Iowa Gov. Terry Branstad (R) has a curious justification for vetoing a tax break last week for 240,000 Iowa families making $45,000 or less a year: the plan didn’t also include a tax break for corporations. Members of both partiesin the Iowa House and Senate agreed to increase the state’s Earned Income Tax Credit (EITC), which reduces the amount of income taxes lower-income families owe:
The change would have saved Iowa families an estimated $28.5 million in taxes over two years.
Branstad vetoed that part of the bill writing that it is his desire to approach tax policy in a more comprehensive and holistic manner. [...]
Branstad additionally campaigned last year to slash Iowa’s corporate income tax rate by 50 percent, which he said would attract businesses while costing the state about $200 million a year in lost revenue. That proposal also failed.
Ironically, given Branstad’s fondness for expensive corporate tax breaks, he said he was concerned about the cost of the measure, estimated at $28.5 million a year. Branstad explained that he would only support “an overall tax reduction package that both fits within our sound budgeting principles while reducing those taxes that are impeding our state’s ability to compete for new business and jobs.”
Tim Albrecht, a spokesman for the governor, reiterated that Branstad would have supported the tax break if it had been part of a “larger effort” that included lower taxes for corporations. But since this tax break was only for poor families, Branstad suddenly abandoned his “strong support for tax relief.”
Sen. Joe Bolkcom (D), the chairman of the Senate Ways and Means Committee, points out that the EITC “is the most effective antipoverty program for working families.” Bolkcom said of Branstad’s veto, “He has again shown that he will only consider tax cuts that benefit Iowa’s wealthiest citizens and corporations.” The tax break for working families would have translated into more money for people to spend in Iowa’s economy, but Branstad apparently prefers “huge, unaffordable tax breaks for Wal-Mart and other wealthy out-of-state corporations.”
Branstad has the authority to veto individual items in spending measures. He also effectively shut down dozens of unemployment offices by vetoing language that would have prohibited the Iowa Workforce Development from closing 37 unemployment field offices across the state.
By: Marie Diamond, Think Progress, August 3, 2011
“Cash-strapped states are also feeling the burden of the Medicaid
entitlement. The program consumes nearly 22 percent of states’ budgets today, and things are about to get a whole lot worse.”
— Sen. Orrin Hatch (R-Utah), June 23, 2011, at a hearing of the Senate Finance Committee
“Medicaid is the lion’s share of that spending burden as it now consumes about 22 percent of state budgets now and will consume $4.6 trillion of Washington’s budget over the next ten years.”
— Former Kentucky governor Ernest Lee Fletcher (R), June 23, 2011, at the same hearing
“Across the country, governors are concerned about the burgeoning cost of Medicaid, which in fiscal 2010 consumed nearly 22 percent of state budgets, according the National Association of State Budget Officers. That’s larger than what states spent on K-12 public schools.”
— Washington Post front page article, June 14, 2011
When a statistic is universally tossed around as a certified fact, it’s time to get suspicious.
Such is the case with this oft-cited statistic that 22 percent of state budgets is being gobbled up by Medicaid, the state-federal program that provides health coverage for the poor and the disabled. Medicaid supposedly is even dwarfing what is spent on educating children and teenagers.
But note the phrase “state-federal.” There’s billions of dollars in federal money involved, and the “22-percent” statistic obscures that fact. Let’s dig a little deeper into the numbers.
Medicaid was a central part of President Lyndon Johnson’s “Great Society” initiative in the mid-1960s. Each state administers its own Medicaid program, but with federal oversight, federal requirements—and plenty of federal dollars. On average, the federal government provides 57 percent of Medicaid funds.
Initially, Medicaid was focused low-income Americans, but elderly nursing home care has also become a big part of it. The new health care law would also greatly expand eligibility to people up to 133 percent of the official poverty line.
There’s no question that the recession has put pressure on Medicaid spending, as more people lost jobs or income and so became eligible for coverage. The new requirements of the health care law also will boost Medicaid spending.
