Tag Archives: Center on Budget and Policy Priorities

Recession Over? Some Americans Haven’t Gotten the Memo

In case you missed the news, the recession ended in 2009. Some members on a panel of economists are now disputing that fact, to the surprise from politicians and mainstream media who long ago declared the greatest economic crisis of our time dead and gone, and are merely bickering over precisely when it dropped off the twig: Was it in mid-2009? Before then? After? 

Of course, some people just refuse to get with the program, insisting that with a national unemployment rate hovering around 10 percent , the recession isn’t really over. And that for older people dependent on deep-sixed 401ks, it most likely will never be over. People who are unemployed and on food stamps don’t think it’s over. People underemployed and still looking for more work are not receiving any trickledown. And for those lucky enough to have been receiving unemployment insurance, who now find it running out and still can’t find a job, things don’t seem to have materially improved. 

The Center on Budget and Policy Priorities, the Washington,D.C.-based think tank with a liberal bent, recently released a report that offers a different slant on this subject: 

The long-term unemployment rate — the percentage of people in the work force who have been out of work for over half a year and are still looking for a job — reached an unprecedented 4.3 percent of the labor force in March (see the chart). Yet Congress has allowed the Recovery Act measures that provide additional weeks of unemployment benefits and subsidized COBRA health insurance coverage for unemployed workers to lapse. Opponents’ arguments that these measures should not be extended unless they are paid for with cuts in other spending do not withstand scrutiny. Meanwhile, delay imposes unnecessary hardship on the long-term unemployed and weakens the economic recovery. 

Although there are growing signs that the economy is in the early stages of a recovery, unemployment remains very high, and the economy is not running on all cylinders. Demand for goods and services remains far below what the economy is capable of producing, and the rate of job creation anticipated over the next several months will represent only a small start toward restoring the 8.2 million jobs lost since the recession started. (That loss essentially erased all of the jobs created between 2003 and 2007 in the economic recovery that followed the previous recession.) 

Sam Smith over at prorev.com calls attention to another factor reported by Air Force Times

Disturbing new statistics from the Labor Department show that one in three veterans under age 24 is unemployed – and that the unemployment rate for Iraq and Afghanistan veterans has jumped to 14.7 percent, half again as high as the national employment rate of 9.7 percent.The March unemployment rate of 30.2 percent for veterans aged 18 to 24 is a big jump from February’s figure of 21.7 percent, although it may be partly the result of a small sample used by the Labor Department in determining unemployment, said Justin Brown, a labor expert for Veterans of Foreign Wars. 

Then, there’s this from Black Agenda Report:

Official labor statistics show Black unemployment rose to 16.5 percent in March, up from 15.8 percent the month before, while white joblessness remained steady at 8.8 percent. At least a score of major Black population centers now register official unemployment levels nearing 25 percent, comparable to the depths of the Great Depression – and it took World War Two to pull the economy out of that pit.

With 5.5 job seekers for every actual job opening, according to the latest data, employers can discriminate in favor of whites to their hearts’ content, while continuing to lower wages and working conditions. It’s easy to casually fire Black people and even easier not to hire them. We will soon find out if a statistical “point of no return” in unemployment levels exists, from which communities cannot recover absent extraordinary assistance by a caring government.

Health Care Reform Will Not Wreck the Budget

Perhaps the hysteria surrounding the new health care reform will soon begin to die down. But even then, what will remain is a huge, complicated piece of legislation. To get to its heart, you really have to proceed slowly, step by step, looking into different nooks and crannies. And you have to decide which guides you trust.

The Center on Budget and Policy Priorities, the liberal-minded Washington think tank, has been tracking the changing legislation as it made its way through Congress. So it knows something about the behind-the-scenes manuevering as well as what’s gone on in public. More importantly, the Center is the one think tank which has maintained a firm historic grasp of the shredding of the nation’s safety net over the years, closely paralleled by the growth in income disparities and numbers of poor and struggling Americans. It is conscious of how this sort of legislation actually affects people.

Note to Tea Party adherents: This is not some pinko outfit. It was started by people around Jack and Bobby Kennedy and managed by  public servants who actually ran government programs, and who call on others with the same backgrounds to help figure out what’s what. CBPP has proven year after year to be thoroughly credible. At least, that’s what I think, and that’s why I pay attention to what it has to say and cite it a fair amount of the time.

A new report from CBPP on the budget impact of the health legislation begins as follows:

Despite an official estimate by the Congressional Budget Office (CBO) to the contrary, some critics of the new health reform legislation — such as Rep. Paul Ryan and former CBO director and McCain campaign adviser Douglas Holtz-Eakin — charge that it will not reduce federal budget deficits because it relies on budgetary gimmicks or games. Careful analysis of these charges shows them to be misleading or inaccurate. They do not withstand scrutiny.

