KanOwaSin: Low-road neighbors, together?

Think carefully about snake-oil pitches to follow the lead of Kansas and Wisconsin, putting Iowa on a fast track to the bottom.

Here we sit in Iowa, nestled between two political petri dishes where experiments have gone wrong, and wondering if our elected leaders may let the mad scientists loose on us as well.

Some politicians would like to turn Iowa into another Kansas, another Wisconsin, where tax-cut zealotry already has driven down economic opportunity.

Welcome to KanOwaSin. In the anti-tax ideologues’ world, we’d all look the same. Why not ​share a name?


​Before someone squeezes another drop of anti-tax, anti-worker snake oil on us, let’s get out the microscope.Our friends in Wisconsin tell us: Don’t become Wisconsin. Our friends in Kansas tell us: Don’t become Kansas — and Kansans already are turning off the low road.A couple of researchers in Oklahoma are telling us: Listen to those folks. From the abstract of their working report:

“The recent fiscal austerity experiments undertaken in the states of Kansas and Wisconsin have generated considerable policy interest. … The overall conclusion from the paper is that the fiscal experiments did not spur growth, and if anything, harmed state economic performance.”

 

Their findings are among the latest exposing the folly of tax-cut magic, particularly with regard to Kansas, which IPP’s Peter Fisher has highlighted in his GradingStates.org analysis that ferrets out the faulty notions in ideological and politically oriented policies that tear down our public services and economic opportunity.

Iowa has long been ripe for tax reform, due to a long list of exemptions, credits and special-interest carve-outs in the income tax, sales tax and property tax. These stand in the way of having sufficient resources for our schools, public safety and environmental protection.

Each new break is used to sell Iowans on the idea that we can attract families and businesses by cutting  — something we’ve tried for years without success, as Iowa’s tortoise-like population growth has lagged the nation.

On balance, this arrangement favors the wealthy over the poor. The bottom 80 percent pay about 10 percent of their income in state and local taxes that are governed by state law. The top 1 percent pay only about 6 percent. Almost every tax proposal in the last two decades has compounded the inequities.

For the coming 2018 legislative session, and for the election campaigns later that year, we are being promised a focus on income tax. Keep in mind, anything that flattens the income tax — the only tax we have that expects a greater share of income from the rich than the poor — steepens the overall inequity of our regressive system.

Thus, as always, the devil is in the details of the notion of “reform.” If “reform” in 2017 and beyond means more breaks for the wealthy, and inadequate revenue for traditional, clearly recognized public responsibilities such as education and public health and safety, then it is not worthy of the name.

So, when you hear about the very real failures of the Kansas and Wisconsin experiments, stop and think about what you see on your own streets, and your own schools. Think about the snake oil pitches to follow their lead, and whether you want Iowa on a fast track to the bottom.

That is the promise of Kansas and Wisconsin for Iowa.

Or, if you prefer, KanOwaSin.

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Dan S. Rickman and Hongbo Wang, Oklahoma State University, “Tales of Two U.S. States: Regional Fiscal Austerity and Economic Performance.” March 19, 2017. https://mpra.ub.uni-muenchen.de/79615/1/MPRA_paper_79615.pdf
Posted by Mike Owen, Executive Director of the Iowa Policy Project
mikeowen@iowapolicyproject.org

Any way you cut it — Americans lose health coverage

The stakes for some 200,000 Iowans are significant, jeopardizing recent health-care coverage gains and putting vulnerable Iowans at risk.

First, let’s make no mistake: Both the Senate and House bills to repeal and replace the Affordable Care Act (ACA) represent substantial cuts in health coverage, including Medicaid.

People will lose coverage, have less coverage, and/or pay more for it. This is a public policy choice being offered in the drive to repeal ACA’s enhancement of insurance coverage for millions of Americans. In Iowa alone, uninsurance dropped from over 8 percent to 5 percent in just two years.

It is at best disingenuous for anyone to suggest otherwise, or to downplay the cut. Those who want to promote this legislation, for whatever reason, have to own the impact. If they’re afraid of the political disadvantage of admitting it, that’s another story.

The stakes for some 200,000 Iowans are significant, jeopardizing recent health-care coverage gains and putting vulnerable Iowans at risk. An Iowa Fiscal Partnership report from Peter Fisher of the Iowa Policy Project sets the context for this week’s discussions in the Senate.

