Work requirements don’t work. Just look what they did to TANF.

February 26th, 2018 at 6:24 pm

This WaPo piece I posted this AM taps some new evidence by my CBPP colleagues (Mitchell, Pavetti, Huang). I found the numbers highly germane to the work-requirement thrust from conservatives attacking safety-net programs. The CBBP results track poor parents sanctioned off of the TANF program in Kansas and finds what I’ve always, always, always maintained in this debate, since I started out my adult life as a social worker in East Harlem, NYC: Able-bodied, poor people work.

No question, they’re less solidly attached to the job market than the non-poor, but the idea that they’re just chillin’ at home on SNAP and Medicaid never made any sense, and the data don’t come close to supporting either that myth or the notion that kicking them off the rolls will help. That is, if by “help,” we mean improve their own and their kids’ living standards and life chances. If instead, we mean: “will help offset the cost of the tax cuts”…well, that’s different.

I mentioned in the piece: “…the combination of work requirements in the 1996 welfare reform, the expansion of the earned income credit, additional child-care funding and the uniquely tight latter-90s labor market led to increases in the employment rates of mother-only families. But as the job market weakened, those employment gains faded, even as the work requirements remained in place. Meanwhile, the loss of income supports exacerbated not just poverty but deep poverty (families with income below half the poverty threshold, about $10,000 for a single parent with two children).”

Here’s the evidence: employment rates of high-school or less (think: relatively low earners) never-married mothers climbed sharply in the 1990s on the back of the factors just noted, until they were comparable to those of single women without kids (who wouldn’t be eligible for TANF and thus not responsive to the work requirements). But their employment rates then fell in the 2001 recession, and after that they track the rates for single women, no kids. Given that the TANF work requirements apply only to the unmarried moms, this pattern suggests that labor market opportunities, not punitive policies, are driving employment rates.

Meanwhile, it’s straightforward to see that TANF (which used to be AFDC) has become far less responsive to helping those in need (see figure below).

We must therefore tirelessly resist that same destructive outcome for all the other safety net programs that conservatives are currently going after, with “work requirements” as their stalking horse.

What’s at stake in the Janus case.

February 26th, 2018 at 11:15 am

Lots of people think unions are pretty much kaput, but that’s not so, especially in the public sector, where union membership has been a bit north of one-third of the public-sector workforce, and remarkably steady, since the late 1970s (private sector coverage, by contrast, is 6.5%; see figure). That’s why the Janus case being argued at the Supreme Court today is so vitally important. Its outcome will either strengthen or weaken public sector unions, and if the result is the latter, it will have political repercussions far beyond the voice of workers in their workplaces.

The Janus case is about whether public sector unions can require “agency fees.” Such fees, also called “fair share” fees, are paid to the union to cover the cost of bargaining on behalf of all workers in the bargaining unit, not just union members. Absent such fees, there is a clear “free rider” problem wherein those benefiting from collective bargaining activities on their behalf pay no costs to cover the union’s work. In that sense, Janus is kind of the public-sector corollary of the misnamed state “right-to-work” laws about which I’ve written elsewhere.

The named plaintiff, Mark Janus, is an Illinois social worker covered under a collective bargaining agreement negotiated by the public workers’ union AFSCME (American Federation of State, County and Municipal Employees). He’s not an AFSCME member, but he’s required to pay a fee to cover the cost of his representation. Note that such fees can only be used for this purpose, and not for, say, political activities by the union.

The Trump administration is supporting Janus, hoping to persuade the court to overturn its 1977 ruling allowing states to require fair share fees for government employees. Two dozen states and the District of Columbia require such payments, covering roughly 5 million public-sector workers.

You can read up on the technical background in various places, but if you want to know what’s really going on here, you have to read this NYT expose of the very deep-pocketed, anti-union forces behind the Janus case:

In the summer of 2016, government workers in Illinois received a mailing that offered them tips on how to leave their union. By paying a so-called fair-share fee instead of standard union dues, the mailing said, they would no longer be bound by union rules and could not be punished for refusing to strike.

The mailing, sent by a group called the Illinois Policy Institute, may have seemed like disinterested advice. In fact, it was one prong of a broader campaign against public-sector unions, backed by some of the biggest donors on the right. It is an effort that will reach its apex on Monday, when the Supreme Court hears a case that could cripple public-sector unions by allowing the workers they represent to avoid paying fees.

The piece carefully goes through this “broader campaign,” which has strong, and obvious, political motivations. The reason the SCOTUS is hearing Janus today is simple. It is because there is no single, larger, unified, better-resourced, pro-worker political voice in American politics today than that of the unions. Obviously, they’re far from alone, but even in their diminished capacity, this remains the case, and that flat public sector line in the figure above is a main reason why.

