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Week Ending July 25, 2014

Rep. Ryan’s Anti-Poverty Plan a Sham

This week, House Budget Chairman Paul Ryan (R-WI) released his plan, “Expanding Opportunity in America,” ostensibly to combat poverty.  While some of his proposals contain positive buzz words like innovation, flexibility and individualized services, the reality is that Rep. Ryan has not changed his stripes from being the lead proponent of budgets that would drastically cut the very same programs that have and are continuing to reduce poverty levels. And, he continues to oppose real anti-poverty actions Congress could take, including making investments in job creation, extending unemployment insurance benefits for the three million and counting workers who have lost this income lifeline since the beginning of this year, raising the minimum wage to an above-poverty wage for full-time workers, and ensuring that corporations and wealthy Americans pay their fair share of taxes so that anti-poverty initiatives and other national priorities are adequately funded. Instead, the bulk of his plan focuses on combining federal programs in a way that will reduce federal investments in poverty reduction. 

The hallmark of Ryan’s proposal is an “Opportunity Grant”, which would combine 11 federal programs into one federal funding stream to states. While he refuses to call this a block grant, that is exactly what it is.  Among the programs he would combine are SNAP (formerly food stamps), child care assistance, the Workforce Investment Act’s (WIA) dislocated worker job training program, public housing capital and operating funds, Temporary Assistance for Needy Programs, and housing and energy assistance.  These programs constitute the bulk of the safety net for the most vulnerable.  Including SNAP is very troubling because it would end the federal entitlement to this basic nutrition assistance and would allow states to end it as well.  In future recessions, states and localities could easily run out of money for SNAP without federal aid and be unable to meet increased need.  Other federal SNAP rules would be lost as well, including timeliness requirements and recipients’ access to face-to-face eligibility interviews, among many others. 

Loss of the entitlement status for SNAP is not the only extremely harmful result of converting all of these programs into one block grant of funds to states.  By cherry picking WIA’s dislocated worker program for inclusion, fewer workers who lose their jobs would receive assistance and the assistance provided would be reduced; child care providers could see their subsidies cut and fewer children served; housing authorities could have their federal funding cut for both capital improvements and operating expenses; and on and on.  How to spend dwindling federal dollars would largely be made state by state, but all the flexibility in the world will not protect the integrity and effectiveness of these programs or the millions of Americans who rely on them.

The Ryan plan also would impose extensive new work requirements on adults receiving a host of benefits but fails to include any job creation measures or otherwise point to where all of these jobs would come from.  And, while it proposes to expand Earned Income Tax Credits to adults without children, it offsets the cost by eliminating the Social Services Block Grant and requiring a Social Security number for a family to be eligible to receive the Child Tax Credit.  Robbing Peter to pay Paul will not reduce poverty.

House and Senate Far Apart on Supplemental Funding for Humanitarian Border Crisis

The humanitarian crisis of tens of thousands of Central American child migrants coming to the U.S. to flee violence in their home countries necessitates additional federal funding.  President Obama has requested $3.7 billion, with approximately half going to the Department of Health and Human Services (HHS) for housing, food, medical care and the children’s other basic needs.  Most of the remainder would go to Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP). 


Senate Appropriations Committee Chair Barbara Mikulski (D-MD) released a supplemental funding bill (S. 2648) on Wednesday.  The Senate bill includes $1.2 billion for HHS and just under $1 billion for ICE and CBP.  It also includes $615 million in emergency firefighting funds and $225 million for Iron Dome interceptors for Israel.  The Senate bill does not include any immigration policy provisions, which leaves intact the 2008 anti-trafficking law that affords child migrants from non-contiguous countries, like Honduras, Guatemala and El Salvador, more legal rights than children from Mexico or Canada.

Also on Wednesday, House Appropriations Committee Chair Harold Rogers (R-KY) presented an outline of what his committee recommends in response to President Obama’s supplemental funding request.  He said the maximum amount in a House bill would be $1.5 billion, but could be lower.  Rep. Kay Granger (R-TX) at the same time detailed the recommendations from a GOP-only border working group formed by House Speaker John Boehner (R-OH).  They included, among others, authorizing National Guard troops at the border and changing the 2008 law to remove legal protections for Central American children. 

We expect the Senate will vote on its supplemental funding bill next week.  It remains to be seen whether the House will move forward next week on this, and whether the Senate and House can come to agreement on a bill before they adjourn for their five week congressional recess, which is scheduled to begin on July 31.  

Senate Bill to Block Multinational Corporations from Sham Relocations to Overseas Tax Havens

Recently, several large profitable corporations generated strong congressional opposition with plans to “relocate” their corporate headquarters from America to a low-tax haven nation in an explicit effort to reduce their federal, state and local taxes.  As a result of these moves (called corporate inversions), Sen. Carl Levin (D-MI) introduced the “Stop Corporate Inversions Act of 2014” (S.2360), which would prevent U.S. corporations from claiming to be foreign companies unless they meet specified conditions.  Since 1983, about 75 corporations abandoned America via this troubling process and more than 10 more corporate inversions are currently underway, including large drug companies and Walgreens.  Congress’ Joint Committee on Taxation estimates these new tax evasion efforts would reduce federal revenues by $20 billion over 10 years.  Last week, a Senate committee approved Sen. Dick Durbin’s (D-IL) amendment to disqualify these cut-and-run corporations from bidding on government contracts.  This week, President Obama urged action to stop these corporate practices and continued his administration’s ongoing efforts to retroactively block them from receiving tax benefits.