A new report from the Center on Budget and Policy Priorities (see graph at right) shows how the Senate bill would drive up costs for the 31 states that — along with Washington, D.C. — expanded Medicaid under the ACA.

For Iowa, the estimates are daunting: In 2021, Iowa would have $54 million more in costs, and in 2024, $395 million more — a 315 percent increase.

That CBPP report is part of the exceptionally good information available even in the short time frame we have to understand what is emerging from the backrooms of Washington, out of public view.

See these reports, just produced in the last couple of days by tremendously reputable organizations:

This is our business. We can demand to know the facts and we might just want to know them before the Senate votes — even if some in the Senate might be uncomfortable with that.

By Mike Owen, Executive Director of the Iowa Policy Project

mikeowen@iowapolicyproject.org

Health care ‘reform’ just keeps getting worse

The bottom line: worse health care coverage at higher cost to millions, loss of coverage entirely to millions more, in order to finance tax cuts for corporations.

The House Republican plan to replace Obamacare (the Affordable Care Act) with the American Health Care Act (AHCA), which a few weeks ago failed to even come to a vote, has been reincarnated. The new version of the AHCA has apparently won the support of the Freedom Caucus in the House, but in so doing has become significantly worse for millions of Americans.

Here are the key points about this new attempt to “repeal and replace” Obamacare:

  • Despite repeated promises to keep the most popular part of Obamacare, the provision prohibiting insurance companies from refusing to cover those with pre-existing conditions, the new version returns us to the bad old days. While a particular state may choose to keep the prohibition, there is no longer any nationwide requirement that insurance companies issue affordable policies regardless of pre-existing conditions.
  • Nationwide standards for health insurance policies will be rolled back; plans will no longer be required to cover services such as mental health, maternity care, or substance abuse treatment.
  • The nationwide prohibition on lifetime and annual limits on benefits will be gone, meaning the possibility of medical bankruptcy will loom once again for many.
  • The modified version of the bill still effectively ends the Medicaid expansion; about 150,000 Iowans now covered under that provision could lose insurance altogether.
  • The bill still cuts $840 billion from Medicaid over 10 years, most of the savings going to wealthy individuals, drug companies, insurance companies, and other corporations.
  • Premiums and deductibles will still rise for large numbers of persons buying insurance on the exchanges, especially for the elderly, those with lower incomes, and those in high-cost states or areas, such as most of rural Iowa.
  • Under the bill, there would be no limit on the premium an insurance company can charge based on medical history; thus someone with pre-existing conditions could in theory be offered coverage, but at a cost that is simply unaffordable. There is little difference between this situation and straight denial of coverage. A state could choose to prohibit this practice (i.e., to keep the Obamacare provision in place), but few states chose to do so before Obamacare.

While the proponents of this revised plan may argue that it keeps the prohibition on gender discrimination, a woman would pay substantially more for a plan that included maternity coverage. Such coverage would not be a required part of all plans, but instead would be an expensive option.

Just how this revised bill would affect overall coverage rates, premiums, and out-of-pocket costs, awaits a new analysis by the Congressional Budget Office. But it is quite possible that the bill will be voted on in the house without the benefit of that analysis. Part of the pressure to pass the bill now comes from the desire on the part of the Trump administration to come up with large savings to the federal government that can then be used to finance cuts to corporate and individual income taxes.

The bottom line: worse health care coverage at higher cost to millions, loss of coverage entirely to millions more, in order to finance tax cuts for corporations (and probably millionaires as well).

Posted by Peter Fisher, research director of the nonpartisan Iowa Policy Project. pfisher@iowapolicyproject.org

Also see Fisher’s March 2017 policy brief for the Iowa Fiscal Partnership: “Replacing ACA: What you need to know about the AHCA.”

Session Recap: ‘Historic’ — not label of pride

Some legislators may boast of a “historic” session. History will mark 2017 as a low point in Iowans’ respect and care for each other.

By

4/22/17

IFP Statement: ‘Historic’ session not a label of pride

Legislative session hits working families and traditions of good governance

Basic RGB

Statement of Iowa Fiscal Partnership • Mike Owen, Iowa Policy Project

To describe the 2017 Iowa legislative session as “historic” is not a label its leaders should wear with pride.

