“The backlog of forest restoration projects suggests that there are issues on public lands that really need to be addressed, but that is not an argument for creating a vast new federal bureaucracy with as many as 1.5 million government employees.”
“This is all wrong. With reasonable design parameters, a welfare state does almost nothing to discourage core potential workers from working. And there’s nothing wrong with a situation in which the elderly, teenagers, parents of very young kids, and people with severe disabilities and their caretakers don’t work. A strong welfare state has big benefits for its recipients, and it helps stabilize the macroeconomy and prevent deep recessions. Last, but by no means least, a strong welfare state creates a situation where regulatory policy questions can be evaluated on the merits with the knowledge that people will be taken care of rather than used as a backdoor to support jobs and incomes.”
“America’s original cash welfare program, Aid to Families with Dependent Children (AFDC), suffered from very real design flaws that genuinely did discourage work. The best and most natural fix would have been to spend more on the program so benefits didn’t phase out so sharply. But congressional Republicans in the mid-1990s were determined to use the flaws in the program to all but eliminate cash welfare, and after a bit of hemming and hawing, Bill Clinton went along with it and claimed it as a victory. As Dylan Matthews details, that ended up being a disaster for the poorest Americans.
But it did achieve its political objective of opening up space for two other kinds of programs. On the one hand, you have cash assistance programs that are tied to work (Earned Income Tax Credit and Child Tax Credit). On the other hand, you have programs — Medicaid, SNAP, Section 8 housing vouchers — that don’t require work but also don’t give you cash. There’s also TANF, which is a federal program that gives grants to states to help them organize a cash welfare system whose benefits are only temporary (that’s what the T stands for) and conditioned on finding work within two years. The states are given huge discretion on how to run this program, often using the money for things other than delivering cash benefits.
Then America also has a separate, much more generous welfare state for senior citizens — Social Security and Medicare — and there seems to be a social consensus that the elderly are deserving of help. Stuck somewhere in between are disability programs, which are formally part of the Social Security system but politically speaking seen as “welfare” programs in part because there are always questions about the rigor of the diagnostic criteria.”
“living in poverty — and especially growing up in poverty — has really bad impacts, and providing assistance can deliver useful long-term benefits.
A recent paper by Manasi Deshpande, for example, shows that when kids lose their SSI benefits, it has a negative long-term impact on their younger siblings’ earnings”
“This is a powerful finding because the younger sibling’s situation is not the target of the program. It’s simply showing that delivering extra financial resources to the family improves the kids’ long-term situation — better nutrition, more focus on school, whatever it is.
A study of the rollout of the SNAP program, similarly, shows that kids whose parents got benefits while they were in utero or up to age five ended up better educated, living in better neighborhoods, and less likely to be disabled as an adult than kids whose parents started getting the benefits when the kid was in their teens. The children also ended up less likely to receive social assistance programs themselves. All of these effects are modest in scale, but the impact on adult receipt of social assistance is large enough that SNAP “pays for itself” in fiscal terms separate from the benefits to the beneficiaries. SNAP benefit availability also appears to reduce obesity and reduce the number of days kids miss school due to illness.
A comprehensive study of one of America’s first cash welfare programs — mothers’ pensions — showed that women who got the benefits lived longer while their sons earned 20 percent more as adults and were less likely to be overweight (they couldn’t track daughters because of name-changing). By the same token, kids whose parents benefit from more generous EITC benefits have higher math scores and are more likely to graduate high school.”
“Medicaid expansion has saved over 20,000 lives since it was enacted. A study of a previous expansion in the 1980s showed that kids who grew up benefitting from expansion paid more in taxes and were less likely to need EITC benefits than those who did not benefit from that Medicaid expansion. A separate study shows that the grandchildren of women who benefitted from that expansion are less likely to have low birth weight. Those kids are not old enough to study adult outcomes yet, but we know that low birth weight kids are likely to have lower IQs and generally worse outcomes in terms of education and income.
Last but by no means least, kids whose families get housing assistance earn more as adults and “childhood participation in assisted housing also reduces the likelihood of adult incarceration for males and females from all household race/ethnicity groups.””
“The big problem with this patchwork of programs is that it’s so much a patchwork.
Eligibility rules and procedures vary by state. If you move, you might lose benefits which creates a significant disincentive to relocate even when doing so might have other major benefits. The cash programs phase in and phase out in an odd way that delivers too little assistance to the poorest while creating very steep marginal tax rates on somewhat higher-income families.
Social Security, by contrast, is really convenient. You can earn a living in New Jersey and take it with you to Florida when you retire. And the coverage is so broad that it even takes a bite out of child poverty thanks to kids who live with older parents or older relatives and kids who receive the benefit if one of their earning parents dies or becomes disabled.”
“And to the best of my knowledge, there’s no real magic to the means-testing programs. SNAP does a lot to help people and so does housing assistance and so does Medicaid, but basically all for the same reason that cash does — the money is fairly fungible and having more money is helpful.”