AFSCME opposes these corporate tax evasion schemes and are advocating that Congress enact legislation that ensures that corporations pay their fair share of taxes. 

President Obama Signs Workforce Bill; Vice President Biden Releases Report on Federal Training Programs

On Tuesday, President Obama signed The Workforce Investment and Opportunity Act of 2014 (WIOA), which continues and modifies the Workforce Investment Act (WIA), which was first enacted in 1998. AFSCME supported WIOA because it includes several of our workforce system priorities.  (For more detailed information, see the July 11 Legislative Weekly Report.) 

On the same day, Vice President Biden released a report on needed reforms to job training and other workforce strategies to grow the economy and to widen pathways to the middle class.  President Obama called for this review of America’s job training programs in his 2014 State of the Union address.  The report emphasizes support for training programs that are job-driven and that include career pathways to better jobs. It highlighted best practices that should be replicated, including union and labor-management partnerships that provide quality training programs in a number of occupations, including health care.

Various federal agencies will now begin to develop regulations that will guide the implementation of WIOA and the Biden report recommendations.  AFSCME will continue to advocate for policies and financing that strengthen and protect the services and programs our members provide, as well as union-provided and supported job training programs. 

House Passes Tax Credit Bill that will Harm the Poorest Children and Children in Immigrant Families

On Friday, the House passed H.R. 4935, the so-called “Child Tax Credit Improvement Act of 2014” in a largely party-line vote of 237 to 173.  Instead of improving the child tax credit (CTC), this legislation would harm the lowest-income parents and children who rely on this critically important income source, while expanding eligibility for the tax credit to higher income families.  If this bill were to become law, a family earning $150,000 a year would receive a new tax cut of $2,200 in 2018, while a single mother of two who works full time all year at the minimum wage and earns $14,500 would lose $1,725 because her eligibility for the CTC would end in 2017.

In addition to reducing the incomes of working-poor families across the board, H.R. 4935 targets immigrant families for especially harsh treatment.  Currently, immigrants can use Individual Taxpayer Identification Numbers in lieu of Social Security numbers to pay their taxes and to be eligible for the CTC.  H.R. 4935 would require that at least one parent have a Social Security number in order to claim the refundable CTC on behalf of his or her children.  This means that at least five million children in very low-income families – approximately four million of whom are U.S. citizens – will lose access to this critically important source of income for basic necessities including food, clothing and housing. 

AFSCME opposed this bill in the House.  No Senate action is currently planned. 

House Passes Child Welfare Bill

On Wednesday, the House approved by voice vote H.R. 4980, “The Preventing Sex Trafficking and Strengthening Families Act.”  The bill makes several improvements to services for children that include continuing the Adoption Incentive Fund for three years; extending these incentive payments to child placements with guardians; strengthening requirements for states to reinvest savings they will realize as a result of the expansion of Adoption Assistance funding back into child welfare; adding screening and services to victims of sex trafficking to state plan requirements; and requiring that children leaving foster care be given a copy of their birth certificate and other official documents they will need when emancipated.

We expect the Senate will vote on and likely pass this bill next week, before Congress leaves for its five week August recess.   

Federal Courts Issue Conflicting Rulings on Subsidies Under Affordable Care Act

Right-wing Senators and groups backed by the Koch brothers have sought to upend the Affordable Care Act (ACA) by attacking federal subsidies provided to help individuals purchase health care coverage through the federal exchange,  Roughly five million Americans use subsidies through the federal site to purchase health coverage. 

On Tuesday, the U.S. Court of Appeals for the District of Columbia Circuit ruled in Halbig v. Burwell that an Internal Revenue Service regulation allowing federally facilitated exchanges to issue premium tax credits to low and middle-income Americans is invalid.  But the Fourth Circuit Court of Appeals based in Richmond, Virginia, on the same day unanimously upheld the IRS rule in a similar case. At this point the adverse ruling does not have any practical impact because the Obama Administration will challenge this effort to deny Americans health care coverage. AFSCME President Lee Saunders said in a public statement that “the ruling … does not change the fact that the Affordable Care Act is working to provide more Americans with health care they can afford…. Direct and indirect efforts to repeal the Affordable Care Act are misguided and will not stand the test of time.” Stay tuned for further court action.

Panel Looks at Impact of Affordable Care Act on Medicare Advantage Plans

At a House committee hearing on the Affordable Care Act (ACA) and Medicare, Chairman Kevin Brady (R-TX) suggested that the health care law threatened private insurance plans called Medicare Advantage (MA) which are offered to Medicare enrollees as an alternative to traditional Medicare.  These private plans are a substitute for, not supplemental to Medicare, which pays these plans to provide benefits to those enrolled beneficiaries.  AFSCME submitted a statement for the record to correct the misinformation contained in the oft-repeated chorus that the ACA “cuts Medicare.”  Before the ACA, these private insurance plans preyed on seniors with abusive marketing and sales tactics, did not provide improved care for the excessive cost and placed many ill seniors at the mercy of private insurance companies.  Before the ACA, Medicare paid nearly $44 billion in extra payments to MA plans, which increased premiums for all Medicare beneficiaries. The ACA scaled back MA overpayments and put in place more protections for beneficiaries enrolled in these private plans.  For example, the law stops MA plans from spending too much of premium dollars on overhead expenses, CEO salaries and perks, or profits.  All insurers must now use at least 85 cents out of every premium dollar to pay medical claims and improve the quality of care. 

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