meals and the potential benefit to the foster family of including children in foster care on the same school meals application as other children in the household.
  • Notify foster parents that their children in foster care are eligible for free school meals and explain how to apply for benefits for their foster and non-foster children.
  • Maintain certification when a child in foster care changes schools by transferring the certification for free meals to the new school.
  • Relieve foster families of paperwork if an application with a child in foster care is selected for verification by obtaining documentation of the child’s foster care status directly from a foster care agency or court (or by allowing foster parents to provide contact information for an appropriate third party who can verify the child’s foster status, such as a social worker).

A Framework for Deficit Reduction: Principles and Cautions

March 26, 2011 Comments off

A Framework for Deficit Reduction: Principles and Cautions
Source: Center on Budget and Policy Priorities

The nation is on an unsustainable fiscal course, and policymakers need to make major changes in policy. As a number of bipartisan panels have recommended over the past year, policymakers should aim to stabilize the debt as a share of the economy (the Gross Domestic Product) so the debt does not rise relentlessly as a share of the economy. That would put the nation on what economists define as a sustainable budget path.

To achieve this goal, policymakers should aim to balance the primary budget — the budget other than interest payments on the debt. As these panels have explained, stabilizing the debt — and avoiding the specter of a debt explosion in future decades — is the key, not balancing the total budget (i.e., the budget including interest payments). As a rough rule of thumb, if the budget excluding interest payments is in balance, then the debt will not grow faster than the economy. That means running total budget deficits of no more than about 3 percent of GDP. [1] In short, balancing the total budget isn’t necessary to put us on a sustainable course and reassure financial markets. Stabilizing the debt is.

Policymakers should meet this goal in a reasonable period of time, but it isn’t necessary to meet it in the next few years. Indeed, it would be unwise to put austerity measures into effect now while the economy is still growing too slowly to bring unemployment down to more normal levels in the next few years. Putting substantial deficit-reduction measures into effect now would cause the loss of hundreds of thousands of jobs over the next year or two by slowing the already inadequate economic growth. Ideally, policymakers would enact legislation this year that begins to take effect once the economy is stronger — probably in fiscal year 2013, not before — and puts us on track to stabilize the debt as a share of GDP by the end of this decade. Doing so would involve very tough choices, both substantively and politically, but meeting that goal would be a huge accomplishment and greatly allay the fears of financial markets. Reducing the deficit more precipitously, however, is neither necessary nor sound as fiscal or economic policy.

Medicaid Block Grant Would Produce Disparate and Inequitable Results Across States

March 14, 2011 Comments off

Medicaid Block Grant Would Produce Disparate and Inequitable Results Across States
Source: Center on Budget and Policy Priorities

Some policymakers, including House Energy and Commerce Committee Chairman Fred Upton and House Budget Committee Chairman Paul Ryan, are considering converting Medicaid to a block grant to produce large federal budget savings. For example, a block-grant proposal that Ryan co-authored last fall would reduce federal Medicaid spending by $180 billion over the next ten years, according to the Congressional Budget Office (CBO). All states would face substantial reductions in federal funding under such a block grant, but some states would likely be hit particularly hard — including states whose current Medicaid expenditure levels are relatively low and states whose expenditures would rise relatively quickly in future years due to demographic, economic, or other factors…

Some Basic Facts on State and Local Government Workers

March 2, 2011 Comments off

Some Basic Facts on State and Local Government Workers
Source: Center on Budget and Policy Priorities

The public workforce has been the subject of much discussion lately — and, unfortunately, much misinformation. This brief report presents some basic facts about state and local employees: the jobs they perform, how many there are, how their pay compares with pay in the private sector, and how much states and localities — mainly school districts, cities, and counties — spend on pay and benefits.


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