“”Using data from a nationally representative survey of older adults, we find that higher Social Security income significantly improves health outcomes among the elderly. Specifically, we find that increases in annual Social Security benefits led to significant improvements in functional limitations and cognitive function, and that the improvements in cognition function were larger for individuals with better cognition.””
“In practical terms, there’s nothing wrong with an incremental approach. We should keep fighting to expand Medicaid in the states that haven’t done it yet. We should try to pass Joe Biden’s proposal to make Section 8 vouchers available to everyone who qualifies. We should listen to the Center on Budget and Policy Priorities and put more money into TANF—it’s 40 percent smaller than it was when it was enacted merely because of inflation. We should also require that states actually use a large share of the grants for cash assistance, instead of for other vaguely-related-to-welfare stuff like abstinence programs.
But in bigger picture terms we ought to do what I advocate in my book One Billion Americans and create what’s basically Social Security for Parents — a truly universal cash allowance for parents of young kids. Michael Bennett and Sherrod Brown have a plan for a child allowance worth $300/month for kids under six and $250/month for kids under 17. It’s a great plan. To be even more ambitious, I would recommend they drop the means testing (theirs phases down to zero for married couples earning over $200,000) and add a one-time baby bonus payment (you could think of it as nine months’ worth of payments during pregnancy). And conceptually, I think you should probably consider eliminating SNAP, Section 8 housing assistance, and weird stuff like LIHEAP and instead just making monthly checks even bigger. You could also scrap the family size adjustment in EITC and turn it into a narrower wage subsidy.
What you’d definitely do is take away the tax code’s backdoor subsidies for parents and instead give middle class — and even wealthy — parents access to this same allowance that everyone gets.
This would massively reduce child poverty with all kinds of ancillary benefits for child development and long-term growth.”
“In March, researchers at Columbia led by Zachary Parolin estimated that as a result of President Joe Biden’s stimulus package, the American Rescue Plan, the US poverty rate would fall to 8.5 percent, the lowest figure on record and well below 2018’s figure of 12.8 percent. This past month, researchers at the Urban Institute, using a slightly different means of measuring poverty, found that 2021 poverty will be around 7.7 percent, almost a halving relative to 2018’s rate of 13.9 percent per their methodology. (Official US Census poverty statistics for 2020 have not yet been released.)
The Columbia authors find that if you compare 2021 to every year for which the census does have data, from 1967 to 2019, and use a consistent poverty line, 2021 is projected to have the lowest poverty rate on record.
Considering that the US endured a pandemic and economic shock in 2020, these numbers are remarkable.”
“If handing out cash led people to work dramatically fewer hours or to quit their jobs, then cash payments wouldn’t cut poverty by as much as they initially seem to.
Luckily, cash doesn’t seem to discourage work to that degree. In 2019, a group of economists and sociologists specializing in child poverty put together a major report for the National Academy of Sciences, and their estimate based on the research literature was that a cash benefit of $3,000 per year for all but the richest children would reduce work effort by about 1.15 hours a week on average — a fairly trivial amount that barely changes the antipoverty impact of such a program.
The effects of stimulus checks to adults, like those pursued in the past year, are surely different, but the evidence generally suggests that work disincentive effects of cash are small. University of Pennsylvania economist Ioana Marinescu, in a wide-ranging review of the effects of cash programs, concluded, “Our fear that people will quit their jobs en masse if provided with cash for free is false and misguided.””
“The US has been sending out a lot of cash during the pandemic. But that’s almost certainly coming to an end. The enhanced child tax credit is a policy many Democrats want to make permanent, or at least (as the Biden administration has proposed) extend for several more years. But the $1,200 and $600 and $1,400 stimulus checks were emergency measures, as were the $300/$600 weekly unemployment supplements.
All that implies that in 2022, when those measures are gone, poverty is likely to shoot back up again, even in a strong economy with robust job growth.”
“A time when the United States runs mostly on wind- and solar-powered electricity could be a reality in only a few years. It wouldn’t require any scientific breakthroughs or technological leaps for clean energy to overtake coal and natural gas, which still dominate 60 percent of the US power sector. What it would take to challenge a century of fossil-fuel dominance in record-breaking time is one sweeping, underappreciated policy: a clean electricity standard.”
“A clean electricity standard is a bit of a misnomer because the actual policy being discussed is even more boring-sounding: a clean electricity payment program that pays utilities to clean up their act and fine them for missing deadlines. Still, this approach could effectively double the amount of wind and solar on the market, moving the nation toward roughly 80 percent renewable sources of electricity by 2030, and within reach of 100 percent clean electricity by 2035. It’s critical to getting the US halfway to Biden’s pledge under the Paris climate agreement.”
“Two of the biggest ways Americans contribute to climate change is in their transportation and electricity usage. You might cut your carbon footprint by making your home more efficient, installing a solar panel, and even buying an electric car — and the power that flows from your outlet is a lot cleaner than it was a decade ago. But coal and natural gas, more often than not, are still the status quo. This reality limits the impact of well-meaning actions: A coal-fired power plant may be charging your Tesla, and gas might be powering your office’s air conditioning.”