The assertion that Medicaid is 22 percent of state spending, and thus now exceeds education spending, comes from an annual survey of the National Association of State Budget Officers (NASBO). But if you dig into the report — if you just go to page
one — you will see that this number includes the federal contribution, in what
is known as “total funds.”
If you want to see what states themselves are spending on Medicaid —“general funds” — you have to use another set of statistics.
As NASBO says on page one, “For estimated fiscal 2010, components of general fund spending are elementary and secondary education, 35.7 percent; Medicaid, 15.4 percent; higher education, 12.1 percent; corrections, 7.2 percent; public assistance, 1.9 percent; transportation, 0.8 percent; and all other expenditures, 27.0 percent.”
In other words, without the federal dollars included, Medicaid falls to second place, far behind education. It turns out that on average, states spend 15.4 percent of their funds on Medicaid — not 22 percent.
Brian Sigritz, NASBO’s director of state fiscal studies, said, “You are correct that there are several different ways of looking at Medicaid spending that you can use. If you consider just general funds, K-12 easily remains the largest component of general fund spending, as it historically has been.”
Indeed, when you look at NASBO’s historical data (table three of this report), it becomes clear that Medicaid spending, as a proportion of general funds, has remained relatively consistent since 1995 — about 15 percent — in contrast to the popular image of being a drain on state budgets.
Sigritz said that the two figures provide a different picture of state spending. “General funds gives you a sense of spending deriving from state revenue, while total funds gives you a sense of total state expenditures,” he said. “Typically when you discuss overall state budgets you examine the various funding sources that go into them including general funds, other state funds, bonds, and federal funds.”
The Office of the Actuary for Medicare and Medicaid makes this distinction. The 2010 Actuarial Report for Medicaid notes the broad figure, but then takes pains to add: “This amount, however, includes all Federal contributions to State Medicaid spending, as well as spending from State general revenue funds and other State funds (which for Medicaid consists of provider taxes, fees, donations, assessments, and local funds).” The report concludes: “When only State general revenues are considered, however, Medicaid spending constitutes an estimated 16.2 percent of expenditures in 2009, placing it well behind education.”
Antonia Ferrier, a spokeswoman for Hatch, defended the 22-percent figure, noting its wide use. “It is part of their budgets, and there are many different streams of funding that fund those state budgets (including federal funding, taxes, etc.) that fund their many programs,” she said.
But Colleen Chapman, a spokeswoman for the Georgetown University Center for
Children and Families, a policy and research center, said, “In the current budget debate, the data are being misused to argue that the Medicaid program in states is out of control and needs to be cut dramatically, when in fact, Medicaid is still much less of state spending than education and has not grown, as a portion of state budgets, in any way close to the mammoth way that others argue it has.”
The Pinocchio Test
We will label this with one of our rarely used categories: TRUE BUT FALSE.
(We still need to get an appropriate icon for this one — suggestions are welcome.)
Yes, the 22-percent figure is a valid number. But it is being used in an inappropriate way, and therefore is misleading. Hatch and Fletcher are only the latest in a long line of public figures — and news outlets — who have seized onto this number without apparently realizing that it is the wrong statistic to use. If people want to understand the impact the Medicaid is having on state budgets, politicians should begin to use the 15-percent figure — or at the least offer a caveat to the 22-percent number. Otherwise, there might be some Pinocchios in their future.
By: Glenn Kessler, The Fact Checker, The Washington Post, July 5, 2011
A telephone help line service for the elderly will not be ringing today in Minnesota.
Blind residents reliant on state funding for reading services will remain in the dark for as long as the government’s lights are turned off. Poor families who receive subsidies for childcare are on their own. The St. Louis Park Emergency Program’s food shelf will have bare pickings for those who depend on the program for sustenance. The Community
Action Center of Northfield will likely be forced to close down its homeless shelter without the state funding upon which it relies to house the homeless.
And yes, 23,000 state workers will be trying to figure out how to care for their families without a paycheck for the duration along with an estimated 5,000 to 10,000 construction workers who will be laid off as the state shuts down dozens of road and highway projects.
