Federal Issues

Senator Murray and deficit reduction committee can, and should, include revenue

Tara Lee — 2011-08-11T16:34:25Z

Earlier this week, Senator Patty Murray was named co-chair of the bipartisan deficit reduction committee. The 12-member panel or “super committee” has until late November to identify how to reduce the federal deficit by $1.5 trillion over 10 years. Senator Murray and the other members should not consider deep cuts to public structures without any significant new revenues. The deficit can, and should, be reduced through a balanced approach of revenue increases and spending cuts.

If Congress fails to enact the full $1.5 trillion in deficit reduction, further increase in the debt limit could be no more than $1.2 trillion, and automatic across-the-board cuts would result starting in January 2013. Given the current state of our economy, additional cuts to Medicaid, SNAP (Food Stamps), and the Earned Income Tax Credit, would throw more people into poverty and hurt our recovery.

Some, including Speaker Boehner, have argued that the legislation does not allow the joint congressional committee to consider revenue in order to decrease the deficit.

According to recent analysis from the Center on Budget and Policy Priorities, the committee does have the ability to make revenue part of the solution.

The report states in part: “One question that has fostered different interpretations is whether the Joint Committee can consider increases in revenues as a means of achieving its deficit-reduction target, and — more particularly — whether it can consider tax reform that would produce higher revenues than if Congress extended expiring tax provisions (such as the 2001 and 2003 Bush tax cuts, which are scheduled to expire at the end of 2012) but lower revenues than if Congress let all of those tax cuts expire.

The issue revolves around what "baseline" is used in calculating the amount of deficit reduction that the Joint Committee's recommended policy changes would produce. The standard baseline that the Congressional Budget Office (CBO) uses is a so-called "current-law" baseline, which essentially assumes that Congress will enact no changes in current laws governing entitlement programs and taxes. Thus, it assumes that tax cuts that are scheduled to expire — including "temporary" relief from the alternative minimum tax (AMT), which Congress has routinely extended for years — will all terminate on schedule.

However, an alternative baseline exists: a "current-policy" or "plausible" baseline, which assumes that Congress will extend the 2001 and 2003 tax cuts (other than those for upper-income taxpayers) and relief from the AMT. (This baseline also has some other differences from a current-law baseline.) The President's budget used this alternative baseline as a benchmark.

Which baseline one uses to measure deficit reduction is crucial, as the tax reform component of the Gang of Six plan illustrates. Their proposal to reduce or eliminate many tax expenditures while lowering individual income tax rates below current levels would increase revenues by $1.2 trillion relative to a "plausible" baseline that assumes extension of the 2001 and 2003 tax cuts (other than those for upper-income taxpayers) and AMT relief, but would reduce revenues by $1.5 trillion relative to CBO's current-law baseline.”

As CBPP notes, the debt limit legislation does not prohibit the Budget Committees from asking CBO to produce estimates of the effects of a Joint Committee proposal relative to a current policy or plausible baseline. Nor does the legislation prohibit Congress from using that estimate to determine the extent to which the Joint Committee has met its deficit-reduction target.

With so much at stake and the sheer size of the deficit reduction target, it is imperative that Senator Murray and the new “super committee” include revenue increases as a realistic way to reduce the federal deficit.

Read CBPP’s full report here.

Federal budget decisions could make matters worse for cash-strapped states

Kim Justice — 2011-07-28T21:39:55Z

A new report by the Center on Budget and Policy Priorities (CBPP) shows that among states that enacted a budget for the 2012 fiscal year, nearly all will spend less than they spent in 2008, (after accounting for inflation). Across the country and in Washington state, reductions fall heavily on K-12 education, higher education, health care, and other public structures.

If this weren’t troubling enough, debates at the federal level about raising the debt ceiling have centered on additional cuts to these core services. Further cuts at the federal level would only make matters worse for states who are struggling to recover from the recent recession. In Washington state, federal funding accounts for approximately $15 billion, or 30 percent, of our state operating budget. Cuts at the federal level could spell further troubles for our state budget.

As the CBPP report points out, state budgets for fiscal year 2012 have been hampered by three main factors:

Depressed revenues caused by the severe recession;

Rising costs to meet people’s needs due to demographic changes and the fact that more people are in need of services during a recession;

The expiration of emergency federal aid.

