Week Ending January 15, 2016
Congressional Hearing on Puerto Rico’s Economic Crises
On January 12, Senate Minority Leader Harry Reid (D-NV) wrote to Senate Majority Leader Mitch McConnell (R-KY) to propose a bipartisan Senate Task Force on Puerto Rico, composed of six to eight Senators, to develop a reasonable solution to the Commonwealth’s economic crisis by the end of February. Sen. McConnell has not responded.
On the same day, the House Subcommittee on Energy and Mineral Resources held a narrowly-focused hearing entitled Exploring Energy Challenges and Opportunities Facing Puerto Rico. The committee’s Republican leaders noted their committee lacks jurisdiction over bankruptcy and restructuring Puerto Rico’s debt.
Similarly, it lacks jurisdiction to address other needed federal assistance for Puerto Rico, such as parity with states for funding Medicaid, Earned Income Tax Credits (EITC) and Child Tax Credits (CTC).
Chairman Rob Bishop (R-UT) said “arguments being made that enacting Chapter 9 for Puerto Rico without broader fiscal reform are naïve” and that energy provisions would need to be part of any related legislative package.
AFSCME continues to strongly advocate for Congress to enact legislation to address these issues before Puerto Rico’s fiscal problems worsen and default spreads. Another hearing is scheduled in the House Natural Resources Committee on January 26 that will focus on potential oversight or a control board. This hearing is more likely to address debt restructuring and bankruptcy issues.
President Obama’s Final State of the Union
President Obama delivered his final State of the Union address to Congress and the nation this week. The president focused on his vision for the future, which included the importance of unions in building a strong economy: “Middle-class families are not going to feel more secure because we allowed attacks on collective bargaining to go unanswered.”
From the AFSCME blog on the speech (http://www.afscme.org/blog/the-state-of-our-union-afscme-strong): “Those words, though brief, tell volumes about the importance of strong unions in building the middle class and why we need to stand strong in the face of such attacks coming from Wall Street and corporate interests that are more concerned, as President Obama noted, about their quarterly earnings than improving the wages of hard-working people who help them make those profits.”
The president also addressed workers’ retirement security, saying: “Social Security and Medicare are more important than ever; we shouldn’t weaken them, we should strengthen then.”
The president detailed many of the successes of his presidency, which include expanding health insurance, sustaining job growth, stemming the threat of Ebola, and bringing Osama bin Laden to justice. He also discussed using his remaining time as president to address pressing current challenges such as curbing gun violence, fighting ISIL and foreign policy threats, and creating a cleaner and safer environment
In discussing the economy, he pushed back on those peddling doom and gloom, saying: “The United States of America, right now, has the strongest, most durable economy in the world.” As he acknowledged persistent wage inequity he cited the longest streak of private-sector job creation in history, the auto industry’s best year ever, and 14 million new jobs. “Anyone claiming that America’s economy is in decline is peddling fiction,” he said.
He also renewed his calls for an increase in the minimum wage, a new war on cancer, and immigration reform. In summation he said: “We’ve made progress. But we need to make more.”
Hillary Clinton Proposes Tax Fairness for Multi-Millionaires
Hillary Clinton recently announced new federal tax proposals to ensure multi-millionaires pay their fair share. First, she proposed a "Fair Share Surcharge," which would impose a four percentage point federal tax on annual earnings above $5 million. This is estimated to raise taxes on only about 2 of every 10,000 taxpayers. Second, she reiterated her support for a minimum federal tax rate of 30% on those annually earning above $1 million.
This is typically labeled the "Buffett Rule," named after Warren Buffett who famously said millionaires should not pay a lower tax rate than their secretaries. Third, she would close egregious tax loopholes that allow multi-millionaires and their lawyers to exploit the tax code's gaps and ambiguities.
For example, she would close the loophole on "carried interest," which allows private equity, hedge funds, and similar Wall Street fund managers to pay much lower tax rates on their earnings. She also would raise tax rates on capital gains from short-term stock trades.
Fourth, she would reform the estate tax on multi-millionaires by returning it to the more progressive rules that applied in 2009 that had higher tax rates and fewer exemptions.
AFSCME supports her proposed tax reforms and loophole closures, which are expected to raise an estimated $500 billion during the next decade that could be used for domestic investments and job creation.
GOP Presidential Candidates’ Poverty Solutions Would Harm More Than Help
Last Saturday, House Speaker Paul Ryan (R-WI) moderated a forum for GOP presidential hopefuls to talk about poverty. Six candidates participated, although the top two contenders – Donald Trump and Ted Cruz – were not there.
The consensus view was reached by participants that poverty is largely the fault of federal government programs, which in their view foster dependency and stop people from looking for jobs. Their solution is to convert the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) and other dependable safety net programs that expand when poverty grows, into a “block grant” to states. Under this scenario, states would receive a fixed amount of federal funding that would not increase even when need explodes, as it did during the recent Great Recession.
This would leave cash-strapped states and local governments to decide between pulling funds from schools, law enforcement, infrastructure and other key priorities to meet basic nutritional needs, or allow very low-income families – including millions of children – to go hungry. Instead of proposing policies that will exacerbate poverty, the GOP presidential candidates and congressional leadership should support policies that tackle the unprecedented, growing concentration of wealth at the top that harm everyone else.
The top 1% and profitable corporations should be required to pay their fair share of taxes and no longer be allowed to use loopholes that keep their taxes low. A fairer tax system would not only provide additional resources for SNAP and other federal anti-poverty safety net programs, it would also expand the shrinking middle class.
Legislation Threatens Federal Employees’ Workplace Protections
Federal workers’ current workplace protections would be significantly weakened by legislation passed on January 12 by the House Committee on Oversight and Government Reform. The committee voted 20 to 16 along party lines to approve Rep. Ken Buck’s (R-CO) H.R. 3023, which would lengthen most federal workers’ probationary period from one to two years. Furthermore, this probation would start after certain training periods are completed and licenses obtained.
The committee earlier voted on party lines to reject two helpful Democratic amendments to replace the bill with a report on the issue and affirmation of a one-year probation period. The committee also approved by voice vote Chairman Jason Chaffetz’s (R-UT) amended Official Personnel File Enhancement Act (H.R. 4360), which would require a federal agency to record any adverse findings from a resolved investigation in a former employee’s official personnel file.
Chairman Chaffetz withdrew the harmful The Administration Leave Reform Act (H.R. 4359), which would set a 14-day limit for a federal employee to serve administrative leave for reasons related to misconduct or poor performance. AFSCME opposes these three bills because they would weaken sensible safeguards protecting federal workers.
The committee approved by voice vote the Government Neutrality in Contracting Act (H.R. 1671), which would repeal President Obama’s Executive Order 13502 that provides agencies with the authority to require “project labor agreements” on federal government construction projects. AFSCME opposes this bill.
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