A pair of U.S. senators have struck a deal aimed at averting the chaos in health insurance markets caused by President Donald Trump’s unilateral decision to cut off payments that help keep coverage affordable for low- and middle-income families. The agreement crafted by Tennessee Republican Lamar Alexander and Democrat Patty Murray of Washington would extend “cost sharing reduction” payments for the next two years and give new flexibility to states in seeking waivers from federal regulations. Alan Fram and Erica Werner of the Associated Press have more on the timeline and next steps:
Alexander said he and allies including Sen. Mike Rounds, R-S.D., would spend the next several days trying to build up support with the goal of formally introducing legislation later this week. If the legislation does pass, it would almost certainly be as part of a larger package including must-pass spending or disaster relief bills and that might not be until the end of the year. Murray lauded the effort, saying, “When Republicans and Democrats take the time … we can truly get things done” for the American people.
In Amazon competition, Amazon wins
CIties across the country are pulling out all the stops to sell themselves as the next Seattle in the bid to host Amazon’s second U.S. headquarters. Even Baton Rouge is getting in on the action. Southeast Louisiana remains an extreme long-shot to land the headquarters, as the region lacks the kind of workforce, education infrastructure, transportation network and market size the company is looking for. The city that wins the bidding is likely to offer a wagonload of tax incentives and subsidies. Greg LeRoy, president of Good Jobs First, issued a strong warning in Fast Company about the costs of such giveaways:
More families arriving means more teachers to hire; more classrooms, roads, water mains and sewerage to build; more public safety to provide; and more trash to pick up. All of those things cost money. But if Amazon is paying no sales tax, no property tax, no income tax, and is getting cash gifts from its employees and/or the state treasury by selling tax credits, then Amazon won’t be bearing those new costs. Instead, there will be a huge burden shift: Either everyone else’s taxes will have to go up, or the quality of public services will have to go down, or some of both. There’s no such thing as free growth.
EITC for all
The Earned Income Tax Credit (EITC) is one of the country’s most successful social safety net programs, lifting nearly 10 million workers out of poverty in combination with the Child Tax Credit. In 1993, under the Clinton administration, Congress expanded the program to include childless workers over 25. While workers with children have seen their tax credit grow substantially since then, childless workers have not. Gene B. Sperling makes the case in The Atlantic for an EITC that helps all low-income American workers:
Expanding the so-called childless worker provision would increase the share of Americans who would at key points in their life benefit from the EITC: For example, when they start out, when they face unemployment for part of the year, or if they for some reason must take a lower paying job in the later years of their work life. And while an expansion in the “childless” credit may not seem to help a lower-income single parent with children today, it could provide important economic help for that parent when her children are no longer dependent and she would otherwise lose all assistance from the CTC and EITC.
Meanwhile, members of Congress are considering a bill which would expand EITC upwards to some households earning up to $76,000 annually. Rep. Ro Khanna’s bill would also nearly double the maximum benefits for workers with children and increase it by sixfold for childless workers, finally making their tax credits comparable to those of workers with children. Khanna is hoping to repurpose the EITC as a tool that can help not just the lowest-income Americans, but the middle class as well. Catherine Rampell of the Washington Post writes:
These expansions are designed to help middle-income workers “reclaim” the pay they would have received had there not been decades of wage stagnation, the House bill’s primary sponsor, Rep. Ro Khanna (D-Calif.), told me in a recent interview. Khanna also observed that expanding the EITC is a much more direct way to raise middle-class families’ earnings than some Rube-Goldberg-like corporate tax-code machinations. “Trump is saying he’s going to cut the corporate tax rate in order to raise your wages,” Khanna said. “I’m saying: Let’s just raise your wages.”
Number of the Day
$293 – The average federal earned income tax credit for eligible childless adults. (Source: Center on Budget and Policy Priorities)