Not only is federal emergency aid ending, but federal policymakers are in the midst of debating various proposals to reduce national spending as part of a deal to raise the national debt ceiling. Proposals would cut anywhere from $500 billion to $1.8 trillion from entitlement programs that support low-income and working families. While the proposals have been shifting and changing by the minute, cuts could include slashing Medicaid, Medicare, Social Security, food assistance, and rolling back health care reform. The disastrous result? More people in need of public systems, less federal money to states (many of which are already operating far below pre-recession levels), and likely additional deep cuts to balance state budgets.

As the President and members of Congress work towards a solution to raise the debt limit and reduce the deficit, they should protect low-income Americans and seek a balanced approach— one that considers reductions or eliminations of special tax breaks for high-income families and corporations.

Click here to read our post on key deficit reduction principles.

Key deficit reduction principles

Tara Lee — 2011-07-11T23:49:49Z

The national debate over deficit reduction and raising the debt limit has intensified this week, as the President and members of Congress work toward an August 2nd deadline. While the debate rages over the size and scope of a package, it is vital that any deficit reduction efforts protect key programs for low-income Americans -- something that can only be accomplished if special tax breaks for high-income families and corporations are reduced or eliminated.

Accordingly, any final deficit reduction package must:

Exempt programs that affect low-income families and individuals

Any deficit reduction package that relies entirely on spending cuts would likely increase poverty and inequality. Cuts to programs such as Medicaid, Medicare, possibly Social Security will harm lower-income families, seniors, veterans, people with disabilities, and children. These vital public structures are pivotal to the economic security of millions of Americans. Cutting them now would greatly harm our economic recovery and could throw millions into deep poverty.

Furthermore, cuts to these programs would likely take an enormous toll on states. The lingering effects of the recession have left states in no position to absorb higher costs. Yet, cuts to programs like Medicaid that are funded jointly by the states and the federal government would do just that. (In the current biennium alone, Washington state has already cut approximately $4.5 billion from health care and education services in order to keep the state budget in balance).

Take a balanced approach to deficit reduction

Significant revenue must be included in any deficit reduction package. Special interest tax breaks and tax cuts for high-income individuals should not remain at the expense of programs that benefit all Americans. Without additional revenue, spending cuts are the only option. All forms of government spending – including spending on narrow tax breaks – need to be on the table.

Reject a global spending cap

Some in Congress have proposed a “global spending cap” which would mean a cap on total federal spending each year. While this might sound harmless, it would put the burden of deficit reduction entirely on the direct spending side of the budget while ignoring spending on narrow tax cuts or breaks. One proposal would arbitrarily limit total spending to 20.6 of Gross Domestic Product (GDP)—which is significantly below current and projected levels.

According to the Center on Budget and Policy Priorities (CBPP), if the cuts to reach the target came entirely through an automatic global spending cap, over the first nine years alone (2013-2021) they would total $1.3 trillion in Social Security benefit cuts, $860 billion in Medicare cuts, and $550 billion in Medicaid cuts.

Notably, federal programs like unemployment insurance, food stamps (SNAP), and Medicaid are designed to provide an automatic cushion for families and the economy during recessions. A global spending cap would prevent these programs from providing an effective backstop during economic downturns.

Furthermore, a global spending cap would force cuts in federal spending during a weak economy. The cap could result in a devastating cycle of a weak economy turning into a deeper recession, and further slowing economic recovery.

The results of any deficit reduction package this year will have ramifications for decades to come. Therefore it is essential that deficit reduction negotiations should include revenues and exclude a global spending cap. A balanced approach by national lawmakers will ensure protection of programs for low-income families and will not increase poverty or income inequality.

New estate tax rules are costly

Tara Lee — 2011-06-13T22:54:52Z

As lawmakers in Washington D.C. continue to debate the size and scope of the federal government, many are proposing deep cuts and substantial changes to health care, education, and other vital public structures. The programs under scrutiny primarily benefit low to moderate income Americans, yet earlier this year, lawmakers extended the estate tax which benefits only the largest one-quarter of 1 percent of estates.

The estate tax, the amount paid on assets of a decesased person, has been the subject of intense political debate and negotiation for years.

