Our Take on Today’s Trustees’ Reports

July 28, 2014 at 4:34 pm

We just issued statements on the trustees’ 2014 reports on Social Security and Medicare.  Here are the openings:

  • CBPP President Robert Greenstein on Social Security:

    “Social Security can pay full benefits for close to two decades, the new trustees’ report shows, but will then face a significant, though manageable, funding shortfall that the President and Congress should address in the near future.

    “Specifically, the trustees estimate that Social Security can pay full benefits until 2033, at which point its combined trust funds will be exhausted.  After 2033, even if policymakers failed to act, Social Security would pay about 75 percent of scheduled benefits, relying on Social Security taxes as they are collected.  The exhaustion date is unchanged from last year’s report and is within the range that the trustees have projected for some time.  In the late 1990s, they projected the exhaustion date as early as 2029; at one point in the last decade, they projected an exhaustion date as late as 2042.

    “The trustees caution that their projections are uncertain.  For example, they estimate an 80 percent probability that trust fund exhaustion would occur between 2029 and 2038 — and a 95 percent chance that it would happen between 2028 and 2041.  The Congressional Budget Office (CBO) recently estimated that exhaustion would occur in 2030, largely because CBO expects somewhat faster improvements in mortality.  Fluctuations of a year or two in either direction are no cause for either alarm or celebration.  The key point is that all reasonable estimates show a manageable long-run challenge that policymakers must address, the sooner the better, but not an immediate crisis. . . .”

  • Senior Fellow Paul Van de Water on Medicare:

    “Medicare has grown somewhat stronger financially in both the short and long term since last year but continues to face long-term financing challenges, today’s report from its trustees shows.  The projected date of insolvency for Medicare’s Hospital Insurance (HI) trust fund is 2030 — four years later than projected last year.

    “Health reform, along with other factors, has significantly improved Medicare’s financial outlook, boosting revenues and making the program more efficient.  The HI trust fund’s projected exhaustion date of 2030 is 13 years later than the trustees projected before the Affordable Care Act.  And the HI program’s projected 75-year shortfall of 0.87 percent of taxable payroll is down from last year’s estimate of 1.11 percent and much less than the 3.88 percent that the trustees estimated before health reform. . . .”

History Suggests Ryan Block Grant Would Be Susceptible to Cuts

July 28, 2014 at 2:47 pm

At the heart of House Budget Committee Chairman Paul Ryan’s new poverty plan is a block grant — called the “Opportunity Grant” — that would consolidate 11 disparate low-income programs, the largest being SNAP (formerly food stamps).  Ryan says that the block grant would maintain the same overall funding as the current programs.  But even if one thought that current-law funding levels were adequate, they likely wouldn’t be sustained over time under the Ryan proposal:  history shows that block grants that consolidate a number of programs or may be used for a wide array of purposes typically shrink — often very substantially — over time.

The table below shows 11 major block grant programs created in recent decades.  Eight of them have shrunk since their inception, in some cases sharply.  (Our analysis accounts for the effect of inflation.)

Block grants’ very structure makes them vulnerable to cuts.  Block grants generally give state and local governments more flexibility in how to use funds, leading to varied approaches for achieving program goals.  But this variety makes it hard to see how changes in funding levels affect beneficiaries, or even to be sure how the money is being used.  That, in turn, makes it easier for policymakers looking for savings to target block grants rather than other benefit programs for long-term freezes or cuts.  Block grants in general have fared poorly in the competition for resources.

In Case You Missed It…

July 25, 2014 at 5:03 pm

This week on Off the Charts, we focused on the safety net, federal taxes, Social Security, food assistance, and health policy.

