It’s easy to forget all the publicly funded services on which Iowa businesses, health and personal lives rely.
Funding for education — our public universities, community colleges, and state aid to local schools — consumes more than 60 percent of Iowa’s budget. Realistically, there simply is no way to reduce General Fund spending without touching education.
We expect and rely on safe, well-maintained roads and highways. We need water that is clean and drinkable. We enjoy parks that are kept neat and safe by public funds.
Budgeting requires tough choices, even when the economy is thriving. Balancing a budget in tough times — when needs are greater than usual — is even more difficult.
Iowa has cut quite a bit already. Further reductions would come at a price that might not be so apparent on a sheet of paper. But they would become clear as Iowans move about their daily lives.
Deficit demagogues make points in Congress, but miss the point about good recovery policy.
Should we rob the hungry tomorrow to help the sick today?
Economic recovery efforts should be aiding both — and other vulnerable populations — and neither at the expense of the other.
Congress is showing renewed interest in passing an extension of the temporary increase in the federal government’s share of Medicaid financing.
The proposed extension, however, could come at a steep price. To offset the cost of extending the Medicaid increase, Congress is looking at reducing Supplemental Nutrition Assistance Program, or SNAP (formerly known as food stamps) by $6.7 billion.
Deficit demagogues may be making points in Congress, but they miss the point about good recovery policy.
It’s no secret that the federal budget deficit has grown over the past decade. But the long-term deficit is primarily due to a few select causes: the Bush tax cuts of 2001 and 2003 that heavily favored the highest earners, the deficit-financed wars in Iraq and Afghanistan, and the dip in tax revenues due to the recession.
Recession recovery efforts, such as the Recovery and Reinvestment Act of 2009, which included the original increase in federal Medicaid payments, add a negligible amount to the long-term deficit, while providing immediate benefits to the most vulnerable Americans and stimulating the economy. An analysis of Recovery Act provisions by Mark Zandi, chief economist at Moody’s Economy and former economic adviser to Sen. John McCain’s presidential campaign, estimated that every federal dollar invested in SNAP generates $1.74 of economic activity.
Congress will need to address deficit concerns. But doing so at the expense of the most vulnerable Americans doesn’t make sense fiscally, morally or economically.
Health reform has brought an immediate potential benefit to many small businesses.
Help has finally arrived for small businesses and their employees. The rapidly rising cost of health insurance has made it extremely difficult for many small businesses to provide their employees with health insurance, and entirely precluded many others. In addition, because they lack the bargaining power and large risk pooling of larger employers, small businesses face higher premiums than larger employers.
Health reform, or the Patient Protection and Affordable Care Act (PPACA) should ease this problem for some small businesses. Firms that pay for at least half of their employees’ premiums and have 24 or fewer employees may qualify for a health insurance premium tax credit of up to 35 percent of the premium’s average cost.
An Iowa Fiscal Partnership policy brief details the small business health insurance premium tax credit. The table below illustrates potential credits based on number of employees and how much they are paid.
Families USA, a national consumer advocacy group, and Small Business Majority, released a report this week estimating that as many as 51,100 Iowa small businesses may be eligible for some portion of the tax credit, with as many as 14,000 of those eligible for the full 35 percent credit.
Though similar state-level incentive programs have had varying levels of success in inducing small businesses to provide insurance to their employees, the PPACA credits appear poised to make a real difference for small businesses.
Blue Cross Blue Shield of Kansas City saw the tax credits as an opportunity. It began marketing the new tax credit to small businesses that were not providing insurance benefits to employees.
Its efforts had a tremendous payoff for Blue Cross Blue Shield of Kansas City, to small businesses in that area, and to their employees. Sixty small businesses in the area that had previously not offered health insurance to employees signed up for BCBS’s small business health insurance plan. As a result of the tax credit and BCBS-KC’s marketing efforts, Small Group sales have increased 179 percent between April and June of this year, meaning 5,000 new customers for it, and 5,000 more Kansas Citians with health insurance.
One former congressman gets it. We will soon find out how many of our current members of Congress do as well.
Former U.S. Congressman Berkley Bedell from northwest Iowa writes in today’s Des Moines Register that eliminating the estate tax would compound tax policy mistakes that only allow the super-rich to get richer and richer.
On an issue distorted beyond recognition by emotional, inaccurate and at best disingenuous arguments made by those who would do away with the estate tax, Bedell is a breath of fresh air.
In his column, Bedell offers the relevant questions:
Do we want to properly pay our teachers and make it possible for our young people to attend college regardless of their family’s wealth? Do we want to build an economy where common people can have jobs and provide for their families? Do we want to attack our dependence upon Mideast oil and the pollution of our planet? Do common people matter? Or do we want to mostly help the top 1 percent of our population become richer and richer and own more and more of our country by cutting their taxes so that we put their wealth ahead of the lives of the other 99 percent of our people?
Bedell is right on the mark.
Return the estate-tax debate to the real world of our budget choices of what we need as a nation, and how we should pay for it.