As we noted back in December, the compromise between President Obama and Congressional leadership resulted in estate tax rules for 2011 and 2012 that were considerably weaker than those in effect in 2009 (the tax was set to expire at the end of 2010). The changes exempted estates from paying taxes on the first $5 million for individuals ($10 million for couples), and sets the tax rate on these estates at 35 percent—down from 45 percent in 2009.

According to the Center on Budget and Policy Priorities (CBPP), the new rules will cost about $23 billion more than reinstating the 2009 rules over the same two years. The new estate tax rules will only benefit the largest one-quarter of 1 percent of estates, since they are the only ones that that would owe any estate tax under the 2009 rules. Taxable estates will receive more than $1 million apiece in tax breaks this year from the new rules, on average, and estates worth more than $20 million will receive an average of nearly $3.8 million apiece.

CBPP argues (and we agree) that in light of the nation’s serious long-term budget problems — and proposals to slash a wide range of government services, particularly Medicare, Medicaid, and programs for low-income Americans — it would be irresponsible to extend these new rules beyond 2012.

Read the full CBPP paper here

Proposed federal budget plan would disproportionately impact low-income families

Tara Lee — 2011-06-13T22:33:05Z

Discussions around the federal budget have intensified this week, with a possibility of a Government shut-down. Against this backdrop, House Budget Committee Chairman Paul Ryan has proposed a budget plan that would get about 2/3rds of its savings from cuts to programs that serve low-income people.

According to analysis from the Center for Budget and Policy Priorities, the plan proposes cuts of $4.3 trillion over 10 years. Cuts in low-income programs appear to account for at least $2.9 trillion.

The cuts fall into three categories:
• Reductions in Medicaid and other related health care-- $2.17 trillion
• Cuts in mandatory programs that serve low-income Americans--$350 billion
• Cuts in low-income discretionary spending--- $400 billion

Click here for the details.

Federal budget decisions should include revenue, protect low-income populations

Tara Lee — 2011-06-13T22:35:19Z

Just as any solution to our state’s budget deficit must include a balanced approach, decisions made by Congress around the federal budget should also provide a foundation for long-term growth and shared prosperity.

As Congress continues to debate the size and scope of the federal budget, including deficit reduction, the following principles should be used to guide their decisions:

All three major areas of the budget — discretionary spending, entitlement spending, and revenues — should be reviewed.

Future economic growth is threatened by the long-term structural imbalance between spending and revenue. The Great Recession has exposed a key flaw both nationally, and here in Washington state: our failure to systematically account for billions of dollars spent each year on the hundreds of special tax breaks, credits, preferential rates, and other tax preferences or “tax expenditures.”
The co-chairs of President Obama’s deficit commission proposed that reductions in discretionary spending be split between reductions in security and non-security spending.
Non-security discretionary spending constitutes only one-eighth of the federal budget, yet funds many key investments such as education, infrastructure, and research.

Focus on economic growth in the short-term

Congress should consider the impact on state and local governments. One-third of all non-security discretionary funding is in the form of grants to state and local governments to provide services. The precipitous withdrawal of billions of dollars in federal funding would make state and local budget gaps larger, necessitating even greater cuts while negatively impacting the local economy.

Deficit reduction proposals should not push families into poverty, make lower-income people worse off, or widen the gap between rich and poor.

Adoption of a global spending cap (which has been proposed) would force draconian changes in Social Security, Medicare, and Medicaid causing significant harm for the people who need these programs. Deep cuts in programs for low-income and vulnerable Americans would be virtually inevitable. A global spending cap could lead to harmful changes including a block grant in the Medicaid program which would make it far more difficult for states to provide lower-income people access to needed health care.
Any deficit reduction agreement this year should fully protect all means-tested mandatory programs, including the refundable EITC and Child tax Credit from any cuts or harmful changes.
Capping spending at historic levels ignores developments such as the aging of the population, rising healthcare costs, and new federal responsibilities such as homeland security, all of which should be considered in determining federal spending levels.

Members of Congress, as well as policymakers in Olympia, are going to have to make some difficult choices. Lawmakers should take a balanced and equitable approach to putting the federal and state budget on a sustainable long-term path.

