More About Robert Greenstein

Robert Greenstein

Greenstein is the founder and President of the Center on Budget and Policy Priorities. You can follow him on Twitter @GreensteinCBPP.

Full bio and recent public appearances | Research archive at CBPP.org


Mr. Kristol, Mr. Capretta — Heads Up on Health Reform’s Employer Requirement

July 16, 2013 at 11:37 am

In recent days, critics of health reform’s requirement that large employers offer health coverage or pay a penalty have repeatedly and inaccurately cited an October 2009 CBPP paper to support their contention that it will discourage firms from hiring low-income workers.  This is sloppy work on their part.  As CBPP Senior Fellow Paul Van de Water explained last week, our paper criticized an early Senate Finance Committee version of the proposal.  Largely in response to our criticisms, policymakers essentially fixed the provision months before enacting health reform.

Since Paul’s post, we’ve learned that William Kristol has pointed to congressional testimony by James Capretta — which Paul cited as a prime example of serious misuse of our October 2009 paper — as a “must read” in the Weekly Standard. So, we’ll repeat what Paul wrote last week:

[Our October 2009] paper criticized a version of the so-called “employer mandate” that’s very different from the one enacted in health reform. . . .

Here’s the biggest change.  One provision that our October 2009 paper criticized would have required large employers that do not offer health coverage to pay a substantial fine for each low- and moderate-income worker who received a subsidy to buy coverage in a health insurance exchange.  That would have given companies an incentive to avoid hiring additional people from low- and moderate-income families.

In the law that was enacted, however, the size of the penalty for large employers that don’t offer coverage isn’t tied to the number of workers receiving subsidies.  Instead, non-offering employers will pay an annual penalty of $2,000 for every full-time employee beyond the first 30, as long as the employer has at least one employee who receives subsidized coverage in the local exchange — which large firms will find difficult to avoid.

In other words, the powerful incentive our October 2009 paper described for large employers who don’t offer health coverage to avoid hiring low-income workers isn’t part of the final legislation.  To cite a CBPP critique of a problem that policymakers have addressed as though it applied to the legislation as enacted shows a lack of care by some critics who, too often, can’t resist latching on to anything to attack health reform.

House Strips SNAP From Farm Bill in Unprecedented Move

July 11, 2013 at 10:59 am

7/12/13 Note:  We have updated this post to reflect legislative action.

For several decades, legislation to reauthorize farm programs and SNAP (formerly known as the Food Stamp Program) have moved together.  Now, the House Republican leadership has split the bills, passing a stand-alone farm bill now and planning to move a separate SNAP bill later.

The reason is clear.  Even though the farm bill the House defeated a few weeks ago contained more than $20 billion in SNAP cuts (nearly all of them in food assistance benefits) as well as an unprecedented measure allowing states to cut families off SNAP if a parent wants to work but can’t find a job and letting state politicians take half of the resulting savings and use them for any purpose, that wasn’t enough for many of the most conservative House Republicans.  So the House leadership has dropped the SNAP provisions and plans to come back later with a still harsher SNAP bill designed to pass solely with Republican votes.

This turn of events is deeply disturbing:

  • Until now, farm/SNAP legislation has been one of the few remaining areas of bipartisan legislative activity.  The House Republicans’ scorched-earth policy with respect to SNAP is ending that, turning farm and SNAP legislation into a bitter partisan battleground on the House floor.
  • This could well lead to enactment of farm-only legislation, with SNAP being placed in a more tenuous position when its authorization expires on September 30.  (The House very likely will later pass a severe SNAP-only authorization bill to which the Senate may not respond.)  What would happen then is unclear, with a decided risk of Republican threats and actions to short-change SNAP’s appropriation on the grounds that the program hasn’t been reauthorized.
  • Tens of millions of Americans (including many who work for low wages) live in poverty, struggle to make ends meet, and often suffer significant hardships, but they can at least get basic nutritional assistance through SNAP.  They ought not to be pawns in political maneuvers, and Congress should not jeopardize their chances of getting enough food to eat.

