Michigan Gov. Rick Snyder (R)

In a letter to a Senate subcommittee, Michigan Gov. Rick Snyder (R) warned that the deep cuts to a federal heating assistance program proposed by President Obama would have disastrous consequences for his state’s poorest residents:

Governor Rick Snyder, together with state utility companies and social service agencies, is warning that federal heating assistance cuts proposed by the Obama administration would have disastrous effects across Michigan.

Congress is now considering President Barack Obama’s proposal to cut funding for the Low Income Home Energy Assistance Program (LIHEAP) by 50 percent.

The block grant program is a major part of the safety net in Michigan and the proposed cut would leave the state with $120 million less to help subsidize heating costs for 1.2 million low income households.

The Coalition to Keep Michigan Warm noted that cuts to the program “will increase the home energy burden for the more than 600,000 households who annually benefit from LIHEAP.” Snyder reminded the senators that “winters in Michigan can be brutally cold” and that without federal funds to help families pay for heating, Michigan will either have to “reduce the number of eligible recipients, or reduce the level of assistance to a point that would not cover one month of heating for this coming winter.”

Chronically high unemployment in Michigan has forced more families to seek assistance from the program in recent years. Nationwide, 8.9 million households received federal help for heating or cooling this year compared to 5.8 million in 2008-09. Yet Michigan saw its federal funding plummet from $238 million to $38 million, and Obama wants to cut the program back to $2.5 billion for the entire country.

Jim Crisp, executive director of the Michigan Community Action Agency Association, which connects people with LIHEAP assistance, notes that Michigan’s social safety net is already developing gaping holes. “We’ve seen reduction of the Earned Income Credit. We are looking at the loss of [the state Low Income Energy Efficiency Program], and a 50 percent reduction in LIHEAP.” Even as he asks for federal assistance to aid low-income families, in his last budget, Gov. Snyder proposed eliminating the EITC altogether.

Will a Georgian innovation pave the way to helping America's unemployed?

The Wall Street Journal reported that the White House is strongly considering including a version of the “Georgia Works” unemployment program — where unemployed Georgians work at an employer for up to six weeks while getting unemployment benefits, with the possible promise of a paid job at the end — as a part of a major jobs package that it plans to introduce early next month.

One of the benefits of modeling a federal program on an existing state program is that you have a test case to analyze. Looking at the the results of Georgia Works, there are a number of successes that the program can claim:

— It Saves Employers Money: In a precarious economy, many employers are afraid to expend the funds necessary to hire new workers. An analysis of Georgia Works from the state Department of Labor presented in 2010 found that the average employer saved $4,590 in the “up to six weeks of pre-employment training” that they offered to jobless Georgians. Saving on these labor costs would create incentives for employers to provide the job training that workers need.

– It Has Helped Thousands Find Work: Since its inception in 2003, more than 4,000 Georgians have found new careers thanks to the job training offered by Georgia Works. The state’s labor commissioner in 2010 claimed that Georgia saved $6 million in the Unemployment Insurance Trust Fund thanks to unemployed Georgians finding work through the program.

– It Has Been Popular Enough To Rapidly Expand: In 2010, Georgia more than doubled the size program thanks to its popularity. Other states, including New Hampshire and Missouri, recently created “carbon copies” of the program within their own states.

But the program does have its critics. For instance, it has been lambasted for failing to get enough people back to work and undercutting full-time paid work:

– The Program Provides Little Guaranteed Additional Assistance To Participants: Sandra Gresham, who heads up a nonprofit called Arms of Love in Atlanta, noted that the transportation stipends provided to participants were insufficient and made it very difficult for them to work: “I’ve had five or six people from Georgia Works who wouldn’t do the job. It’s enough to barely pay bills or put gas in the tank. They can’t afford to do it.”

– The Program Could Be Abused To Undercut Full-Time Laborers: The National Employment Law Project (NELP) points out that Georgia Works often behaves more like an unpaid internship than job training. “We reviewed Georgia Works. It looks more like work than training,” said NELP’s Andrew Stettner. “You can’t try someone out and not pay them. It’s not allowed under our nation’s labor laws. If a lot of businesses can bring in a lot of people essentially working for free, somebody else [working full-time] isn’t getting an extra shift or extra work hours.”

– Most Employers Do Not Hire The People They Trained: The Pew Center On The States’ Stateline points out that only 38 percent of participants in the program were later hired for the job they were training for. However, 63 percent of those who were trained under the program did find work within 90 days at some employer.