These are but a few of the consequences of the shutdown of Minnesota’s government.
At issue is how to close a $5 billion deficit in the state left by the previous Minnesota governor, Tim Pawlenty.
Minnesota Governor Mark Dayton, a Democrat, had tried to bargain his way toward an agreement by offering up massive cuts in state services. In return, he asked the Republicans to agree to a tax increase for the wealthier citizens of the state to make up the remainder of the funding required to close most of the gap in the budget.
But the Republicans held firm on taxes – even when Dayton made his final offer that would have placed an additional 3% tax on only those Minnesotans earning over $1 million a year, a burden that would have been placed on just .03% of all Minnesotans.
It’s not so much that the state’s GOP leaders had a violent, allergic reaction to those earning seven figures a year having to pay a few percentage points more in taxes. What appears to have ended negotiations were the
Republican demands that Governor Dayton agree to their social agenda issues, including Voter ID legislation and abortion restrictions, as the price for the Republicans allowing the very wealthy to pay a little more.
When the Governor refused to swallow the notion that the conservative social agenda should be used as a tool to resolve budgetary issues, the talks broke down and the lights at the statehouse were turned off.
So, you might wonder, how did the Minnesota GOP suggest that the gap in the finances be met even as they seemed to realize that there was little left for the Governor to offer on the cutting side of the ledger?
You won’t believe it.
The Republicans actually proposed creating more debt to close the gap.
The GOP proposed delaying another $700 million in payments owed to schools, which would add to the more than $1 billion the state already owes K-12 schools.
Republicans also offered to issue “tobacco bonds” of an unspecified amount to cover any remaining budget gap. Sources said Dayton considered the offer, but he criticized it as unwise borrowing late Thursday. Via The Star Tribune
I guess a Republican has to do what a Republican has to do when it comes to protecting the wealthiest in the state from paying a higher tax rate- even if it means creating more debt despite a GOP platform that, allegedly, abhors debt.
If you find the lessons of Minnesota disturbing, get used to it.
What you are seeing is simply the national debate playing out on a smaller stage. I suppose this is what Republicans mean when they suggest using the states as laboratories for what will and won’t work on the national level.
You can bet that every political player on the national stage will be watching to see how the Minnesota public reacts to their situation along with which party gets the lion’s share of the blame for bringing this blight upon their land.
If Governor Dayton caves and simply accepts the GOP budget, we can expect that our Congressional Republicans would take great heart in such an occurrence and be emboldened to stick with the plan.
If the GOP legislators begin to fear that their jobs may be in jeopardy as punishment for shutting down the state in order to protect a little more than 7,000 Minnesotans earning at least a million bucks a year, that too will be noticed.
Watch the polls in Minnesota over the next week or two. They may tell you everything you need to know about what is likely to happen as we move towards resolving the debt ceiling debate.
By: Rick Ungar, The Policy Page, Forbes, Junly 1, 2011
If you’ve been wondering lately who’s been writing the Republican playbook, I think I’ve found him. It’s none other than Lenny Dykstra.
Back in his baseball playing days, Dykstra was a tough as nails leadoff hitter famous for filling his cheeks with huge wads of tobacco and crashing into outfield walls. After his playing days were over, he wowed the world with his stock-picking acumen. Made millions. Drove fancy cars. Owned an $18 million mansion. He even had a sink that cost $50,000. (It’s true.)
And then, it all came tumbling down. He went bankrupt. His house was seized. He was indicted. And what did he do? He broke back into his old house … and stole his prized sink.
Back in November, a new breed of Republican governor was enjoying its own “wow” moment. Rick Snyder was the “one tough nerd” to get Michigan’s financial house in order. Scott Walker was about to take a blow torch to Wisconsin unions. Florida’s Rick Scott won perhaps the most coveted prize on the presidential election map. They were supposed to be the leading edge of the Republican revolution, finally doing what conservatives have long held Americans want their leaders to do: fundamentally recalibrate the way government operates in the public square, and disentangling it from the everyday lives of ordinary people.
