President’s Budget: Increasing Mobility and Opportunity for All

In his State of the Union address, President Obama put a laser-like focus on “middle-class economics”, calling for policies that ensure every American has a fair shot at economic security. While the President may not have said the word “poverty” in his address, his FY2016 budget, released today, makes clear that “middle-class economics” must also expand the population of people to whom that term applies. Infused throughout the president’s budget are policies and proposals that would provide a smoother pathway for people struggling on the financial brink to not just find a bit of security, but to have a shot at climbing the economic ladder through policies to create good jobs, support strong and healthy families, update our social contract for the 21^st century, and remove barriers that keep people trapped in poverty. We’ll review a few of the highlights below.

Good Jobs
Strong Families
21st Century Social Insurance
Removing Barriers to Opportunity

Good Jobs

The President calls for a new investments in infrastructure projects such as ports, bridges, and roads, which would create millions of new jobs that pay a living wage.

The budget also includes significant investments to prepare American workers for medium- and high-skills jobs, including $60 billion for the president’s historic proposal to make community college free for students who keep up their grades, as well as funding to ensure that Pell grants don’t erode with inflation. Other funding would allow a doubling of apprenticeships over 5 years, and a significant expansion of re-employment services, and other workforce development programs that serve low- and middle-income workers.

Importantly, the president’s proposal includes significant new funding to help some of the most disadvantaged workers in the labor market. The budget includes $3 billion for a “Connecting for Opportunity Initiative,” which would make summer and year-round job opportunities more widely available and offer competitive grants to create educational and workforce opportunities for at-risk youth. Recognizing that subsidized jobs are an important tool for helping disadvantaged workers, the president’s budget also redirects over half a billion dollars to a “Pathways to Jobs” initiative to help states partner with employers to create these positions. The budget provides additional funding for subsidized jobs under the Workforce Innovation and Opportunity Act.

Finally, the “First in the World” program would fund evidence-based and promising practices to improve the likelihood that low-income students could complete degrees and have a better shot at medium- to high-skill jobs in today’s economy.

Strong Families

CAP’s recent report on family policy underscores that policies that strengthen the economic foundation of families are an important part of ensuring that all families are stable, healthy, and strong. To that end, the president’s budget includes several key initiatives to ensure that families don’t need to make choices between a needed paycheck and bonding with a new baby, or going to work without affordable and quality child care.

Specifically, the President’s budget includes a proposal that provides incentives for up to five states to adopt earned paid leave legislation so that the birth of a child or illness of a family member doesn’t send a family into an economic tailspin.

The President reiterates his commitment to providing preschool for all by providing matching funds to states that set up preschool programs, but also offers up a historic expansion of childcare assistance, tripling the maximum child and dependent care tax credit to $3,000 and enabling more families to claim it.

The proposal also includes substantial investments of $82 billion over 10 years in the Child Care and Development Fund to help states offer subsidized child care to low-wage working parents. This could boost the number of slots available by more than 1 million. The budget also increases investments in quality infant and toddler care by expanding access to the Early Head Start program and ensures that children in Head Start can access full-day, full-year programs, which helps parents to work and improves outcomes for kids. The president’s budget continues his commitment to evidence-based home visiting programs that provide professionals like social workers and nurses to pregnant women and new moms in order to help parents support their child’s healthy development. The funded programs have shown a range of positive outcomes including lower rates of depressive symptoms and stress for parents and higher grade point averages and graduation rates for the children in the long-term.

21^st Century Social Insurance

Given that four out of five Americans will face at least a year of significant economic insecurity at some point during their working years—and half will experience three years or more—we must ensure that our social contract provides sufficient protection amid the ups and downs of life.

To that end, the President’s budget includes important investments to strengthen several key elements of our social insurance system. He proposes bold reforms to Unemployment Insurance to make it respond more effectively as a stabilizer during recessions; ensure that long-term unemployed workers get the assistance they need without Congress needing to extend benefits; and help individuals secure comparable jobs as quickly as possible through investments in vital re-employment services.

