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Sequestration Cuts To Education Programs Threaten To Widen Education Gap Between Rich And Poor

The achievement gap between school districts in high-income neighborhoods and those in low-income ones is already more canyon than crack, and if $1.7 trillion in automatic sequestration cuts are allowed to go into effect on March 1, that gap could grow even wider.

Dozens of education programs would face reduced funding, but three crucial programs — No Child Left Behind, Head Start initiatives, and the Individuals with Disabilities Act — provide the most assistance to low-income students and also face the sharpest cuts if the sequester is allowed to go into effect, as the Center for American Progress’ Juliana Herman and Kaitlin Pennington detailed in a new report:

Altogether, the sequester would cut approximately $725 million from Title I funding, potentially affecting 2,700 schools, impacting 1.2 million students, and placing 9,880 education staff at risk of losing their jobs. [...]

Head Start and Early Head Start—a similar program for infants—both work to ensure that parental income does not determine whether a child will be able to learn during these influential years. But should sequestration happen next week, approximately 70,000 children will be kicked out of Head Start due to inadequate funding. [...]

If sequestration goes through, funding under the Individuals with Disabilities Act could be reduced by as much as $579 million.

In all, the report estimates, the cuts would impact as many as 1.2 million children, 30,000 teachers and 2,700 schools, the overwhelming majority of which will be from low-income communities.

Recent studies have shown the devastating correlation between income and student achievement. Since the late 1980s, the gap in metrics like college completion between students from high-income and low-income households grew by more than 50 percent.

White House Announces Plan To Open Up Access To Research Supported by Federal Funds

Office of Science and Technology Policy Director John Holdren

Today, the White House released a memo directing federal agencies to make publicly funded research available to the people who pay for it:

“The Office of Science and Technology Policy (OSTP) hereby directs each Federal agency with over $100 million in annual conduct of research and development expenditures to develop a plan to support increased public access to the results of research funded by the Federal Government.”

The directive is similar to the Fair Access to Science and Technology Research Act (FASTR), a recent bi-partisan legislative proposal aimed at opening up access to federally funded research, although the waiting twelve month waiting period before research is made available in the White House plan is twice the length of the six month delay suggested by FASTR. Both the White House plan and FASTR build upon the success of the National Institute of Health’s 2008 public access policy.

Dr. John Holdren, Director of the White House Office of Science and Technology Policy, thanked signers of a We The People petition calling for the reform, saying its popularity was “important to our discussions of this issue.”

Today’s announcement could be critical to addressing the broken for profit academic publishing system that has led to a flourishing open access movement in scholarly circles. The movement gained a new public spotlight following the suicide of activist Aaron Swartz while facing prosecution for what many believe was an attempt to liberate research from the closed academic database JSTOR.

European Economy Expected To Contract Even More In 2013

The European economy, beset by high unemployment and austerity measures aimed at reducing debts and deficits, will contract again in 2013, according to the continent’s official economic body. That would make 2013 the second consecutive year, and third in the past five, in which the 17-nation Eurozone’s economy will have shrunk, adding to its already record-high unemployment rate and further complicating the deficit reduction efforts it has pursued without fail since the end of the global recession.

Another contraction would especially hit the countries that have already been hurt the most by the recession and resulting austerity, the European Commission said. The Wall Street Journal reports:

The European Commission, the EU’s executive arm, forecasts a 0.3% contraction for 2013 and sees falling spending by businesses, consumers and national governments pushing euro-zone unemployment to a new high. Mass joblessness is expected to increase in the countries hardest hit by the crisis, with the average unemployment rate expected to reach 27% in Greece, 26.9% in Spain and 17.3% in Portugal.

Slow growth, and in some cases the lack of growth at all, has already hampered deficit reduction efforts, causing Spain, Greece, and France to miss deficit targets. French president Francois Hollande announced this week that he would not pursue further austerity to hit this year’s deficit target. The Eurozone officially fell back into recession in November.

How Raising The Minimum Wage Could Reduce Gun Violence In Chicago

It may be possible to help reduce gun violence in Chicago — a city that saw over 500 homicides last year — in one simple step: Raising the minimum wage.

A new report released by the group Stand Up! Chicago draws a clear connection between violent crime and low wages and economic inequality in the Windy City, and while raising wages alone can’t eliminate the gun violence that haunts the city’s streets, it could certainly help, the group asserts:

Decades of research have demonstrated that there is a statistically significant link between low wages, income inequality and crime. Researchers have found that the majority of increases in violent crime can be explained by downward wage trends, and The National Bureau of Economic Research reports that a twenty percent drop in wages leads to a 12 to 18 percent increase in youth crime.Other analysis shows that a 1 percent point increase in the Gini index (a measure of wealth inequality) produces, on average, a 3.6 percent increase in the homicide rates for a population.[...]

Much of Chicago’s poverty crisis is attributable to the problem of low wages and unemployment. According to a recent report by Women Employed and Action Now, the number of low-wage workers in Chicago, defined as those making $12 per hour or less, increased by nearly 30 percent over the last decade.

According to the report, 89 percent of murders and violent crimes in Chicago were in low-income areas where mostly black and Latino people live — areas where wages are lowest and extreme poverty rates are highest. Overall, the city has income inequality similar to that of El Salvador. That follows the wider national trend that poverty and income inequality results in homicides:

Raising wages won’t just be beneficial to the lives and wallets of Chicago’s poor; it will also help the city overall. Researchers at the University of Chicago found that the financial cost of the gun epidemic — between hospital bills, time spent in courts, people leaving the city, and a range of other factors — costs households about $2,500 each year. The Center for American Progress has calculated the direct costs per capita at $390 in Chicago. And homeowners could benefit from a reduction in gun violence too, since housing prices would rise by billions if fewer people were getting gunned down.