“The biggest short-term benefits aren’t even about climate change. Continuing to cut coal also slashes the country’s air pollution, like the ozone and particulates that damage people’s lungs and hearts. These gains would easily dwarf what the Environmental Protection Agency has accomplished under previous presidents because it would close more coal-powered plants than even President Barack Obama’s most effective environmental regulation, the mercury and air toxins rule.
And then there are the lives saved, according to research from Harvard University: By 2030, the policy would save 9,200 lives because of the sudden cut in air pollution. Over the next 30 years, that number grows to 317,500 lives saved.”
“a review of the literature about the impact of government spending on growth reveals that, generally, such spending crowds out the private sector. This dispels the hope that more spending will produce economic wonders.
Deficit spending will eventually result in higher taxes for future generations. That’s a profoundly unfair burden. Debt is also expansive in and of itself, as interest payments on an enormous amount of debt—even when interest rates are low—will result in a larger and expanding deficit. According to Brian Riedl at the Manhattan Institute, Congressional Budget Office data reveal that by 2049, “Interest payments on the national debt would be the federal government’s largest annual expenditure, consuming 42% of all projected tax revenues.”
Eventually, growing debt will also slow economic growth. Lower growth means fewer innovations, lower wage growth, and higher unemployment. It’s all-around bad news. Finally, higher debt could result in a debt crisis. These are good enough reasons for me to want to restrict the size of government and impose fiscal prudence.”
“Interestingly, recent concerns over inflation have highlighted one additional reason why higher debt is problematic. You see, when it comes to inflation, people’s expectations about the price trajectory in the next few years are what really matters. So, it matters less than we think that the current inflationary forces are likely transitory. If people believe that inflation is here to stay, they will try to protect themselves from it today, and we will indeed have inflation today.
Under that scenario, to get inflation under control, the Federal Reserve will have to raise interest rates. And this is where your debt levels matter. Higher interest rates result in a large increase in overall interest payments fairly quickly, as so much of our debt needs to be rolled over on a short-term basis. A sudden increase in interest rates would slow down the recovery, too, which hurts lower-income Americans.
If the Fed were immune to political pressures, this reality might not matter. However, we can expect that political pressure to be enormous. No administration would be happy to see a large increase in interest payments suddenly show up on its balance sheet followed by a large increase in the size of the deficit, especially if that administration is already planning to spend a larger amount of money in the first place. This pressure only grows under an administration that will resist any rate change that could hurt growth. The Fed may also be slow to act because it has made addressing inequality one of its priorities.”
“Do I know what expectations are and how long inflation will stick around? I don’t. But in truth, no one really does. That’s part of the point. In that context, fiscal prudence now is the best course of action, because with so much political pressure in the worst-case scenario, there will be fewer opportunities when the Fed must actually raise interest rates.”
“The first of the 2021 child tax credits hit parents’ bank accounts in July — but not for everyone. For many of the parents who need it most, accessing the money may be more of a struggle.
That’s because the IRS — an agency that knows little about the lowest-income Americans, who often don’t file taxes — has been tasked with distributing the money, up to $300 per month per child.
On July 15, the day payments first went out, the IRS said it sent $15 billion to 35 million families, 86 percent of which was sent via direct deposit. That suggests that the vast majority of initial recipients were from families who earned income and filed taxes, many of them middle- or lower-middle-income parents whose names, addresses, and bank accounts are on file from tax returns.
More than 10 million children live in poverty, according to 2019 data from the US Census. Of those, the People’s Policy Project estimates that about 7 million live in non-filing households. (Because these families are, by definition, somewhat difficult to track, estimates vary: The Census Bureau says that 36 percent of children in poverty are from families that did not file taxes in 2019, including 55 percent of children in families in deep poverty.)
Most of these families haven’t signed up to get government stimulus checks, either, effectively leaving thousands of dollars from the government on the table over the past year. The IRS gathered information on an additional 720,000 children in non-filing households where the parents registered to receive stimulus payments.
But that still leaves millions of children whose parents are eligible for the child tax credit (CTC) but who are not on track to receive it.”
““The North Star should be making this as automatic as possible so families don’t have to take affirmative steps to get the support they need.””
“It’s an imperfect science, indeed. Under the gambit, budget forecasters estimate how much a policy change might boost the economy and send more cash flowing to the federal government. This time, Democrats are pinning their revenue hopes on the idea that major investments in the social safety net, climate policy and tax reform will yield robust, long-term economic growth.
“I’m very concerned that the pay-fors aren’t real,” said Sen. Rand Paul (R-Ky.), a fiscal conservative. “Both parties bear some culpability. But I’m worried about adding so much debt in such a short period of time.”
Both Democrats and Republicans have previously relied on dynamic scoring and both have lampooned its use as a budget trick. Predictions about how much revenue a new government policy will generate are often exaggerated or inaccurate and are difficult to calculate, placing enormous pressure on independent budget analysts to come up with favorable numbers that might turn out to be a bust.”