Additionally, while the Earned Income Tax Credit (EITC) is one of our nation’s most effective antipoverty programs, it largely misses childless workers and noncustodial parents, who remain the only group the federal government taxes into poverty. The President’s budget would expand the EITC for these workers, while also making permanent the 2009 improvements to the EITC and the Child Tax Credit, currently set to expire in 2017.

Finally, the President’s budget includes a commitment to keeping our Social Security system strong for current and future generations. To that end, the President would rebalance the old-age and survivors’ fund and the disability insurance fund to put both on sound footing for the next 20 years and to prevent a shortfall in the disability fund. (Rebalancing is a routine step that has been taken 11 times in the past when either fund has faced a shortfall—and it is the only option available to avoid needless, across-the-board benefit cuts for millions of disability insurance beneficiaries—which is what would happen if Congress fails to act before the disability fund’s reserves are depleted in 2016). With his budget, the President is sending a clear message to Congress that it would be irresponsible to threaten the benefits of nearly 9 million disabled workers and 2 million spouses and children for the sake of Congressional politicking. The budget also proposes much-needed increases in administrative funding for the Social Security Administration to reduce the backlog in disability hearings, and mandatory funding to ensure that the agency can do critical program integrity work.

Removing barriers to opportunity

As a recent CAP report highlights, one group that faces significant barriers to opportunity is the approximately 1 in 3 Americans who have some type of criminal record. To ensure meaningful access to second chances, the President proposes increased investment in programs that support successful reentry. For instance, the budget includes a doubling of the Second Chance Act Grant program, which provides funds to state and local agencies and nonprofit organizations that provide services to support reentry and reduce recidivism; significant increases in resources for Bureau of Prisons programs that support mental health treatment and residential reentry centers, and the establishment of a new program to maintain and strengthen familial bonds for incarcerated individuals with minor children.

Moreover, recognizing that an individual’s zip code should not determine his or her life chances, the President proposes important investments to tackle place-based and concentrated poverty, including an expansion of the Promise Zones initiative, which aims to revitalize high-poverty communities through comprehensive, evidence-based strategies while helping local leaders access federal funding. The President designated five Promise Zones in 2014, and will name another 15 by the end of 2016.

Additionally, the President’s budget includes several policies to ensure that workers with disabilities have a fair shot at employment and economic security. For instance, it provides demonstration authority and funding for key federal agencies to explore early intervention strategies to support workers with disabilities in remaining in the workforce, as well as incentives for states to better coordinate services.

Budgets are about choices. One important choice that cuts across all of the above themes is the president’s choice to reject the spending caps imposed by sequestration in his budget. These caps are due to re-emerge in the next fiscal year absent congressional action, which would have disastrous consequences for our economy and for families. Sequestration costs jobs and erodes funding for skills training; sequestration undermines family economic security by kicking children out of Head Start and child care slots; it hurts the most vulnerable by slashing programs such as affordable housing and nutrition aid for babies and toddlers; and it means fewer resources for investments in community development in distressed neighborhoods, second chances for ex-offenders, and other opportunity-boosting programs.

But the president’s budget isn’t just about damage control. It makes real investments in cutting poverty and boosting economic mobility. In fact, the study that launched the Half in Ten campaign several years ago showed that raising the minimum wage, expanding the EITC and Child Tax Credit, and making childcare more broadly available to low-income families could cut poverty by 26% over 10 years. Those types of investments are all in this budget.

While a Republican-controlled Congress is unlikely to adopt the president’s budget, there are opportunities for bipartisan movement—including on the EITC, subsidized jobs, and common-sense reforms to our criminal justice system. But even if Congress were to ignore the vast majority of the president’s budget blueprint, it is important for advocates to pay attention. Budgets are about choices, and the President’s budget underscores that we can achieve deficit reduction while making investments in key aspects of economic opportunity: good jobs, strong families, a 21^st century social contract, and removing barriers to opportunity. The question is this: can we build the political will to make these choices happen?