  • On the safety net, we excerpted Robert Greenstein’s commentary on House Budget Committee Chairman Paul Ryan’s “Opportunity Grant” proposal and highlighted his discussion of the Ryan poverty plan on MSNBC’s “The Last Word with Lawrence O’Donnell.”  Stacy Dean excerpted a post by Olivia Golden of the Center for Law and Social Policy debunking myths about safety net programs.  Arloc Sherman explained that there are fewer poor children in America but more very poor children since the 1996 welfare law.  Donna Pavetti pointed out the discrepancy between Chairman Ryan’s rhetoric and the reality of his poverty plan.  She also listed three reasons why the 1996 welfare law should not be a model for reforming other safety net programs and four reasons why Ryan’s proposed work requirements are cause for concern.  And we rounded up all of our writings to date on the Ryan plan.
  • On federal taxes, Chuck Marr applauded Chairman Ryan’s call for an expansion of the Earned Income Tax Credit while noting two serious flaws in his plan.  He also pointed out the contradiction between Ryan’s new poverty plan and House Republicans’ vote to permanently change the Child Tax Credit in ways that will increase poverty.  Chye-Ching Huang excerpted her New York Times piece calling on Congress to address the growing number of corporate tax inversions. Arloc Sherman excerpted his commentary on issues related to marginal tax rates and government benefits.  Michael Mazerov urged Congress not to extend the ban on state and local sales taxation of Internet access fees unless pairing with legislation enabling states and localities to collect sales taxes on purchases from out-of-state Internet and catalog sellers.
  • On Social Security, Kathy Ruffing previewed Monday’s 2014 Social Security trustees’ report.  Paul Van de Water highlighted our new chart book on Social Security Disability Insurance.
  • On food assistance, we excerpted Stacy Dean’s testimony before a House Agriculture subcommittee on SNAP (food stamps) as a successful and influential part of the safety net.
  • On health policy, Edwin Park explained what the recent conflicting court rulings on federal marketplace subsidies mean for health reform.

We issued papers on how “direct certification” can enable more low-income children to receive school meals, the increase in deep poverty among children in the welfare law’s first decade, and why the House’s Child Tax Credit bill will leave millions of low-income working families behind.  We also released a chart book on Social Security Disability Insurance.  Arloc Sherman released a commentary on the effects of marginal tax rates on low- and moderate-income people.  Robert Greenstein released commentaries previewing Chairman Ryan’s poverty plan and examining Ryan’s “Opportunity Grant” proposal.  Stacy Dean testified before a House subcommittee on SNAP’s role in the safety net.  And we updated our backgrounder on how many weeks of unemployment compensation are available.

CBPP’s Chart of the Week:

A variety of news outlets featured CBPP’s work and experts recently. Here are some highlights:

Beware the Balanced Budget Amendment
U.S. News and World Report
July 25, 2014

Paul Ryan’s poverty plan attacks the wrong problem and comes up with the wrong solution
Washington Post
July 24, 2014

End the Deception on Profits and Taxes
New York Times
July 22, 2014

Don’t miss any of our posts, papers, or charts — follow us on Twitter and Instagram.

Ryan Roundup: What You Need to Know About Chairman Ryan’s Poverty Proposal

July 25, 2014 at 4:42 pm

We’ve compiled CBPP’s analyses and blog posts on House Budget Committee Chairman Paul Ryan’s new poverty proposal.  We’ll update this roundup as we issue additional analyses.

