Off the Charts Blog | Center on Budget and Policy Priorities

This week on Off the Charts, we discussed the economy, the looming debate on taxes, and health reform implementation.

• On the economy, Chad Stone commented on today’s jobs report, finding that the latest figures show that the economic recovery still needs a boost. Leading up to Labor Day weekend, Liz Schott explained why the job-creating TANF Emergency Fund should be renewed by Congress and Donna Pavetti highlighted stories from previously unemployed workers who found jobs through the fund.
• On taxes, Paul Van de Water wrote a few posts (here and here) explaining the Center’s analysis comparing the high-income tax cuts and the Social Security shortfall.  We also highlighted a recent Wall Street Journal op-ed arguing for restoring the federal estate tax (“Bring Back the Estate Tax Now”).   And, we sat down with Chuck Marr to discuss the debate on taxes that will take center stage when Congress returns after Labor Day.
• On health reform implementation, January Angeles debunked the claim that health reform will impose unmanageable costs on states.  Also, the Center recently joined a campaign to help five million children gain health insurance coverage, which we highlighted.

In other news, the Center released a report with state-by-state numbers on the TANF Emergency Fund and a statement by Chad Stone on the August employment report.  We also released a podcast on the upcoming debate on middle-class and high-income tax cuts and on the August jobs report.  Find them on iTunes here.

Today’s jobs report provided better news than expected about private-sector job creation, but the case for additional stimulus to boost a tepid economic recovery and revive the job market remains strong.  The good news, as the chart below shows, is that the economy has now added private-sector jobs for eight straight months.  The bad news is that adding fewer than 100,000 private-sector jobs a month, as we have been doing, will not bring down the unemployment rate.

Here are some of the key numbers from today’s report on the August employment situation:

• Private and government payrolls combined fell by 54,000 jobs in August.  Private employers on net added 67,000 jobs, but those gains were not enough to offset the decline in government jobs.  So far this year, private payrolls have expanded by 763,000 jobs, a pace of 95,000 jobs a month.
• The decline in government payrolls of 121,000 jobs was due largely to the scheduled termination of 114,000 temporary jobs associated with the decennial census.  Also, state governments reduced their payrolls by 14,000 jobs (6,000 of those in education).  Local government payrolls increased by 4,000 as the loss of 10,000 education jobs was offset by a gain of 14,000 jobs outside education.
• There are 7.6 million fewer jobs on nonfarm payrolls than there were when the recession began in December 2007, and 7.7 million fewer jobs on private payrolls.
• The unemployment rate edged up to 9.6 percent in August, and the number of unemployed rose to 14.9 million.
• A piece of good news on unemployment is that people came back into the labor force looking for work in August after four straight months of declining labor force participation.  The percentage of the population with a job also edged up after dropping for three straight months.
• Other unemployment statistics show that it remains very hard to find a job.  The Labor Department’s most comprehensive alternative unemployment rate measure — which includes people who want to work but are discouraged from looking and people working part time because they can’t find full-time jobs — edged up to 16.7 percent in August.
• Long-term unemployment remains a significant concern. Over two-fifths (42 percent) of the 14.9 million people who are unemployed — 6.2 million people — have been looking for work for 27 weeks or longer. These long-term unemployed represent 4.1 percent of the labor force. Prior to this recession, the previous highs for these statistics over the past six decades were 26.0 percent and 2.6 percent, respectively, in June 1983.

As I said last week when the Commerce Department report on weak second-quarter growth came out, the economy is still growing but the recovery needs a boost from further monetary — and fiscal — stimulus as soon as possible.

Update: For more charts on the economy, see our new chart book.

The Atlantic’s Megan McArdle has written another post about our comparison over the next 75 years of the Social Security shortfall and the cost of the Bush-era tax cuts for high-income taxpayers.  The gist of Ms. McArdle’s argument seems to be that we’re not computing the present value of these two policies in the same way.  That’s simply incorrect.

Our figure for the Social Security shortfall comes straight from the 2010 Social Security Trustees’ Report.  The report estimates that the program’s shortfall over the long term (which the trustees define as the next 75 years) is equivalent to 1.92 percent of payroll subject to Social Security tax, or 0.7 percent of gross domestic product (GDP).  (See Table IV.B5 on page 63 and Table VI.F4 on page 187.)

Note that the trustees don’t define the shortfall as simply the difference between the present value of the taxes Social Security will collect and the benefits it will pay out over the next 75 years.  The trustees also take into account the current amount of the Social Security trust funds — something that Ms. McArdle has omitted.

We estimated the 75-year cost of the high-income tax cuts in a comparable manner.  On Tuesday I listed the estimate’s three components, which total $837 billion (0.43 percent of GDP) over the 2011-2020 period and $120 billion (0.5 percent of GDP) in 2020 alone, according to the Treasury Department and Congress’s Joint Committee on Taxation.

We projected the cost of the tax cuts for another 65 years using their average rate of growth for 2017-2020, discounted the costs back to the present using a discount rate that averages about 5.25 percent, and expressed them as a percentage of GDP.

Ms. McArdle says that the tax law won’t stay the same for 75 years.  That’s true, but Social Security law won’t stay the same for 75 years either.  The whole point of projecting the long-term cost of policies is to help policymakers decide whether to continue or alter them.  And our analysis showing that the Social Security shortfall is much smaller—and the cost of the high-income tax cuts is much larger—than they are often portrayed is designed to inform coming debates over the future of both policies.

Ms. McArdle also says that the Social Security shortfall eventually exceeds the cost of the high-income tax cuts.  That’s true, too.  But the cumulative amounts are about the same for the next 75 years, which is not “a time so brief as to be meaningless.”

The Center on Budget & Policy Priorities is one of sixteen organizations participating in Connecting Kids to Coverage, a five-year public-private campaign launched this February by Health and Human Services (HHS) Secretary Kathleen Sebelius to help the five million uninsured children who are eligible for Medicaid or CHIP to enroll in coverage.

For the past sixteen years, the Center has operated an outreach campaign that worked to help make public health insurance programs more accessible to eligible families, such as by cutting red tape in the application process.

Tomorrow, HHS will unveil new data from the Urban Institute that will help define the future of this new initiative.  You can watch the event at www.HHS.gov/live at 9:30a.m.

We know that we’ve talked about the job-creating TANF Emergency Fund a lot on this blog, but its merits bear repeating as we approach Labor Day – a day that celebrates the American worker.  Labor Day is a yearly national tribute to workers’ contributions to our country’s strength and prosperity.   The subsidized jobs that the TANF Emergency Fund have created have done exactly that — helped to support and stabilize families and helped workers and businesses weather this recession and build toward a better future.

But, unless Congress extends the fund beyond its scheduled September 30 expiration, many more workers will lose their jobs – for example, more than 20,000 in Illinois, as many as 12,000 in Pennsylvania, 7,000 in Los Angeles and 3,000 in Florida.  Perhaps you have seen our previous posts on this?  Here’s more information about the fund – which is, in short, an emergency jobs program that was a piece of the 2009 Recovery Act through which 37 states have provided subsidized jobs for nearly 250,000 otherwise unemployed parents and youth.

As September 30 approaches, states are ramping down their subsidized jobs programs, stopping new placements and giving notice that existing jobs will end.  This comes at a time when long-term unemployment is at historic highs and data suggest the nation faces a slow and long road ahead to providing sufficient jobs for unemployed workers.

We released a report today outlining how the fund is working and what jobs to support their families have meant to the unemployed parents that the program has served.  Let’s celebrate Labor Day by helping keep and create more jobs, not fewer, for unemployed workers.