Issues at Stake in Looming Budget Wars
President Joe Biden’s budget sets forth where the battle lines are being drawn by Democrats and Republicans between now and the 2024 Presidential elections and the issues at stake.
At an Ethnic Media Services briefing, March 17, experts – Chad Stone, Chief Economist at the Center for Budget and Policy Priorities; Elizabeth Lower-Basch, Deputy Executive Director of Policy at the Center for Law and Poverty CLASP; and Andrew Eschtruth, Associate Director for External Relations at the Center for Retirement Research at Boston College – explained the President’s Budget, an ambitious spending plan including repealing Trump’s tax cuts for the wealthy and increasing the corporate tax rate to pay to shore up Medicaid and Medicare, a permanent Enhanced Child Tax Credit, and environmental and educational priorities, among other programs, plus deficit reduction measures. They also examined Social Security’s future, which the budget didn’t address, but might be under attack by Republicans.
Chad Stone, Chief Economist at the Center for Budget and Policy Priorities, presented an overview of Biden’s proposed budget and delved into what the Republicans might propose for theirs.
“It’s important to start with the reminder that the separation of powers in the Constitution gives Congress the power of the purse with respect to taxes and spending, the President’s budget is a guide to the President’s vision and desires and power of persuasion, but Congress has no obligation to accept the President’s proposals,” said Stone.
“That said, President Biden has presented a visionary budget proposal which recognizes that meeting the needs of the United States in the 21st century requires more revenues and bolder program initiatives than we currently have.
“Democratic-controlled Senate likely will pass a budget if they actually get to doing a budget that reflects that vision, but it won’t be a rubber stamp out of the Bible as we learned in the earlier proposals where lots of good legislation got done but it wasn’t like the President said ‘this is what I want and Congress that,’ here you are, so frankly it’s impossible to know what will happen in the Republican-controlled House where spending and taxing measures ultimately originate under the Constitution because so far GOP rhetoric doesn’t even honor the rules of arithmetic, and reckless and dangerous brinkmanship over substantively meaningless debt limit.
“Something that has no real economic significance is still an issue that could blow up everything. We hope not.
“Center on Budget and Policy Priorities President Sharon Parrott’s statement on the President’s budget which is on the CBP website that explains how President Biden’s 2024 budget moves us toward a nation where everyone can thrive and share in the nation’s prosperity, which will be a change from how things have been.
“By doing things like investing in people, in communities, and importantly creating a 21st century tax system that supports these investments in a fiscally responsible manner, the budget invests in children; supports for workers; housing affordability; education; and core government functions, among others. Big ideas for changing the way things have been going, and it finances these investments by raising taxes on high-income people and profitable corporations that have benefited the most from the nation’s economy to date.
“It also broadens opportunity, including among people in communities who have long been under-invested in such as people with low incomes; people of color; indigenous communities; and people in rural communities.
“Rather than being financed by dedicated taxes like Social Security and Medicare, to a large degree these include national defense, but non-defense discretionary spending is where a lot of the funding to help people in communities can be found including Social Security and IRS administrative costs.
“The IRS has some money that allows it to conduct many more audits on high income individuals where lots of missing tax revenue can be found.
“How all this will play out in the House is anybody’s guess at this point since we hear a lot of uninformed or arithmetically impossible rhetoric at this point.
“It’s quite possible that there won’t be a budget process that normally. The House and Senate pass their own budget resolutions. They get together to come up with the Congressional budget resolution which doesn’t need to be signed by the President. This is a resolution, not a law, and that lays out the ground rules and totals for various programs that Congress then proceeds to pass the laws that enact. I don’t know how things are going to play out. We live in interesting times,” said Stone.
Commenting on how heavily will funding for Ukraine figure into this fight, and how big of a slice of the budget is for Ukraine, Stone said, “I’m sorry I don’t have the number in front of me. It’s a significant amount of money but it’s not a budget buster amount of money.”
“It is money that’s being spent there rather than somewhere else and so it has some effect on squeezing other things.
Elizabeth Lower-Basch, Deputy Executive Director of Policy at the Center for Law and Poverty CLASP, discussed the safety nets.
“The budget does propose to make some really important investments in children, families, seniors, workers, particularly those with low and moderate incomes, and it’s a particularly important moment because a lot of the pandemic era programs are winding down,” said Lower-Basch.
“We know that costs for food, child care, health care are continuing to rise. Families are feeling the pinch. The President’s budget does propose to bring back the enhanced Child Tax Credit which was rolled out in 2021 as part of the American Rescue Plan.
