September 2, 2010
The Center on Budget and Policy Priorities makes a strong case for letting $40 billion in Bush tax cuts for high-income households expire as scheduled at the end of this year. That $40 billion could instead be redirected to help stimulate the weak national economy.
According to the nonpartisan Congressional Budget Office (CBO), if this money were used for job-creation tax credits, continued federal aid to states and extended unemployment insurance benefits, it would create more jobs and generate more economic growth than simply extending the Bush tax cuts for the top income households in the nation (i.e., those with incomes over $250,000 a year). Why? Because higher income households are more likely to save this extended tax windfall than spend it. What the economy needs right now, however, is more consumer spending.
In fact, “CBO found extending the tax cuts for high-income households to be the worst of all options under consideration for preserving or creating jobs and boosting economic growth while the economic is weak,” the Center on Budget and Policy Priorities notes.
In the near term, the CBO found that some actions would create more economic growth and more jobs per dollar spent than extending the high-income tax cuts. For example:
- A temporary jobs tax credit (a temporary payroll reduction on new hires).
- Extending federal fiscal aid to states to help them avoid bigger and deeper spending cuts. (Congress in fact has recently taken this action, which may provide $430 million for health care and education in Minnesota.)
- Extended unemployment insurance benefits for the unemployed. This provides the greatest “bang for the buck,” as benefits paid out to the unemployed would undoubtedly be injected right back into the local economy in spending by the unemployed to meet basic living needs.
When Congress returns from its summer recess in September, expect a fierce debate over the future of the expiring tax cuts (along with whether or not Congress will extend tax credits targeted to low- and moderate-income working families, such as the Child Tax Credit and the Earned Income Tax Credit). Extending the tax cuts for high-income households is the worst option for spurring economic growth, and would add $1 trillion to the national debt over the next ten years. Congress should allow the Bush tax cuts to expire. In the short-term, Congress should redirect that money toward initiatives that will truly stimulate the economy and help struggling working families. Once the nation’s economy is on more solid footing, the resources can be used to make a dent in the nation’s deficit.
-Steve Francisco
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Economy, Federal Budget, Taxes | Tagged: Congress, federal stimulus, income tax, low-income, Taxes, unemployment, unemployment insurance | 
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Posted by Steve Francisco
July 27, 2010
Last Thursday, U. S. Senate Majority leader Harry Reid announced that he did not have the 60 votes necessary to pass major climate change legislation. This was very disappointing news for those working to pass comprehensive, equitable legislation to address climate change. It is expected that Congress will instead push through a series of smaller bills focused on addressing liability and safety issues related to the BP oil spill and potentially some other less comprehensive energy efficiency and clean energy measures.
This is a loss not only for our environment, but also for low-income populations and people of color. The failure to pass comprehensive climate change legislations means:
- Those who disproportionately bear the negative effects of climate change will continue to be in harm’s way. To learn more about what this means, read how the Red Cross is already working to help vulnerable populations prepare for extreme weather events caused by climate change.
- The anticipated piece-by-piece legislation to address climate change will not provide a revenue stream for funding priorities like consumer relief from energy price increases, training for green jobs for those traditionally without equitable access to livable wage jobs, and dedicated funds to help nonprofits and low-income households afford efficiency improvements and reduce their energy consumption.
This is an important moment for you to speak up on behalf of disadvantaged populations. Let Minnesota’s congressional delegation know that you are paying attention and are disappointed that Congress failed to pass comprehensive climate change legislation at this critical time.
- If your representative in the U.S. House voted in support of The Clean Energy Jobs and American Power Act (Congresswoman McCollum and Congressmen Ellison, Oberstar, Peterson and Walz), thank them for supporting comprehensive climate legislation and ask them to continue working for viable solutions that consider the impacts on vulnerable populations.
- If your representative in the U.S. House voted against The Clean Energy Jobs and American Power Act (Congresswoman Bachmann and Congressmen Kline and Paulsen), let them know that you are disappointed in their vote and the failure of Congress to address climate change as a serious issue that will continue to bring harm to our environment and to vulnerable populations.
- Tell Senators Franken and Klobuchar that you are disappointed in the U. S. Senate’s inability to pass comprehensive climate change legislation, but that you appreciate their willingness to champion climate equity issues. Ask them to keep fighting for solutions to climate change that consider the impacts on vulnerable populations.
Find out who represents you and call their offices today! For more information on climate change and implications for vulnerable populations, visit the Minnesota Budget Project Climate Change Resource Page.
