Hit ‘reset’ on center closings

The Labor Center is critical to all three elements of the university’s mission.

Editor’s Note: These are the remarks of Professor Elizabeth Heineman, chair of the History Department at the University of Iowa, prepared for a news conference Wednesday about the planned closing of the UI Labor Center. Professor Heineman was one of several speakers at the news conference.

elizabeth-heineman_0My name is Elizabeth Heineman. I’m a member of the History faculty at the University of Iowa, where I’ve taught for almost 20 years.

The announcement of the closure of the Labor Center and many other centers and programs complemented them on their good work, but said they weren’t critical to the university’s academic mission and student success. I’d like to talk about the university’s mission and the Labor Center’s role in fulfilling it.

The university’s mission is a three-legged stool: teaching, research/scholarship, and public engagement/community service. We’ve heard a great deal about the Center’s public engagement and community service, so I want to talk about the other two legs of the university’s mission: teaching, and research/scholarship. I’m here to say that the Labor Center — in addition to everything you’ve already heard — is also critical to these elements of the university’s mission.

Let me start with some information about the Labor Center’s research activity.

  • The Labor Center is a major recipient of nationally-competitive grants, which have totaled some $950,000 since 2002 — almost a million dollars. These attest to the Labor Center’s outstanding role in the research mission of the university. In fact, far from losing steam during the current stringent budgetary environment, the Center won a grant of nearly $200,000 from the National Endowment for the Humanities just this spring. The NEH doesn’t throw money around. This kind of grant from the National Endowment for the Humanities means that the Labor Center is on the map in the research world. This is exactly the kind of activity that helps to establish UI as a major research university.
  • Why does the Labor Center keep winning these major grants? One reason is the Iowa Labor History Oral Project, nationally recognized as one of the country’s most important collections in labor history. It has been used for cutting-edge research by Iowa faculty, staff, and PhD students as well as scholars nationally and internationally — and every time someone travels from far away to use our collections, it enhances the University’s reputation as a hot spot for research activity.
  • Perhaps most important: the Labor Center is an integral part of the university’s teaching mission. We’ve heard a bit about graduate education, but the Labor Center is perhaps even more crucial to undergraduate education.
    • Labor Center staff teach courses: not just in communities and on the shop floor, but in the undergraduate classroom. Their courses on labor history in the US and internationally are a crucial part of any basic education in both US and global history.
    • In those courses, students aren’t just reading textbooks and listening to lectures. Rather, they’re using the Center’s oral history collection and performing their own oral histories, gaining experience in public history, not just academic history. Often, they choose to research their own hometowns. When they go home to do interviews, when they talk with their families and neighbors about their assignments, it helps to send the message that the University is committed to preserving the history of working Iowans and Iowa communities – and engaging our young people in the process.
    • Finally, the Labor Center is very important in facilitating internships with community organizations. Those internships help students to gain jobs skills, and they provide fresh perspectives and energy for the host organizations.

It’s possible that those who made the decision for closure weren’t aware of all these aspects of the Labor Center’s activity. No one can be in command of all detail. This is why a process of consultation and input is necessary — consultation with the people on the ground who work closely with the Center and who are aware of all aspects of its activity and its contribution to the university’s three-legged mission: teaching, scholarship, and public engagement.

I would like to see such a process. Let’s hit reset, gather the information we need about what, exactly, would be lost if the Labor Center were to close. Otherwise, we risk losing a resource that is invaluable to the state and to the university alike.

Tight margin — big difference

The two-vote House margin on the Farm Bill would mean big changes for struggling Iowa families if accepted by the Senate.

More Iowans than you might expect have a stake in what happens in Washington in the coming days on the Farm Bill. It’s not just farmers.

While the Farm Bill addresses conservation, commodities, rural development, and crop insurance, among other issues, it also carries reauthorization of the Supplemental Nutrition Assistance Program (SNAP) — formerly known as Food Stamps.