Splitting the farm bill and paving the way for the House to pass a more draconian SNAP-only bill in coming weeks would be the latest demonstration of how dysfunctional the House is becoming.

Congress should go back to producing legislation that covers agriculture and nutrition together and can pass both chambers because it is bipartisan and moderate, unlike yesterday’s House action and the farm bill the House defeated in late June, not partisan and extreme.

“Blank Slate” Approach to Tax Reform Leaves Biggest Question Unanswered

June 28, 2013 at 11:54 am

Yesterday’s call from Senate Finance Committee Chairman Max Baucus and ranking Republican Orrin Hatch to initiate tax reform with a “blank slate” that doesn’t include any of the deductions, credits, exclusions, and other tax breaks collectively known as “tax expenditures” leaves a critical question unresolved:  what will policymakers do with the proceeds from narrowing or eliminating tax expenditures?

Will they use a substantial share of the savings to help put together an alternative to sequestration or otherwise devote such savings (presumably in conjunction with spending reductions) to the long-term deficit reduction that the nation needs?  Or will the savings go entirely to cutting tax rates?

Using some of the savings as part of a responsible, balanced alternative to sequestration —thereby averting harsh cuts in areas ranging from national security to education, medical research, and Head Start — and to help put the nation on a firmer long-term fiscal footing ought to be a higher priority than the pursuit of ever-lower tax rates.

Tax reform that curbs unproductive tax expenditures surely has merit.  Yet revenue-neutral tax reform would be highly problematic, as it would likely take revenues off the table for deficit reduction for years to come by using up virtually all politically achievable reductions in tax expenditures.  That, in turn, would likely take mandatory programs off the table for deficit reduction as well, because many policymakers would justifiably reject large mandatory cuts in the absence of new revenues.

In addition, policymakers face an immediate need to replace the harmful sequestration budget cuts, which are affecting defense and non-defense programs alike, with a mix of savings from tax expenditures and mandatory programs.  But revenue-neutral tax reform could foreclose that option by using up all of the politically achievable tax expenditure savings to pay for tax-rate reductions.

An essential ingredient of tax reform — and the one target for policymakers to specify in advance — is therefore a revenue target: one that contributes to a balanced deficit-reduction package that includes replacing sequestration.  Revenues raised through tax reform — including through a “blank slate” approach — should go to lower rates only after this target has been met, as most budget agreements under discussion over the past few years would have done.

This means that while policymakers may have useful exploratory discussions on tax reform now, they should defer actual legislative action until there is a larger fiscal policy agreement that includes a revenue target under which tax reform will contribute meaningfully to deficit reduction.

Rep. Brady’s Stunning Mischaracterization of the Estate Tax

June 25, 2013 at 11:48 am

Proponents of permanently repealing the estate tax often propagate various myths about it, but Rep. Kevin Brady (R-TX), who chairs the Joint Economic Committee and is a senior member of the House Ways and Means Committee, went a step further last week.  In introducing legislation to repeal the estate tax, Brady stated, “What kind of government swoops in upon your death and takes nearly half of the nest egg you’ve spent your entire life building?”

Well, not the U.S. government — not even close.  Rep. Brady’s characterization of the tax, highlighted in a news release he issued June 19 with Senate Finance Committee member John Thune (R-SD), the bill’s Senate sponsor, is not only flatly wrong.  It’s also highly irresponsible, in that it comes from such a senior member of two relevant congressional committees who should know the basic facts about the tax he’s proposing to abolish, at considerable cost to the Treasury.

The truth is this:  only a tiny sliver of estates pay any tax at all, and the very wealthy ones that do so pay at a rate that’s far less than half.  Repealing the estate tax would amount to a massive windfall for the inheritances of the wealthiest Americans.