-Leah Gardner
Leave a Comment » | Action Opportunity, cap and trade | Tagged: climate equity, climate-change, Congress | Permalink
Posted by leahgardner
July 9, 2010
Minnesotans have received approximately $2.6 billion in direct federal assistance from February 2009 through May 2010 as a result of the American Recovery and Reinvestment Act (ARRA), according to the Center on Budget and Policy Priorities. The direct assistance was provided through increased benefits for existing federal programs, through new tax credits and through direct cash payments. The collective impact of this direct assistance has been to put additional income into Minnesotans’ pockets to help struggling working families avoid falling into poverty and to save jobs in our local economy through increased consumer spending. Most economists agree that increased consumer spending is the key to a sustained economic recovery.
Here’s a breakdown of how much direct assistance has been received by Minnesotans through tax credits or direct cash assistance through May 2010 thanks to the Recovery Act:
1. Making Work Pay Tax Credit – $1.4 billion for Minnesotans. The Recovery Act created a new refundable tax credit equal to 6.2 percent of a worker’s earned income in 2009 and 2010. The vast majority of wage earners will benefit from this tax credit, receiving a maximum credit of $400 for an individual or $800 for a married couple. Individuals earning over $75,000 or married couples earning over $150,000 receive a smaller credit. No tax credit is available to individuals earning over $95,000 or married couples earning over $190,000.
2. Food Stamps - $109 million for Minnesotans. The Recovery Act provided a nearly 14 percent temporary increase in the maximum Food Stamp benefit. This translated into the average participating household getting $40 to $50 more each month beginning in April 2009. Also, the time limit on how long childless adults could receive Food Stamps was suspended.
3. Unemployment Insurance (UI) Benefits – $232 million for Minnesotans. The Recovery Act temporarily increased the regular Unemployment Insurance benefit by $25 per week.
4. Extended Unemployment Compensation (EUC)- $672 million for Minnesotans. The Recovery Act , as well as other legislative action, provided additional weeks of unemployment benefits to people who would otherwise have exhausted their benefits.
5. $250 Economic Recovery Payments – $212 million for Minnesotans. The Recovery Act included a one-time payment of $250 to anyone receiving Social Security, Supplemental Security Income (SSI), Railroad Retirement or disabled veterans’ benefits. This one-time payment was distributed mostly in May 2009.
While we have a long way to go to return to a robust, vibrant and growing economy here in Minnesota, consider how much worse off many Minnesotans and our economy would be today if not for the $2.6 billion in tax credits and direct assistance made possible by the Recovery Act. The money is flowing to struggling families and individuals who spend it in our communities, helping to spur economic recovery.
To keep the economy on the right track, Congress should extend additional aid to individuals (such as by extending Unemployment Insurance benefits) and to states (such as through the extension of the enhanced federal matching rate for Medicaid). One point seems clear: the federal government has a powerful and significant role to play in helping struggling Minnesotans survive the continuing economic recession.
-Steve Francisco
Leave a Comment » | Economy, Federal Budget | Tagged: ARRA, Congress, food stamps, income tax, unemployment insurance | Permalink
Posted by Steve Francisco
June 3, 2010
Congress is considering whether to provide states with additional funding for health care, helping state governments at a time when most are facing budget shortfalls and considering reductions in health care and services. Unfortunately, the opportunity to protect access to health care for many Minnesotans may be slipping away.
Last week, Democratic leaders in the U.S. House of Representatives agreed to strip out a key provision extending the enhanced federal matching rate for Medicaid, known as FMAP, from a larger bill to extend unemployment insurance. (A provision extending subsidies that help the unemployed maintain their health care coverage through COBRA was also dropped from the bill). That bill passed the House last Friday and awaits Senate action as early as the week of June 7th. A key question is whether Senate Majority Leader Harry Reid will agree to add the extension of federal aid to the states to the Senate version of the bill.
Last year, Congress passed the American Recovery and Reinvestment Act (ARRA), which temporarily increased the federal share of Minnesota’s Medicaid costs from the regular 50 percent up to roughly 60 percent. But this increased matching rate is set to expire at the end of this year. Extending the matching rate would bring Minnesota an estimated $408 million, funding that could protect health care and other services as our state continues to face budget shortfalls.
The focus now shifts to the U.S. Senate, which is expected to take up the Unemployment Insurance extension bill when it returns to session the week of June 7th.
It is highly unlikely that Congress would pass a separate bill to extend federal aid to states for Medicaid and so the extension of aid must be included in some other “must pass” bill, such as the bill to extend expiring Unemployment Insurance benefits.
Both of Minnesota’s U.S. senators have been supportive of extending the federal aid to states for Medicaid. Senator Franken has been particularly outspoken about the need to extend additional aid to the states and cosponsored a separate bill. Hopefully, the Senate will move quickly to add the extension of health care funding to the Unemployment Insurance bill when they return from their recess next week.