In the 2014 Farm Bill, SNAP constituted 80 percent of spending.[i] That investment makes a big difference to about 1 in 9 Iowans — and to the local stores where they use their SNAP benefit. About 350,000 Iowans received SNAP assistance in April of 2018.[ii]

The Senate proposal, which may come to a vote next week, differs markedly from the House bill, which passed 213-211 despite bipartisan opposition. The House bill would cut SNAP for 1 million households, imposing new and unnecessary work requirements on households where people are already working, or unable to work.[iii]

Robert Greenstein, president of the nonpartisan Center on Budget and Policy Priorities, summarized the challenge for low-income working people under the House bill:

Robert Greenstein,
Center on Budget and Policy Priorities

Among those likely to lose food assistance are a considerable number of working people — including parents and older workers — who have low-wage jobs such as home health aides or cashiers and often face fluctuating hours and bouts of temporary unemployment that could put their SNAP benefits at risk. In addition, substantial numbers of people with serious physical or mental health conditions, as well as many caregivers, may struggle either to meet the monthly work-hours requirement or to provide sufficient documentation to prove they qualify for an exemption — and, consequently, may be at risk of losing nutrition assistance.[iv]

The Senate bill looks to improve the SNAP job training program by using feedback from local employers on the skills and opportunities needed in the area. It continues to invest in pilot testing of job training programs, while House-proposed work requirements have not been tested in such state-level pilots.[v]

The bill would also focus assistance on underserved populations, fund nutrition education initiatives, and reauthorize SNAP. It reduces verification barriers for elderly and disabled households by extending certification periods for two to three years.

SNAP is critically important for child development, educational attainment, preventing disease, and lifetime earnings.[vi]

The Senate and House Farm Bill proposals offer decidedly different directions for a proven anti-poverty program that already assures that thousands of Iowans receive nutrition assistance.

Natalie Veldhouse is a research associate for the nonpartisan Iowa Policy Project. nveldhouse@iowapolicyproject.org

 

[i] United States Department of Agriculture, “Projected Spending Under the 2014 Farm Bill.” January 2018. https://www.ers.usda.gov/topics/farm-economy/farm-commodity-policy/projected-spending-under-the-2014-farm-bill/
[ii] Iowa Department of Human Services, “F-1 Food Assistance Program State Summary – April 2018.” May 2018. http://publications.iowa.gov/27559/
[iii] Center on Budget and Policy Priorities, “House Agriculture Committee’s Farm Bill Would Increase Food Insecurity and Hardship.” April 2018. https://www.cbpp.org/research/food-assistance/chairman-conaways-farm-bill-would-increase-food-insecurity-and-hardship
[iv] Robert Greenstein, Center on Budget and Policy Priorities, “Greenstein: Partisan House Farm Bill Would Turn Clock Back on Efforts to Reduce Hunger and Hardship.” June 21, 2018. https://www.cbpp.org/press/statements/greenstein-partisan-house-farm-bill-would-turn-clock-back-on-efforts-to-reduce
[v] Center on Budget and Policy Priorities, “Senate Agriculture Committee’s Bill Strengthens SNAP and Avoids Harming SNAP Households.” June 2018. https://www.cbpp.org/research/food-assistance/senate-agriculture-committees-bipartisan-farm-bill-strengthens-snap-and
[vi] Feeding America, “Child Food Insecurity: The Economic Impact on our Nation.” 2009. https://www.nokidhungry.org/sites/default/files/child-economy-study.pdf

Housing threat to 65,000 Iowans

New proposals would destabilize secure housing for thousands of Iowans, with tremendous impacts on child development including social and emotional well-being, and physical health.

Over 36,000 low-income households in the state of Iowa depend on rental assistance from the U.S. Department of Housing and Urban Development (HUD)[1] Rental programs are crucially important for the financial security of Iowans who are able to receive benefits. However, 3 of 4 households qualifying for rental assistance are unable to access them due to funding constraints.[2] A proposal from the Trump Administration and a House bill proposed by Rep Dennis Ross seek to further stifle this shrinking program.

Iowans projected to be affected by housing proposals
By congressional district (Source: Center on Budget and Policy Priorities)


In Iowa, the average income of households using rental assistance is just over $12,000. Ninety-seven percent of Iowans using rental assistance fit the category of very low income, meaning they earn 50 percent of the local median income or less. Housing affordability is an issue in both rural and urban areas — 18,700 of Iowa households using rental assistance are in non-metropolitan areas.[3]

The HUD proposal seeks to increase the percentage of a household’s income that they must contribute to rent from 30 to 35 percent. That 17 percent increase is on average a $55 monthly rent increase for families.[4] The changes proposed by the Trump Administration would impact 65,400 Iowans, including 24,600 children. The plan also stands to triple minimum rents for households with a non-elderly or disabled member[5] and eliminate deductions used by the elderly and disabled, and by working families for childcare expenses.

