The Trump tax and spending law imposes strict work reporting requirements for people who need Medicaid and the Supplemental Nutrition Assistance Program. While work requirements increase hardship by taking away needed aid, they do not actually increase employment. But there are several steps policymakers can take to increase employment and reduce poverty, which are outlined in a new report from the Urban Institute:
The proposed package of policies includes seven elements: a transitional jobs program, an increase to the federal minimum wages, an expansion of the EITC, an expansion of the child tax credit, a new program of child care purchasing accounts, changes to the SSI program including benefits increases, and changes to Social Security including a benefit increase and changes to payroll taxes.
The authors explain how these policies serve as anti-poverty tools:
Of the individual policies we modeled, the expansion of the earned income tax credit, including employment effects, has the largest antipoverty effect. This policy would lower the overall share of people in poverty from 11.4 percent to 8.8 percent. The policy that increases Social Security benefits has the second largest antipoverty impact, lowering the share of people in poverty to 9.1 percent.
And as effective ways to increase employment:
For the version of the policy package that includes employment effects, the net increase in employment is about 6.7 million. This change in employment comes from the net effect of transitional jobs, increased employment due to the EITC and child care policies, and decreased employment due to the minimum wage and CTC policies.
Legislative maps violate Voting Rights Act
A federal appeals court has upheld a previous ruling by a Louisiana judge that the state’s legislative maps violate the federal Voting Rights Act by discriminating against Black voters. But as the Louisiana Illuminator’s Piper Hutchinson explains, there won’t be immediate action to redraw the political boundaries for the state House and Senate:
Though the 5th Circuit panel agreed that the maps in the Nairne (v. Landry) case violate the Voting Rights Act, there is a stay on redrawing them until the Supreme Court rules in Louisiana v. Callais, the congressional redistricting case. A ruling on [Louisiana v.]Callais is not expected until next May or June. Attorneys for the Nairne plaintiffs have advocated for new maps to be quickly adopted and special elections to be held. But if new maps are eventually adopted, it is most likely they will not be used until the 2027 elections.
The BS at the BLS
President Donald Trump recently fired the head of the Bureau of Labor Statistics, arguing (without evidence) that last month’s disappointing jobs report was “rigged” to hurt him politically. As the Wall Street Journal’s editorial board explains, there are good reasons why the agency’s monthly revisions have become more volatile in recent years:
The response rate for the BLS establishment survey, which is used for the monthly jobs report, has fallen to 43% from 61% over the last decade. Response rates for the household survey that feeds into the unemployment and labor force participation rates have declined to 68% from 88%. Inflation reports may also be affected by falling response rates in calculating shelter prices (14 percentage-point decline over a decade) and weights for items in the consumer price index (28 point decline). … Another problem: A funding shortage has caused BLS to stop collecting some granular data that can illuminate economic changes.
The New York Times’ Jason Furman explains the fallout from Trump’s decision to tap E.J. Antoni as the next BLS commissioner:
Dr. Antoni’s selection has done something I have rarely seen, which is to unite a number of economists and policy wonks from across the political spectrum. The American Enterprise Institute’s Stan Veuger told The Washington Post that “he is utterly unqualified and as partisan as it gets.” Similar sentiments were echoed by people affiliated with conservative and libertarian think tanks, in a Wall Street Journal editorial and a National Review article.
Social Security turns 90, but faces challenges
The Social Security program, which administers earned benefits to more than 70 million retirees, their survivors and the poor and disabled, turned 90 this week. But the program faces insolvency in a decade unless tax increases or cuts are used to address its shortfall. If nothing is done, the popular program would pay 81% of benefits after 2035. The AP’s Fatima Hussein explains how recent legislation has helped to deplete the program:
The Social Security Fairness Act, signed into law by Democratic President Joe Biden and enacted in January, had an impact. It repealed the Windfall Elimination and Government Pension Offset provisions, increasing Social Security benefit levels for former public workers. The new tax law signed by Trump in July will accelerate the insolvency of Social Security, said Brendan Duke at the Center on Budget and Policy Priorities.
Policymakers face difficult choices to shore up the program:
“We will have to make a choice,” [Columbia University professor and top economist in President George W. Bush’s White House Glenn] Hubbard said. “If you want Social Security benefits to look like they are today, we’re going to have to raise everyone’s taxes a lot. And if that’s what people want, that’s a menu, and you pay the high price and you move on.” Another option would be to increase minimum benefits and slow down benefit growth for everyone else, which Hubbard said would right the ship without requiring big tax increases, if it’s done over time. “It’s really a political choice,” he said, adding “Neither one of those is pain free.”
Number of the Day
0.0% – Year-over-year spending change for Americans in the lowest-third income percentile. For comparison, spending increased nearly 2% for higher-income households. (Source: Bank of America Institute via Axios)