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Let’s be honest about food stamp work requirements…

April 18, 2018 - 2:45pm

The following is a guest blog post from Sheila Christopher, Executive Director of Hunger-Free Pennsylvania. The post originally appeared on their blog here.

The House Health Committee recently approved a measure (H.B. 1659) that would impose mandatory work requirements for all able-bodied food stamp recipients. The legislation is now being fast-tracked for consideration before the full House.

Mandatory work requirements sound reasonable … until you know the facts.

One in seven Pennsylvanians currently use the Supplemental Nutrition Assistance Program (SNAP), or food stamps, to help buy the food they need to survive and feed their families. SNAP helps keep food on the table for thousands of low-wage and part-time workers who can’t find steady employment, veterans, people who are homeless, and people struggling with addictions, in addition to children, seniors, and people with disabilities.

Proponents of this measure are trying to advance it with bogus claims that SNAP keeps Americans from working, and that mandatory work requirements save taxpayer money. They’re wrong on both accounts.

The average monthly SNAP benefit totals just $120 per person --- or just $1.34 per meal. When was the last time you ate a meal for less than $1.34? You probably haven’t. But that’s what SNAP families need to find a way to do for every meal, each and every day.

The fact is that most SNAP recipients who can work do work. The number of SNAP households with workers has been rising for more than a decade, tripling from 2000 to 2015 --- suggesting that more working families are turning to SNAP to supplement under-employment, not unemployment.

The irony here is that the proponents who are pushing for SNAP work requirements are among the same lawmakers who hate big government and promote economic development.

Well, every dollar spent in SNAP generates $1.70 in economic activity, so imposing sanctions will reduce spending at supermarkets and farmer’s markets. And, SNAP work requirements are expensive to administer. Monitoring compliance with new work requirements would cost the state millions of dollars we do not have.

Let’s be honest: Individuals who lose SNAP benefits still must eat. Taking away food assistance will not create work opportunities in areas lacking jobs. Taking away food assistance will not increase hours for part-time workers who would gladly work more hours. Taking away food assistance will not expand access to skills training for low-wage workers to advance to positions with better pay.

House Bill 1659 does nothing more than demonize poor families, cut off their access to healthy food, create new bureaucracies that cost millions in state taxes, and hurt local economies. Tell your legislators to oppose House Bill 1659. Please take action today.

A $4,000-pay raise? Nope. Since Trump’s tax cut, businesses spending 39 times as much on stock buybacks than on wages or bonuses.

April 17, 2018 - 3:54pm

“My council of economic advisors estimate that this [tax cut], along with a lower business tax rate, will likely give the typical American household around a $4000 pay raise. And that is money that will be spent.” – Donald Trump, October 17, 2017 at the Heritage Foundation’s annual President’s Club meeting.

A $4,000-pay raise. Sounds pretty good, doesn’t it? Now that Trump’s Tax Cut and Jobs Act has been passed and corporations are receiving huge tax cuts, let’s look at whether or not Trump’s claim has come to pass.

The Americans for Tax Fairness website “Trump Tax Cut Truths” examines what corporations are actually doing with their tax cuts. Their analysis shows that only 4.3% of workers — 6.3 million out of 147.6 million workers in the U.S. — are getting a wage increase or one-time bonus from their employer. Only 1.7 million (1.15%) of U.S. workers have received a pay raise.

Out of 26 million U.S. businesses, only 383 are providing one-time bonuses and/or wage hikes to their workers for which the cost has been announced or able to be estimated. Corporations are getting nine times as much in tax cuts as workers are getting in bonuses or wage increases.

Out of 42 Pennsylvania-based firms on the Fortune 1000 list, only three (highlighted in blue in Chart 1) have announced bonuses or wage increases for their employees (Comcast, Erie Insurance Group and PNC Financial Services Group). The other 39 Pennsylvania-based companies (not in blue) have made Americans for Tax Fairness’s list of “Corporate Cheapskates.”

Chart 1: Pennsylvania-Based Companies on Fortune 1000 List Who Gave Bonuses or Wage Increases (Highlighted in Blue)

Another claim by proponents of this legislation is that Trump’s tax cut will create jobs. However, 96,096 private sector jobs at 185 companies have been cut since the tax cut legislation went into effect. This is an underestimation because some large corporations like Amazon and Wells Fargo have not announced how many layoffs they’ve had.

So, if businesses aren’t spending their tax cuts on their workers like Trump and his economic advisors allege, what are they spending it on?

Companies are spending their tax cuts on stock buybacks. Stock buybacks, or a company using its own money to buy its own shares, are a way for companies to boost its stock price. These buybacks go straight into the pockets of companies’ wealthy investors — the richest 1% own 40% of all stock, and the richest 10% own 84% of all stock.

Corporations are spending 39 times as much money on stock buybacks than they are on wage increases or bonuses. Authorizations for stock buybacks have increased $253 billion since the Tax Cut and Jobs Act was passed, compared to the $6.5 billion that workers have received.

Despite Trump’s claims to the American people that this tax cut will create a windfall to middle class Americans, the evidence shows otherwise. Most workers have not seen a pay raise. But wealthy stockholders sure have.

The Trump Tax Bill Wasn't For You

April 17, 2018 - 10:17am

It’s Tax Day 2018, and you know what that means?  The country’s wealthiest Americans are about to experience long-term gains from the Tax Cuts and Jobs Act.  The Pennsylvania Budget and Policy Center is concerned about the effects of the tax cut law and legislation that would make temporary tax cuts permenant after 2025.  A new report from the Institute of Taxation and Economic Policy shows that the top 1% will receive more federal tax dollars than the bottom 60% in 47 states, and the top 20% will gobble up the majority of returns from the temporary tax provisions that were baked into the bill as tax cuts for the middle class. The top 20% will also receive a larger and more disproportionate tax cut in relation to their income.

The report published by the Institute of Taxation and Economic Policy explains that those in the top 20% income bracket will largely benefit from the extension of the temporary provisions that are set to expire at the end of 2025. These temporary provisions were meant to benefit low and middle-income Americans. Once these provisions expire, low and middle income would see their taxes increase in 2026. Lawmakers are now looking to make these temporary provisions permanent, but the wealthy will benefit the most.

According to the report, the top 20% of Americans will receive tax cuts that a large in relation to their income than what other Americans would receive. The top 20% of Americans will also “receive 71 percent of the benefits of the law in 2018,” and continues “this same group would receive 65 percent of the benefits of an extension of the temporary provisions in 2026 and would receive 71 percent of the benefits of the proposed extension combined with TJCA as already enacted.”  A closer look shows that the richest 1% will take 24% of benefits in 2018.

In Pennsylvania, the top 1% will get 26% of the benefits and the top 20% of residents will get 73% of benefits, while the bottom 60% will only get 12% of all benefits.

The Center on Budget and Policy Priorities published a map using data from the ITEP report that shows how the one percenters benefited compared to the bottom 60% of American households that were left out. The top 1% of households in 47 of 50 states will receive more dollars from the federal tax cuts than the bottom 60% of households. The states where the bottom 60% will receive more than the top 1% are: California, New Jersey and New York.  

The Center on Budget and Policy Priorities also points out that the tax cuts will impact state budgets and coffers. The new tax cuts will add $1.5 trillion to the federal deficit over the next ten years. This may prompt cuts to public services and federal assistance programs, which may then prompt states to cut these programs in their budgets.  

While there are some provisions of the Tax Cuts and Jobs Act that may benefit low and middle-income Americans, the new tax cuts bill will largely make income inequality between the top 1% and the bottom 60% even worse. The legislation will create a deficit, which may then prompt more cuts to health care and assistance programs on the state and federal levels. On top of that, temporary extensions that would be made permanent will almost exclusively allow the wealthiest of Americans to prosper.     

"Work Requirements" and the Political Appeal of Cruelty

April 15, 2018 - 8:38pm

We at PBPC are engaged in a major effort to push back against legislation in the PA General Assembly to create work requirements for Medicaid and SNAP. The new federal Farm Bill put forward by House Republicans, which authorizes the SNAP (Food Stamp) program, has similar provisions.

We have been pointing out that the stereotypes used to justify work requirements are simply untrue. We show that stereotypes that justify harsh measures on those who are struggling with low incomes are based on falsehoods. The American social safety net almost entirely benefits people who cannot work — the elderly, ill, and disabled — or working Americans. It offers very little to able-bodied men and women who do not work.

People who receive Medicaid and food stamps mostly work when they can find employment and are not ill, disabled, in school, or taking care of young children or elderly adults. Except for the ill and disabled, they don’t stay on Medicaid or food stamps indefinitely, but take advantage of these programs when they are unemployed or their income drops. We’ve pointed out that federal support for health care goes to everyone, including many middle class or rich people who receive tax breaks for health isurance, whether they get it through their employer or purchase it on the exchanges. Yet the stereotypes about “welfare” are astonishingly difficult to extirpate from our public lives. I want to consider why that is so. There are two fundamental reasons, one having to do with those who keep repeating these stereotypes and the other with those who believe them. 