The Ross bill also would eliminate income deductions for eligibility and increase rents for Iowa’s elderly and disabled rental assistance recipients.[6] The bill would impact over 24,400 Iowa households receiving rental assistance; with a 41 percent monthly rent increase for recipients.

Rental assistance encourages work by freeing up household income for work-enabling basic needs such as food, transportation and child care. Secure housing has tremendous impacts on child development including social and emotional well-being, and physical health.[7] These two proposals threaten to destabilize housing for many working low-income households with children, as well as for the elderly and disabled all across the state of Iowa.

Natalie Veldhouse is a research associate for the nonpartisan Iowa Policy Project. Contact: nveldhouse@iowapolicyproject.org

 

[1] Center on Budget and Policy Priorities analysis of 2016 HUD administrative microdata

[2] Center on Budget and Policy Priorities, “Policy Basics: Federal Rental Assistance.” November 2017. https://www.cbpp.org/research/housing/policy-basics-federal-rental-assistance

[3] U.S. Department of Housing and Urban Development. “Assisted Housing: National and Local Dataset.” 2017. https://www.huduser.gov/portal/datasets/assthsg.html#2009-2017_query

[4] Center on Budget and Policy Priorities, “Trump Plan Would Raise Rents on Working Families, Elderly, People with Disabilities.” April 2018. https://www.cbpp.org/blog/trump-plan-would-raise-rents-on-working-families-elderly-people-with-disabilities

[5] Center on Budget and Policy Priorities, “Trump Plan to Raise Minimum Rents Would Put Nearly a Million Children at Risk of Homelessness.” April 2018. https://www.cbpp.org/blog/trump-plan-to-raise-minimum-rents-would-put-nearly-a-million-children-at-risk-of-homelessness-0

[6] Center on Budget and Policy Priorities, “House Bill Would Allow Sharp Rent Increases on Struggling Low-Income People.” May 2018. https://www.cbpp.org/blog/house-bill-would-allow-sharp-rent-increases-on-struggling-low-income-people

[7] Research and Practice, “US Housing Insecurity and the Health of Very Young Children.” August 2011. https://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2011.300139

 

 

15 yards, loss of revenue

Governor Reynolds’ remarks about her tax cuts for the wealthy fail any test of accuracy.

It’s time to throw the penalty flag on Governor Kim Reynolds. Her remarks about the tax cuts she signed into law Wednesday for the wealthy fail any test of accuracy. Iowans need to know the facts.

It would be different if she had acknowledged, and made a case for:

•  massive tax cuts for the wealthiest.
•  cutting revenues, assuring continued suppression of education and opportunity, public health and safety and investments in the future of Iowa.
•  continued massive corporate tax giveaways, as business tax credits have doubled in five years.

But those were not her messages — and those messages will not be repeated here. The Governor is (1) deceiving Iowans about some policies she has adopted, and (2) ignoring likely damage to the economy from these tax cuts.

She even put off some forward strides she had suggested but abandoned during the recent legislative session. The concept of “reform” is gone, as the bill does nothing to simplify taxes for at least four years, and leaves in place a system that already was heavily skewed to benefit the wealthy.

Here are a few critical realities:

  The income tax savings to a middle class family next year are only $3 to $4 a week (according to the Department of Revenue) — while the sales tax increase will offset such savings for many.
  Millionaires, on the other hand, will see on average an $18,773 cut for the year.
  Larger tax cuts scheduled to take place in five years might not happen because they are triggered by a revenue target that will be very difficult to meet. (But count on tax-cut proponents to campaign on them.)
  Instead of adjusting taxes in a way that cuts would be paid for, this legislation will actually take $300 to $400 million a year out of the budget. Those dollars could have gone to adequately fund education or public safety or mental health care.
  The bill makes $40 million in corporate income tax cuts.
•  The bill provides an unneeded tax break for wealthy earners of “pass-through” income from business.