Federal cuts would contribute to state budget shortfall

Kim Justice — 2011-03-03T17:54:45Z

H.R.1, a proposal recently passed by the U.S. House of Representatives, proposes to cut non-security discretionary funding by $64 billion. What does this mean to Washington state? While the final outcome remains to be seen, and still needs to be considered by the U.S. Senate, it is estimated that our state stands to lose over $1 billion in federal funds for essential public structures such as health care, job training, education and transportation infrastructure. Any additional federal cuts would be devastating to our state as we work to recover from the Great Recession. State lawmakers have already cut $5 billion from the state budget over the last couple of years, and the state faces a further shortfall of $5 billion for the next biennium.

Although the federal fiscal year has been underway for almost five months, Congress has yet to enact full-year appropriations and has instead been operating on a continuing resolution which maintains current spending at 2010 levels. The continuing resolution was set to expire this Friday, March 4th, but today Congress approved a two-week extension. Congress is under pressure to enact a spending plan quickly to continue federal funding for the remainder of the federal fiscal year which ends September 30, 2011.

The cuts under the proposed spending plan could come quickly and be felt deeply here in Washington state. As the Legislature grapples with a $5 billion shortfall for the next biennium, the loss of federal funds would come as a major setback. The reductions under H.R 1 would further threaten our widely-shared values: Education and Opportunity, Healthy People and Environment, Thriving Communities, and Economic Security.

According to analysis conducted by the Center on Budget and Policy Priorities, the following are examples of cuts to programs and services that would impact Washington state:

Education and Opportunity:

Grants to low- and moderate-income undergraduate students to help pay for college (Pell grants) would be cut by $82 million, impacting 138,000 students.

Kindergarten through grade 12 funding for special education, school improvement, and schools in low-income communities would be cut by a total of $27.2 million.
Head Start, which provides comprehensive early childhood development services for at-risk children ages zero to five, would immediately be cut $16 million, enough to serve roughly 2,000 children*.

Healthy People and Environment:

Mental health and substance abuse services would be cut by $3.2 million.

Funding to help communities pay for sewage and wastewater treatment, water clean-up projects, and for ensuring safe drinking water would be cut by $38 million.

Thriving Communities:

Crime prevention through funding of law enforcement, prosecution and courts, prevention and education, corrections, and drug treatment and enforcement would be cut by $2.6 million.

Funding through the Community Development Block Grant for homeless programs, social services, and improvements to senior and youth service facilities would be reduced by $41.6 million.

Economic Security:

Funds for states to provide job training, job search, and employment assistance to low-income job-seekers through the Workforce Investment Act would be cut by $20.2 million.

Our state cannot afford more cuts to the very services that support our economy and populations most at-risk during difficult economic times. Federal funds are vital to our economic recovery.

* Source for Head Start estimates: Center for Law and Social Policy and National Head Start Association.

For other figures: Center on Budget and Policy Priorities.

Medicaid block grants would be risky for our state

Tara Lee — 2011-06-13T22:37:29Z

The Center on Budget and Policy Priorities has released a new paper that outlines why Medicaid block grant proposals would likely be harmful to our state.

Medicaid is jointly financed, with the federal government paying a fixed share or percentage of a state's Medicaid program costs. (In Washington state it has traditionally been about half). A block grant would replace the current financing system, and the federal government would pay only a fixed dollar amount and leave the state responsible for all remaining costs. This would radically change how Medicaid is financed in our state and have a huge impact on our state budget.

Estimating health care costs are difficult to predict even a year or two in advance, and the Congressional Budget Office (CBO) projections often overestimate or underestimate actual Medicaid costs.

■ Total Medicaid costs in 2008 were approximately 13 percent lower than the CBO had projected they would be in the estimate it issued five years earlier (in 2003), and 3 percent lower than the CBO had projected just one year earlier, in 2007.
■ In 2009, total Medicaid costs were 9 percent higher than the CBO had projected five years earlier and 12 percent higher than the CBO had projected in 2008.
■ In 2010, total Medicaid costs were about 4 percent higher than the CBO had projected five years earlier and 14 percent higher than the CBO had projected in 2009, [5] likely because the recession turned out to be larger and deeper than had earlier been expected.