The first group are the political representatives of the rich and powerful and the right-wing ideologues, whose main goal in political life is to reduce taxes. Even in a state like Pennsylvania, where the very rich pay a far smaller share of their income in state and local taxes than working people, their political representatives want to cut taxes even more. And to do that, they have to cut public spending. A great deal of public spending is difficult to cut. People really do believe in most public spending — on things like education, higher education, and taking care of the elderly. But if the poor can be blamed for their own situation, then one can justify taking what they receive from government away from them. And if these politicians can associate government spending on the whole with those who they claim are undeserving, they can bring government as a whole into disrepute.

The second group are those working and middle-class people who are suspicious of their fellow citizens and want to make sure that only the “truly needy” benefit from the safety net.

Some of these people are struggling with stagnant or slowly increasing incomes, uncertain pensions, and growing unemployment in the declining areas of the state. They are resentful and angry at the government leaving them behind in a changing economy. And, because the benefits they receive such as tax deductions on their mortgages and health insurance or favorable tax treatment of retirement income in Pennsylvania are not so obvious, they don’t recognize how much they actually get from government. They are ripe for an argument that claims that some people who may not deserve it are benefiting from government help.

But not all working and middle-class people who support "work requirements" are suffering economically themselves.

Support for “work requirements” on all sides is reinforced by an unfortunate tendency in human nature to deal with our own fears by pushing them away onto others. Every single one of us is vulnerable to disruptive events in our lives. Middle-class people, and especially middle-class women, find themselves impoverished every day as a result of job loss, illness, the sudden death of a spouse, or divorce. So many of the people who benefit from food stamps and Medicaid are members of the middle class who have fallen on hard times and use the safety net to keep body and soul together until they can turn their lives back around. Serious misfortune could happen to any of us. In Pennsylvania, 22% of Medicaid recipients are college graduates.

We are so loathe to recognize the possibility of a misfortune that could upend our own lives that we desperately want to believe that impoverishment only happens to those who, in one way or another, deserve it. We want, more than anything, to think that people are impoverished because of something they did wrong, not bad luck. So, we cling to the myth that those with low-incomes are different from us and mostly undeserving.

And then, because we do think they are different and undeserving, we feel free to let loose the worst aspect of human nature — our capacity for cruelty — upon them.

And, of course, cruelty is easier when we can denigrate the people who benefit from the safety net if they are different from us because they are people of color or “white trash.”

And, that is exactly what the work requirement legislation is — an act of cruelty against those who are most vulnerable in our community on the part of not only cynical, but mean politicians who are encouraging that meanness on the part of their constituents in the search for a few votes.

We need to stand up to this cruel, mean, and dishonest policy. We need to stand firm against the instinct we all have to blame the victims of misfortune for their own suffering.

We need to stand together for humanity and justice and say, again, that we are all brothers and sisters under God. And our morality and our God demand that we not distinguish between the deserving and the undeserving poor; that we not indulge our fears and cruelty, and that we instead act on the moral truths we embrace on the Sabbath but too often forget the rest of the week: that no one who lives among us should ever go hungry or without health care.

Don’t be Fooled: The Extension of the Trump Tax Bill Primarily Benefits the Rich, Just Like the Original Law Does

April 12, 2018 - 4:51pm

Tax day is around the corner and many Pennsylvanians are busy gathering their W-2s, 1099s and other financial documents to submit their taxes for 2017. Meanwhile some Congressional leaders are making the case to extend temporary provisions to the Tax Cuts and Jobs Act (TCJA), which will expire after 2025. Republicans pushing for this legislation are spinning it as making permanent the benefits to the middle class. But, don’t be fooled.

A new report from the Institute on Taxation and Economic Policy documents how the extension of these so-called “middle class tax cuts” will continue to primarily benefit the richest Americans and will leave the poorest 20% paying higher taxes on average in 2026 than if the bill was never enacted.

The data for Pennsylvania shows that the combined effect of the permanent provisions of the TCJA plus the proposed extension of the temporary benefits will still skew to the wealthy, just as the original law did. As Figure 1 shows, 72% of the tax cuts (the 2018 TCJA + the proposed extension) would go to the richest 20% in Pennsylvania – those earning more than $133,500 a year. More than half of the tax cuts – 52% – would go to the richest 5% in PA, which are those who make more than $277,700 a year (not shown). Meanwhile the bottom 60% of income earners in PA would see only 12% of the tax cuts (9% for the middle 20%, 3% for the second 20% and -0.2% for the poorest 20%).

Figure 1:

Figure 2 breaks these numbers down and shows how the share of the tax changes is distributed for each income quintile by the 2018 Tax Cut and Jobs Act (in blue), the proposed extension in 2026 (in orange) and then the combined impact (in grey). This shows that the proposed extension in 2026 follows the same trend that the TCJA did – that richest Pennsylvanians are the ones who will benefit the most from the tax bill and the extension.

Figure 2:

Many of the permanent provisions of the Tax Cut and Jobs Act, like the nation’s largest-ever corporate tax cuts, benefit the rich. While some of the extensions do help the middle class, they also include the extension of other tax cuts that are targeted specifically at the wealthy, like the tax cut for “pass-through” businesses and the estate tax.

Chart 1 breaks down the average tax changes for each income group in Pennsylvania, including the tax change due to the TCJA, the proposed extension and then the combined effect. A couple notable points jump out from this data.

Chart 1:

In 2026, the richest 1% in Pennsylvania will receive, on average, a tax cut of $4,400, but with the proposed extension, they would see an additional $33,500. Combined, the richest 1% would see an average tax cut of $37,890 – much more than they would have seen with the TCJA alone.

Under TCJA, by 2026, the bottom 60% of Pennsylvanians would have seen a tax hike. While the proposed extension offsets this somewhat for the middle and second 20%, the proposed extension does not provide enough tax cuts to offset the tax hikes for the poorest 20%. The poorest Pennsylvanians will, on average, still see a tax hike.

With the proposed extension, the richest 1% of income earners in Pennsylvania will see an average tax cut of $37,890 while the bottom 60% will see an average tax cut of $320 (or $26 a month). That is, the richest 1% of Pennsylvanians will see a tax cut 118 times greater than the bottom 60%.

Doesn’t seem like a middle class tax cut to me. Then or with the extension.

Why “Get a Job!” is not the answer to decreasing reliance on food stamps

April 10, 2018 - 12:51pm

“Just get a Job!”

I’ve heard these words yelled out of car windows when I marched alongside poor and homeless people fighting for affordable housing and living wage jobs in the San Francisco Bay Area in the early 2000s. It’s a slogan many who have waited in lines at soup kitchens or homeless shelters have heard again and again.

Get a Job! The belief that anyone who wants to work can get a job permeates our society and has crept into the thinking in both conservative and liberal circles. But this mindset has not emerged out of nowhere – it has been constructed and refined over the last 50 years by conservative scholars, policy wonks pursuing welfare reform and right-wing think tanks (for a detailed description see Lucy Williams article, “Decades of Distortion: The Right’s 30-Year Assault on Welfare”). Alice O’Connor, in her book Poverty Knowledge: Social Science, Social Policy and the Poor in Twentieth Century U.S. History (2002) traced the shift in the study of poverty from a focus on low wages and labor exploitation during the Progressive era to its framing as an individualized problem due to personal failings and the behavioral characteristics of the poor that culminated in welfare reform in the 1990s.

Despite successful efforts over the last 10 years at beginning to shift this narrative back to structural inequality and the growth of the low-wage economy (thanks to the Fight for $15, the growth of unionism in the low wage service sector, Occupy Wall Street, the renewed Poor People’s Campaign and other efforts), the demonization of the poor, specifically those relying on SNAP and Medicaid, has reared its ugly head again on both the federal and state level.

In Pennsylvania, the House Health Committee is having a vote today (Tuesday, April 10) to add work requirements to SNAP, which is the nation’s most effective defense against hunger. HB1659 would prevent the Governor from using allowable federal exemptions to the work requirement, namely geographic waivers for childless adults aged 18-49 who are not disabled in areas of high unemployment. It would also impose work requirements on all two-parent families and on single-parent families with children over the age of 11.

In January of 2018, 1.85 million Pennsylvanian’s received these food stamps, which is 14.5% of the state’s population. Despite the underlying “Get a Job” ideology behind this proposed legislation, the reality is that most SNAP recipients already live in a household where at least one adult is working. Seventy four percent of all households in Pennsylvania receiving SNAP has at least one household member who already has a job. And a primary purpose of the legislation is to impose these work requirements in areas of our state plagued by high unemployment, precisely where there is a dirth of job opportunities. While this legislation is targeted at the unemployed, it would also result in employed people losing access to SNAP as more documentation of work hours will lead to fewer people jumping through the hoops needed to get this assistance. The act of attaching more work requirements to SNAP will not result in more employment and economic security for Pennsylvanians, it will only ensure that more of those without work – many because they can’t find it – and their children, will go hungry.