Meanwhile, the bill fails to reform business tax credits, which have doubled in five years, to $400 million. And it also fails to raise the standard deduction or eliminate federal deductibility, both of which the Governor had proposed but compromised away.

As reviews and promotions of the tax bill proceed, keep these points in mind. And watch for more information, because the analysis will continue on a bill developed in secret, for signing at an invitation-only ceremony.

Mike Owen is executive director of the nonpartisan Iowa Policy Project. Contact: mikeowen@iowapolicyproject.org

Tax bill: Know five points

The new tax plan abandons real tax reform for costly changes slanted heavily to the rich. It is more likely to hurt the Iowa economy than to help it.

Here are five things you need to know about the final version of the tax bill now scheduled for a vote in the Iowa Legislature this Saturday: (1) It is not income tax reform, (2) It is not a middle-class tax cut, (3) It is more skewed to the richest Iowans than previous bills, (4) It is very expensive and will force cuts in education, public safety and other services, and (5) It is more likely to hurt the Iowa economy than to help it.

As we have pointed out previously, real income tax reform would rein in expensive business tax credits that have little effectiveness, eliminate federal deductibility, increase recognition of the costs of raising a family, and raise the Iowa standard deduction — which would both simplify taxes for thousands of Iowans, and target tax cuts at lower and middle-income taxpayers. The tax bill does none of these things for the next four years.

Earlier versions of the House bill would have increased the standard deduction and eliminated federal deductibility, but those provisions were jettisoned in favor of $40 million in corporate tax cuts and more tax preferences for high-income business owners. The bill does little to reform business tax credits, which have doubled in five years. It adds a new and expensive loophole — a deduction for pass-through income from certain businesses.

For the next four tax years the bulk of the tax savings go to the most well off. In 2021, almost half of the tax cuts will go to the richest 2.5 percent of Iowa taxpayers, those making $250,000 or more. Their taxes are reduced by 18 percent, over twice the cut for those in the middle. For those making over a million dollars, the tax cut will average $24,636.

Meanwhile, those in the middle will see income tax cuts of $100 to $300 over the next four years, much of which will be taken back in increased sales taxes of $35 to $60.

All of this comes at a high cost to the state — over $400 million a year by 2021. With over half the budget going to education, this means the underfunding of our public schools and the rising tuition and debt for our community college and university students will continue.

The bill’s only “trigger” does nothing to guarantee fiscal sustainability, its purported purpose. The $400 million hit to the general fund will happen no matter how slow the Iowa economy, and state revenues, grow. We could hit a recession in the next two years, and those tax cuts will remain in place.

The only trigger governs an additional round of tax cuts for 2023. If the revenue target is met (and it would require growth rates of over 5 percent per year) then the annual cost of the bill jumps to $643 million. Only then would federal deductibility end, and the higher federal standard deduction come into play.

If the bill’s backers are counting on growth to come to the rescue, they are willfully ignoring all evidence to the contrary. The last major income tax cuts in Iowa, in 1997-98, not only failed to stimulate growth, but likely contributed to the subsequent slowing of the state’s economy. The tax cuts in Kansas led to slower growth.

Peter Fisher is research director of the nonpartisan Iowa Policy Project. pfisher@iowapolicyproject.org

Tax cuts: Already tried, failed

Iowa’s coming tax-cut experiment has been tried before and failed. Research showed the tax cuts appear to have slowed growth, taking money out of the economy.

Former Iowa Department of Revenue official Michael Lipsman discusses tax issues at a public forum last week at the State Capitol as former Senator Charles Bruner, left, and Senators Joe Bolkcom, Janet Petersen and Amanda Ragan listen. The institutional memory of experts such as Lipsman has been lost as legislators have rushed into plans to overhaul Iowa’s tax system, with most discussions taking place outside public view and earshot.

♦♦♦♦♦♦

Twenty-one years ago the Iowa Legislature enacted an across-the-board 10 percent cut in state income tax rates. That tax cut not only failed to spur economic growth, but bears a share of the blame for the under-performance of the Iowa economy in the years following. And it led to recurring revenue shortfalls and budget cuts.

Some in the Iowa Senate aim to repeat the experiment, this time with an 8 percent cut. There is no reason to expect a different result.

