Week Ending September 14, 2012
House Passes Stopgap Six-Month Spending Bill
This week, the House finished its last must-do task before adjourning for the elections by voting 329-91 to continue funding government programs through March 2013. Without this stopgap measure (H.J. Res. 117), a government shutdown would occur on October 1. Instead, GOP leaders agreed to the Budget Control Act (BCA) spending level of $1.047 trillion, $8 billion over current law. Very few programs received more than an across-the-board increase of .6%. All current policies were kept in place, including a freeze on federal employee pay for the third year in a row. The “continuing resolution” did not include any extraneous policy measures, although it did include extensions of the Temporary Assistance for Needy Families (TANF) program and continued funding for childcare. However, funding for transportation remains at FY 2012 levels, lower than the level set in the recently passed MAP-21 transportation bill. Five hundred million dollars will be cut from road and bridge repair, resulting in the loss of 17,000 jobs. Sen. Barbara Boxer (D-CA) is working to restore this funding.
Sequestration – the deep across-the-board cuts coming next January – was not addressed in this bill, but would be modified in another bill passed by the House (H.R. 6365), largely along party-lines. The so-called National Security and Job Protection Act would replace the sequester with deeper domestic spending cuts and no increases in revenue. The cuts would gut non-defense, domestic programs including Medicare. The bill also reneges on the BCA and would impose the House-passed FY 2013 budget cap of $1.028 trillion, a $19 billion cut. The Senate is scheduled to vote on and is expected to pass H.J. Res. 117 next week. It is unlikely to vote on H.R. 6365.
House Committees Oppose State Flexibility in Temporary Assistance for Needy Families Program
In a vote that is more about politics than policy, the House Ways & Means and Education and the Workforce committees passed identical resolutions on party-line votes disapproving a new Health and Human Services (HHS) policy which allows states to request permission to try new welfare-to-work approaches in their TANF programs. HHS informed states that they must meet specific targets to be eligible for waivers and not undermine the work requirements in the law. The votes came after the Government Accountability Office (GAO) found that the Obama administration should have notified Congress before allowing state waivers of TANF work requirements. The Congressional Research Service disagreed, concluding that it is within HHS’s power to give states this flexibility. The Romney campaign is running ads that mischaracterize the HHS policy and are aimed at inflaming old anti-welfare sentiments. The full House likely will vote on the resolution of disapproval next week.
Obamacare is Making a Difference!
- Saving Money for Seniors and People with Disabilities
Thanks to the Affordable Care Act (ACA) nearly 5.4 million seniors and people with disabilities have saved over $4.1 billion on prescription drugs since the law was enacted in 2010. For seniors in the Medicare prescription drug coverage gap known as the “donut hole” it has meant an average of $768 back in their pockets. In addition, in 2012, 18 million people with traditional Medicare have received at least one preventive service at no cost to them.
- Expanding Coverage
For the first time in three years, the share of Americans without health coverage dropped in 2011 from 16.3% to 15.7%. The number of uninsured fell by 1.3 million. A major factor in this development was growth in coverage for young adults age 19 to 25. Under the ACA, insurance plans are required to allow parents to keep adult children on their plan until age 26.
- Holding Down Insurance Costs and Providing Rebates to Consumers and Employers
The ACA has saved consumers an estimated $2.1 billion on health insurance premiums according to a new report released Thursday by the Department of Health and Human Services. For the first time ever, new rate review rules in the health care law prevent insurance companies in all states from raising rates with no accountability or transparency. To date, rate review has helped save an estimated $1 billion for Americans.
Additionally, the law’s Medical Loss Ratio (MLR) rule is delivering rebates worth $1.1 billion to nearly 13 million consumers or their employers. Under this rule, insurance companies must spend 80% to 85% of premiums on health care services. Insurance companies that spend too much on overhead or hold back too much in profits must pay rebates to policyholders. Despite the benefits of the MLR rule, this week a House subcommittee approved a bill (H.R. 1206), sponsored by Rep. Mike Rogers (R-MI), that would reduce rebates to policyholders by nearly two-thirds. We expect the full committee to take up this wrongheaded bill next week.
Census Data Shows Income Inequality Grew; Median Earnings Fell; Number of Uninsured Dropped in 2011
The share of all household income going to the wealthiest Americans reached historically high levels in 2011, according to Census Bureau poverty data released on September 12. The bottom 20% of households received just 3.2% of all household income and middle-income households received only 14.3%, while the top 20% of households earned 51.1% of all income with the top 5% receiving 22.3%. In other words, those at the top reaped all of the benefits of economic growth in 2011, while middle-income households continue to lose ground. Median earnings for a full-time worker fell 2.5% in 2011. The data also shows that women continued to be paid only 77 cents for every dollar paid to men; African-American women were paid only 64 cents; and Hispanic women were paid only 55 cents for every dollar paid to white men.
The Census data also illustrates how government action has made a positive difference in reducing poverty. The number of people without health insurance dropped by 1.3 million and the share of Americans without insurance fell more than in any year since 1999, due in large part to the ACA’s provision allowing young adults to stay on their parents’ coverage up to age 26. Social Security kept 21.4 million people out of poverty, and unemployment insurance benefits lifted 2.3 million above the poverty line. And, the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) lifted 3.9 million people out of poverty, including 1.7 million children.
What does this Census data reveal about federal policy? First, it lends strong support for President Obama’s call that the Bush-era tax cuts be allowed to expire for the wealthiest Americans. It also confirms the need for Congress to act to save and create middle-class jobs. To ensure that the number of uninsured Americans continues to decrease, the ACA should be allowed to go fully into effect in 2014. And, all of the social insurance and anti-poverty programs that give Americans economic security should be protected and strengthened.
“The State of Working America” Illustrates Low-Income and Middle-Class Workers Are Falling Further Behind
The Economic Policy Institute’s (EPI) newly released “The State of Working America” reports that during the past 30 years policy-driven inequality undermined the ability of low- and middle-income workers to benefit from America’s economic growth. These harmful and divisive policy decisions include: reducing tax rates on wealthy individuals and corporations; failing to maintain the minimum wage’s real value; failing to protect workers’ rights to collective bargaining; deregulating industries; and failing to prevent asset bubbles.
EPI reports that the wages of typical Americans are lower today than they have been in over a decade. Their median household wealth declined sharply between 2007-2010 and is significantly lower than in 1998. Worse, more than one-third of both African-American and Hispanic households have net wealth that is zero or negative. And, the median household wealth of whites is 20 times larger than African-Americans and 75 times larger than Hispanics.
The EPI report confirms that unions help improve wages, benefits and working conditions. For example, the hourly wage advantage of being in a union is 13.6%. Also, union members are 28.2% more likely to have health insurance coverage and 53.9% more likely to have pensions than workers who do not have union representation.
Future of Tax Extenders Package Uncertain
In early August, the Senate Finance Committee approved a $205 billion, one-year package of tax extenders which affect individuals, businesses and energy taxes. By far, the largest part of this package is a $132 billion two-year patch to the Alternative Minimum Tax (AMT) which benefits middle-income households by limiting their exposure to the AMT in both 2012 and 2013. The package also helps states and localities by granting a two-year extension to the state and local sales tax deduction for individuals’ federal income taxes. The package also increases the federal income tax exclusion for employer-provided mass transit commuter benefits, which is used by many AFSCME members commuting via subway, rail, or bus.
While the committee’s 19-5 vote demonstrates strong bipartisan support, the next steps are uncertain. No further action in the House or Senate is expected before the November elections and perhaps not until 2013. And, House conservatives are seeking additional tax cuts as part of a broader tax cut package.
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