How much would this legislation save the state on spending? Nothing. SNAP is 100% federally funded. This legislation would likely cost the state money due to administrative costs to verify individuals work status and hours as well as requirements that the state provide child care and transportation to those impacted by mandatory work requirements.

If Republicans (and Democrats) backing this bill are really serious about reducing the number of people on SNAP, here is what they need to do:

  1. Raise the minimum wage in Pennsylvania, which hasn’t been increased for over 10 years, so that workers can afford to buy their own food.
  2. Pursue policies (like family and medical leave insurance, paid sick leave, support for child care and fair scheduling) that support working parents so they can rely on a stable paycheck when dealing with inevitable life circumstances like having a child, getting sick or dealing with a sick family member or finding reliable and affordable childcare.
  3. Figure out ways to bring good jobs to regions in Pennsylvania with high levels of unemployment, including investing in higher education so the people of Pennsylvania have the education and skills needed by existing and (hopefully) incoming employers.
  4. Invest in the expansion of apprenticeship and other employer-connected job training opportunities that lead to good paying jobs in Pennsylvania.

Rather than continue spinning the problem of poverty and reliance on social programs on what is lacking from the so-called undisciplined and lazy poor, Pennsylvania’s lawmakers need to “Do Their Job” -- address the pervasive problems of poverty and the lack of family supporting jobs that plague our state. Ensuring everyone in Pennsylvania has the economic security to be able to buy their own food will enable these lawmakers to reach their goal of reducing reliance on SNAP. Get to work!

 

Take Action Now: Food Stamp Work Requirements Will Harm People with Criminal Records Trying to Build New Lives

April 4, 2018 - 12:28pm

The following is a guest blog post from Sharon M. Dietrich, Community Legal Services of Philadelphia Litigation Director. The post originally appeared on their website here.

Proposals to toughen work requirements to qualify for SNAP benefits (food stamps) are all the rage.  Even in areas of high unemployment, low income people without children and who are not considered disabled would be permitted to receive SNAP for only 3 out of 36 months, unless they were working 20 hours per week.  The proposals are under consideration by Congress (for the Farm Bill), the U.S. Department of Agriculture, and the Pennsylvania General Assembly (HB 1659).

These work requirements would lead to loss of SNAP and to food insecurity among many low income Americans not fortunate enough to have work.  But one population would be especially hurt: people with criminal records.(link is external) One out of three(link is external) American adults has a criminal record.

Across the country, an average of 26,414(link is external) people leave jails and prisons to return to our communities every day.  They leave these institutions with little more than the clothes on their backs.  Much more often than not, they have no homes or jobs to return to.  Recently released prisoners have among the highest rates of unemployment in the country.  About 60% remain unemployed(link is external) a year about their release.

If able bodied, these returning people are not qualified for any cash assistance, except perhaps if they are custodial parents.  SNAP is the only resource with which they might purchase food.  The maximum benefit for a single person is $192, not generally enough to feed someone for an entire month.  But under the proposals under consideration, most reentering persons would not continue to receive any SNAP beyond 3 months, because they are not able get 20 hours per week of work.

SNAP also is a crucial income support for people with criminal records who are long removed from incarceration – or who were never incarcerated at all, given that the majority of people convicted of crimes are sentenced to probation(link is external) instead of jail.  The reason is that having a criminal record is an intractable barrier to employment.          

More than ninety percent of employers(link is external) conduct criminal background screening, so a criminal record plays a role in almost every employment decision.  Despite policy changes meant to help this population, such as “ban the box,” people with criminal records continue to face significantly high unemployment rates that continue throughout their lives.  Having even an arrest(link is external) any time in one’s life decreases a job seeker’s prospects more than any other stigma.  This employment barrier has had an astonishingly huge impact on low income communities.  A 2009 Villanova paper found that had mass incarceration not occurred, the poverty rate(link is external) would have fallen by more than 20% between 1980-2004.

The Employment Unit of Community Legal Services of Philadelphia serves around one thousand clients per year whose criminal records are preventing them from working or advancing on the job.  Problems caused by criminal records are, by far, the most common reasons that low income Philadelphians seek employment law representation by CLS.  In our experience, no criminal record is too old or too minor to serve as a barrier to employment, including summary offenses and arrests without convictions.  These clients with criminal records seeking work frequently have been unemployed for extensive periods.  Often, their financial records show that they have no cash income and rely entirely on small SNAP benefits to buy food.

Ironically, CLS’s clients are desperately seeking work, but under the pending proposals, they would lose their SNAP because they are not working.  For those long removed from their criminal justice involvement, this change would exacerbate the financial hardships they already struggle with.  For the recently reentered, who are much less likely to find work, the stakes are even higher.  This change will inevitably increase recidivism and send people who might otherwise turn the corner back to incarceration instead.

In recent years, there has been broad, bipartisan agreement that public policies must change to permit people with criminal records to reintegrate into our communities.  Proposals to toughen SNAP work requirements might not on their face appear to impact reentry.  But they would, in a devastating way.

How you can help people with criminal records avoid loss of SNAP benefits:

* By Monday, April 9th, tell the U.S. Department of Agriculture that it should not change the work requirements on low income people without children and who are not disabled, because such a change will harm people with criminal records.  A sample letter that you can modify is here.  Submit comments here.

* Tell your PA state legislator to oppose HB 1659, which would prevent the Governor from seeking waivers from the 3-month time limit in areas of high unemployment. 

*Organizations: Sign on to this letter.

Governor Wolf’s proposed education budget finally restores Corbett's K-12 classroom funding cuts but inequities and inadequate funding still remain

April 3, 2018 - 2:33pm

Governor Wolf’s proposed education budget finally restores K-12 classroom funding cuts (in nominal dollars) from the Corbett years, but Pennsylvania still has a long way to go to reach funding equity and adequacy.

Governor Wolf’s Executive Budget for 2018-19 proposes increases in K-12 education for the fourth year in a row. His proposal this year, if accepted, reaches an important milestone—the disastrous cuts to education instituted under Tom Corbett will be restored. 

There are various ways to evaluate education spending, depending on what lines in the state budget are included. At PBPC we generally focus on what we call Classroom Funding – that is the funding from the General Fund that goes directly to the classroom. And Classroom Funding will finally be restored to its 2010-11 level. In 2011-12 then-Governor Corbett took a hatchet to the K-12 education budget, decreasing classroom funding by $841 million. These budget cuts devastated public schools around the state as school districts were forced to lay off thousands of teachers, guidance counselors and school nurses and eliminate programs that many students benefited from. The restoration of these cuts are, in and of themselves, something to acknowledge and celebrate.

That said, it is important to note that the numbers in the above chart are in nominal dollars and not adjusted for inflation. Inflation would be about 15% between 2010-11 and 2018-19, which means the money actually needed to get the same level of services as of 2010-11 would be an additional $911 million on top of what was proposed this year. So, while this year’s proposal represents an important milestone in terms of inching our way back towards funding levels pre-Corbett, we still have a long way to go in terms of truly resolving the impact of these funding cuts and creating a more equitable school funding system.

Pennsylvania’s public schools are underfunded and face great disparities between rich and poor school districts. In fact, Pennsylvania has the greatest disparities of any other state, with poor school districts spending 33% less per student than our most affluent districts. And the reason stems from inadequate state funding for public education. Only 37% of K-12 funding comes from the state, compared to the national average of 47%, which means that local school districts must foot most of the bill. And as you can imagine, an over-reliance on local school districts to fund schools leads to great inequities between school districts based on the income and wealth of the communities in which they are located and raise funds from.

In addition to education equity, there is the question of education adequacy. How much funding is actually needed to ensure all our schools are funded to properly and adequately educate Pennsylvania’s students?

The Public Interest Law Center concluded that the state would need to add at least $3.26 billion to education funding in order to give every student an adequate education. Almost every school district in Pennsylvania would need more funding but because of the inequity in how we fund schools, school districts in communities with higher levels of poverty would need much more. 

In the figure below, we divide up the 500 school districts in Pennsylvania into four quartiles based on the percent of children ages 5-17 living below the poverty level – 1 being high poverty and 4 being low poverty. We then show the average amount of funding needed for each group of districts to provide an adequate education by this standard. This figure shows that the gap in funding to reach adequacy is much wider for the higher poverty districts. To reach adequacy, funding in the poorest districts would need to increase by $3,614 per student. While the lowest poverty school districts’ gap is much smaller (with $839 per student needed to reach adequacy), it is important to note that a gap still exists.

Raising another $3.26 billion for our schools is a heavy lift. Most of the money would have to come from the state. But the various tax proposals we have put forward would, over time, generate that much money and more, while allowing us to reduce taxes for working people and the middle class.