  • Only the richest 0.14 percent of estates pays any estate tax at all. Only the estates of the wealthiest 0.14 percent of Americans — fewer than 2 out of every 1,000 people who die — now owe any estate tax whatsoever, according to the Urban-Brookings Tax Policy Center (TPC), because the tax is levied only on the portion of an estate’s value that exceeds $5.25 million per person (effectively $10.5 million per married couple).
  • Those paying the estate tax generally pay less than one-sixth of the value of the estate in tax, a far cry from Brady’s claim that nearly half of estates are taxed away. As noted, 99.86 percent of estates owe no estate tax at all.  TPC reports that among the 3,780 estates that owe any tax this year, the “effective” tax rate — that is, the percentage of the estate’s value that is paid in tax — is 16.6 percent, on average.  The 16.6 percent rate is far below the top statutory tax rate of 40 percent because taxes are due only on the portion of an estate’s value that exceeds the $5.25 million per-person exemption level and because heirs can often shield a large portion of an estate’s remaining value from taxation through various deductions.
  • Large estates consist of a large amount of “unrealized” capital gains that have never been taxed. The estate tax serves in part as a “backstop” to the capital gains tax.  Usually, capital gains are taxed when an asset is sold or disposed of and the gain is “realized.”  But if a person holds an asset that mounts in value until his or her death, this “unrealized” capital gain is exempt from the capital gains tax.  Research shows over half of the assets in large estates — those that contain more than $10 million in assets — has never been taxed.  Without the estate tax, those unrealized gains would escape taxation entirely.

Southerland Amendment Not a Normal “Work Requirement,” Would Reward States That Cut Unemployed Families Who Want to Work Off SNAP

June 21, 2013 at 4:14 pm

As I explained yesterday, the farm bill that the House wisely rejected yesterday included an unprecedented provision to reward governors with large sums of unrestricted cash if they cut families off the SNAP (food stamp) program because the parents, through no fault of their own, cannot find jobs.

Some news reports have incorrectly described the provision, which came in an amendment from Rep. Steve Southerland (R-FL), as giving states the option to impose work requirements on SNAP recipients, as though there are no work requirements now.  That’s simply not correct.  The program has had work requirements for years.  The Southerland amendment is very different from a normal “work requirement.”

Work requirements in low-income programs require unemployed people to look for jobs, to accept any job offer, to participate in workforce or training programs if there is a slot available in a program, and the like.  If the individuals fail to comply with the requirements, they can be sanctioned by having their benefits cut or terminated.  The SNAP program also disqualifies people who quit a job.

This is not what the Southerland amendment would do.  It would allow states to end benefits for most adults who receive or apply for SNAP — including parents with young children and many people with disabilities — if they are not working or participating in a work or training program for at least 20 hours a week.  The amendment provides no jobs and no funds for work or training programs, and it does not require states to make any work opportunities available.  People who want to work and are looking for a job but haven’t found one could be cut off.

That’s what makes this fundamentally different from a normal work requirement.  I have been working on SNAP for 41 years and have always supported reasonable work requirements.  There is a bright yellow line down the middle of the road between:  1) requiring people to try to find jobs, to take jobs that are offered, and not to quit jobs, and 2) denying benefits to people who do everything they can to get jobs but can’t find them and aren’t ever offered a work program or job training slot.  The former is reasonable.  The latter is not, and it should offend anyone with a sense of fairness and compassion.

To add insult to injury, the amendment gives states a powerful financial incentive to cut people and their children off simply because they can’t find work in a weak economy.  It allows states to keep half of the savings from cutting these people off and to use the money for whatever they want — tax cuts, special-interest subsidies, or anything else. Governors could help solve their budget problems by dropping unemployed people from SNAP.

Policymakers and the media should recognize the Southerland amendment for what it is:  an unprecedented and draconian benefit cut-off.  That’s why the measure aroused such passionate opposition.