Under a block grant, federal funding would no longer increase automatically to help cover unanticipated costs. These costs would be borne by our state as we struggle to recover from the Great Recession.

Read the Center's analysis here

Federal block grants would move health policy in the wrong direction

Tara Lee — 2011-06-13T22:39:07Z

In the debate over cutting government spending, attempts to convert the Medicaid program into a block grant are receiving attention nationally and here in Washington state. Medicaid, a joint federal-state partnership, provides health coverage to low-income children, parents, seniors, and people with disabilities. Under a block grant or funding cap, the federal government would pay only a fixed dollar amount of a state’s costs, with the state responsible for all costs that exceed the cap. If the program costs rise due to increases in caseload, economic recessions, or even health epidemics, the federal share would remain the same. This would harm states as they struggle to recover from the recession.

In Washington state, the federal government has traditionally paid about half of the total cost of the Medicaid program. Recognizing the increased need of states during the economic recession, the federal match went up temporarily with the FMAP (Federal Medicaid Assistance Percentage) enhancements through the Recovery Act, which extends the match through June 2011. The infusion of federal money accounted for more than 30 percent of the funds available to balance the budget in the 2009-2011 biennium. Without the extra funding the state would have faced an even bigger budget challenge in preserving priorities like education, health care and environmental protection.

Under the current Medicaid program, the federal government requires states to maintain eligibility levels and provide specific services to beneficiaries. If block grant funding were enacted, the federal share would likely be less than what would be needed to finance our state’s Medicaid program. This would provide policy makers with a bleak choice: contribute more of state revenues that are needed for other public priorities, or cut back the Medicaid program, which would likely limit or restrict eligibility and benefits. This would presumably result in less health coverage for those who need it the most.

Our state’s Medicaid program already has difficulty in recruiting and retaining providers, due to lower reimbursement rates than private insurance. Under a block-grant it is likely that payments to providers would be reduced. This would drive many providers from the program threatening Medicaid beneficiaries’ access to care, particularly specialists.

The Center for Budget & Policy Priorities has a detailed analysis of Medicaid block grants here .

Proposed deal on tax cuts and unemployment insurance includes positives for low-income families

Tara Lee — 2011-06-13T22:46:02Z

The agreement reached by President Obama and Republican leaders this week on the Bush Tax Cuts and several other issues – while substantially benefiting those with the highest incomes -- does have some positive provisions for low-to-middle income working families.

Disappointingly, the extension of all Bush Tax Cuts, which was set to expire on Dec. 31, includes breaks for those making more than $250,000 a year. Even worse, the Estate Tax proposal exempts estates from paying taxes on the first $5 million for individuals ($10 million for couples), and sets the tax rate on these estates at 35 percent—down from 45 percent in 2009.

But other provisions will make a very real and immediate difference in the lives of those struggling in this economy. The 13-month extension of Unemployment Insurance (which expired Nov. 30) is vital for millions of people out of work. The proposal also calls for a one-year reduction in the amount of payroll tax paid by employees.

Significantly, the package continues for two years all of the 2009 Recovery Act (ARRA) improvements that encourage work, support working families, help lessen child poverty and help more Americans to obtain a college education. If these credits were not extended, families with incomes between $12,850 and $17,340 would have been the ones to lose the most. Many of them are parents who work full time at minimum wage. (Note: in Washington State, the current minimum wage is $8.55 an hour; it is scheduled to go up to $8.67 an hour on January 1st).

The improvements would continue to provide:

Key financial relief for working people

The Earned Income Tax Credit (EITC) is a federal tax credit for low- and moderate-income working people designed to encourage and reward work as well as offset payroll and income taxes.

In Washington State, there are 308,782 families who utilize the expanded EITC credit, which includes a total of more than half a million children. (Source: Citizens for Tax Justice)

Financial aid to provide students with the opportunity to go to college

American Opportunity Tax Credit is available to millions of low- and moderate-income students. The maximum value is $2,500 and students can claim the credit for four years of education.

Support for low- and moderate income families

The Child Tax Credit (CTC) covers the added costs of raising children while encouraging parents to work.

For example, under the current proposal, a single-parent working full-time for minimum wage with one child would be eligible for a $1,000 Child Tax Credit ($688.50 if allowed to expire).