Restoring the Corbett funding cuts is a notable and important accomplishment for Governor Wolf given the deep cuts in 2011-12 and the challenging political environment. But we have a long way to go in Pennsylvania to ensure all students, regardless of their family’s income or the wealth of their communities, get the education they need and deserve. 

For more information, see the full analysis of the education components of Governor Wolf's proposed 2018-19 budget here.

The Tax Cut and Jobs Act will Worsen Inequality in Pennsylvania

March 23, 2018 - 11:25am

President Trump signed the Tax Cut and Jobs Act into law on December 22, 2017. While spun by Republicans in Congress as a boon to middle class Americans, as a factual matter this tax cut is a not-so-veiled transfer of income into the hands of the already wealthy, which will worsen inequality in our state and across the country.

Let’s put this legislation in context. Over the last 25 years, incomes for the very richest Pennsylvanians has been rising fast while incomes for the majority of us have been stagnant. In fact, in Pennsylvania the top 1% has captured 44 cents of every dollar of income growth since 1979 (Keystone Research Center). Low-wage workers, even those who work full time, can’t make ends meet. Meanwhile Pennsylvania has not raised the minimum wage in 10 years and many low wage workers are forced to rely on government programs for health care and food stamps.  At this time of extreme inequality in our country and our state, the injustice of this federal tax legislation is shameful.

Let me explain why.

First, this bill gives most of its tax cuts to the rich and corporations, while any benefits that the poor and middle class may see will be eliminated in short order. 

This tax bill goes into effect in 2018, but the majority of provisions impacting families and individuals would expire after 2025. The Institute on Taxation and Economic Policy (ITEP) estimates that in 2019:

  • The top 5% of income earners in Pennsylvania – those who earn more than $346,700 a year – will receive more than half of total tax cuts.
  • The richest 1% of Pennsylvanians – that is those making on average $1.86 million a year – will get a tax cut of about $54,000 ($53,580) on average – only a bit less than the median household income in Pennsylvania. This means the richest 1% would see a tax cut greater than the yearly incomes of nearly half of Pennsylvania’s households.
  • The poorest 20% of income earners in Pennsylvania, earning an average of $14,400 a year, would only see an average tax cut of about $110 a year. That works out to about $9 a month.

Over the next eight years, this picture would change, but not for the better. The benefits of the tax bill skew even more strongly to the very top because the provisions that impact families and individuals expire. Any tax cuts, however meager, the middle class and poor might see in the initial years would disappear by 2027.

In 2027, Pennsylvania’s 1% would still see an average tax cut of about $7,000 while the bottom 60% would see a tax increase of, on average, about $100.

While many provisions that benefit the middle class and poor will sunset, corporate tax cuts enacted in this legislation are permanent. This corporate tax cut is the largest one-time rate cut in U.S. history for our nation’s largest companies (35% to 21%).

There is another way this tax plan will accelerate inequality. This tax plan that primarily benefits high income Americans and corporations is phase one of a two-part strategy. It will result in a decrease of $1.5 trillion dollars in federal revenues. That reduction of federal revenues leads to part two of the strategy – an effort to pay for the tax cuts by slashing social programs. While we don’t yet know exactly how this will play out, we do know that Republicans, led by House Speaker Paul Ryan, have targeted the Affordable Care Act and social programs including Social Security, Medicare, Medicaid and food stamps. Taking into account future cuts to social programs, the negative long-term impact of this federal tax reform on middle- and low-income families is likely to be large.

President Trump and the White House have said that this legislation will lead to $4,000 raises for the average family. Yet, so far, only 2% of Americans have reported they’ve received bonuses or an increase in pay as a result of this tax plan’s windfall to corporations. By contrast, there are many reports of stock buybacks that drive up share prices and benefit owners and shareholders. While parents across Pennsylvania stay up late at night worrying about how to feed their kids and pay their rent, the leaders of this country have facilitated a huge transfer of income upwards to the already wealthy.

The unsupported narrative about bonuses and raises for American workers diverts the conversation from what we really need to do to improve jobs and raise wages. To truly create an economy that works for all of us, we need to invest in communities, not transfer more money to the wealthy and deplete our national funds. We need to raise the minimum wage to a livable wage, invest in human and other social services and aim to build up and support our communities and families. 

Wanted – A NAFTA and Trade Policy That Help Unrig the Economy Against Working Families

March 16, 2018 - 2:56pm

The Lamb-Saccone race in Western Pennsylvania upped the pressure on policymakers of both major political parties on trade. It expands the opportunity for progressives and progressive lawmakers to articulate and advocate for a fundamental change in U.S. trade policy in NAFTA renegotiations.

For the Trump Administration, the special election suggested that some working families are no longer willing to take the President’s word for it that he’s in their corner. That’s hardly a surprise given that the President’s actions so far have rigged the economy further against working families, the opposite of what he promised to do. That’s why some Trump voters have “buyer’s remorse” already.

For Democrats, candidate Lamb appears to have done a better job than presidential candidate Hilary Clinton in not being outflanked on trade. He joined Saccone in supporting President Trump’s steel tariffs, the current litmus test for whether politicians are tone deaf – or simply deaf – to the angst of working-class communities to the loss of manufacturing jobs that still pay non-college workers better than non-manufacturing jobs. But progressives need to do more than line up with the President behind a tactic still in search of a strategy.

What might an actual strategy on U.S. trade policy and the renegotiation of the North American Free Trade Agreement (NAFTA) look like?

Here are a couple of starting points.

First, renegotiating NAFTA should be a step towards more balanced and mutually beneficial trade – within North America and between North America and Asia. The gut recognition of the need for more “balance” is the part of Trump’s steel tariffs that is on target – for decades, the U.S. (and Canada) have had big trade deficits in steel that reflect the unwillingness of governments in other countries (and Chinese provinces) to shut steel plants despite global excess capacity. This excess capacity leads China and some other trading partners to dump their steel at below cost in the United States. The U.S. then closes plants that are more efficient and environmentally responsible than other countries’ capacity that remains in operation. Wilbur Ross, Trump’s Commerce Secretary, understands those dynamics and knows that they bear no relationship to the “just-so” stories about the gains to trade that conventional economists tell each other.

In the NAFTA context, the big industry impacted by unbalanced trade is not steel but one of the biggest industries downstream from steel – the auto sector. Under NAFTA, as predicted (including by me), production for the U.S. and Canadian auto markets continued to shift to Mexico. According to the head of Canada’s auto union, Mexico now has half the auto industry employment in North America and 8% of the market. As a consequence, the U.S.'s $74 billion trade deficit in auto with Mexico exceeds the total $63 billion U.S. trade deficit with Mexico. At the same time, both the United States and North America continue to have a large auto industry trade deficit with Asia: for example, auto and auto parts accounted for much of the U.S.'s $108 billion trade deficit with Japan, South Korea, and Taiwan in 2017.

NAFTA-related auto trade imbalances do not reflect the workings of perfect competition and free trade any more than do trade imbalances in the steel industry. They result from structural factors that hurt U.S. workers and the U.S. economy. Within North America, the movement of auto production to Mexico results partly from what Harley Shaiken calls the “broken link between wages and productivity growth” and "high-productivity poverty" — i.e., from the suppression of Mexican workers’ labor rights and of their wages. The North American auto trade deficit with Asia partly reflects the Japanese production system. That system achieves high productivity and quality through lifetime employment security for workers and long-term relations with suppliers, both of which are easier to maintain with large net exports to North America. These same net exports, however, make it harder to create productive labor-management and assembler-supplier relations within the North American auto industry. In auto, as more generally, Asian countries also tend to have non-tariff barriers that keep down U.S. exports.

A U.S. Congressional study in 1992, U.S.-Mexico Trade: Pulling Together or Pulling Apart? (we chose the latter!), recognized the structural roots of the North America-Asia trade deficit in auto. It outlined a “managed trade” approach to achieving more balanced intercontinental trade that drew from the success of the 1965 U.S.-Canada “Auto Pact.” That pact guaranteed Canada higher levels of auto production more commensurate with Canadian auto sales while ensuring the full integration of the U.S. and Canadian industries and high levels of efficiency.

Today, with a nod also to Ronald Reagan’s early 1980s voluntary restraint agreement in auto, one could call an intercontinental Asia-North American auto agreement that supplements NAFTA a “Voluntary Trade Readjustment Under Managed Production” (TRUMP) agreement – voluntary TRUMP agreement. Over time, such an agreement could force major auto assemblers – and some of their suppliers – to make their production (“content”) in North America more closely match their sales (just as the Auto PACT brought production and sales in Canada into closer harmony). An increase in total North American (U.S. plus Canadian plus Mexican) production, in turn, would make it easier for Mexico and Canada to agree to new NAFTA provisions that increase auto production and jobs in the United States also.