In creating a program based on Georgia Works, policymakers should look at both what the program does right and what it does wrong to design the best possible program for the millions of Americans who remain unemployed.

Bill Clinton signs welfare reform.

On this day 15 years ago, President Bill Clinton signed a sweeping overhaul of the nation’s welfare system that enacted onerous work requirements on poor families before they could collect government aid. The new law fulfilled Republicans long-held desire to (in the words of President Clinton) “end welfare as we know it” by creating the Temporary Assistance for Needy Families (TANF) “block grant” program.

The reform achieved its goal of reducing the number of families receiving federal aid: in the process, it also shredded America’s ability to help its neediest families during an economic downturn. The nonpartisan Center on Budget and Policy Priorities has released a series of charts illustrating that TANF has failed to keep pace with the needs of struggling American families, especially during this long and difficult recession:

The number of low-income families receiving welfare has fallen from 68 percent in 1996 to 27 percent today. As the American Prospect’s Jake Blumgart noted, unlike the old system, which could respond to greater need when the economy went south, the TANF block grant program “provides an annual lump sum of $16.6 billion, with no allotted increases for recession, population growth, or rises in the cost of living.” It has even failed to keep up with inflation. In short, TANF’s ability to provide income support to those who need it most has declined dramatically.

Thus, during the worst recession in 80 years, TANF only reached 4.5 million families, or less than a third of those living in poverty. “By contrast, in 1995, the old welfare system covered 13.5 million families, or 75 percent of those living in poverty,” Blumgart wrote. The food stamp program — which does not face the same limitations as TANF — increased by 57 percent in 2009, in response to growing demand driven by high joblessness. As the CBPP’s LaDonna Pavetti, vice president for family income support, observed, “in the process of trying to impose very stringent work requirements, we’ve lost the program’s ability to provide a safety net for the people who are unable to find work.”

State Rep. Carol McGuire (R-NH)

This year, newly-elected Republicans in the New Hampshire legislature pushed a bill to restrict the state’s minimum wage law to the lowest federally mandated amount. The bill, backed by GOP leadership, was vetoed by Gov. John Lynch (D-NH), but still passed by an override vote in both chambers. New Hampshire will continue to have the federal minimum wage, which is $7.25 per hour, a $15,000 salary for a full-time worker.

State Rep. Carol McGuire (R-NH), the sponsor of the law, still believes the federal minimum wage is too high. In a statement to reporters, she said she would like to repeal all minimum wage laws and have corporations pay workers whatever rate they desire. She also said the $7.25 minimum is overly generous to young people who are “not worth the minimum“:

“It’s very discriminatory, particularly for young people. They’re not worth the minimum,” she said. She believes there are young people who would get a job if they could be paid $5 an hour instead of the minimum.

McGuire’s accusation that “young people” are “not worth the minimum” is a slap in the face to youth around the country who work minimum jobs to support their families, save for college, or are forced to survive without the privileges of inherited wealth or their parents’ income.

Moreover, McGuire’s drive for the lowest possible wages further depresses economic recovery. Economists agree that increasing the minimum wage is a direct stimulus for the stagnant economy that improves the standard of living among low-wage earners. Moreover, even the current minimum wage is historically low when adjusted for inflation — in the ’60s, the rate was over $9.00 an hour in 2006 dollars.

As the American economy continues to struggle through a sluggish recovery, some of the nation’s largest corporations are refusing to disclose “a number they don’t want anyone to know”: the number of workers they employ in the United States versus the number employed overseas.

Among the companies are several that are actively lobbying Congress for another special tax break. Apple and Pfizer are members of WinAmerica, a group of corporations lobbying for a tax repatriation holiday that would allow them to bring overseas profits back to the United States at a much lower tax rate than the 35 percent they would normally pay. But those companies, among others, remain secretive about where their actual job creation is taking place, as the Washington Post reports:

So secretive are these companies that they hand the figure over to government statisticians on the condition that officials will release only an aggregate number. The latest data show that multinationals cut 2.9 million jobs in the United States and added 2.4 million overseas between 2000 and 2009.

Despite outsourcing trends, the companies continue to push for the tax holiday (supported by, among others, GOP presidential candidates Mitt Romney and Rick Perry) under the guise of domestic job creation, even though evidence from past holidays indicates the companies would be unlikely to use the tax break to create jobs. In 2004, corporations used repatriated money largely to pay dividends and buy stock and, after the holiday, stashed even more money overseas under the assumption that Congress would approve another such holiday in the future, allowing them to avoid paying taxes yet again.