The difference is even more striking in a family with two children-under this proposal the family would be eligible for a $2,000 credit. For families making $17,000 a year or less, this credit would have a substantial positive impact on their finances.

In today’s weak economy, these credits have a big impact not only for struggling working families but also for businesses in our state. These households use these credits to pay their mortgage or rent, to buy groceries, to pay utility bills and to provide other day-to-day necessities thereby bolstering the economy. According to the Congressional Budget Office, policies that increase the resources of families with lower incomes have a larger short-term economic impact than policies that increase resources for families with significantly higher incomes.

Congress Should Extend Unemployment Insurance

Tara Lee — 2011-06-13T22:47:10Z

Thousands of struggling Washington state families rely on unemployment benefits to get by. Unfortunately, their federal extended unemployment benefits are scheduled to expire in less than a month – on November 30th.

It’s essential that the benefits be extended now when our country continues to face unprecedented job losses. Economists predict it will be years until the unemployment rate returns to a normal level.

Washington State’s unemployment rate has risen to 9.0 percent (4.4 points higher than it was before the recession). Data shows that 780,000 people in Washington were below the poverty line in 2009.

In ordinary times, people who’ve lost their jobs typical receive about 26 weeks of unemployment. But during recessions, the federal government has historically extended benefits for people who have been out of work for longer periods of time.

Under the most recent extension, created in 2008, workers in the state are eligible for a maximum of 99 weeks of unemployment insurance benefits. If the federal government does not extend the benefits, most states will not be able to absorb the cost and continue the program.

According to the Center for Budget and Policy Priorities, unemployment insurance — which expanded substantially last year in response to the increased need — kept 3.3 million people nationwide out of poverty in 2009.

Allowing these emergency Unemployment Insurance measures to lapse would result in more people falling into poverty. It would also mean less spending by unemployed workers and their families, which would hurt sales at local businesses and undermine job creation in an already weak recovery.

Congress should not extend Bush Tax Cuts for the wealthy

Tara Lee — 2010-11-05T21:22:55Z

One of the most important issues the “lame-duck” Congress must deal with before a new Congress takes office in January is the extension of the Bush Tax Cuts, which are set to expire on Dec. 31.

Given high unemployment and the ongoing recession, now is the time to end the tax breaks for the wealthy.

The savings from ending the high-end cuts for those with incomes over $250,000 would be approximately $40 billion in 2011 alone. That’s much needed money for our nation’s priorities. Now more than ever, we cannot afford to waste resources on tax breaks for the richest in society.

Even a temporary extension of another year or two is a bad idea. It would increase the likelihood that the high-end tax cuts would eventually be made permanent. And it would unnecessarily add nearly $1 trillion (including interest costs) over the next 10 years to the deficit.

Congress should continue tax cuts that provide relief for tens of millions of working families and children. If these credits are not extended, families with incomes between $12,850 and $16,333 would be the ones who’d lose the most. Many of them are parents who work full time at minimum wage.

Those tax cuts include:

Child Tax Credit (CTC): provides support to low- and moderate-income families to cover the added costs of raising children while encouraging parents to work;
Earned Income Tax Credit (EITC): a federal tax credit for low- and moderate-income working people designed to encourage and reward work as well as offset payroll and income taxes. Nearly 5 million adults and more than 8 million children would lose this benefit if Congress fails to make the improvement permanent;
American Opportunity Tax Credit: The American Opportunity Tax Credit is available to millions of low- and moderate-income students. The maximum value is $2,500 and students can claim the credit for four years of education.

The choice is clear— help working families or continue to provide tax cuts for the wealthy.

Congress Should Extend TANF Emergency Fund

Tara Lee — 2010-09-27T22:28:08Z

The TANF (Temporary Assistance to Needy Families) Emergency Fund created by Congress as part of last year’s Recovery Act is set to expire on September 30.

If the fund is not extended, additional deep cuts may be made to the TANF program that serves low-income families with children in our state. The program has already been taken deep cuts and will be subject to the 6 % across-the-board cuts ordered by Governor Gregoire. Additional cuts to the program will likely come out of child care cuts and grant reductions.

Many other states will eliminate the program altogether further dampening attempts at economic recovery. In our state, the program is likely to continue.