The second starting point is the wage issue: a new NAFTA should contain labor provisions that begin to repair the link between wages and productivity in Mexico – and the United States. The Canadian Prime Minister’s suggestion that a new NAFTA prohibit U.S. “right to work” (for less) laws would help in the United States, for example.

The broadest point is that trade policy needs to be approached through the lens of “will this agreement create the broadly shared gains from trade so often promised but so rarely delivered in the past forty years?” To put it more succinctly, trade policy, like U.S. domestic economic policy, needs to be looked at through the lens of “will it create an economy less rigged against people?” That was the lens the OTA used when it urged Congress to come up with a NAFTA that would lead to “pulling together” not “pulling apart.” Second time’s a charm? 

(For a Power Point outlining additional dimensions of an approach to trade based on promotion higher wages in all trading partners and broad sharing of the benefits, see here.

Why the PA Supreme Court's Lines Should Stand

March 5, 2018 - 2:16am

The effort by the General Assembly’s Republican leaders to have the United States Supreme Court block the Pennsylvania Supreme Court’s decision to create new, fair congressional districts in our state is based on both a hypocritical attempt to undermine the rights of states and a flawed understanding of the subtle, yet fundamental, ideas of our constitutional system. The vehemence with which they are pursuing their case makes one wonder whether those ideas can survive in a day and age when so many politicians, especially on the Right, appear to have neither the intellect to understand principles that are the least bit complicated nor the integrity to follow them when they cut against the results they seek.

(Click to read the rest of the post.)

The Pennsylvania Supreme Court invalidated the 2011 Congressional redistricting plan on the basis of the Pennsylvania Constitution not the United States Constitution. That is why the PA Supreme Court could act in advance of the US Supreme Court’s consideration of the redistricting cases before it. It is long established practice, based on the fundamental fact that the states have independent authority under our federal system of government, that the highest court in each state is the final arbiter of what the Constitution of that state says. Those decisions cannot be appealed to the United States Supreme Court unless there is some question about whether they violate the US Constitution.

The Republicans argue that there is such a question in this case because the first half of the Elections Clause of the Constitution, holds that “The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof.” They hold that this clause clearly says that the legislature of our state, the General Assembly, which they lead, should draw Congressional district lines rather than the Supreme Court of Pennsylvania.

The easiest way to understand the mistake the Republicans make in how they read the word “legislature” is to recall that the form of government that the United States and Pennsylvania have both adopted is based on two distinct, if partly competing, principles.

The first is the separation of powers which holds that each of the powers of government — the executive, legislative, and judicial — should be mainly exercised by one governmental institution or, as we’ve come to call it, one branch of government. The executive power is mainly held by the president and governor, the legislative power by Congress and the General Assembly, and the judicial power by the federal and state courts.

But the powers of government are not completely separated in the structure created by the constitutions of the United States and Pennsylvania because they also institute a second, partly competing, idea — the checks and balances.

The central premise of the checks and balances is to give each branch of government some share in the governmental power held by the other two branches. Thus the president’s right to veto laws passed by Congress gives him a share in the legislative power while his right to appoint judges givens him a share in the judicial power. The Supreme Court’s right to declare laws gives it a share in the legislative power while its right to declare presidential and administrative acts in violation of law or the Constitution gives it a share in the executive power. And Congress’s right to create and fund executive departments and courts, and to impeach the president and his subordinates and judges, gives it a share in the executive and judicial powers.

The checks and balances compromise the separation of power but were put in place by the framers of the Constitution for two reasons. The first is to give each branch of government some means to protect its primary power from encroachment by the other two branches. The second is to create a government that divides power among different and competing officials in order to encourage governing through slow and careful deliberation and to prevent tyrannical action on the part of any branch of government.

If one understands this basic constitutional design of American governments, then here is the critical question in understanding the Elections Clause:  By giving the “Legislature” the power to set the “time, place, and manner” of holding elections to the House of Representatives did the framers mean to empower all of those who hold the legislative power in the states to draw the lines? Or did they mean to give that authority only to the one branch of government in the states that primarily holds the legislative power?

If the framers meant the latter, then the Republican complaint against the Pennsylvania Supreme Court might carry some weight since the PA Supreme Court has recently taken it upon itself to draw new Congressional district lines.

But our history and prior US Supreme Court decisions make it clear that we should read “Legislature” in the Elections Clause as the legislative process that is created by the constitution of each state. And it is absolutely clear that the Pennsylvania Constitution gives the PA Supreme Court authority to draw Congressional district lines in certain limited circumstances.

If we read “Legislature” in the Elections Clause as referring to the branch of government that holds (most of) the legislative power, then why should the governor of any state, including our own, have the right to veto a plan for creating congressional districts approved by our legislative body, the General Assembly? Some states do explicitly give the legislative branch of government sole authority to draw district lines by allowing them to do so through a joint resolution rather than through legislation. But in Pennsylvania and most other states, congressional district lines are drawn through legislation that may be vetoed by the governor.

Whether this violated the Elections Clause was raised before the US Supreme Court in Smiley v. Holm in 1932 when the legislative body in Minnesota sought to have the US Supreme Court rule that the governor of Minnesota had no right to veto its redistricting plan. The US Supreme Court held that since a redistricting plan in Minnesota was a legislative act and that under the constitution of Minnesota, the governor of the state had a right to take part in the legislative process.

The US Supreme Court adopted a similar line of thought in Davis v. Hildebrandt in 1916. Ohio had adopted a constitution that gave the citizens of the state the right to reject any law passed by its legislative body. A redistricting plan approved by the legislature was rejected in a referendum. The US Supreme Court held that this did not violate the Elections Clause because the Ohio Constitution gave some of the legislative power of Ohio to the people acting through a referendum.

And finally, in 2015, in Arizona State Legislature v. Arizona Independent Redistricting Commission, the United States Supreme Court ruled that a popular referendum that created an independent redistricting commission to draw congressional lines did not violate the Elections Clause even though the commission entirely bypassed the state’s legislative body to do so. The Court ruled that under the Arizona Constitution the people had a right to enact legislation through the referendum process and that this legislative act met the requirements of the Election Clause.

Under the Constitution of Pennsylvania, our Supreme Court has a right to invalidate acts of the General Assembly that violate the Constitution. And since 1790 the Constitution has guaranteed that “elections shall be free and just.” This provision, not found in the United States Constitution, is one of a number of Pennsylvania’s specific grounds under which the Pennsylvania Supreme Court found that the 2011 redistricting plan violated the Pennsylvania Constitution. Whether one agrees with that decision or not, it is absolutely clear that the PA Supreme Court has the right to make it.

A judicial decision to declare legislation unconstitutional generally leaves it to the primary legislative body to draw new legislation that meets the requirements of the Constitution. But there are times when the Courts may legitimately step in and act on its own accord. The Supreme Court gave the General Assembly and governor enough time to enact new redistricting. Modern computer technology enables anyone to draft a number of such plans in hours and a General Assembly in which leadership usually can carry their members with them could have enacted such a plan in a few days. But not only did the General Assembly not enact a new redistricting plan, it did not even try to do so.

Given the necessity of having a plan in place in time for the 2018 primary election, the Court also had the right to put its own plan into place. Indeed, this is not the first time the PA Supreme Court had to take on this responsibility because of the General Assembly’s failure to act. In 1992, after the General Assembly had failed to pass a Congressional redistricting plan, the Supreme Court of Pennsylvania appointed Judge Craig of the Commonwealth Court to draw up a redistricting plan, which it approved after a number of court challenges.

The Republicans are not happy with the redistricting plan approved by the Court because they think it has a Democratic tilt. It appears, however, that in a normal election, Democrats are likely to win 6-8 Congressional seats while Republicans win 8-10 with 2 to 4 of them being closely competitive, even though the overall state vote for Congress is usually about 50-50. This slight Republican tilt is the result of the tendency of Democrats to cluster together, and the Constitutional requirement that any redistricting plan create districts that are compact and contiguous and that do not split county and municipal lines more than necessary to create districts with nearly equal population. But while it has a slight Republican tilt, this plan is far from the 2011 districts, which was a massive and egregious act of partisan gerrymandering that created 13 Republican districts and only 5 Democratic ones.

It is no doubt possible that another plan that also met the Constitutional requirements could have been created that tilted a little further to the Democrats or to the Republicans. Indeed, given their complaints about the plan put in place by the Pennsylvania Supreme Court, one wonders why they did not act quickly to pass a plan a bit more favorable to them. Indeed, the plan Governor Wolf put forward is slightly more favorable to Republicans than the Supreme Court plan and had the Republican leadership embraced it and asked for more time to pass it, it is hard to believe the Supreme Court would have not granted them that extra time.

But Republicans were more determined to object to the entirely appropriate intervention of the Court than they were willing to play by fair  rules. Either they believed their own mistaken criticism of the Supreme Court’s action or they were determined to create the appearance of a constitutional crisis by calling the Court into disrepute.