But in Sunday’s Washington Post, Norman Ornstein of the right-leaning American Enterprise Institute took a moment to detail the woes these boy wonders have since encountered. Rick Snyder’s approval rating is at 33 percent. Scott Walker’s is 43 percent. Rick Scott: 29 percent. [Read the U.S. News Debate: Should Congress Raise the Debt Ceiling?]
Seven months ago they were the toast of the town. Now, milquetoast. What happened?
Well, as Ornstein describes it, the governors launched initiatives aimed at “cutting benefits for the poor and middle class while adding tax breaks for the rich” while also trying to get rid of collective bargaining. As you might imagine, that wasn’t very popular with a lot of people (for instance: the poor and middle class). And, shockingly, it hasn’t done much to balance their state budgets either. So now, according to Ornstein, “the only areas left for meaningful budget reductions are education, Medicaid, and prisons.”
Let’s see: Your approval numbers are in the tank, and all you’ve got left are gutting schools, letting out convicts, and taking healthcare away from disadvantaged kids. I’m guessing, as a re-election strategy, that leaves something to be desired.
In other words: fellas, it ain’t working. And what’s so surprising about all of this is that for some, it’s so surprising. Is it really so hard to figure out that one of the reasons government is its current size and shape is that people have needs that they want their government to try and meet? It doesn’t always work, of course. But frustration over government spending on programs that aren’t working isn’t the same thing as saying people no longer want good public schools. Understanding that distinction is the difference between doing the hard, more complicated work of reforming something that isn’t working as well as we would like, and becoming fixated on an ideological goal that doesn’t end up fixing anything at all.
Which brings me back to Mr. Dykstra and his beloved sink. Now, in fairness, those of us who have been consigned to using standard-issue sinks can only dream about the hydrological wonders of the $50k variety. Perhaps it dispensed nothing but delicious milkshakes. More likely: Even as his world was crashing down, Dykstra couldn’t take his eyes off the one thing he coveted the most. Now it looks like he’s going to prison.
Republicans may be in for a similar electoral fate. Instead of helping the people they were elected to serve, they’ve gone about ruthlessly pursuing an elusive conservative holy grail. Dismantling government—it’s the GOPs $50,000 sink. And they can’t take their eyes off of it even as their house burns down around them.
By: Anson Kaye, U. S. News and World Report, June 13, 2011
Florida’s wildly-unpopular far-right governor, Rick Scott (R), traveled to a retirement community in Central Florida yesterday known for being the most Republican retirement community in the state. Scott was there to sign his new state budget, which helps demonstrate his priorities and commitment to looking out for his most vulnerable constituents.
In his speech Thursday, Scott omitted many of the serious-sounding programs he cut: homeless veterans, meals for poor seniors, a council for deafness, a children’s hospital, cancer research, public radio, whooping-cough vaccines for poor mothers, or aid for the paralyzed.
These are cuts, by the way, he made from an already-austere budget approved by a Florida legislature dominated by larger Republican majorities. Scott thought they were too generous, so he made sweeping changes though line-item vetoes, which is legal in the state.
All told, Scott’s budget throws 4,500 Floridians out of work as a way to help lower unemployment. No, I don’t understand it, either.
The ridiculous governor might have heard from some of his less-supportive constituents had he not banned Democrats from the bill-signing ceremony.
Members of The Villages Democratic Club were barred from the budget signing by Scott staffers who said the outdoor event in The Villages town square was “private.” Other staffers and Republican operatives scoured the crowd and had Sumter County sheriff’s deputies remove those with anti-Scott signs or liberal-looking pins and buttons. They escorted more than a dozen people off the property.
As Tanya Somanader put it, “Many in the community would likely not be pleased with Scott’s cuts, but those voices remained unheard — mainly because they were banned.”
Atrios added the other day, “I normally resist the temptation to blame “stupid voters” for their leaders, but man, Floridians, what were you thinking….”
By: Steve Benen, Contributing Writer, Washington Monthly-Political Animal, May 27, 2011