Iowans needed a legislative session that worked to raise family incomes and expand educational opportunity. Iowans had long demanded water-quality improvement measures. Many called for lawmakers to address the lack of fairness, adequacy and accountability in a tax system laden with special-interest breaks and costly subsidies to corporations.

Instead, Iowans got a continued ratcheting down of funding for PK-12 public education. There were significant and serious cuts in post-secondary education that will lead to tuition increases. We saw cuts to early-childhood education and other programs that serve our most at-risk children and neglect of the child-care assistance program that helps working families struggling to get by.

The Legislature continues to demand little or nothing of industrial agriculture in cleaning up the mess it has left in our waters. Lawmakers tried to dismantle the Des Moines Water Works board, limited neighbors’ right to complain in court about pollution, and eliminated scientific research at the Leopold Center. Their ultimate action on water merely diverts resources from other priorities, such as education and public safety.

Lawmakers largely left the tax issue to the next session. An overture in the House to reform Iowa’s reckless system of tax credits was a welcome acknowledgment that this issue needs attention, but devils in the details make further discussion of this issue during the interim even more welcome.

Perhaps as troubling as the destructive nature of policy content this session, Iowa’s image of adherence to good governance took a big hit. The most controversial policy changes came not through collaborative, public discussion in committee, let alone the 2016 political campaigns, but were often dumped into lawmakers’ laps with little opportunity for amendments.

In what could accurately be called a “session of suppression,” lawmakers achieved:

  • Wage suppression, with a bill to preempt local minimum wage increases while refusing to raise Iowa’s repressive, 9-year-old minimum of $7.25.
  • Workplace suppression, gutting collective bargaining protections for public employees, and making it more difficult for Iowans recover financially from injuries on the job.
  • Health-care suppression, achieved in workers’ compensation legislation while also refusing to reverse Governor Branstad’s disastrous move to privatize Medicaid.
  • Local suppression, whacking at local government control in a variety of areas: minimum wage, legal defenses against concentrated animal feeding operations (CAFOs), fireworks sales, and collective bargaining options.
  • Voter suppression, with a bill to make it more difficult for many citizens, particularly low-income and senior voters, to exercise their right to vote.
  • Suppression of children’s healthy development, with additional cuts to Early Childhood Iowa and Shared Visions that will reduce access to critical home visitation, child care and preschool services for some of our most at-risk youngsters.

Some legislators may boast of a “historic” session. History will mark 2017 as a low point in Iowans’ respect and care for each other, a legacy that will not be celebrated when future Iowans look back on this session and the closing act of Governor Branstad’s long tenure in office.

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The Iowa Fiscal Partnership is a joint public policy analysis initiative of two nonpartisan, nonprofit, Iowa-based organizations — the Iowa Policy Project in Iowa City, and the Child & Family Policy Center in Des Moines. Reports are available at www.iowafiscal.org, and on the websites of the two partner organizations, www.iowapolicyproject.org and www.cfpciowa.org.

Today’s virtual House graphic: Risky fix to non-problem

The proposed constitutional amendment is a gimmick that would hamper Iowa lawmakers’ ability to meet critical needs. If you want lower funding of K-12 education and higher tuition for the Regent universities, this is one way to get there.

Under the radar at the Iowa Statehouse, a significant and dangerous change is being promoted through a proposed constitutional amendment to cap spending in a state where spending is below the U.S. average.

The amendment — approved by the Senate and soon to be considered in the House — is a gimmick rather than real reform. In fact, because the amendment would require two-thirds approval of both legislative changes to prohibit spending more than an arbitrary limit, it would impede elected representatives from making the kinds of public investments in Iowa’s children, the state’s infrastructure, and our environment that the people of Iowa say they want. To learn more about this issue, click here for Peter Fisher’s brief report for the Iowa Fiscal Partnership.

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session the Iowa Policy Project is offering examples. In today’s graphic, we illustrate the realities of state spending in Iowa, often inflated in political rhetoric.

Curtains for tax reform

If there’s anything we need less of this legislative session, it is back-room dealing where major changes in public policy are hatched.

If there’s anything we need less of this legislative session, it is back-room dealing where major changes in public policy are hatched, then rammed through the Legislature without sufficient public vetting.

Senate Majority Leader Bill Dix is quoted in media that a tax plan is coming in the next two weeks. It’s staying under wraps until then — a terrible disservice to the responsible setting of public policy. Senator Dix should pull back the curtains, right now.