CBO estimates the legislation will reduce the deficit by $143 billion over the ten years from 2010 through 2019.  In the following decade, 2020 through 2029, it estimates that the legislation will reduce the deficit by an estimated one-half of 1 percent of gross domestic product (GDP), or about $1.3 trillion. CBO also anticipates that health reform “would probably continue to reduce budget deficits relative to those under current law in subsequent decades, assuming that all of its provisions continue to be fully implemented.

The report goeds on to examine the specific claims–i.e. falsehoods–about the legislation in detail. In particular, it debunks attempts at fearmongering among older people, with claims that the reform bill threatens Social Security. I’ve included some highlights, but you can find the full report here.

Claim: Health reform covers up long-term deficit increases by front-loading revenues and back-loading spending.

Fact: Health reform will reduce deficits in the legislation’s second ten years and in subsequent decades.

In claiming that health reform front-loads revenues and back-loads spending, critics selectively cite just a few provisions and fail to consider the legislation as a whole. The assertion that short-term gimmickry covers up long-term deficit increases is flatly contradicted by CBO’s assessment that the legislation will reduce the deficit in its second ten years and in subsequent decades.

Claim: The legislation uses revenues from Social Security and premiums from long-term care insurance to offset the cost of health reform.

Fact: Health reform reduces the deficit even without counting long-term care insurance premiums and additional Social Security payroll tax collections.

CBO and the Joint Committee on Taxation have concluded that the health reform legislation will reduce employer spending on health insurance, in part because the new excise tax on high-cost insurance plans will lead employers to shift some employee compensation from health insurance to cash wages. Workers will pay Social Security payroll contributions and income taxes on the additional wages.

The legislation also establishes a new, voluntary program of long-term care insurance, called the CLASS Act. Benefit payments from CLASS will be fully financed by premiums that beneficiaries pay and interest earnings. In its early years, as the program starts up, premium collections will substantially exceed benefit payments.

Congressional leaders crafted the health reform bill so that it would be fully paid for without relying on these additional Social Security payroll contributions or the CLASS Act premiums. The CBO estimate clearly shows that if one excludes the net revenues of $29 billion from Social Security contributions and $70 billion from CLASS Act premiums, health reform still reduces the deficit by $44 billion over the first ten years.

Obama’s New Health Care Plan

Readers whose heads already are spinning in an attempt to figure out the President’s new health care reform scheme might start with these basic facts: The plan essentially relies on middle-class tax cuts and supposed new-found competition through a system of exchanges along the lines now offered federal employees.

Of course, people with no health insurance often don’t have the insurance because they don’t have the money to buy it. These same people would need cash to purchase insurance, not tax credits on their nonexistent or drastically reduced income. And then, too, this exchange system and its supposed beneficial competition doesn’t mean lower costs. It just adds mind boggling confusion over what policies to pick. The exchange is like having to pick through a vast assortment of candy in a vending machine. Is a traditional Hershey bar a better deal than a bag of M&Ms?

Finally, it should be remembered the federal employees are nowadays  paying more for insurance, not less. Is this just another version of the game of smoke and mirrors the Congress and Obama administration are laying on us?

Nonetheless, some think the Obama plan spells real change–at least, enough to make it worth supporting.  Robert Greenstein,who heads the Center on Budget and Policy Priorities, a liberal Washington, DC-based think tank that tracks social safety net issues, released a statement this afternoon in support of the president’s  plan. Greenstein Makes these points:

  • It makes insurance more affordable than under the Senate bill for families and individuals with incomes… between $29,000 and $88,000 for a family of four. Most people with incomes below 133 percent of the poverty line would qualify for Medicaid, which does not charge premiums and requires only modest co-payments.
  • It extends important consumer protections to existing employer-based and individual market plans — for instance, giving enrollees the option of keeping their adult children covered under their policy until the children reach age 26, prohibiting annual and lifetime benefit limits, and, by 2018, requiring coverage of preventive services without co-payment charges.
  • It completely closes the gap in Medicare prescription drug coverage (the “doughnut hole”) over the next decade.
  • It fixes shortcomings in the Senate bill’s excise tax…..the vast majority of plans would not face any tax. 
  • It strengthens oversight of insurance companies, makes the “playing field” more level between firms that offer insurance and those that don’t, contains stronger mechanisms to reduce Medicare overpayments to insurance companies, adds new policies to fight fraud, waste, and abuse in both Medicare and Medicaid, and closes several egregious corporate tax loopholes.
  • It offsets the loss in revenue (relative to the Senate bill) from these excise tax changes by broadening the base of the Medicare tax — that is, by applying the tax to capital gains, dividend, and other investment income received by people with incomes of over $250,000 a year. This raises substantial revenue while affecting only about the top 2 percent of Americans. 
  • It increases federal financial support for state Medicaid programs and makes that support more equitable across the states.

You can read the full statement here.