-Steve Francisco
Leave a Comment » | Federal Budget, Health Care | Tagged: COBRA, Congress, FMAP, medicaid, unemployment insurance | Permalink
Posted by Steve Francisco
May 14, 2010
The Minnesota Budget Project is seeking organizations to join our sign-on letter to the Minnesota Congressional delegation in support of recent improvements to the Child Tax Credit and the Earned Income Tax Credit. Both of these tax credits are vital in helping low- and moderate-income Minnesota families make ends meet.
Last year, as part of the American Recovery and Reinvestment Act (ARRA), Congress made it easier for families to qualify for the Child Tax Credit. Approximately 156,000 Minnesota children have been helped by the improvements to the CTC, which brought an additional $126 million to Minnesota families. But unless Congress acts to extend these improvements, they will disappear at the end of this year.
Similarly, the Earned Income Tax Credit (EITC) now includes a new “third tier” that allows families with three or more children to receive a larger tax credit. There is also an improvement for some married couples. Approximately 102,000 Minnesota households have benefitted from these improvements to the EITC that have also brought an additional $51 million to Minnesota families. But again, unless Congress acts, these improvements will disappear at the end of 2010.
Congress will likely vote on extending a package of middle-income tax cuts some time in the next few months. It is important that our Minnesota Congressional delegation hear from you to urge them to also extend these improvements to the CTC and EITC that help low- and moderate-income working families. The deadline for joining our letter is noon on Friday, May 21.
-Steve Francisco
2 Comments | Taxes | Tagged: child tax credit, Congress, earned income tax credit, EITC, federal, federal taxes | Permalink
Posted by Steve Francisco
March 3, 2010
The Minnesota Budget Project has been closely following legislation to address climate change. Low-income populations will be disproportionately impacted if nothing is done about climate change, but these same households will also be impacted harder by price increases resulting from efforts to stop climate change. It is important, therefore, that any climate change legislation protect low-income households from price increases and make sure that they have access to green jobs, home weatherization and other opportunities.
Since the U.S. House passed the American Clean Energy and Security Act in June of 2009, we have all been waiting to see what action the Senate would take. There have been a variety of proposals floated, including cap-and-trade, cap-and-dividend and other ideas somewhere in between. Our allies in Washington D.C. have indicated that the Senate is working to put a bi-partisan proposal in motion within the next few weeks, so the time to influence that bill is now.
Please join the Minnesota Budget Project – and other organizations from across the country – in letting the Senate know that there is broad nationwide support for strong and fair climate change legislation.
Call your Senators during the “72 Hours for Clean American Power” campaign running now through Thursday, March 4th. This is our opportunity to remind our Minnesota Senators that there is a diverse community supporting their efforts to pass comprehensive climate change. However, to make that legislation fair, the bill must provide low-income consumer relief and access to economic opportunities like energy efficiency improvements and green jobs.
Call Senator Klobuchar (202-224-3244) and Senator Franken (202-224-5641) on Wednesday or Thursday to be a part of the “72 Hours for Clean American Power.” If you miss that window, your call is still important. For more information, including phone numbers and sample call language, visit the Minnesota Budget Project climate change resource page.
-Leah Gardner
Leave a Comment » | Action Opportunity, cap and trade | Tagged: cap and trade, climate-change, Congress, federal, senate | Permalink
Posted by leahgardner
March 2, 2010
The state’s February economic forecast reveals that there have been small changes in the state’s budget situation since the last forecast was released in December. Minnesota’s budget deficit has dropped slightly for the current biennium, from the projected $1.2 billion down to $994 million (a change of $209 million). However, this decline doesn’t necessarily mean good news for the state. The forecast also finds that projected deficit for the FY 2012-13 biennium has increased slightly, from $5.4 billion to nearly $5.8 billion. (You can view the February Forecast documents on the Minnesota Management and Budget web site).
What can we learn from this forecast? Basically, not much has changed since last year, so we can’t hope that an improving economy will solve the state’s budget problems. Policymakers will need to make the tough choices to balance the budget now, and in the future. But there are a couple of things they should keep in mind.
Minnesota families are still struggling. State economist Tom Stinson pointed out that the forecast predicts that employment in won’t reach pre-recession levels until early 2013. State budget decisions have a real impact on the services that help families stay afloat in a bad economy. Keep in mind, struggling Minnesotans aren’t just feeling the impact of budget cuts this year, or the impact of budget cuts and unallotments last year, but the cumulative effect of the budget cuts we have been experiencing nearly every year since large deficits first appeared in 2003.