The 2004 holiday “didn’t accomplish its stated goals of bringing jobs and investment to the U.S.,” said Kristin Forbes, a professor at the Massachusetts Institute of Technology and a former member of President Bush’s council of economic advisers. After receiving the tax break in 2004, many of the WinAmerica corporations, including Pfizer, laid off thousands of workers in 2005 and 2006.

In the end, the holiday would result in yet another giveaway to corporations that are already paying low effective tax rates while they create jobs overseas. That’s something lawmakers should take into consideration when discussing the possibility of another holiday, Rochester Institute of Technology professor Ron Hira told the Post. “Should you listen to the kind of advice these companies have about how to grow the economy when their record and their model indicates they’ve cut jobs?” Hira asked. “Or should we talk to people who actually do create jobs in the United States?”

Today, Ohio faces its final deadline to expand its unemployment benefits program. If state officials choose to do so, the state is eligible for $176 million in unemployment insurance funds made available in the 2009 Recovery Act to states that broaden their unemployment programs.

However, despite a steadily increasing unemployment rate that is currently at 9 percent, Ohio Gov. John Kasich (R) has failed to apply for the federal funds. His reasoning? Extending unemployment compensation “makes no sense“:

Gov. John Kasich says it makes no sense for the state to make long-term changes to a fiscally-damaged system for a one-time payment, spokesman Rob Nichols said. And the jobs department, which administers the state’s unemployment compensation system, is not seeking any changes, department spokesman Ben Johnson said. [...]

To receive the remaining two-thirds, the state would have to choose two options from among several: Allow people seeking part-time work to qualify for benefits, extend benefits to those in approved job training programs, increase the allowance for dependents, and provide benefits to people who leave work for certain family reasons, such as domestic violence or transfer of a spouse.

State GOP lawmakers, following Kasich’s lead, refused to consider a bill that would allow Ohio to receive the money “by providing benefits to workers who leave their jobs for family reasons and by extending benefits to people in approved job training.” State Senate president Tom Niehaus (R) buried the bill because he too “was concerned that costs of the long-term changes could outweigh the benefits of one-time funding.”

But like most in his party, Kasich seems dedicated to ignoring the fact that one dollar in unemployment benefits generates two dollars in economic growth, in addition to the piece of mind it would provide for the 529,000 unemployed Ohioans struggling to make ends meet. “We’re going to need the benefits to be extended until we get back on our feet,” said one Ohioan who relies on the benefits to support her four children.

Kasich might have more cause to reject the federal funding if his own jobs agenda offered promising results. However, as Plunderbund notes, Ohio saw 14 straight months of dropping unemployment before Kasich assumed the helm. After the first full month with his job-crushing budget at work, Ohio is now in its second month of increasing unemployment.

Tax cuts have become the panacea of conservative economic thinking, but curiously, the AP reports Republicans are now lining up to raise taxes on nearly half of all Americans. In his radio address this weekend, President Obama called for an extension to the payroll tax holiday he signed into law last year, which benefits every working American, lowering the 6.2 percent tax that funds Social Security to 4.2 percent. The tax cut will expire in January, and many of the same Republican lawmakers who fought tooth and nail to preserve the Bush tax cuts for the wealthy are now coming out against an extension of the payroll tax holiday.

Why? Social Security payroll taxes mainly benefit middle- and working-class Americans, as the tax only applies to the first $106,800 of a worker’s wages. Thus, no matter how much money someone makes, they will see a maximum benefit of $2,136 from the holiday — a pittance compared to the savings for the wealthy from the Bush income tax cuts. Republicans claim these cuts for lower-income earners will do less to stimulate the economy than cuts for the wealthy or employers:

“It’s always a net positive to let taxpayers keep more of what they earn,” says Rep. Jeb Hensarling (R-TX), “but not all tax relief is created equal for the purposes of helping to get the economy moving again.”

Hensarling, the House’ fourth-ranking Republican, is right — some tax cuts do more than others to “get the economy moving again.” He just has it backwards about which cuts do that. Tax cuts for wealthy, such as those in the Bush tax cuts, are the single “least effective way to spur the economy and reduce unemployment,” according to the non-partisan Congressional Budget Office, because wealthy Americans were more likely to save their money than spend it.

Conversely, payroll tax cuts are one of the most efficient ways to stimulate economic growth, because low- and middle-income earners are more likely to spend their extra cash right away. But this analysis and similar ones from Moody’s and other experts has not disuaded Republicans from their myopic focus on tax cuts for the the wealthy only.