  • Blog Post: What Difference Would Ryan’s EITC Expansion Make for Childless Workers?
    July 29, 2014
    We’ve explained that House Budget Committee Chairman Paul Ryan’s proposed expansion of the Earned Income Tax Credit (EITC) for childless adults, including non-custodial parents, would encourage work and reduce poverty.  Our interactive chart allows you to compare the EITC that childless workers at different income levels would earn under current law and under the Ryan expansion, which mirrors a proposal from President Obama.
  • Blog Post: Ryan’s “Opportunity Grant” Would Likely Force Cuts in Food and Housing Assistance
    July 29, 2014
    House Budget Committee Chairman Paul Ryan maintains that consolidating 11 safety-net and related programs into a single “Opportunity Grant” would give states the flexibility to provide specialized services to low-income people.  But providing these additional services would require cutting assistance funded through the Opportunity Grant to other needy people.  And because SNAP (formerly food stamps) and housing assistance together make up more than 80 percent of the Opportunity Grant, the cuts would almost certainly reduce families’ access to these programs, which are effective at reducing poverty — particularly deep poverty.
  • Blog Post: History Suggests Ryan Block Grant Would Be Susceptible to Cuts
    July 28, 2014
    Ryan says that the block grant would maintain the same overall funding as the current programs.  But even if one thought that current-law funding levels were adequate, they likely wouldn’t be sustained over time under the Ryan proposal:  history shows that block grants that consolidate a number of programs or may be used for a wide array of purposes typically shrink — often very substantially — over time.
  • Blog Post:  Why Ryan’s Proposed Work Requirements Are Cause for Concern
    July 25, 2014
    House Budget Committee Chairman Paul Ryan’s new poverty plan predictably showcases the 1996 welfare law, which replaced Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF), as a model for reforming other safety net programs.  For example, states would have to impose work requirements on all recipients of assistance funded through the “Opportunity Grant” — the block grant that would replace 11 safety net and related programs — who are not classified as unable to work.  We have four key concerns about this proposal.
  • Blog Post:  Dean: SNAP Is a Successful, Influential Component of the Safety Net
    July 25, 2014
    SNAP is not only one of the most efficient and effective safety net programs, but it’s also helping improve other programs, CBPP’s Stacy Dean told a House Agriculture subcommittee.
  • Commentary:  Ryan “Opportunity Grant” Proposal Would Likely Increase Poverty and Shrink Resources for Poverty Programs Over Time
    July 24, 2014
    A centerpiece of House Budget Committee Chairman Paul Ryan’s new poverty plan would consolidate 11 safety-net and related programs — from food stamps to housing vouchers, child care, and the Community Development Block Grant (CDBG) — into a single block grant to states.  This new “Opportunity Grant” would operate initially in an unspecified number of states.  While some other elements of the Ryan poverty plan deserve serious consideration, such as those relating to the Earned Income Tax Credit and criminal justice reform, his “Opportunity Grant” would likely increase poverty and hardship, and is therefore ill-advised, for several reasons.
  • Blog Post:  Ryan Adds Momentum to Expanding EITC for Childless Workers
    July 24, 2014
    House Budget Committee Chairman Paul Ryan highlighted the Earned Income Tax Credit as one of the most effective anti-poverty programs and joined growing bipartisan calls to expand it for childless adults (including non-custodial parents), the lone group that the federal tax system taxes into poverty.  We applaud this step, though we encourage him to reconsider some of his proposals to offset the cost — which would hit vulnerable families — and his opposition to a much-needed increase in the minimum wage.
  • Blog Post:  Ryan’s Rhetoric Doesn’t Match His Proposal’s Reality
    July 24, 2014
    House Budget Committee Chairman Paul Ryan left the impression that his proposed Opportunity Grant will allow low-income individuals to get income assistance as well as help they may need to go to school, get off drugs, and succeed in the workplace.  That picture, however, doesn’t reflect the reality of his proposal.

We also issued several pieces ahead of Chairman Ryan’s announcement of his proposal:

