Friday, August 28, 2015

Friday, August 28, 2015

After Katrina, the decline of low-income housing; Pro-work tax credits at risk; Corps of Engineers responsible for wetlands damage; and Why should the government care about wage inequality?

 

After Katrina, the decline of low-income housing

Policy decisions during the rebuilding of New Orleans stunted the rebirth of affordable, low-income housing in the city, writes Brentin Mock with Atlantic’s CityLab. Mock argues that political leaders’ lack of commitment to creating enough low-income housing and constant delays in construction had a big impact on the demographic of New Orleans ten years after the storm:

 

When the VWB Research firm released a housing assessment study in September 2009, it counted roughly 10,743 actual subsidized units before Katrina…Only 6,561 subsidized rental units had been built by 2009, though, according to the firm’s count—more than 4,100 fewer affordable units than before the storm…A recent survey from Louisiana State University’s Public Policy Research Lab found that, of residents forced to live somewhere else after the storm, the ones who took the longest to return home were those who made less than $20,000 a year. Nearly 68 percent of those households took longer than a year to move back to New Orleans, compared with just 8.23 percent of those who made more than $100,000 a year. Part of the reason for that gap was the fact that poor families had few places to move back to…

 

No subsidized housing projects could move forward without approval from the state’s bond commission, especially apartment complexes, which needed multifamily mortgage bonds from the state. When the bond commission rejected plans for two multifamily housing projects that would have included permanent supportive housing units to help the homeless, it was a bold statement on the new direction around housing. State Bond Commission Chairman John Kennedy and then-State Bond Commissioner Jim Tucker were now calling for further studies on housing needs…New Orleans has broken a lot of ground for housing over the past 10 years. But there’s no telling how much ground was lost to begin with during the affordable-housing moratorium.

 

Pro-work tax credits at risk

When Congress returns to work after Labor Day, it is expected to take up a proposal to permanently extend a number of corporate tax breaks that are set to expire. Congress should do the same for the Earned Income Tax Credit and Child Tax Credit–pro-work tax credits that help low-income families–say Chuck Marr, Vincent Palacios and Bryann Dasilva with the Center on Budget and Policy Priorities:

 

These tax credits have long enjoyed bipartisan support because of their policy success; they encourage work and reduce poverty.  In fact, the EITC “may ultimately be judged one of the most successful labor market innovations in U.S. history,” according to the University of California’s Hilary Hoynes…Several key provisions of these successful tax credits, however, will expire at the end of 2017 unless policymakers act…An estimated total of 19 million workers are at risk of cuts in their standard of living, representing a wide cross-section of occupations.

 

According to the Center, if Congress fails to act, the lowest-paid workers will see big cuts to their Child Tax Credits, and married couples and families with the most children will also see their EITCs cut–in short, those most in need will be hurt the most. Here in Louisiana, the changes would hit the most workers in sales (42,300), office and administrative support (39,800) and restaurants (34,300).

 

Corps of Engineers responsible for wetlands damage

Longstanding federal law holds the Army Corps of Engineers immune from liability if flood protection structures fail like they did in the wake of Hurricane Katrina. But that same immunity does not apply to damage caused by poorly maintained “navigation channels.” Cain Burdeau with the Associated Press reports that legal distinction could net Louisiana $3 billion in federal money to repair wetlands:

 

A judge ruled Thursday that the federal government should foot the bill – tagged at about $3 billion – for fixing damage done to wetlands just outside New Orleans by a shipping channel the Army Corps of Engineers dug in the 1960s. The ruling Thursday by U.S. District Judge Lance M. Africk ordered the federal government to pay the full cost of restoring the wetlands around the Mississippi River-Gulf Outlet, a shipping channel dug through marshlands as a shortcut from the Gulf of Mexico to New Orleans. The ruling can be appealed. The Army Corps says it’s reviewing the case and declined to comment…Louisiana’s attorney general, James D. “Buddy” Caldwell, hailed Thursday’s ruling as a victory in the state’s fight with the Army Corps over who should pay to restore the MRGO.

 

Why should the government care about wage inequality?

When it comes to wage inequality, there are some who say it is not the government’s place to use policies like a higher minimum wage or the Earned Income Tax Credit to combat it. Focus on economic growth, they say, and all will be well, living standards will rise. Oren Cass with the conservative Manhattan Institute for Policy Research is not one of those people, as his recent paper proposing a new wage subsidy to replace the minimum wage and EITC makes clear. As the American Enterprise Institute’s blog notes, Cass makes a strong case for government intervention to combat inequality. He writes:

 

One response to these challenges is simply to accept them: Living standards have improved across the income distribution. Efforts to distort the market wage are inherently inefficient. Social programs exist precisely to help those unable to earn a sufficient income. And investment in education will improve skill levels and productivity over time. Such acceptance is a mistake because it leaves unused the most effective weapon in the antipoverty arsenal. Low wages do not only—or even primarily—produce poverty through the obvious and static mechanism that earning less money leads one to have less money. Of greater concern are the dynamic ways in which low wages grease the flywheel of long-term and intergenerational poverty. Low wages leave individuals who work with insufficient resources to invest in their future and that of their children. Low wages discourage entry into the workforce and the formation of stable families

 

Number of the Day
34,300 – Estimated number of restaurant workers in Louisiana who would see a tax hike if Congress fails to extend parts of the Earned Income Tax Credit and Child Tax Credit (Source: Center on Budget and Policy Priorities)