With two weeks left in the second enrollment period for Affordable Care Act health coverage, marketplace enrollment is projected to reach between 9 million and 9.9 million people this year. That’s a net increase of between 2 and 3 million people gaining coverage through the marketplaces. Millions more will gain coverage through Medicaid expansion.

That’s something to celebrate – but the celebration could be short-lived for many people. Instead of figuring out how to get more people health coverage in 2015, many newly-elected and re-elected state legislators and governors are actually plotting how to take health care away from people who just received it for the first time.

It’s a real threat to people who’ve just gained coverage through Medicaid expansion – especially in states where incoming lawmakers are openly hostile to anything related to the Affordable Care Act. Those at greatest risk of losing coverage are women and people of color.

In Arkansas, where 211,000 people recently gained coverage, the state legislature must reapprove the Medicaid expansion plan by a three-quarters majority again in 2015. The incoming Republican governor is unenthusiastic about the plan – and expansion opponents won seats in the legislature. That doesn’t bode well.

In Ohio, where more than 400,000 people have coverage under Medicaid, the state legislature is also required to reauthorize the program in 2015. And in New Hampshire, where more than 20,000 people enrolled in just three months, the new Republican majority in the NH House of Representatives will also take a fresh vote on the program as well.

The continuing failure of more than 20 states to adopt any expansion plans at all, and the prospect of newly elected legislators revoking expanded coverage for hundreds of thousands of residents, represents a serious health threat to women.

A recent 50-state report card on women’s health by the Alliance for a Just Society clearly shows that most of the states that rejected Medicaid expansion have poor or failing records on women’s health. When it comes to ensuring that women have access to health care, the majority of legislators in these states have turned their backs on women.

Being denied access to health care is the latest Jim Crow.

The 2014 Women’s Health Report Card ranks and grades every state in the country on 30 distinct measures of women’s health. The results: 17 of the 21 states that rejected Medicaid expansion received final grades of C, D or F – and 13 of those states received a D or F.

Politicians in these states are failing women, but they are especially failing women of color who are more likely to be working low paying jobs, not covered by health insurance, and are least likely to have access to medical care.

The number of black women without health insurance is at least 20 percent higher than for women overall in 17 states. The uninsured rate for Latina women is at least 50 percent higher in 44 states. Black, Latina, and Native American women without access to health care have dramatically higher rates of hypertension, diabetes and infant mortality than other women.

While it’s encouraging news that Wyoming, Montana, and even Idaho seem to be moving toward Medicaid expansion, it will also leave our nation with a disturbing illustration of how alive and well racial segregation is in America. Take a look at the map of states that are refusing coverage to their most vulnerable residents: being denied access to health care is the latest Jim Crow.

Lawmakers in states that haven’t expanded Medicaid yet should move quickly to adopt expansion plans this year. If they don’t, they will bear the responsibility for their states falling even further behind on women’s health, and worsening racial disparities in our health care system.

As for lawmakers considering a vote to take health care away from thousands of their constituents, all I can ask is: Seriously? Do you really want to do that?

It’s one thing to stand in the way of people gaining access to quality, affordable health care. But it’s something else when people have just experienced quality, affordable health care for the first time, and then you snatch it away from them.

I can’t imagine that many will take kindly to it. And just in case anybody’s forgotten, there’s another election just a couple years away.

You probably don’t know about it, but you should: there is a huge “retirement savings gap” in America. The gap is the difference between the assets available to families and the assets that they need to retire at age 67 without incurring a significant lifestyle change. A 2013 study by the National Institute on Retirement Security found that among working households ages 25-64 the collective gap is between $6.8 trillion and $14 trillion.

Really more like a gorge than a gap.