“Parents who filed a tax return or a simplified form got $300 per month for each child younger than six; $250 per month for children ages 6-17 for six months, and then they got the other six months’ worth of benefits when they filed their taxes. This was fully refundable so even if you had little or no earnings you got the full amount of the credit, and this was transformative.
“This was allowed to expire. The President is still putting forward a proposal to have it, going forward, and particularly to make some refundable part of it, permanent.
“Another big proposal in Medicaid, which provides health insurance coverage access to health care for tens of millions of low-income individuals and families. There are some people who are still left out, the President aims to close the coverage gap in the states that still haven’t expanded it so that reaches people without children as well as parents who are low income but not quite low enough to qualify.
“It’s called the coverage gap. It would also require all states to expand Medicaid for postpartum women, people who just had babies for 12 months. This is now a state option probably.
“The budget also calls to invest an additional 150 billion dollars over 10 years for seniors and people with disabilities so that they can get care at home or in community settings rather than having to be cared for in a nursing home.
“The budget provides high priority on federal nutrition food security programs including school meals. The special supplemental nutrition for women, infants, and children (WIC) program that helps pregnant women and babies particularly by formula, by healthy groceries, as well as SNAP (Supplemental Nutrition Assistance Program).
“This year the farm bill is up for reauthorization and that’s off usually a bipartisan bill so the SNAP is one area where there might be some opportunity for legislation to happen even, given the divided Congress.
“Some of the most striking proposals are in the space of care, both child care and paid lien. The budget calls for a National Paid Family and Medical Leave program which we have never had in the United States. It would allow 12 weeks of paid family and medical leave for all workers so that they can step away and still be paid while they’re caring for a newborn, a sick family member, or for their own health care.
“The child care and early childhood programs would also get large increases, $600 billion over 10 years for child care. This is the largest investment that we’ve seen in a previous budget proposal. It would serve an additional 16 million children with affordable child care and four million four-year-olds could get proposed pre-kindergarten education.
“These proposals do need to go through Congress to become real and there certainly would be a lot of fighting and back and forth to get it.
“These do build on proposals that didn’t quite make it to the finish line last year, even when Democrats did control both the House and the Senate.
“In states that haven’t expanded Medicaid, expansion is very popular. The pandemic really helped everyone understand how important child care is, and that you can’t work if you don’t have child care, if you have young children,” said Lower-Basch.
Speaking about student loan forgiveness, Lower-Basch said, “The widespread forgiveness that the President proposed is still caught in the courts and has not rolled out, but there’s existing programs that provide public service loan forgiveness for people who work for the government; for non-profits; so that includes people like teachers, child care providers, doctors, and that program has been around for a while but it was previously very badly implemented.
Andrew Eschtruth, Associate Director for External Relations at the Center for Retirement Research at Boston College, talked about Social Security.
“There’s not a lot of detail on the budget in terms of Social Security,” said Eschtruth.
“Social Security is the backbone of the U.S. retirement and disability income systems. In this country, it currently provides inflation-protected benefits to more than 65 million people.
“Currently the program does have a long-term financing shortfall which has been motivating discussions about ways to reduce or eliminate the financing shortfall and that is one of the reasons why it’s got a lot of attention in the last few months and during the State of the Union.
“Under current law, if there were no policy changes to the Social Security program the system’s actuaries estimate that it could continue to pay full benefits until 2035. At that point, if there were no changes made before then, this system could continue to pay about 80 percent of benefits based on incoming payroll taxes.
“You can increase revenues going in and or you can reduce benefits being paid out. Sometimes people talk about raising the full retirement age as if that were a third option, that it were not a benefit cut of some sort, but it just for clarity, from an accounting perspective and a budget, in a real world perspective if you were to raise the full benefit retirement age that is a form of the benefit cut to the program.
“One of the things the President’s budget does is it would increase by 10 percent that administrative budget of the program and that would be used to deal with these backlogs to generally improve service throughout the agency, to be able to hire more people, to improve technology that workers work with, and improve services in that way that Social Security delivers,” said Eschtruth.
“With respect to the overall finances of the program, the President’s budget did not go into any detail other than to say that it was not going to propose any benefit reductions and would fight any benefit reductions that were proposed by the Congress.
“If that were the case and that it would work with the Congress to strengthen Social Security by ensuring high income workers pay more, that was essentially the full extent of the statement on the Social Security program.
“In terms of any changes to the benefit structure, or the tax structure, it is important to think about any changes to Social Security in the context of the whole retirement system, for example, many people don’t have access to an employer-sponsored savings plan in the workplace that’s a 401k,” said Eschtruth.