This is not the place to speculate about why Speaker Turzai and Senate President Scarnati chose the path they did. But it is based on a tendentious and faulty analysis of the place of the Pennsylvania Supreme Court in the constitutional system of Pennsylvania. And, for Republicans who generally support states’ rights, to call on the US Supreme Court to overturn that decision is not only based on profoundly wrong analysis but is deeply hypocritical.

 

Key Sources on the Value of Unions and the Importance of Protecting Workers' Real Freedom to Join Together

February 26, 2018 - 12:01pm

Today is a little like Labor Day except with a twist: because of oral arguments today in the Supreme Court on the Janus case, editorial boards, the media, social media, and the public are all focused on workers — in this case on their freedom to join together into unions.

Given the widespread interest, here are some links new and old on unions.   A "two-pager" on the value of unions that draws heavily from this longer piece by the Economic Policy Institute published last year.   A new report by the Economic Policy Institute that documents the orchestrated, decades-old funding by right-wing individuals, foundations, and non-profits that led up to the Janus case. Today's New York Times story appears to draw heavily from the new EPI report althought it does not reference it. A podcast on the value of unions from last week's Rick Smith Show.   "New Unions for a New Economy," an old but still relevant piece that explains the simple idea that "unions are as imporant in the new economy as in the old." Got another idea besides union growth for restoring broadly shared prosperity? Didn't think so.   A video from AJ+ about how the U.S. was once known for strong labor unions, but how billionaire donors are killing them off.   A recent conference paper arguing that, even though unions are down, we may be closer to an upsurge in unionism that people realize! Workers and their unions in the past few years have made significant progress reinventing the basic union paradigm to fit today's service economy and win the public argument that "unions are as important in the new economy as the old."   The transcript of a conference call with 100 child care advocates across the country — explaining how unions might be relevant to overcoming the core dlilemma of early-childhood education, "parents can't afford to pay, teachers can't afford to stay, there's got to be a better way." The transcript also drives home a key point about the flexilibity of unions — unions are a form of collective action, they are workers' vehicle (in this case early childhood educators vehicle) for reshaping their world of work in ways that treat them, and those serve, with dignity and decency.    A Power Point from a conference of Wisconsin early childhood educators that again explores in that concrete context how unions might be the "better way" leading to quality jobs and higher quality education in early childhood.   A classic law review article by our friend and colleague Howard Wial that also drives home the flexibility — and varied forms — of unionism. If you read this article and take it to heart, you will never again conflate unionism with its U.S. industrial union form in factories. Again the fundamental point — unions are a vehicle for collective action by workers to make our capitalism more humane and our democracy more responsive to regular people and the common good.    And, finally, if you are a glutton for punishment, a progress report for an International Labour Organization book on U.S. unions attempts to adapt to the new economy.

People Who Live in Glass Houses Shouldn't Throw Stones

February 23, 2018 - 8:17am

(NOTE: at a future date we plan to address the substance of the op ed referred to below by Anthony Davies and a co-author in more detail.)

So, this is rich: in an op ed critiquing our Pennsylvania Promise free tuition (not free college) proposal, Anthony Davies and a co-author snidely say “we use the term loosely” after describing the Keystone Research Center and Pennsylvania Budget and Policy Center as “think tanks.” 

Why is this rich? Because Davies is the guy who wrote multiple papers for conservative “think tanks“ with flawed statistics claiming to show that states which have not privatized alcohol distribution (like Pennsylvania) have HIGHER traffic fatalities. 

As Mark Price showed, Davies and a co-author manufactured this result by leaving two key variables out of their statistics. 

One missing variable was average vehicle miles traveled. It turns out that the farther you drive on average the more likely you are to have an accident and a fatality. Duh. In the few states that still have state-controlled alcohol distribution -- again like Pennsylvania -- people tend to drive long distances. If you leave average vehicles miles traveled out of the statistics then the variable for "state control" erroneously picks up some of the fatalities associated with driving long distances. 

The second variable Davies and his co-author left out was average per capita income. Turns out that states that control alcohol distribution tend to have lower per capita income. Having lower per capita income results in people having older, and less safe, cars on average. So once again what economists call "omitted variable bias" artificially drives up the estimate of fatalities in states that control alcohol distribution. 

When you fix the statistics, Davies and his co-author's original result reverses: privatized alcohol distribution states have more traffic deaths, properly controlling for other important factors. This makes intuitive sense. States with privatized distribution tend to have more places where people can buy alcohol and they also have a profit motive to sell to people who they shouldn't (people who are under age or have had a few).

Given his track record producing shoddy research that no self-respecting think tank would publish, Davies might not want to throw stones.

STUDY: Teachers in Pennsylvania Are Undercompensated

February 15, 2018 - 5:30pm

The Economic Policy Institute is out today with a new paper authored by Jeffrey Keefe examining compensation for public school teachers in Pennsylvania.  If you are still an avid reader of letters to the editor in your local paper, or perhaps a braver reader of the comment section of the online edition of your local paper, you will not infrequently encounter angry comments about teacher pay being high. Those comments are typically based on bad data or incorrect assumptions.

The Keefe paper carefully compares the wages and benefits of Pennsylvania public school teachers with other full-time workers who have similar characteristics – critically, similar skills and education – and finds that total compensation (wages plus benefits) are 6.8% lower for public school teachers than comparable workers. More troubling, Keefe finds that recently enacted pension changes for new teachers in Pennsylvania (Act 5) will increase the compensation penalty to 10%.

 A growing pay penalty for choosing a career in teaching comes at a particularly bad time, as the number of students graduating from teacher training programs has fallen in recent years by 63%. The wave of teacher layoffs, and school districts choosing not to replace new teachers that followed the deep budget cuts in the first budget of Tom Corbett, seem to have convinced many potential teachers that a career in teaching is not a good option. Now, districts in Pennsylvania seeking to hire great teachers are having difficulty finding qualified candidates. Falling total compensation for teachers is only going to make the teacher recruitment problem more severe.

Proposed Elimination of the Community Services Block Grant (CSBG)

February 13, 2018 - 4:44pm

The following is a guest post from Steven Martinez, Communications Director at the Community Action Association of Pennsylvania:

Today the Trump Administration released its FY 2019 budget proposal, doubling down on last year’s unprecedented proposed cuts. The budget calls for the elimination of three programs critical to America’s working families –  the Community Services Block Grant (CSBG) which helps fund your local Community Action Agency, the Weatherization Assistance Program (WAP), and the Low-Income Home Energy Assistance Program (LIHEAP). CAAP CEO, Susan Moore, said: 

“While we are not surprised by the budget put forth today, we are profoundly disappointed that the Administration has once again chosen to turn its back on the nearly 1.6 million Pennsylvanians (507 thousand children) living in poverty. We are confident that Congress will reject these cuts and provide robust funding for programs proven to lift families out of poverty.”

CSBG continues to serve over 15 million Americans each year (nearly 900 thousand Pennsylvanians) through a delivery network of over 1,000 Community Action Agencies in 99% of U.S. counties. 43 of those agencies are located right here in Pennsylvania. CSBG allows states and local communities to take the lead on combating poverty, tailoring programs and solutions to meet locally determined needs. Community Action Agencies provide workforce development, education, health services, housing support, and other critical bridges out of poverty.

Seth and Rachael Fredericks, from the Lycoming-Clinton Counties Commission for Community Action (STEP) and CAAP 2017 Self-Sufficiency Award winners, were one of the many families affected by the opioid epidemic sweeping across Pennsylvania. Their local Community Action Agency supported their path to sobriety and to financial self-sufficiency. Seth said, “I believe that there are other people like us who really have a desire to change but are held back. If it wasn’t for programs like this, we might never have had a fighting chance.” CLICK HERE to hear directly from Seth and Rachael about the impact their local Community Action Agency had in their lives.

Community Action Agencies are unique agencies in their communities, each overseen by a governing board that represents public and private stakeholders and low-income community residents. While each agency may vary in size and scope, they all share a common mission of fighting poverty and promoting self-sufficiency at the community level. Local agencies respond to short-term crises that can topple a working family into poverty and address chronic conditions that can trap multiple generations in dependency.

CAAP is committed to working with our partners both in and outside of Washington, D.C. to defend low-income Americans. Members of Congress have demonstrated strong, bipartisan support for these vital programs. We are confident that Congress will craft a sensible budget that preserves critical funding and prioritizes America’s working families.

Too many low-income families would suffer if our communities lost their local Community Action Agency. Go HERE to hear directly from just a few of the families PA Community Action supported in 2017 and to meet a few of the leaders who run Community Action Agencies throughout the Commonwealth. 

On President Trump's Infrastructure Proposal

February 13, 2018 - 11:41am

The president has put forward a "plan" for infrastructure spending that identifies no new source of funding, that makes unbelievable assumptions about how much state and private spending can be leveraged by a limited amount of new federal spending and that proposes an end-around of environmental regulations in the guise of streamlining those regulations. 