A 2004 report by Michael Lipsman, then head of the Tax Research and Program Analysis Section of the Iowa Department of Revenue, explains why the tax cuts of 1997 and 1998 had a negative effect on the economy.[1] That legislation cut all income tax rates by 10 percent, expanded the exemption for capital gains income, increased the pension exclusion, and exempted lineal ascendants and descendants from the state inheritance tax.[2]

The tax cuts were expected to reduce state revenue by $318 million in 2019. But Lipsman estimates that the effect of all these tax provisions was a reduction in revenue exceeding $600 million a year by 2002. Why the larger number? Because not only did the state take a smaller share of Iowans’ income in taxes, but income grew more slowly than it would have without the tax cuts.

This runs counter to the ideology of supply-side economics, which predicts that tax cuts will always spur growth. But Lipsman’s point is that it depends on the nature of those cuts — how much goes to non-residents, how much to high-income residents, where savings are likely to be invested, and where goods are produced.

The Iowa tax rate cuts, the pension exclusion, and the capital gains preference all concentrated their benefits on higher income taxpayers, and over a third of the inheritance tax benefit went to non-residents. The 3 percent of Iowa taxpayers with over $100,000 income got 24 percent of the benefit from the rate cuts, and these are the taxpayers most likely to invest their tax cut rather than spend it locally. It is likely that much of the tax savings was invested outside the state. Furthermore, most of the high-value consumer goods purchased by upper-income Iowans are produced outside the state.

At the same time, the tax cuts reduced state and local revenue, and public-sector employment dropped as a result. State and local government payrolls in Iowa decreased 16 percent from 1997 to 2002, over twice the rate of decline for the country as a whole. And state and local governments spend primarily within the state of Iowa, helping to boost the state economy. Cuts in public sector spending hurt the state economy directly (reduced purchases from local suppliers) and indirectly (reduced local purchases by public sector workers).

The upshot is that the tax cuts appear to have slowed growth, taking money out of the economy that ultimately ended up invested elsewhere, or went directly to non-residents, or was spent on goods produced elsewhere, instead of supporting Iowa businesses. In the five years leading up to the tax cuts, the Iowa economy grew at a rate nearly identical to the national economy: 28 percent. In the five years following the cuts, Iowa’s growth fell to 22 percent, compared to the national rate of 27 percent.

The massive tax cutting experiment in Kansas produced similar results — the Kansas economy slowed rather than accelerated. The experiment was a failure, and was ended by the Legislature.

The latest House tax bill would shower three-fifths of its benefits on taxpayers with income over $100,000, much more skewed to the top than the 1997 legislation. The Senate bill is likely to be skewed as well; it includes a pass-through income loophole that would cost $100 million, four-fifths of that going to the richest 5 percent of taxpayers.

Doing the same thing and expecting a different result is not the definition of rational policy making.

[1] Michael A. Lipsman. The Economic Effects of 1997 and 1998 Iowa Tax Law Changes. Tax Research and Program Analysis Section, Iowa Department of Revenue, July 2004.

[2] These are the major provisions, accounting for 90 percent of the cost. The bills also increased the personal credits and the tuition and textbook credit.

Peter Fisher is research director of the nonpartisan Iowa Policy Project. pfisher@iowapolicyproject.org

SNAP changes: Ignoring what works

EITC and child care more effective than drug tests and work requirements

Work requirements for public assistance seem to be all the rage — at both the national and state levels — when other policies would do more to encourage and support work.

President Trump signed an executive order April 10 enhancing enforcement of federal public assistance work requirement laws, evaluation of program effectiveness, and consolidation or elimination of “ineffective” programs.[1] The Trump administration also is considering drug tests for SNAP (Food Stamp) recipients.[2]

Similar legislation in Iowa (Senate File 2370) intended to expand regulations on and further monitor recipients of public assistance in Iowa, but appears to have stalled as the 2018 session nears an end. This included implementing work requirements, drug testing, quarterly reviews of eligibility, and a one-year residency requirement.[3]

The Farm Bill draft[4] released April 12 would reduce or eliminate SNAP benefits for 1 million households, or 2 million recipients, according to the Center on Budget and Policy Priorities (CBPP). Work requirements would force able-bodied adults without dependents to prove every month that they work or participate in a training program 20 hours per week. Severe sanctions for noncompliance would cut off benefits for one year the first time — three years the second.[5]