This shortfall is distributed among a very broad swath of workers. In fact, the median retirement account balance for working-age households is $3,000. In other words, the typical working family is on a path to severe retirement insecurity.

Some of the causes of this crisis have to do with economic transformations we’ve undergone in recent decades. For one thing, stagnating—and in many sectors, declining—wages make it hard for workers to devote adequate resources to retirement. Additionally, the much-noted transition in the private sector from defined benefit pensions to defined contribution retirement schemes like 401(k) plans has shifted massive amounts of risk to workers, and, in many cases, decreased the value of retirement benefits — especially for workers who don’t begin putting money in their accounts early in their working life.

The typical working family is on a path to severe retirement insecurity.

On the other hand, one cause of the crisis has been around for decades. Throughout the many changes in the American economy, labor market, and retirement system, the share of workers lacking access to employer-based plans has been alarmingly high, usually hovering between 40 and 50 percent. Though workers whose employers offer no plan could theoretically open an Individual Retirement Account (IRA) on their own, the data are overwhelmingly clear that far too few of them do. A number of reasons fuel this phenomenon. First, sitting down and making one’s own financial plans for a retirement that might be many decades away is difficult and counter-intuitive. Second, the array of investment products available in today’s marketplace is complex and bewildering. Finally, low- and middle-wage workers often wind up paying very high fees.

Fortunately, the Illinois Secure Choice Retirement Savings Program, signed into law on January 4^th, addresses several of these problems. Through this legislation, many workers will now be automatically enrolled in a Roth IRA with a 3% payroll deduction. All workers qualify who have worked for a company with at least 25 employees that has been in business for at least 2 years, and offers no retirement plan. Workers may opt out, or select a contribution level other than 3%.

In many ways, this is a modest idea: it doesn’t require employers to fund these accounts, and it doesn’t involve any government subsidy. On the other hand, it tackles some major issues. First and foremost, it directly takes on the problem of access to employer plans. Secondly, by enrolling people by default unless they want to opt out, it will increase participation. Finally, by pooling a huge number of participants into a single program, workers—especially those who have low wages and work for comparatively small firms—will benefit from fees that are far lower than many would have otherwise paid.

The idea of the automatic enrollment IRA for workers without access to employer plans has been around for nearly a decade. It was invented by Mark Iwry, then of the Brookings Institute (now at the U.S. Treasury Department), and David John, then of the Heritage Foundation (now at AARP). It was supported in 2008 by the presidential campaigns of both Barack Obama and John McCain, and has been introduced in dozens of state capitols. However, due to opposition from the financial industry, no state was able to enact a law implementing such a program—until we passed Secure Choice in Illinois.

Interestingly, after years of battling with special interest groups over this legislation, most of the concerns recently expressed are focused on the question of why the law doesn’t go further. Some have asked why the employee contribution level is only 3%, or why it doesn’t escalate incrementally every year. Others point out that by exempting businesses with fewer than 25 employees, we’ll leave too many workers without coverage. These points are all sound. Indeed, the Illinois Secure Choice Program, while a major step, will not entirely solve the problem of retirement security for workers in the state who currently lack access to workplace plans. What’s more, it makes no progress on wage stagnation or most of the challenges associated with the shift to defined contribution retirement plans.

So we still have much more work to do if we are to create truly adequate retirement security for all workers. But after many years of changes in retirement policy that have usually meant bad news for American workers, I’m proud to have played a role in moving our society in a new direction, and I’m energized to build on this momentum and strive for progress in the years to come.

TalkPoverty.org is proud to collaborate with BillMoyers.com as it focuses exclusively on poverty coverage over the next two weeks. Every day, visit BillMoyers.com to discover a new action you can take to help turn the tide in the fight against poverty

Martin Luther King Jr. said, “America is going to hell if we don’t use her vast resources to end poverty and make it possible for all God’s children to have the basic necessities of life.”