Since its creation, 37 states, including Washington, have also used the Emergency Fund to support a range of subsidized jobs programs, including transitional jobs, summer jobs programs for youth in low-income families and supported work models for individuals with disabilities.

It has provided more than 7,000 jobs in Washington State alone.

The Emergency Fund has helped unemployed families find work; businesses expand capacity in a difficult economic environment, and given a financial boost to local communities. The jobs subsidized by the TANF Emergency Fund are in the private, non-profit, and public sectors, and include administrative, retail, construction, health services, and landscaping.

The job subsidies provided by the Emergency Fund have been especially helpful to small businesses—helping them add new jobs and expand their business. With subsidized jobs, small businesses have extra resources for additional investments.

With unemployment in Washington State at 11 percent, Congress should extend this fund and continue to provide federal aid for jobs to strengthen the local economy. This is no time to abandon a successful job program that supports those trying to stay in the workforce.

Federal funding would come at a critical time

Tara Lee — 2011-06-13T22:49:50Z

Update (Aug. 10, 2010): The U.S. House joined the Senate in approving this critical aid to states.

The U.S. Senate voted this morning in support of $26 billion in additional federal assistance for states -- including $338 million for Washington.

The bill, which is moving toward final passage in the Senate, comes at a critical time.

Given declines in the state’s revenue forecast and in recent revenue collections reports, this amount would likely be enough to barely balance the current state budget -- obviating any immediate need for a special session or Governor-ordered across-the-board cuts.

The much-needed funding comes at a time when the state has already cut $4 billion in cuts in response to the effects of the recession and faces an additional shortfall in maintaining essential services in the coming biennium.

Without the funding, the state would have faced an even bigger budget challenge in preserving priorities like education, health care and environmental protection.

The bill would also include an additional $200 million to prevent teacher layoffs at a critical time.

As part of last year’s Recovery Act, states received federal assistance through an increase in federal matching dollars on state Medicaid spending. This aid has helped our state weather the impacts of the national recession by preventing damaging cuts to health care services and saving jobs in the public sector. The increased FMAP provisions are currently set to expire at the end of 2010, but the Senate bill would extend the funding through the end of the state fiscal year (June 30, 2011).

Congressional Budget Office (CBO) estimates released Tuesday night show the revised bill would pay for itself, even reducing future deficits by $1.37 billion over the next decade.

Failing to Extend FMAP and COBRA would have drastic consequences in Washington

Ben Secord — 2010-06-18T23:21:07Z

With more than 300,000 workers in Washington unemployed, it’s critical that Congress extend critical provisions that help struggling families during the slow economic recovery.

Just before Memorial Day recess, the U.S. House passed H.R. 4213, which would, among other things, extend the emergency jobless benefits millions of long-term unemployed workers are relying upon.

However, in last minute negotiations two critical provisions were left out of the bill. The first is federal aid to states through increased federal matching dollars for Medicaid spending, known as FMAP (Federal Medical Assistance Percentage). The other is an enhanced COBRA program that provides subsidized health coverage to unemployed or underemployed workers.

When Congress returns from recess today, the U.S. Senate will likely take up the House-passed bill immediately. If they fail to include these provisions in their version, Washington state will face some dramatic consequences.

FMAP

As part of last year’s Recovery Act, states received federal assistance through an increase in federal matching dollars on state Medicaid spending. This aid has helped our state weather the impacts of the national recession by preventing damaging cuts to health care services and saving jobs in the public sector. But the increased FMAP provision is set to expire at the end of 2010, a full six months before our state fiscal year ends in June of 2011.

If this FMAP provision is not extended in the final version of the bill, Washington would likely face deeper cuts to health care services to make up for the $480 million loss in funding at a time when more families are relying upon them.

COBRA

Also part of the 2009 Recovery Act was a temporary improvement to COBRA, which provides health coverage for workers in between jobs. The improvement gave qualifying workers a 65 percent bump to their health benefits, giving them access to affordable insurance while they are out of work. But that help expired at the end of May.

An estimated 3,502 workers in Washington were receiving the enhanced COBRA subsidy each month. Without an extension of this program, thousands of workers will lose the only reliable health coverage they can afford.