We need a balanced approach to solving this deficit problem. Spending cuts will be part of the solution this session, but the only way to lessen the burden on the Minnesotans hit hardest by the recession is to ensure that revenue increases will be part of the plan too. With the state facing a $5.8 billion deficit in the next biennium (nearly $7 billion with inflation), it is irresponsible to continue to balance our budget through spending cuts and one-time resources alone. In times like these, everyone needs to contribute to solving the deficit in the way they are able to. For some, it’s the loss of services, for others, it’s an increase in taxes. And Minnesota wouldn’t be alone – a majority of states in the nation have found a way to balance their budgets through a combination of spending cuts and revenue increases.
What comes next? The Governor will need to revise his supplemental budget proposal to reflect the updated forecast numbers. One important issue will be the role of federal dollars in any budget solution. If you remember, the Governor’s initial budget proposal counted on $387 million in enhanced federal Medicaid funding (about one-third of his solution). Congress, however, had not yet passed any bill providing the states with federal fiscal relief and the Governor did not offer any plan for how to balance the budget if Minnesota didn’t get the $387 million.
Since then, Minnesota has learned it will receive an additional $83 million health care related dollars from the federal government (these dollars were incorporated into the February Forecast and contributed to the decline in the size of the deficit). However, Congress has yet to pass the new round of federal stimulus that the Governor’s budget is counting on. We strongly support the passage of federal fiscal relief for the states and we hope to see the Governor articulating the importance of Congress acting quickly on this. However, we must recognize that action by Congress may not come in time to impact the budget decisions policymakers need to make this session. Given the importance of coming up with a solid plan for solving the state’s budget deficit, we’ll be looking for the Governor’s revised budget proposal to include a detailed contingency plan for how the state would balance the budget if the federal dollars do not materialize.
-Christina Wessel
Leave a Comment » | Budget Process | Tagged: budget deficit, Congress, February Forecast, fiscal relief | Permalink
Posted by Christina Wessel
February 11, 2010
The Minnesota Budget Project has been following the climate change debate for some time. Low-income populations will be disproportionately impacted if nothing is done about climate change, but these same households will also be impacted harder by price increases resulting from efforts to stop climate change. It is important, therefore, that any climate change legislation protect low-income households from price increases and make sure that they have access to green jobs, home weatherization and other opportunities.
We thought it was time for a little update on what is happening with climate change legislation.
In the U.S. Congress:
- The U.S. House passed a cap-and-trade bill last June called The American Clean Energy and Security Act. The bill set aside the revenues necessary to target consumer relief to the lowest-income 20 percent of the population. Our main recommendation for improving the bill was to extend relief to moderate-income households.
- Last October, the U.S. Senate proposed a similar cap-and-trade bill called the Clean Energy Jobs and American Power Act which has passed through the Environment and Public Works Committee. In its present form, the bill falls short of fully funding low-income consumer relief. As the bill heads towards the Finance Committee, we will continue to ask for reallocation of revenues to fully fund relief for at least the lowest-income households.
- An alternative to cap-and-trade was introduced in the U.S. Senate in December by Senators Maria Cantwell (D-WA) and Susan Collins (R-ME). The Carbon Limits and Energy for American Renewal Act (CLEAR) Act proposes a cap-and-dividend approach to reducing carbon emissions. This bill would provide consumer relief on a per capita basis, using 75 percent of revenues to fund dividends. It appears that this level of resources would more than mitigate cost burdens for low-income households. Here is a two page summary and a link to the full text.
- In December Senators John Kerry (MA), Joseph Lieberman (CT) and Lindsey Graham (SC) presented a “Framework for Climate Action and Energy Independence” to inform the debate on cap-and-trade in the U.S. Senate and gain bi-partisan support. You can read their 5 page outline here. In the President’s State of the Union address in January, Obama seemed to open the door to many of their interests while pushing for a comprehensive climate bill.
On the international scene:
- The 15th Conference of the Parties (COP 15) brought world leaders together in Copenhagen last December to discuss international commitments to address climate change. Many anticipated this meeting would nudge the U.S. Congress toward passing legislation to address climate change. A short agreement called the Copenhagen Accord was created - its influence on U.S. policy remains to be seen.
Unfortunately, it is still unclear what will happen next on climate change or how soon Congress might act to pass legislation. We will keep you posted as we learn more.
We also have a new climate change resource page where you can find our written materials on the basics of cap-and-trade and the importance of low-income consumer relief, the latest policy updates on climate change legislation, and resources and program information regarding consumer relief, green jobs, energy efficiency and weatherization. You will also find more information about environmental justice concerns and local programs and partnerships working to address climate change.