In response to deep and long ignored needs in Pennsylvania and throughout the country for upgrading our roads, bridges, transit systems, airports and water and sewer works - needs that should be met by new investments that could create tens of thousands good jobs - the president has offered a glittering fantasy with little of the substance necessary to meet those needs. 

The basic problem with the president's approach is that he offers a new means of financing infrastructure projects - public private partnerships - when it is funding, not financing, that is the barrier to infrastructure development. The traditional method of financing infrastructure, generating the upfront money to things like build roads and bridges through issuing government bonds, works well, and there is no reason to think it will not continue to do so. What we are lacking is not a mechanism to finance infrastructure, but a mechanism to fund it, that is to pay back the bonds through some mix of government funding and user fees. Again, this mixture works well and should be used as is appropriate, with the benefits that flow to the public - such as the lower prices for goods and faster economic growth generated by reducing the costs of transportation - paid for by public funding and benefits that flow to private individuals - such as the profits of trucking companies and the producers of goods - paid for by user fees.

Public funding at federal, state, and local levels has been shrinking. And the Trump plan, which only adds $200 billion in new federal funding, is at best a very modest increase in the short term. But because the president's budget also calls for deep cuts to federal funding for existing infrastructure programs - for public transit, Amtrak, and the TIGER program, which has supported innovative local infrastructure projects over the last eight years - it is not clear whether total federal funding will increase at all. 

In addition, it appears that the president's program calls for state and local governments to pick up 80% of the cost of infrastructure projects rather than 20%, as in the past. It is very hard to imagine states that have tenuously balanced budgets, like Pennsylvania, being able to contribute enough to generate the $1 trillion in new infrastructure spending the president hopes to generate. 

While the president touts his private-public approach as a way to reduce the cost of infrastructure projects because it bypasses the requirement that contractors pay the prevailing wage to their workforce, the most likely result of this approach will be to reduce wages for working people, while increasing profits for contractors. 

Finally, the president's proposal to speed up government approval of infrastructure spending is not merely a way to make the approval process faster but appears to set artificial deadlines as way to approve projects without the necessary environmental safeguards. 

This proposal is a public relations scheme, not a serious response to our infrastructure needs. If it accomplishes anything, it will, like the tax cut and health care plans, mainly shift income and wealth from working people and the middle class to the president's friends in big business.

FACT CHECK: Undocumented Immigrants Like the Dreamers Are Not a Drag on State and Local Government

January 27, 2018 - 1:00pm

A political movement that is based on demonizing a group of people needs a demon. So the efforts of the Trump administration to generate anger and hatred toward immigrants, both documented and undocumented, has been combined with repeated claims by the administration and its supporters about the terrible burden immigration creates on the United States. Immigrants have been called rapists and murders and terrorists and have been said to be dragging down our economy and burdening citizens with higher taxes.

That rhetoric has heated up as Congress struggles to pass legislation to restore the DACA program, which protects the Dreamers — undocumented immigrants brought to this country as children — from deportation. It has reached even higher levels as the Trump administration uses the debate over DACA as a bargaining chip to win Congressional support for a border wall with Mexico and radical changes to immigration policy.

Most of those claims have been rebutted, time and again. It is not clear how effective facts can be in tempering hatred. But we intend to do our part by putting the truth before Pennsylvanians.

We begin today with the impact of undocumented immigration on state and local taxes, particularly in Pennsylvania. Those who fear immigration often claim that immigrants are a large burden on state and local governments because they benefit from the services those governments provide but do not pay taxes to support them. That is simply not true

A recent study by the Institute on Tax and Economic Policy (ITEP) shows that the estimated 137,000 undocumented immigrants in Pennsylvania pay our state and local governments almost $135 million in taxes each year. (They pay $11.7 billion in state and local taxes nationwide.)

How is that possible? Well, to begin with undocumented immigrants work hard and their average family income in Pennsylvania is $31,400. While that is more than $20,000 below the average for all families, it is enough to generate substantial tax payments. Undocumented immigrants pay about $64 million in sales taxes in Pennsylvania. They also pay $36 million in property taxes both directly, as 30% of families headed by undocumented immigrants own homes in our state, and indirectly, as property taxes are passed through in the rents paid by those who don’t own their own homes.

Undocumented immigrants also pay $34 million in personal income taxes (PIT) to the state. That may surprise people who think of undocumented immigrants as being paid under the table in cash. But federal laws have forced may undocumented immigrants to secure papers, including Social Security numbers or Individual Tax Identification numbers that allow them to be paid through payroll systems that withhold personal income taxes from their paychecks.

Of course, some undocumented immigrants are paid through channels that do not withhold personal income taxes. Yet, overall, undocumented immigrants pay 7.2% of their income to state and local governments. That is less than the percentage paid by low and middle-income Pennsylvanians (which is 12% for those in the bottom 20% of families and 10% for the middle 20% of families.) But it is far more than the rate paid by the richest 1% of Pennsylvania families, which is 4.2%.

While undocumented immigrants pay a bit less in taxes, they also receive fewer government benefits. Contrary to what the demonizers say, undocumented immigrants are not eligible for federal programs such a Medicare, Social Security, Food Stamps or federal-state programs such as general assistance or Medicaid or CHIP. (We will consider the cost of educating the children of immigrants in future posts and show that, by and large, these costs do not place a large burden on Pennsylvania taxpayers.)

And if we want undocumented immigrants to pay more in taxes, there is a simple solution: give them legal status. ITEP estimates that doing so would bring another $52 million, mostly in personal income and wage taxes, into the coffers of the state and local governments of Pennsylvania and raise the taxation rate of currently-undocumented immigrants almost to the level of middle income Pennsylvanians.

One last point: this entire analysis only looks at what undocumented immigrants themselves pay in taxes. It does not take into account the dynamic effects of undocumented immigration on Pennsylvania’s economy, that is the impact of the consumption of undocumented immigrants on the earnings of other Pennsylvanians and the taxes they pay. Comprehensive studies of the impact of immigration on the American economy have shown that our economy, and thus the taxes raised by federal, state, and local governments, realize benefits from immigration of all kinds.

When it comes to the DACA issue, the first thing we should consider is the moral horror of sending young people brought to this country through no choice of their own “back” to countries they may not even remember, whose language they do not speak, whose culture they do not know, and where they have few connections to other people. That should settle the issue. But for those who worry that a generous policy towards the Dreamers will create an economic burden on Pennsylvania and other states, we can state clearly that the answer is the opposite. Undocumented immigrants pay substantial taxes to state and local governments in Pennsylvania. And offering them legal status will increase the taxes they pay even more.

The Pennsylvania Promise - Affordable College for all Pennsylvanians

January 26, 2018 - 3:04pm

Pennsylvania is barreling towards a future where only the descendants of the well-off will have access to quality higher education. Or perhaps we are already there. See the figure below, which shows high performing, high-income youth are more likely (74%) than high scoring, low-income youth (41%) to complete college (columns in blue):

Those from families with modest means, if they do choose college, will likely graduate riddled with debt that follows them in the decades to come. Take Daniel Le, a sophomore psychology major at Shippensburg University — one the colleges in Pennsylvania’s state system of higher education — and member of Pennsylvania Student Power Network:

I grew up in a poor city (Reading, Pennsylvania), with a poor family. I love going to college but it’s financially destroying my family. I’m $30,000 in debt and I’m not even half way through undergraduate. My mom grew up very poor and never had the means to go to college but when she was 33 she found a way to make it happen. Six years later she graduated with an Associates and a Bachelors. She inspired me to go to college to better my situation and my family’s situation. But that’s not all that is happening. Tuition is digging my family into a new hole. Some days writing a paper or going to class seems like an impossible task when all I can think about is the parent plus loan that my mom had to sign for me to go to college. I get endless feelings of guilt and regret about going to college, something that I’m supposed to feel great about and feel proud of.

Over the last six months, the Pennsylvania Budget and Policy Center (PBPC) and the Keystone Research Center (KRC) have produced several reports documenting the abysmal job Pennsylvania is doing in terms of investing in higher education for our state’s youth. To give you a sense:

  • U.S. News and World Report ranks Pennsylvania dead last for higher education after 35 years of state disinvestment, high levels of student debt and the state’s high tuition and fees.
  • In terms of per capita investment in higher education, Pennsylvania ranks 47th out of 50 states (at $132.44 per capita investment), which is about half of the U.S. national average (at $259.18 per capita).
  • Pennsylvania ranks 40th for the share of adults 25-64 with more than a high school education. Worse, more than half of Pennsylvania’s counties ranked below even the last place state, West Virginia. A large body of economic research shows that lagging educational attainment results in lower wages and incomes for individuals and slower economic growth for regions.

