Chad Stone, Chief Economist, and Hannah Shaw, Research Associate, discuss the disappointing jobs report for March and what it indicates about job creation and economic growth.
In an editorial today, the Wall Street Journal claims a Medicaid waiver in Rhode Island shows that states would do well and beneficiaries would not be hurt by less federal funding if policymakers converted Medicaid to a block grant.
The Journal bases its case on an unauthorized report from Rhode Island’s former Medicaid director that has been rebutted by current state officials, our own analysis, and a recent independent report in the state. Rhode Island’s waiver was a “sweetheart deal” between the outgoing Bush Administration and the state’s governor that allowed the state to claim millions of dollars in additional federal funds in return for accepting a cap on its Medicaid spending at an inflated level that it never expected to reach anyway.
Rhode Island’s waiver did not save $1.1 billion over 18 months as the Journal claims. Instead, it generated $23 million in state savings over three years, according to a recent independent report that Governor Lincoln Chafee commissioned. Moreover, the report found the state has achieved additional savings by utilizing existing flexibilities available to all states for Medicaid. These findings are consistent with our previous analysis of Rhode Island’s waiver, which showed that Rhode Island could have achieved the positive policy outcomes without a cap on federal funds.
In misrepresenting the financing of Rhode Island’s waiver, the Journal ignores the disastrous effects that a block grant would have on seniors, children, persons with disabilities, and health care providers. Consider the block grant in the budget of House Budget Committee Chairman Paul Ryan, which the House passed last week and which would slash federal Medicaid funding by 34 percent by 2022. The Urban Institute projected that a similar block grant in last year’s House budget would have resulted in between 14 and 27 million people losing health coverage by 2021.
As the April 17 tax-filing deadline approaches, we’re taking time this week to examine where our tax dollars go. Earlier this week, we looked at what federal tax dollars pay for. Today, we turn to the state level.
States spend more than half of our tax dollars on education and health care, on average.
Click here for the latest update of our Policy Basic on this issue.
Today’s jobs report disappointed expectations with employers adding only 120,000 jobs in March. The unemployment rate edged down to 8.2 percent, but that decline reflected people leaving the labor force, not people finding jobs.
Below are some charts to show how the new figures look in historical context. Read our statement with further analysis.
See our chart book for more charts.
In my latest post for US News & World Report, I identify three myths about spending, debt, and taxes that conservative politicians use to justify the plan of House Budget Committee Chairman Paul Ryan — one that would set the nation on a path to end most of government other than Social Security, health care, and defense by 2050. I ask:
Are those who advance these myths interested in fixing the deficit and debt problem, as most Americans would hope, or are they conducting a bait-and-switch in pursuit of anti-tax advocate Grover Norquist’s quest to “reduce [government] to the size where I can drag it into the bathroom and drown it in the bathtub?”
I draw on CBPP analyses to rebut the following three myths:
Myth #1: Spending Is Out of Control, and Only Draconian Cuts Will Rein It In
As CBPP analysis has shown, non-interest spending outside Social Security and Medicare spiked in the Great Recession but is scheduled to fall substantially as a share of Gross Domestic Product (GDP) over the next 10 years as the economy recovers. Moreover, the aging of the population and rising health care costs economy-wide are responsible for the growth in government spending in subsequent decades, not uncontrolled growth in government spending generally.
Myth #2: The Country Faces a Looming Debt Crisis Due to the Debt Incurred In the Past Few Years
That myth fueled irresponsible brinksmanship over legislation to raise the nation’s debt limit last year, and it stands in the way of meaningful deficit reduction. But the weak economy and the legacy of policies enacted under President Bush (especially his tax cuts) play a far larger role in explaining deficits and debt going forward than recent temporary measures that were designed to combat the financial crisis and recession.
Myth #3: Americans’ Tax Burden Is High and Rising
As this CBPP analysis shows, the most recent “Tax Freedom Day” report that the Tax Foundation released earlier this week gives a misleading impression of the tax burden that the average American faces. And as this CBPP analysis shows, average federal income rates are at historic lows for typical taxpayers. When total taxes, including federal and state and local taxes, are taken into account, the United States has one of the lowest average tax rates among all industrialized countries.