-Leah Gardner and Julia Jackson
Leave a Comment » | Environment, Poverty, cap and trade | Tagged: cap and dividend, cap and trade, climate-change, Congress, copenhagen | Permalink
Posted by leahgardner
December 21, 2009
The House and Senate are in the process of passing a comprehensive plan for reforming the health care system. But regardless of what Congress does in the coming months, U.S. health care costs will continue to rise. The question is, what do we get in return for our investment?
A recently-released report from the Urban Institute highlights the costs that await us – both financial and human – if health care reform fails. The Cost of Failure to Enact Health Care Reform: Implications for States said without reform, Minnesota’s uninsured rate and health care spending would continue to grow significantly in the next ten years.
The Urban Institute report analyzes how current health care policies would affect public and private insurance rates state by state, for non-elderly residents. Researchers created three scenarios using different assumptions about future unemployment rates, wage increases and health care costs. Here is what it projects if no reforms are passed:
- Even under the best-case scenario, 34 states, including Minnesota, would have at least a 10 percent increase in the number of uninsured people by 2019.
- By 2019, the number of uninsured Minnesotans would increase somewhere between 58,000 and 136,000.
- In Minnesota, Medicaid and the Children’s Health Insurance Program (SCHIP) costs would increase somewhere between $2.5 billion (67 percent growth) and $4.8 billion (128 percent) by 2019.
- Uncompensated care by Minnesota health care providers would rise between 58 and 102 percent, or as much as $705 million in the next ten years.
The Urban Institute study recognizes that health care reform would be more costly than staying the course. Reform plans are estimated at approximately $900 billion over 10 years (although current plans include provisions to pay for the reform and reduce the deficit). Yet reform would extend health care coverage to many more people, reduce uncompensated care costs and reduce spending for a large number of lower income families. The House-passed bill would extend health insurance coverage to 36 million uninsured Americans.
While reform is costly, the Urban Institute report said, “often lost in the debate are the likely changes in coverage and costs if no reform were enacted.”
-Scott Russell
Leave a Comment » | Health Care | Tagged: Congress, health care reform, medicaid, Urban Institute | Permalink
Posted by Scott Russell
November 30, 2009
In early November, the Senate climate change bill (the Clean Energy Jobs and American Power Act) made its way through the Senate Environment and Public Works Committee. Here at the Minnesota Budget Project, we asked Minnesotans to contact our own Senator Amy Klobuchar, who sits on this committee, to ask her to maintain and strengthen the low-income consumer relief provisions related to the cap and trade system. Unfortunately, there was a setback in terms of fully funding consumer relief, and we want to update you on what changes were made and where the bill is headed next.
While the House bill provided full relief for low-income consumers, committing 15 percent of the total emissions allowance value, the Senate version has decreased the overall amount of funds due to deficit reduction requirements. Although the bill still says it provides 15 percent for consumer relief, it is 15 percent of a smaller pot of money. In comparison to the House bill, the Senate bill actually ends up allotting 12.6 percent of the previous total allowance value according to the Center on Budget and Policy Priorities. For more information on the Senate climate bill you can read their full report on the latest markups.
Although the Senate may not be looking at the Clean Energy Jobs and American Power Act again until early 2010, now is the time to get involved.
The Minnesota Budget Project is hosting two events this week to bring people together to talk about why climate change is a concern for low-income communities and how proposed solutions can create new opportunities. These Convening on Climate Change events are free and will take place in Duluth on December 2nd, and Mankato on December 3rd. You can find the details and RSVP for these events online.
Now is also a great time to contact your Senators or plan a visit for when they are home for the holiday break. We suggest the following simple talking points:
- Provide full protection to low-income households and extend additional relief to moderate income households by increasing the allowance revenue dedicated to direct consumer relief. At a minimum, dedicate the same amount of revenue as the House bill did—using 15 percent of total allowance revenue.
- Redirect allowances currently going to utilities, as needed, to fund direct consumer relief.
- Provide additional funds for the Low-Income Home Energy Assistance Program (LIHEAP) to provide energy assistance to low-income consumers who face above-average cost burdens, risking utility shut-offs or other hardships.
Another reason to act now is because we expect discussion to heat up with the upcoming COP15 international conference on climate change taking place in Copenhagen in December. Find out more online at the COP15 website.
-Leah Gardner (with Julia Jackson, our intern working on climate change)
Leave a Comment » | Action Opportunity, cap and trade | Tagged: climate-change, Congress, consumer relief, low-income | Permalink
Posted by leahgardner