Today, 150 years after the end of slavery, every other black baby in America is poor. Every third Hispanic baby is poor. Nearly every fourth rural child is poor. All told, there are 14.7 million poor children and 6.5 million extremely poor children in the United States of America. It is a national disgrace that such an unconscionably large number of children are homeless, hungry and living in poverty in a country with the world’s largest economy.

It doesn’t have to be this way.

It is way past time for a critical mass of Americans to confront the hypocrisy of America’s pretension to be a fair playing field while almost 15 million children languish in poverty. Sadly, politics too often trumps good policy, moral decency and responsibility to the next generation and the nation’s future.

Politics too often trumps good policy, moral decency and responsibility to the next generation.

But the Children’s Defense Fund has just released a groundbreaking report, Ending Child Poverty Now, showing how — for the first time — we can massively reduce this scourge. The CDF’s plan would cut child poverty overall by 60 percent, shrink black child poverty by 72 percent, and improve economic circumstances for 97 percent of poor children – all at a cost of $77.2 billion a year, a relative pittance.

By pursuing these policies immediately, we would not only improve the lives and futures of millions of children; over the long term, we would save taxpayers hundreds of billions of dollars annually. Child poverty costs our country about half a trillion dollars a year, six times more than what it would cost to significantly reduce child poverty and improve the future for millions of children, their parents and the country.

In its report, the CDF has identified multiple ways to pay for these changes without increasing the federal deficit, such as closing tax loopholes and cutting corporate subsidies. The report concludes that by investing another two percent of the federal budget to improve programs and policies we already know work – such as parental employment, making work pay and ensuring that children’s basic needs are met – the solution to ending child poverty is within reach.

Children have only one childhood — they can’t wait. It’s time to act with urgency and, together, ensure that all God’s children have the opportunity to reach their potential. If we love America, and we love our children, we must all stand against the excessive greed that tramples the millions of children entrusted to our care.

Read the report at the Children’s Defense Fund website, and sign up to receive updates about how you can fight for a real plan to reduce child poverty by 60 percent right now.

Sargent Shriver, President Johnson’s personal choice to lead the War on Poverty, was once asked which anti-poverty program he considered the most important.

“My favorite is Head Start because it was my idea,” he answered. “But I am proudest of Legal Services because I recognized that it had the greatest potential for changing the system under which people’s lives were being exploited.”

Legal services, also known as civil legal aid, has indeed been a potent anti-poverty tool in two ways. First, through individual case work that enables poor people to gain access to the rights and benefits from state and federal service agencies, health care providers, and schools to which they are entitled. Second, through large, class-action lawsuits and advocacy efforts that change laws and governmental policies that adversely―and overwhelmingly―affect poor people.

With the 50^th anniversary of the War on Poverty in 2014, we have been treated to numerous assessments of the effectiveness of Johnson’s (and Shriver’s) program these past 12 months. It is indisputable that tremendous progress has been made and that much work remains.

To continue progress, civil legal aid must be deployed more broadly in future efforts to combat poverty, and public resources for legal assistance must be increased greatly.

With regard to class action lawsuits, we have seen how civil legal aid has resulted in significant legal victories. In 1970, legal aid attorneys successfully argued before the U.S. Supreme Court in Goldberg v. Kelly that state welfare departments cannot terminate benefits without first providing applicants with a fair hearing. In 1973, California Rural Legal Assistance successfully sued to stop large agricultural operators from requiring migrant farm workers to use short-handled hoes while working in fields. (The short-handled hoes forced workers to stay bent over for long periods of time; field managers required their use because if they saw workers standing up, then they knew that they were resting and not working. After these hoes were banned, back injuries among farm workers dropped by more than 30 percent. ) More recently, a federal lawsuit by Greater Boston Legal Services resulted in changes in policy by the Massachusetts Department of Transitional Assistance which had improperly denied benefits to people living with disabilities.

A look at how civil legal aid case work for individuals struggling with homelessness and/or unstable housing, as well as those who are victims of intimate partner violence, is also instructive.