Recent research found recipients under work requirements for Temporary Assistance to Needy Families (TANF) continued to live below the federal poverty level, and that small increases in employment diminished over time and did not result in stable employment in most cases.[6] In the long term, programs that provide training, skill building, and educational opportunities to recipients are shown to be more successful than only implementing work requirements.[7]

Evidence shows that people in SNAP households who can work do work. More than 80 percent work during the year before or after receiving benefits.[8]

Drug testing public assistance recipients has proven to be costly and frivolous. States that have implemented drug testing found that applicants have lower drug usage rates than the general population. The state of Missouri spent $336,297 in 2015 to test 293 of 31,336 TANF applicants and found only 38 positive results.[9]

Eleven percent of Iowans received public assistance in February of 2018.[10] Already, able-bodied adult without dependents have work requirements to receive SNAP in the state of Iowa.[11]

By contrast, the Earned Income Tax Credit and Child Care Assistance (CCA) are policies that are effective in encouraging work. In addition, Iowa could make changes in work support programs, such as CCA,[12] to reduce what are known as “cliff effects” — when families with a pay raise or a new job are faced with a net loss because a reduction in benefits exceeds the new income.

Policies that support working families, not drug testing and work requirements, would do more to encourage work, raise family incomes, and boost local economies.

 

[1] The White House, “Executive Order Reducing Poverty in America by Promoting Opportunity and Economic Mobility.” April 2018. https://www.whitehouse.gov/presidential-actions/executive-order-reducing-poverty-america-promoting-opportunity-economic-mobility/

[2] Associated Press, “Drug testing plan considered for some food stamp recipients.” April 2018. https://www.apnews.com/6f5adff5efeb4f9a9075f76bf9cf5572

[3] IA Legis, “Senate File 2370” February 2018. https://www.legis.iowa.gov/legislation/BillBook?ga=87&ba=SF2370

[4] House Agriculture Committee “H.R. 2: the Agriculture and Nutrition Act of 2018.” April 2018. 115th Congress. https://agriculture.house.gov/uploadedfiles/agriculture_and_nutrition_act_of_2018.pdf

[5] Center on Budget and Policy Priorities, “Chairman Conaway’s Farm Bill Would Increase Food Insecurity and Hardship.” April 2018. https://www.cbpp.org/research/food-assistance/chairman-conaways-farm-bill-would-increase-food-insecurity-and-hardship#_ftn1

[6] Urban Institute, “Work Requirements in Social Safety Net Programs.” December 2017. https://www.urban.org/sites/default/files/publication/95566/work-requirements-in-social-safety-net-programs.pdf

[7] Center on Budget and Policy Priorities, “Work Requirements Don’t Cut Poverty, Evidence Shows.” June 2016. https://www.cbpp.org/research/poverty-and-inequality/work-requirements-dont-cut-poverty-evidence-shows

[8] Center on Budget and Policy Priorities, “Making SNAP Work Requirements Harsher Will Not Improve Outcomes for Low-Income People.” March 2018. https://www.cbpp.org/research/food-assistance/making-snap-work-requirements-harsher-will-not-improve-outcomes-for-low

[9] Center on Law and Social Policy, “Drug Testing SNAP Applicants is Ineffective and Perpetuates Stereotypes.” July 2017. https://www.clasp.org/sites/default/files/publications/2017/08/Drug-testing-SNAP-Applicants-is-Ineffective-Perpetuates-Stereotypes.pdf

[10] Iowa Department of Human Services, “Food Assistance Report Series F-1.” March 2018. http://publications.iowa.gov/27299/1/FA-F1-2016%202018-03.pdf

[11] Iowa Department of Human Services, “ABAWD Letter.” September 2017. https://dhs.iowa.gov/sites/default/files/470-3967.pdf

[12] Peter S. Fisher and Lily French, Iowa Policy Project: Reducing Cliff Effects in Iowa Child Care Assistance, March 2014. https://www.iowapolicyproject.org/2014docs/140313-CCA-cliffs.pdf

 

2018-NV-6w_3497(1)Natalie Veldhouse is a research associate at the nonpartisan Iowa Policy Project.

nveldhouse@iowapolicyproject.org