Over the past five-plus years, as the country has dug itself out of the Great Recession, U.S. workers with lower levels of income and education have not experienced much of an economic recovery. We all know the story by now. Workers’ wages remain flat. The unemployment rate is twice as high for those with high school degrees, compared with college graduates. And too many of the jobs being created come from low-paying sectors like retail, home health care, or tourism and hospitality.
The latest budget proposal from President Obama, released Tuesday, tries to combat this by seeking to expand the earned-income tax credit for low-income workers without children. (Right now, this group can only claim up to $500 from this tax credit, with strict restrictions on age and income eligibility, whereas a family with children claimed an average of $2,905 from the same credit in 2011, according to the Center on Budget and Policy Priorities, a left-leaning think tank).
Beyond the mechanics of how the tax credit would work, the administration’s proposal is a huge yet subtle admission that the country’s labor market remains too weak. The plan is basically a mea culpa, acknowledging that low-wage positions no longer cut it financially for a wide swath of Americans — and that they probably won’t in the future either, unless the federal government somehow intervenes.
By expanding the earned-income tax credit for childless workers (including those between the ages of 21 and 24, a group that suffers from high unemployment), the Obama administration is trying to prop up a labor market and lift people out of poverty. The White House estimates that expanding the earned-income tax credit would boost the earnings of 13.5 million Americans. More importantly, it could help childless workers who’ve been largely left behind in the recovery: men without college degrees; young adults between the ages of 21 and 24 who are not in school; and older workers, ages 65 and 66, who continue to stay on the job.
The president’s budget blueprint would let these low-income childless workers claim up to $1,000 a year, a benefit twice as generous as the current provision. (And, as an added bonus to the 2014 and 2016 political calculus, an expanded credit would overwhelmingly help workers in politically important states such as Florida, California, Illinois, Michigan, Ohio, Texas, and North Carolina).
The president’s budget proposal is not expected to get much political traction this spring, especially as lawmakers in Washington shift their focus to 2014 midterm elections and abandon any serious attempts at making policy. Yet just the fact that the Obama administration and Republicans like Sen. Marco Rubio are talking about ways to revamp the tax credit shows that members of both parties recognize the need to rethink the best way to help boost the earnings of working Americans, many of whom can no longer properly support themselves on wages alone.
What We're Following See More »
"The Senate standstill over a stopgap spending bill appeared headed toward a resolution on Friday night. Senators who were holding up the measure said votes are expected later in the evening. West Virginia Democrat Joe Manchin had raised objections to the continuing resolution because it did not include a full year's extension of retired coal miners' health benefits," but Manchin "said he and other coal state Democrats agreed with Senate Democratic leaders during a caucus meeting Thursday that they would not block the continuing resolution, but rather use the shutdown threat as a way to highlight the health care and pension needs of the miners."
Donald Trump transition team announced Friday afternoon that top supporter Rudy Giuliani has taken himself out of the running to be in Trump's cabinet, though CNN previously reported that it was Trump who informed the former New York City mayor that he would not be receiving a slot. While the field had seemingly been narrowed last week, it appears to be wide open once again, with ExxonMobil CEO Rex Tillerson the current favorite.
The House has completed it's business for 2016 by passing a spending bill which will keep the government funded through April 28. The final vote tally was 326-96. The bill's standing in the Senate is a bit tenuous at the moment, as a trio of Democratic Senators have pledged to block the bill unless coal miners get a permanent extension on retirement and health benefits. The government runs out of money on Friday night.
The Senate passed the National Defense Authorization Act today, sending the $618 billion measure to President Obama. The president vetoed the defense authorization bill a year ago, but both houses could override his disapproval this time around.