Will a win for the plaintiff in Janus change that? Well, here’s a political science finding mentioned in the Times’ piece:

A recent paper by Mr. Hertel-Fernandez and two colleagues may foretell what Democrats can expect if Mr. Uihlein and his fellow philanthropists [the conservatives backers of Janus–JB] succeed. It found that the Democratic share of the presidential vote dropped by an average of 3.5 percentage points after the passage of so-called right-to-work laws allowing employees to avoid paying union fees. That is larger than Democrats’ margin of defeat in several states that could have reversed their last three presidential losses.

So, attention must be paid. The court considered a similar case in 2016, when it split 4-4 following the death of Justice Scalia, but there’s considerable concern as to the outcome given the makeup of the current court. A lot hangs in the balance.

Perspective, people!

February 21st, 2018 at 3:58 pm

Over at WaPo. I left out one figure/point due to space constraints. The other day when the CPI report came out slightly above expectations, as I discuss in the WaPo piece, a few freaker-outers actually started talking about 70’s-style stagflation. So here’s a graph of how we measured stagflation back in the day, using the “misery index,” or unemployment + inflation. Not quite back to 70’s levels, I’d say.

Sources: BLS


Lynx, and a comment about the political non-costs of fiscal recklessness.

February 16th, 2018 at 11:59 am

I’m not exactly sure which links I’ve put here already, but I’ve been busy (there is the possibility that if you can’t remember what you’ve been writing, you’re either writing too much or getting too old; I know the latter is true; not sure re former).

WaPo PostEverything Posts:

There’s a leaked proposed rule from team Trump that expands the definition of “public charge cases,” wherein immigration status is threatened by use or expected use of public benefits. Here’s why the daft draft rule is destructive and counterproductive. My intuition is that it won’t block people from coming here; it will lead to disinvestment in them and their kids once they’re here.

Yes, inflation and interest rates are definitely picking themselves up off the mat. That’s a good and expected development at this point in the cycle. Do not confuse heating with overheating.

One profound challenge we face in gauging economic capacity is that economists cannot identify the lowest unemployment rate consistent with stable inflation or the level of GDP at full potential.

Unless we’re willing to put new revenues on the table, deficits and debt will only continue to grow.

Here’s a fun episode of The Indicator, one of my favorite, new podcasts, wherein I explain how I ambivalently welcome that the current slug of stimulus. Yesterday, I listened to about five of these episodes in a row–they’re short–and I gotta tell you: huge bang-for-buck in terms of engaging and even entertaining info/minute.

Sticking with fiscal policy, Paul K has a column up today wherein he appropriately excoriates the hypocrisy of Republicans on their transparently phony fiscal rectitude, along with self-identified “centrists” who have, in their play to appear balanced, long refused to recognize the truth that these alleged fiscal hawks are and have always been chicken hawks. The deficit matters to them if and only if it can referenced to a) block Democratic spending initiatives, and b) leverage cuts to any government program that doesn’t redistribute income toward their donors.

If I may add an editorial comment outside my econ zone, consider conservatives’ indifference to debt (tax cuts), the safety net (Trump budget), and gun control. These policymakers should never be allowed to say another word about their concerns for children or future generations. Their actions completely belie any such claims.

But the point I wanted to add to Paul’s piece is a political economy one. Politicians have never paid a price for adding to the debt. To the contrary, George HW Bush paid a price for raising taxes to try to do something about red ink. One reason for this political non-cost is that all that deficit spending has not had the negative impacts economists’ typically claim.

A voter might vote against a politician who raised taxes or opposed abortion rights or was hostile to immigration. These are all very clear positions. But, based on the empirical record, our voter can be wholly forgiven for discounting arguments about the impact of public debt on interest rates, growth, and jobs.

I’ve argued that, in fact, deficits do matter. In weak economies, we often need them to be larger than they are, but as we close in on full employment, we generally want fiscal gaps to close (though listen to my Indicator interview above for some nuance re the current moment).

I’ve got four reasons:

Political reasons: it’s a lot harder to sustain support for programs that are deficit funded;

Fiscal reasons: any spike in interest rates is more expensive at high public debt levels than low ones;

Recessionary reasons: though there’s not much of an economic rationale for it, it’s clear that policymakers will apply less fiscal policy to offset recessions at low vs. high fiscal space;

Economic reasons: though we haven’t seen it for decades, if the economy is already at capacity, it’s likely that deficit spending will generate not jobs or growth, but just higher inflation and interest rates.

When you consider the politics, it may only be the first and last reasons that catch voters attention. If higher deficits can clearly be linked to economic hardship voters are experiencing or the loss of programs they value, those voters may discipline fiscally reckless policy makers.

But that’s just a conjecture on my part. There must be someone out there who has cast a vote against a politician based on their fiscal recklessness, but I’ve never met them.

The President’s new budget. Sorry, but attention must be paid.

February 12th, 2018 at 4:32 pm

Every year around this time, we ask the Talmudic question: is there any reason to pay attention to the president’s budget?