GOP budget guru Rep. Paul Ryan (R-WI) dismissed a payroll tax holiday in June as nothing but “sugar-high economics.” Meanwhile, presidential candidate Mitt Romney said he “would prefer to see the payroll tax cut on the employer side,” instead of for the employee. Both sides pay an equal amount for a total contribution of 12.4 percent per worker.

Indeed, the conservative dogma on taxes seems to flip for low-income earners, as many conservatives have explicitly called for the poor and middle-class to pay more in taxes.

H&R Block Co-Founder Henry Bloch

Earlier this month, billionaire investor Warren Buffett wrote in a New York Times op-ed that Congress has been “coddling the super-rich,” and called for higher taxes on millionaires and billionaires. “While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks,” he wrote. “My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.”

Several Republicans have scoffed at Buffet’s proposal, including the multimillionaire Mitt Romney. However, in an interview with Fox 4 News, multimillionaire Henry Bloch — co-founder and chairman emeritus of the tax preparation company H&R Block and a registered Republican — said that “the wealthy have a debt to this country. They can afford to pay it and they should.” He added that the Republican push to protect tax breaks for millionaires in order to promote job creation is “baloney“:

“That’s so baloney,” Bloch said. “Rich people don’t create jobs. Companies create jobs.”…”You probably pay a higher rate than I do… and yet my income is probably many times what yours is,” Bloch said to FOX 4 Reporter Rob Low.

Watch it:

Bloch is not alone in the GOP in agreeing with Buffett’s op-ed. Last week, Rep. Jeff Fortenberry (R-NE) said Buffett is right that loopholes in the tax code “skew in favor of the ultra-wealthy, ultra-wealthy corporations, and the overseas aristocracy.” (HT: former ThinkProgress intern Paul Breer)

When the credit rating agency Standard & Poors downgraded the U.S. from AAA to AA+, it pointed to both the use of the nation’s debt ceiling as a political football and the GOP’s complete intransigence on taxes as justification for the drop. As National Journal put it the day that S&P handed down its decision, “It’s hard to read the S&P analysis as anything other than a blast at Republicans.”

Since then, Republicans have desperately tried to spin the downgrade in order to pin the blame for it on President Obama. Rep. Michele Bachmann (R-MN), for instance, said that S&P “essentially proved me right,” even though she was one of the premier “default deniers,” whose very existence S&P said contributed to the downgrade. Last week, as Political Correction’s Alan Pyke noted, Speaker John Boehner (R-OH) and House Majority Leader Eric Cantor (R-VA) quoted S&P in a USA Today op-ed “to support their claim that the downgrade was ‘a clarion call to get America’s fiscal house in order’ rather than the penalty for their party’s shameless politicization of the debt ceiling.”

Cantor is back at it in a Washington Post op-ed today, first pointing to S&P to criticize the Obama administration, and then blasting the administration for proposing new revenues:

Since taking office, [Obama] has added trillions to the debt, ignored the recommendations of his own fiscal commission and put forth a budget that failed to address the drivers of our debt. Then we had to drag him to the table to make even the modest spending cuts that Standard & Poor’s says don’t go far enough. [...]

But the politics of division have reared up, fueled by efforts to incite class warfare. For example, though he often talks about millionaires, billionaires and corporate jet owners paying their “fair share,” behind closed doors the president admits to wanting to raise taxes on individuals making $200,000 per year and families and small businesses earning $250,000 per year.

Why does the president insist on higher taxes? Behind the rhetoric lies a desire to permanently increase the size of government — a philosophy that most Americans, who already think the government is trying to do too much — do not agree with. For the past few years, investors, families and businesses small and large have felt the threat of higher taxes, increased regulations and government expansion.

Of course, even a cursory look at the S&P report reveals that the agency agrees with Obama and the Democrats when it comes to taxation. “The majority of Republicans in Congress continue to resist any measure that would raise revenues,” the report says, noting with dismay that “new revenues have dropped down on the menu of policy options.”

Cantor has already acknowledged S&P’s warning regarding taxes, but has urged his GOP colleagues to ignore it. Evidently his part in this bit of theater is repeatedly citing S&P while continuing to advocate the policies that led S&P’s to issue its downgrade in the first place.

On a separate note, President Obama’s pledge to let the Bush tax cuts expire for those households making more than $250,000 annually was one of his highest profile campaign promises, which he has repeatedly cited over the last two and a half years. How does this qualify as a position that he only admits “behind closed doors”?