  • Analysis:  Deep Poverty Among Children Worsened in Welfare Law’s First Decade
    July 23, 2014
    Since the mid-1990s, when policymakers made major changes in the public assistance system, the proportion of children living in poverty has declined, but the harshest extremes of child poverty have increased.  After correcting for the well-known underreporting of safety net benefits in the Census data, we estimate that the share of children in deep poverty — with family income below half of the poverty line — rose from 2.1 percent to 3.0 percent between 1995 and 2005.  The number of children in deep poverty climbed from 1.5 million to 2.2 million.Blog Post:  Fewer Poor Children Under Welfare Law, But More Very Poor Children
  • Blog Post: CLASP: State Experiences Show Safety Net Programs Don’t Need Massive Overhaul to Work Better
    July 23, 2014
    Olivia Golden of the Center for Law and Social Policy (CLASP) took a closer look at the experiences of six states to debunk common myths about the delivery of safety net programs. . . . Golden explained that the experiences of the six states involved in the Work Support Strategies (WSS) initiative — a project coordinated by CBPP, CLASP, and the Urban Institute that is designing, testing, and implementing more effective, streamlined, and integrated approaches to delivering key supports for low-income working families — offer lessons for how to improve safety net programs.
  • Blog Post:  Why the 1996 Welfare Law Is Not a Model for Other Safety Net Programs
    July 22, 2014
    House Budget Committee Chairman Paul Ryan’s upcoming poverty plan will likely showcase the 1996 welfare law, which replaced Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF) — a block grant with fixed federal funding but broad state flexibility — as a model for reforming other safety net programs.  A careful examination of the record, however, indicates that the 1996 law’s results were mixed and that if the goal is to reduce poverty, especially among the most disadvantaged families and children, there are serious downsides to embracing the 1996 law as a model.
  • Commentary:  Policymakers Often Overstate Marginal Tax Rates — and Understate Trade-Offs In Reducing Them
    July 22, 2014
    Some Washington policymakers are increasingly focused on whether government benefits for low- and moderate-income people create disincentives to work — in particular, when these benefits phase down as the earnings of beneficiaries rise.That phase-down rate is often called the “marginal tax rate” because it resembles a tax — benefits fall as earnings rise.  The relationship between marginal tax rates and disincentives to work is an important issue, one worthy of serious debate.  Some policymakers, however, often overstate the size of marginal tax rates and their impacts on work, and understate the trade-offs in trying to lower these rates.Blog Post:  Understanding Marginal Tax Rates and Government Benefits

Why Ryan’s Proposed Work Requirements Are Cause for Concern

July 25, 2014 at 3:30 pm

House Budget Committee Chairman Paul Ryan’s new poverty plan predictably showcases the 1996 welfare law, which replaced Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF), as a model for reforming other safety net programs.  For example, states would have to impose work requirements on all recipients of assistance funded through the “Opportunity Grant” — the block grant that would replace 11 safety net and related programs — who are not classified as unable to work.  There are four key concerns about this proposal:

  1. It would divert funds that help families put food on the table and keep a roof over their heads to pay for programs that, at best, produce modest employment increases.  Even the most successful welfare employment programs usually don’t enable more than half of participants to get steady jobs, and the success rate for typical welfare employment programs is much lower than that.  In contrast, SNAP (food stamps) and housing assistance lift millions of people out of poverty.  As I explained yesterday, the way the Ryan plan would provide more resources to impose and monitor work requirements would largely be by cutting food and housing assistance that now goes directly to needy individuals and families.  If that assistance is taken away, poverty will rise and the long-term benefits of SNAP and housing assistance will be diminished.
  2. It ignores the realities of today’s labor market.  Low-skilled individuals looking for work today facing a daunting reality:  the economy still isn’t operating on all cylinders, and employers are increasingly looking for skills that these individuals generally don’t have.  Imposing work requirements won’t itself create new job opportunities for people who are struggling to find work.  In addition, millions of Americans work hard for little pay — 28 percent of workers in 2012 had wages too low to support a family of four at the poverty line through full-time work, the Economic Policy Institute has found.   Government assistance that helps working-poor families meet basic needs shouldn’t be diverted to pay for work programs that will be of little value to them.  Yet that’s likely what would occur under the Opportunity Grant proposal.
  3. It may reinforce the mistaken belief that most public benefit recipients don’t work.  More than half of SNAP households with at least one working-age, non-disabled adult work while receiving SNAP — and more than 80 percent work in the year before or after receiving SNAP.  Similarly, nearly three-quarters of non-elderly, non-disabled households receiving one of the major forms of rental assistance work (or recently worked) or participate in a program through which they likely face a work requirement.
  4. States haven’t shown a commitment to investing in work programs.  Although caseloads in most states’ cash assistance programs for poor families with children fell sharply in the late 1990s, states generally haven’t used much of the freed-up resources to improve the job prospects of poor parents who have barriers to employment.  Only 8 percent of state and federal dollars under TANF directly supports employment activities for cash assistance recipients.  Even when you count funds that support families with jobs, like child care assistance and the refundable part of state earned income tax credits, states spend only one-third of their federal and state TANF dollars to promote and support work.