This year, given that the Congress just passed, and President Trump just signed, a spending deal covering the next couple of years, the question is particularly germane, as “dead on arrival” would be an upgrade for this year’s budget.

And yet, I once again conclude that attention must be paid. People should know an administration’s priorities, but in the case of team Trump, as the gulf between their rhetoric and their budget preferences is uniquely wide, tracking their priorities is particularly important. They make a huge deal over infrastructure but cut transportation funds; they talk about helping the left-behind but propose cuts to health care, nutritional assistance, and housing. They preach fiscal rectitude but practice fiscal recklessness.

In this regard, the basic structure of Trump’s second budget is closely related to those Republicans have been writing for years, reflecting their shared priorities of tax cuts for the wealthy and spending cuts for the economically vulnerable.

For example, according to CBPP analysis, the budget takes us back to the big health care debate of last year, calling for repealing the Affordable Care Act, cutting Medicaid, and eliminating protections for people with pre-existing conditions. It proposes cuts in nutrition, housing, and other basic assistance for millions of vulnerable Americans. For example, SNAP (formerly food stamps) would face a $213 billion, or a nearly 30 percent cut over ten years; at least 4 million low-income people would lose their SNAP benefits altogether.

Regarding infrastructure, do not—I repeat, do not—take seriously the claim that there’s a plan here to invest $1.5 trillion in our public goods. Far, far from it. The budget proposes $200 billion over 10 years, but as budget analyst Bobby Kogan tweeted: “The budget cuts $178 billion in…transportation [not including cuts to] water, broadband…and energy. This means [Trump is] giving $200 billion with his left hand but taking away that much with his right.”

In fact, the “plan” depends on shifting the costs of infrastructure investment to private investors, states, and cities. Regarding the states’ ability to fund infrastructure, there’s a critical interaction with the Trump tax cut to consider. Recall that the plan significant lowers the amount of federal taxes that state and local taxpayers can deduct from their tax bill. This change will make it much harder for states and cities to raise the revenue to support this sort of infrastructure plan. As I recently wrote on this topic, “Trump and the Republicans are shifting infrastructure costs to the states at the same time they’re cutting the states’ revenue-raising capacity off at the knees.”

One thing to watch is the extent to which the budget violates the terms of the bipartisan spending plan Trump just signed. Remember, at this point, a lot of that spending is just topline amounts, yet to be allocated to specific spending lines. Nudged on by this budget, which sets funding for Democratic priorities from the deal $57 billion below the agreed-upon levels, conservatives will try to chip away at non-defense allocations to education and worker training, medical research, transportation, low-income housing, environmental protection, the national parks, child care, and more.

For example, CBPP points out that “the bipartisan agreement calls for adding $2.9 billion per year over the next two years to the discretionary Child Care and Development Block Grant, boosting this key federal program to help make child care affordable for low- and modest-income parents. But the budget reneges on that and proposes essentially flat funding for the program.”

Again, I don’t think Congress will violate the new agreement, but there’s no question the president’s budget dials up the pressure to re-open the deal at the expense of programs in those areas.

Here’s one area where the budget reveals serious damage that’s already been done to government under Trump’s watch. As the Wall St. Journal’s Richard Rubin put it, “A big result of President Donald Trump’s tax cuts is a predictable one: Less revenue for the federal government.” Even using the administration’s own rosy economic scenario, projected revenue is down 6 percent from their last budget.”

In 2019, they predict revenues as a share of GDP to be 16.3 percent. What’s alarming about that number is that it’s projected to occur in a period when the economy is at, or at least near, full employment. In such periods, the percolating economy should be spinning off increasing revenues as a share of GDP, as more people make more money and pass into higher tax brackets. Using data back to the 1960s, when the unemployment rate has been around where it is now—in the 4 percent range—revenues have come to about 18 percent of GDP. In today’s economy, that difference of two percentage points (16 vs. 18) of GDP amounts to $400 billion per year in revenues lost to the tax cuts.

Of course, that’s a feature, not a bug, for those in the starve-the-beast camp. But as I argued the other day, with the recent spending bill as exhibit A, it doesn’t work that way. Once they whack the tax base and take new revenues off the table, the beast doesn’t starve. It gets fed in deficit dollars.

The media is probably one or two crazy tweets away from never mentioning this budget again, and I certainly understand that in terms of news value. But it is incumbent on those of us who recognize what Trump and the Congressional Republicans are up to, to call them out.

And what is it that they’re up to? Channeling revenue from the Treasury to the wealthy, while trying to convince the public that America’s problem is not inequality, dysfunctional government, disinvestment in physical and human capital, and an increasingly non-representative democracy. Instead, their budget implies that what’s holding America back are poor people getting $1.40 a meal in nutritional assistance, or a family whose housing assistance and Medicaid allows them to get by on a minimum wage job.

Immediate political salience aside, anytime that demonstrably false argument is made, it must be highly elevated and thoroughly rejected.