But, since the senator is not going to let the rest of us in on his big secret tax plan, we should all go into this recognizing at least two major points at the start:

(1) Iowa taxes are in the middle of the pack or below average by any responsible measure, something the business lobby and far-right ideologues never want to acknowledge; and

(2) any discussion of tax changes should take a comprehensive approach that should be grounded in widely accepted principles of taxation.

Point 2 is something that is always a problem in Iowa. The typical approach is to target one tax, cut it, and move on to the next one. Meanwhile, the impact on the overall adequacy and fairness of the tax structure (two of the important tax principles), and on the critical public service that the tax system supports, is left to a “let the chips fall” mentality.

Take the curtains away, Senator Dix. It’s the business of all Iowans, right now. A late-session rush job to make a major overhaul of Iowa taxes is not only wrong from a civics-textbook standpoint, but it is bound to create problems that its authors cannot predict.

Posted by Mike Owen, Executive Director of the Iowa Policy Project

mikeowen@iowapolicyproject.org

Repeal of Obamacare: Following the money

Replacing ACA will be costly to many Iowa families, particularly older and rural Iowans.

Congressional Republicans have proposed replacing the Affordable Care Act, known as Obamacare, with the American Health Care Act, or AHCA. To understand why, suppose we follow the money — who loses, who gains?

On the losing side are thousands of Iowans who would find themselves facing higher costs for health insurance. Consider a married couple with two young children, and with $40,000 annual income. In Iowa’s metropolitan counties, this family’s tax credits for the purchase of health insurance would fall by $3,469 annually. In rural areas, where health insurance is much more expensive, the same family would face nearly an $8,000 reduction in credits — in other words, an $8,000 increase in the cost of health insurance. For couples in their late 50s or early 60s, the jump in costs is much higher: $11,300 in urban areas, over $17,000 in rural counties. (See an earlier IPP report for details.)

The much greater impact on rural Iowans is because the Republican plan gives everyone the same credit, whether they are in a high-cost or low-cost county. While the credit rises with age,  the credits for older Iowans cover a far smaller share of their much higher insurance costs. Overall, the average Iowa family currently receiving subsidies for the purchase of insurance would see a $2,512 drop in the subsidy.[1]

But who are the winners? The Republican plan includes tax cuts primarily for the wealthiest Americans, as well as drug and insurance companies. The 400 highest-income taxpayers nationally would get annual tax cuts averaging about $7 million each. These taxpayers, whose annual incomes average more than $300 million, would receive tax cuts totaling about $2.8 billion a year.[2]

We now know how two of these cuts, amounting to $31 billion a year, would impact Iowans. The Affordable Care Act was financed in part by these two new taxes. One is the Net Investment Income Tax, the other the Additional Medicare Tax. Both fall primarily on the wealthiest. Repeal of these two ACA taxes would shower $116.7 million in tax cuts each year on just 1.9 percent of Iowa taxpayers. A full 92 percent of those tax cuts would go to the richest 1 percent of Iowa taxpayers — those making $444,000 a year or more, and with an average income of $1.17 million. Those taxpayers would receive on average $7,004 a year.[3]

Basic RGB“Follow the money” is good advice. But what you find when you get there is often not a pretty picture.

[1] Aviva Aron-Dine and Tara Straw. House Tax Credits Would Make Health Insurance Far Less Affordable in High-Cost States. Center on Budget and Policy Priorities, March 9, 2017.

[2] Chye-Ching Huang. House Republicans’ ACA Repeal Plan Would Mean Big Tax Cuts for Wealthy, Insurers, Drug Companies. Center on Budget and Policy Priorities. March 8, 2017. http://www.cbpp.org/research/federal-tax/house-republicans-aca-repeal-plan-would-mean-big-tax-cuts-for-wealthy-insurers

[3] Institute on Taxation and Economic Policy. Affordable Care Act Repeal Includes a $31 Billion Tax Cut for a Handful of the Wealthiest Taxpayers. March 2017. http://itep.org/itep_reports/2017/03/affordable-care-act-repeal-includes-a-31-billion-tax-cut-for-a-handful-of-the-wealthiest-taxpayers-5.php

Posted by Peter Fisher, Research Director of the Iowa Policy Project

pfisher@iowapolicyproject.org