Understanding these benefits and the consequences of losing them needs to be paramount in congressional decisions about temporary, targeted extensions of ARRA funding.
Today’s New York Times discusses a problem faced by 30 states — including Iowa.
State budgets have been put together assuming the extension of an increased reimbursement for Medicaid, a smart move for economic recovery and a necessary move to help states deal with the increased demands in a severe economic recession.
For Iowa, the loss of those dollars would cause a Medicaid deficit of almost $120 million, according to the nonpartisan Legislative Services Agency.
When building the state’s 2011 fiscal year budget this spring, Iowa lawmakers assumed the federal government would extend a temporary increase in its share of Medicaid financing. The American Recovery and Reinvestment Act of 2009 (ARRA) temporarily increased the Federal Medical Assistance Percentages (FMAP), the portion of Medicaid financed by the federal government. That increase, however, expires in December 2010, right in the middle of Iowa’s fiscal year. Iowa and many other states expected this financing to continue as these needs have not subsided.
So far, however, Congress has not acted. Without an extension, Iowa faces a shortfall that at some point will need to be addressed, with cuts in services that could come both in and outside the Medicaid program. Either way, a cut would be bad for the economy, which has benefited from the infusion of federal dollars. Pennsylvania Governor Edward Rendell, in fact, warns in the New York Times story today that in his state, the cuts “would actually kill everything the stimulus has done.” His concern is warranted.
Every federal dollar of economic stimulus invested in Medicaid yields about $1.68 in total output for the state of Iowa. Out of that dollar, 76 cents is returned to Iowa workers in the form of wages and salaries and incomes of small business owners.
ARRA — by providing dollars for Medicaid, unemployment insurance and food assistance — has come through with important resources for vulnerable Iowa families at a time they are most needed. At the same time, it has boosted the economy by increasing or maintaining spending by Iowans on goods and services, keeping people employed and spending their money in the economy.
Understanding these benefits and the consequences of losing them needs to be paramount in congressional decisions moving forward on temporary, targeted extensions of ARRA funding.
The labor force grew by 2,900 workers last month. This could be a sign of increased confidence in the market, as more Iowans decide looking for work is a worthwhile endeavor.
I cannot wait for the day when The Iowa Policy Project’s monthly JobWatch headline reads unequivocally, “Nonfarm Jobs Increase for 12th Consecutive Month and Unemployment Remains Steady at 3 Percent.”
Alas, the forecast is still a bit mixed: Iowa is certainly making headway in nonfarm jobs numbers, but we continue to see high unemployment rates.
The good news is pretty good. The number of nonfarm jobs in Iowa increased by 7,300 to 1,474,200 in March. This increase is heartening, though we do have a ways to go. Iowa is still down 16,200 jobs compared to last March.
Then there is that other number: the unemployment rate. The unemployment rate edged upward to 6.8 percent, from 6.7 percent in February and well above the 5.5 percent we saw this time last year. The last time the unemployment rate reached 6.8 percent was July 1986, when the state was recovering from the chronically high unemployment of the early 1980s.
As is usually the case, Iowans are fortunate to be better off in terms of unemployment than the rest of the nation. The national unemployment rate remained steady in March at 9.7 percent.
But there are other clues in these numbers. The labor force grew by 2,900 workers last month and is up by 12,700 over March 2009. This could be a sign of increased confidence in the market, as more Iowans decide looking for work is a worthwhile endeavor.
March marks the third consecutive one-month improvement in nonfarm jobs, and the sixth in the last eight months. Iowa has posted an average gain of 5,100 jobs per month for the last 3 months. We are currently down 54,000 jobs from last decade’s high point (1,528,2000 in November 2007).Continuing this trend would be great… and would start to push us closer to that headline I can’t wait to type.
It is quite possible there is no more heavily spun day on the calendar.
Today is, as we all know, “Tax Day,” the deadline for filing our federal individual income tax returns. It is quite possible there is no more heavily spun day on the calendar. You can’t even find refuge on the comics pages.
Beyond that perspective on the value of taxes in funding essential public services, other useful information also is worth considering today about who pays taxes. Citizens for Tax Justice, in a report this week about tax changes resulting from the recovery, or “stimulus,” legislation signed by President Obama last year, notes the following:
99 percent of working families and individuals in Iowa benefited from at least one of the tax cuts signed into law by President Obama.
Working people in Iowa received $1,115, on average, from these breaks.
These tax breaks benefited working people at all income levels.
For the full report (3-page PDF) click here and for the Iowa-specific summary (4-page PDF) click here.
David Leonhardt of the New York Times and Ezra Klein of the Washington Post (whose blog links to Jon Stewart’s take of the situation on “The Daily Show”) illustrate that lower-income Americans pay taxes, even if others might not want to acknowledge it.
As Stewart suggests, actually getting the facts about who pays taxes — which also include federal payroll taxes and state and local taxes — might not fit the outrage being pushed at a given moment: “Knowing that doesn’t make you as mad, does it?”