Civil legal aid yields a measurable―and significant―return on investment.

Numerous programs around the country demonstrate that civil legal services can help poor people keep their housing, or negotiate exits from housing that prevent immediate evictions, and ensure a smooth transition to safe, affordable housing. A pilot program launched in 2009 by the Boston Bar Association showed conclusively that poor people fighting eviction notices in housing court in Quincy, Massachusetts fared much better when they were represented by attorneys. Two-thirds of those with full representation kept their housing; only one-third of those who went through housing court without an attorney were able to do the same. Similar results have been found in New York City, San Francisco, and San Mateo County in California.

Meanwhile, a landmark 2003 study published in Contemporary Economic Policy showed that legal services is one of the most effective ways to help women living in poverty escape intimate partner violence. Amy Farmer and Jill Tiefenthaler, researchers at the Carnegie Mellon Census Research Data Center, were intrigued by a U.S. Department of Justice report noting that rates of domestic violence had significantly declined during the 1990s. They analyzed data from the National Crime Victimization Survey and the U.S. Census to tease out the reasons for the improvement. Their conclusion? Access to civil legal services ensured delivery of protective orders; assistance with child custody and support; and divorce and property distribution that victims needed to begin rebuilding their lives. Civil legal assistance was also critical for resolution of domestic violence-related legal disputes around immigration, housing, and public benefits.

While services provided by emergency shelters, counselors, and hotlines are vital in the short-term, Farmer and Tiefenthaler wrote, services provided by civil legal aid “appear to actually present women with real, long-term alternatives to their relationships.” (It is also interesting to note that between 1994 and 2000, the period during which incidents of domestic violence declined, the availability of civil legal services for victims of domestic violence increased 245 percent—from 336 such programs to 1,441).

Despite these clear successes, many people do not understand what civil legal aid is, and surveys regularly find that most Americans erroneously believe that poor people have a right to free counsel in civil cases. Meanwhile, state and federal funding for legal assistance is well below what it needs to be.

This fall, the Boston Bar Association’s Statewide Task Force to Expand Civil Legal Aid in Massachusetts released Investing in Justice, a report showing that more than 60 percent of those who are eligible for civil legal aid in Massachusetts and seek services are turned away due to lack of resources. (Full disclosure: I am a member of the task force.) The Task Force proposed that the Commonwealth’s investment in civil legal aid be increased by $30 million over the next three years to begin to address the unmet need. Currently, the state invests $15 million annually in civil legal aid.

The irony, of course, is that the civil legal aid yields a measurable―and significant―return on investment. Looking at work solely related to housing, public benefits, and domestic violence, three independent economic consulting firms which did analyses for the Task Force found that every dollar spent on civil legal aid in eviction and foreclosure cases saved the state $2.69 on services associated with housing needs such as “emergency shelter, health care, foster care, and law enforcement.” Every dollar spent assisting qualified people to receive federal benefits brings in $5 to the state. Every dollar spent on civil legal aid related to domestic violence is offset by a dollar in medical costs averted due to fewer incidents of assault.

This summer, Philadelphia resident Tianna Gaines-Turner became the first person actually living in poverty to testify before Congressman Paul Ryan’s Congressional hearings on the War on Poverty. In her strong and moving testimony she spoke of the need for increased state and federal funding to end poverty, saying, “People living in poverty―those who were born into it, and those who are down on their luck―want to get out of poverty. We want to create our own safety nets, so we never have to depend on government assistance again.”

Civil legal aid is a powerful tool. It helps people living in poverty build a foundation of stability so they can create a better future for themselves, their families, and our communities.

President’s Budget: Increasing Mobility and Opportunity for All

The Question for Lawmakers Who Might Backtrack on Expanded Health Coverage: Seriously?

A Solution to America’s Devastating Retirement Shortfall

We Can Reduce Child Poverty by 60 Percent Right Now

Civil legal assistance saves money and helps people escape poverty

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