Two and a half suggestions for a better Manchin-approved Social Insurance / Rebuild program

To be clear, when I say ‘approved by Manchin’ I am referring to his insistence that the programs not exceed expenses and that they be fully funded without the gimmick, and his declaration just before Christmas that he would vote. not on the Build Back Better bill in its current form, or in any version the Biden administration was willing to accept. And I have criticized the structure of many of the programs in this bill – not just buy it now, pay later which is a fundamental part of plans that claim to be balanced over a 10 year window but end. to the benefits themselves only. a few years later, but also the fundamental design of some of these benefits such as childcare and parental leave.

So here’s a wishlist of changes that sure wouldn’t get Biden the praise he wanted as a “second FDR,” but would be, it seems to me, a lot more practical and, dare I say it? , bipartite.

First of all, adopt Sen. Mitt Romney’s child tax credit, or a negotiated and amended version thereof.

This proposal, which he called the Family Security Act, dates back to February this year, would be presented by the social security administration as a European-style “family allowance” system rather than a “credit.” tax ”. It would provide $ 350 per month for young children and $ 250 per month for school-aged children, up to a family maximum of $ 1,250 per month. As explained by the Tax Foundation, it would have no work obligation, but it would replace the TANF (traditional “welfare”) for inactive parents. It would also replace the per child portion of the earned income tax credit, creating instead a simple credit per worker, finance it in part by ending the SALT (state and local tax) deduction for income taxes. , and would make a number of other changes. And while Democrats might find much to object to the proposal, it’s a clear path to designing a benefit that can find support from Republicans as a “pro-family” movement.

Heck, even Matt Bruenig of the People’s Policy Project endorses it, noting in particular that benefits would start four months before a child’s due date and could serve as a kind of parental leave pseudo-allowance.

Is there hope for this? After Manchin made his announcement, Romney tweeted,

“Now that it is clear that ‘Build Back Better’ is not moving forward and with bipartisan opposition to the President’s ill-conceived child tax credit extension, the administration has an opportunity to actually work with Republicans and Democrats on a sustainable and fiscally responsible family policy. “

and in response to a question on the matter, White House Press Secretary Jen Psaki said:

“We will work with anyone interested in taking action to reduce costs to the American people, whether it is child care, senior care, or health care,”

which is as evasive as possible but does not rule out the possibility.

Second, develop a form of parental leave as a social insurance system, funded, Social Security style, through payroll taxes and with a strong focus on parental leave.

Creating a paid vacation program funded by a “tax the rich” game is fundamentally wrong. Yes, we have to admit that it was a mistake to promise significant new government benefits without tax increases for incomes below $ 400,000. So be it. As I have already pointed out, paid leave is a social insurance program and this requires broad-based payroll tax type funding. It turns out that not so long ago the Chief Social Security Actuary provided an estimate of the cost of a paid vacation program on wages, 0.62% of wages (although I was skeptical of the assumptions used) for a 12 week benefit.

Yes, it can be difficult to convince Americans to agree to a tax hike, especially for those who may think the benefits are “unfair” because they are over or under childbearing age. ‘intention to have children. But we are beginning to recognize that an early return to work is detrimental to the well-being of mothers and children. These are benefits for the good of society, not just for individuals.

And that would drastically reduce the costs of reducing the scope of a large program providing wage replacement for any illness (which in addition comes with greater risk of messing with the system), to a whole lot more. limited eligibility circumstances (and, after all, it is easy to prove fairly definitively that a child was born or adopted).

Third – well, this is where I would like to propose a solution for “free daycare!” “And” free kindergarten! Plans in the bill. But I only have half a solution here.

Both of these programs were problematic in a way that stretched beyond the gadget of their first end points. The child care program was deeply flawed in its design, offering a 7% “co-payment” that ended at an income level that would have created a steep cliff, was designed to dramatically increase costs with a long list. requirements to qualify as “high quality” and would have prompted families to place their children in full-time institutional day care.

The preschool program would have excluded denominational programs via “non-discrimination” requirements that would prevent favoring members in the hiring of staff, for example (a requirement which, according to the New York Times, was not an oversight but intentional). Additionally, despite claims that the program supports a “blended delivery system” comprising both institutional and family-based schools and child care, the separation between “preschool” and “child care” is irrelevant. meaning only in the circumstances where a family is caring for a child. child at home / in a family environment and wishes to elect a “preschool” environment to offer the school readiness experience (socialization with other children, experiences following the instructions of a teacher, etc.). As explained to Education Next, in an interview with expert Sue Renner,

“The proposed new investments in universal pre-K are not in tune with the realities of the existing mixed birth system and its many participants. . . . Biden’s plan risks separating universal kindergarten from the broader childcare sector, limiting parents’ choices and their access to subsidized care without fully meeting their needs.

At the same time, the Biden proposal would have required “free preschools” to operate for 1,020 hours per year, which, like Raison note, exceeds the total class time of most K-12 schools: “Preschool is meant to be a bridge to full-time school. Parents who don’t want a full-time preschool program aren’t well served by Biden’s plan.

It’s a mess.

To a certain extent, we have existing programs that provide early childhood education and care to low-income families. The Child Care and Development Fund provides free or subsidized child care services to 1.3 million low-income families, but funds are limited. In some states, the maximum earnings are only 127% of the federal poverty level, although other states have higher eligibility thresholds or have chosen to use COVID money for temporary increases. The program also has a significant wellness cliff (see analysis here for Illinois and Florida), in which participants lose benefits at such a high rate that increases in income are best avoided; a 2010 study found that one in three recipients rejected salary increases in order to maintain eligibility. Likewise, Head Start is only intended for children living in poverty according to federal definitions.

So should we just move on to more eligibility and smoother phase-outs for these programs, and just do the math as to how much is affordable given the level of tax increase we’re willing to accept, and rely on family allowances to provide relief for the middle class? Should we even take the existing family allowance proposals and allocate more money to a child’s early years? In any case, it should be taken for granted that such a program, whatever the amount of money it involves, should not involve either introduction or phasing out, but be financed on the basis of tax revenues.

As for the rest, “green” spending? Hell, I’m going to talk about social insurance issues seemingly without stopping, but this is something I don’t claim to have any expertise with.

As always, you are welcome to comment at JaneTheActuary.com!



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