This week KRC and PBPC released a plan to reverse Pennsylvania’s disinvestment in higher education and begin to create a future where higher education and workforce training are more affordable, and therefore more accessible, for residents of our state.

Called the Pennsylvania Promise, the plan:

  • covers two years of tuition and fees for any recent high school graduate (regardless of family income) enrolled full-time at one of the Commonwealth’s 14 public community colleges; 
  • covers four years of tuition and fees for any recent high school graduate with a family income less than or equal to $110,000 per year accepted into one of the 14 universities in the State System of Higher Education;
  • provides four years of grants ranging from $2,000 up to $11,000, depending on family income, for students accepted into a state-related University;  
  • finances the expansion of grant assistance to adults seeking in-demand skills and industry-recognized credentials, as well as college credit.

This plan would make Pennsylvania Promise grants the “last dollar” of tuition and fees remaining after accounting for all other federal, state or institutional grants awarded to a student, similar to plans in New York, Tennessee and Oregon. The plan calls for the establishment of the Office of Income Mobility which would be located within the Department of Education and coordinate strategies with colleges, high schools and local communities to lower barriers to college attendance for high achieving low- and middle-income students.

The Pennsylvania Promise plan also includes potential strategies to fund such legislation, which we estimate will cost the state $1.16 billion. We recommend establishing a special fund to be earmarked for the PA Promise, managed by the Commonwealth. This establishes a direct link between increased taxes and services funded by those increases. See the Pennsylvania Promise plan for more details on potential funding strategies. 

Like most public policies, the Pennsylvania Promise is about our values as a state. Do we want to make college affordable and accessible to young Pennsylvanians regardless of their family’s income? Do we want to ensure poor and middle class youth have access to the American Dream of upward mobility? Do we want our economy to thrive because we invest in the education and training of our future workforce? 

As Daniel Le simply stated: “We need to fix college. We need to save the next generation’s future. Education should not be a privilege, it should be a right.”

PA Leads on Overtime Pay – Where the Governor Can Act Without the State Legislature

January 21, 2018 - 1:28pm

Turns out that Gov. Wolf believes in the 40-hour week. Because he does, about 460,000 lower-paid Pennsylvania salaried workers will soon be on track to receive overtime pay if they work more than 40 hours a week. If their employer doesn’t want to pay overtime, these hard-working members of Pennsylvania’s middle class will get back time with their family, instead of having to work for free. We’re talking here about shift supervisors at a McDonald’s who mostly serve customers, department managers at a Walmart, accountants and para-legals overseen by high-paid executives and partners, team leaders in some factories. Their salary ranges from $24,000 to $48,000 and, if they work 45-50 hours per week, their pay per hour can be $10 or $11 – or less. They hold together many of our businesses, arriving early, staying late, going the extra mile – and too often their employers take advantage of them. (Thankfully, good employers such as Altoona-based Sheetz recognize that salaried workers paid decently will repay their employers in loyalty, productivity and service.)

The Governor stepped up to give lower-paid salaried workers basic fairness because a Texas court and the Trump Administration derailed the Obama Administration’s effort to do the same for 12.5 million workers nationally. The Trump Administration has appealed the court’s December 2016 claim that the Department of Labor does not have the authority to set an overtime threshold. But it has indicated that it will set a much lower threshold than $48,000, a little over $30,000 rather than the current $23,600. That will leave some salaried workers still working for as little as $12-$13 per hour.

Gov. Wolf’s leadership on the overtime rule provides an interest contrast with Pennsylvania’s inaction on the minimum wage. On the minimum wage, every one of our neighboring states has raised its minimum wage above the federal $7.25 per hour. But Pennsylvania is the regional laggard because increasing the state minimum wage requires state lawmakers to act. Since they have not done so, Pennsylvania’s lower-paid workers have not enjoyed a roughly $1,500 per year (if they work full time, full-year) increase in wages enjoyed by lower-paid workers in our neighbors. Our county map of pay trends in a typical lower-wage industry across the seven-state region drives home, which workers have seen little increase in their pay since 2012. Most of them are in Pennsylvania and there’s a big concentration in rural central Pennsylvania. Those counties’ lawmakers should be leading the parade for a higher minimum wage (cue to Mufasa’s voice from The Lion King), “but they’re not.”

In stark contrast to the situation on the minimum wage, Pennsylvania is now a regional – and national – leader on overtime pay for lower-paid salaried workers. It is because Gov. Wolf can raise the overtime threshold on his own, even while state lawmakers sit on their hands. The regulatory process will take some time and provides opportunities for public (get ready!) and legislative input. But unless both chambers of the General Assembly can muster a veto-proof, two-thirds vote to block an increase – which they can’t – and as long as the Governor puts forward a solid rationale for the increase and the overtime threshold chosen (which he will), the Governor’s position will prevail.

New York is also a regional leader on the overtime rule – it already has overtime thresholds that will increase above the Obama threshold (as does California). But Pennsylvania is the first state where a Governor or legislature has stepped up to give salaried workers a long-overdue raise since the Texas Court and President Trump failed to do so. We share the hope of our national partners at the Economic Policy Institute and the National Employment Law Project that Gov. Wolf’s leadership emboldens his peers – got that New Jersey Gov. Murphy? Washington Governor Inslee? And friendly legislatures beyond CA and New York?

As with the minimum wage, and increasingly paid family and medical leave, inaction in Washington D.C. means that states must take the lead on overtime pay to create an economy that works for all.

While the Trump Administration has refused to defend President Obama’s bold attempt to raise the overtime threshold nationally, here’s one thing to get ready for: President Trump increasing the rule from the current $23,600 to slightly over $30,000. He will then call his meager bump “huge” that benefits “many millions” of workers and claim that this shows he, and not President Obama, is the real champion of the middle class. Inoculate yourself and your friends against such nonsense.

The Unnecessary Federal Budget Impasse

January 20, 2018 - 11:34pm

Let’s be straight about the politics of the federal budget. The Republicans control the House, Senate and Presidency, but partly because they are not united and partly because they are short of the 60 votes needed under current practices to move most legislation in the Senate, they are unable to pass a budget without Democratic support. So to pass a full-year budget, Republicans and Democrats must compromise.

The federal government is shut down today because too many Republicans in Congress won’t compromise and because President Trump doesn’t appear to know what he really wants.

Democrats are demanding that their key priorities be included in the budget: restoration of DACA protections for the children of undocumented immigrants who have spent almost all of their lives in the United States; reauthorization of the CHIP program that provides health care for millions of American kids (including over 100,000 in Pennsylvania), and additional funding for community health centers, worker pensions, the growing opioid epidemic, and disaster relief for Americans in Puerto Rico and the Virgin Islands.

None of these Democratic demands are extreme or even especially partisan. By large majorities, American support all of them. A majority of Republicans in the country and the Senate support all of them, and there is a Republican majority in the House for CHIP reauthorization. In the case of DACA, there was no need for the current dispute at all. President Trump didn’t have to revoke President Obama’s executive order on DACA.

So why haven’t Democrats and Republicans in Congress and President Trump reached an agreement on the budget for this year? What is the hold up?

There are two problems. The first will remind us of the situation here in Pennsylvania: An extremist group among Republicans in the House of Representatives are delaying an agreement. They are opposed to a reasonable compromise on DACA. They don’t want to spend more on disaster relief. Many don’t want to spend more on the opioid problem, either. Speaker Paul Ryan has invoked the “Hastert” rule, saying he won’t bring legislation to the floor that is not supported by a majority of the Republicans.

The other problem is President Trump. He is both making demands that Democrats are reluctant to accept and being inconsistent in those demands.

The president’s key demand is to spend $18 billion on a new border wall with Mexico. This is just a waste of money. Illegal immigration from Mexico is at the lowest level since 2010 and in recent years more Mexicans have emigrated from our country than immigrated to it. There is also no reason to think that a wall will do much to stop the illegal immigration that continues.

Still, Democrats have been willing to spend some money for the wall this year. But that leads to another problem. The president, who prides himself on his negotiating skills, can’t seem to make up his mind about what he wants. How far does his demand for a wall go? How much is he willing to back the demands of Republican extremists in the House on DACA as opposed to seeking a compromise agreement? No one really knows because he says one thing one day and another thing the next.

Between the extremism of so many Republican House members and the president’s inconsistency, reaching a compromise agreement on this year’s budget has been far harder than necessary. And that is true even though Democrats have reluctantly acceded to many Republican demands, especially about spending more than they think is necessary on defense and spending something on the border wall. But Democrats are rightly not compromising on policy goals supported by the majority of Americans. 

We need to do right by the Dreamers. We need to reauthorize CHIP. We need more money for disaster relief, community health centers, and opioid addiction. These are not ideological, left-wing demands. They are simply common sense responses to problems almost every American wants to solve.

Unless President Trump and the Republican extremists decide they want to solve them too, this budget impasse and government closure could continue.