Preparing for the next recession

Preparing for the next recession

As night follows day, the nation’s economy will contract at some point – though no one knows exactly when. The consequences of recessions on the state level are predictable: less revenue flowing into state government, and higher costs for programs like unemployment insurance and Medicaid. During the Great Recession, states and the federal government worked together well to offset falling revenues. As Anne Stauffer of The Hill explains, fears of an upcoming recession means state and federal officials should start rebuilding the relationships that have fallen off during the decade-long recovery.

Much of the knowledge and institutional relationships that were built during the recession have been lost in the ensuing decade. The online database for tracking ARRA funds, Recovery.gov, has been shuttered, and a new generation of lawmakers and officials, many with no firsthand experience of either a recession or stimulus effort, have taken office. (…) Given the nation’s experiences during the past two recessions, federal and state policymakers should consider developing now the intergovernmental knowledge and relationships they’ll need to quickly deploy critical funding across levels of government during the next economic downturn.

 

Rich people want your pity
Rich people in the United States pay shockingly little of their income in taxes and live longer and in better health than their less-wealthy counterparts. But even with those advantages, and with wealth inequality at historic highs, some rich Americans argue that they, too, are victims of meritocracy. Richard V. Reeves argues in The New York Times that the woes of the rich are self-inflicted—unlike Americans struggling to get by, the rich can simply choose to stop doing many of the things that make their lives stressful.  

There is no moral equivalence between the stress of a senior executive staying up late to polish a presentation for a client and the stress of a retail worker unsure if she will get the shift she needs to make rent. The problems of the affluent are not systemic. They are self-inflicted.

 

Urban League tackles big problems
Those who attended the Louisiana Empowerment and Policy Conference, hosted by the Urban League of Louisiana and the Louisiana Legislative Black Caucus, know that the state has serious work to do to lower the barriers to economic opportunity that too many black Louisianans face, and to build a state where a person’s race and their ZIP code can’t predict their life outcomes. The Advocate’s editorial board applauded the conference’s focus on policy solutions. 

We were happy that Urban League of Louisiana President and CEO Judy Morse Reese focused on establishing policy work groups and made a commitment to develop a specific state legislative agenda as next steps as the event closed. Those attending the conference have first dibs to get on the ground floor of this work, but the Urban League welcomes others who want to make a difference.

 

The high costs of IRS cuts
Deep cuts to the Internal Revenue Service over the last decade have weakened the agency’s ability to perform its core functions – collecting taxes and enforcing tax laws – according to a new report from the Treasury Inspector General for Tax Administration. Our tax system is based on voluntary compliance, but that compliance might wane as people see less punishment for breaking the law. Samantha Jacoby of the Center on Budget and Policy Priorities explains. 

“There is a significant financial cost to underfunding the IRS and reducing its staff,” observed former IRS commissioner John Koskinen. Indeed, as the number of revenue officers investigating employment tax noncompliance has fallen, so has the number of penalties assessed for unpaid employment taxes. Similarly, the number of cases referred for criminal investigation has fallen by a third.

 

Number of the Day
$1.22 – The price of a gallon of gasoline the last time funding for the Temporary Assistance for Needy Families program was increased in 1996. (Source: The Hill)