Why Sequestration May Not Actually Reduce America’s Deficit

The United States is on the brink of sequestration, the $1.2 trillion in automatic budget cuts included in the summer 2011 deficit deal that will begin taking effect March 1 if Congress does not act to avert them. The goal of the cuts is to reduce America’s budget deficit, which remains Washington’s focus even as unemployment is high and the overall economic recovery is modest at best.

Despite the $85 billion in cuts that will take place this year, it is entirely possible that sequestration won’t actually lead to substantial shrinking of America’s deficit. There are a number of reasons for that, as Scott Lilly from the Center for American Progress explained in a column today. The primary reason, though, is that fiscal contraction caused by sequestration is likely to slow economic growth, reducing tax revenue and preventing meaningful deficit reduction, as CAP’s Adam Hersh notes:

Figure 1 also shows that the projected effect of the sequester will be to lower U.S. economic output by $287 billion from where we would be without any fiscal contraction—barely ahead of where the U.S. economy was at the end of 2012. To be certain—with sequestration on top of other fiscal contraction draining so much momentum—the U.S. economy would need to steer clear of all other risks to growth: potential oil- and commodity-price shocks, slowing global demand for U.S. exports, and the faltering confidence in the governability of U.S. economic policy. It is possible none of those risks will rear their ugly heads in the next year, but it would be foolish to bet America’s economic future on it.

Lilly estimates that the cuts could result in $17 billion in lost revenue this year, but because reducing government investment will also inhibit private sector growth, the effects may be even bigger than the Congressional Budget Office projects:
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Republican Senator Bemoans Influence Of Grover Norquist On Tax Policy

Sen. Chuck Grassley (R-IA)

AFTON, Iowa — Though some have questioned the influence that Grover Norquist’s anti-tax pledge holds over the GOP, a leading Republican senator left no doubts of its influence at a recent town hall.

An Iowa constituent asked Sen. Chuck Grassley (R-IA) on Tuesday about closing a loophole that allows online companies like Amazon to skirt paying sales taxes. Though Grassley declined to take a firm position on the issue, he explained to the man how Norquist’s influence blocks Congress from closing that loophole. “It may not be a tax increase because the states already have the taxes, but there are people in Washington who define what a tax increase is and they seem to have a lot of political power,” Grassley said, implicitly referring to Norquist. “They’ve gotten people not willing to go out and want to be labeled as a tax-increaser even if they aren’t increasing taxes.” Watch it:

Despite Norquist’s influence, some Republicans are joining Democrats and trying to close the Amazon loophole. Currently, Sen. Mike Enzi (R-WY) and a bipartisan group of 56 members of Congress are sponsoring the Marketplace Fairness Act of 2013, which would allow states to collect sales taxes on online purchases.

3 Million Americans Missed Work Because Of Illness Last Month, Many Without Paid Sick Leave

The flu epidemic that has swept the nation this winter is expected to be the worst outbreak of the virus in at least a decade, and the flu and other illnesses are hitting America’s workers harder this year than they did in the past. Nearly 3 million workers took time off because of illness in January, according to data from the Bureau of Labor Statistics. That’s the most in any month since the winter of 2008, TODAY reports:

Nearly 2.9 million full-time workers only worked part-time during the week in which they were surveyed because of illness, injury or medical appointment, the BLS said. Also, more than 1.2 million people were off work for the whole week they were surveyed because they were sick, the BLS said.

That’s the highest level of people calling in sick since February 2008, when 1.3 million people missed a full week of work and 3.3 million full-time workers only worked part-time because of illness.

America’s lack of paid sick leave means many of those 3 million workers likely lost pay by taking time off due to illness, and the number who did take off would likely be higher if more workers had access to paid time off. 40 percent of private sector workers and 80 percent of low-income workers don’t receive a single paid sick day from their employers; 79 percent of food and restaurant workers have no paid sick time. The lack of paid sick time makes the spread of viruses like the flu even worse: there were an estimated 5 million additional cases of the H1N1 virus in 2009 because workers couldn’t take time off, according to the American Journal of Public Health.

Lawmakers in multiple states and cities have pushed legislation that would provide workers with paid sick leave, but business groups have largely opposed those efforts, citing research that says the legislation would hurt businesses and job growth. Those studies are often flawed, though, as the cost to businesses is relatively small and there is no evidence that paid sick leave causes job loss. In fact, because paid sick leave increases worker productivity and decreases turnover while limiting the spread of outbreaks, it likely provides benefits to both businesses and the overall economy.

GOP Rep. Open To Closing Loopholes To Avoid Defense Cuts

Virginia Rep. Scott Rigell (R) would consider raising new revenue through the closure of tax loopholes in order to avoid part of the automatic budget cuts that will take effect March 1, he said Thursday. Rigell was among the Republicans who hinted at support for ending the Bush tax cuts for the wealthy during debate over the so-called “fiscal cliff,” when a last-minute deal raised tax rates on Americans making more than $450,000 but pushed sequestration off until March.

Now, Rigell is again calling for talks about revenues to avoid defense cuts that would hit his district, the Wall Street Journal reports:

Rep. Scott Rigell (R., Va.), whose Hampton Roads district is home to the largest naval base in the world and relies heavily on Pentagon spending, said he is reaching the point where he will consider whatever Senate Democrats offer up, even if that includes closing tax loopholes.

“I want our leadership to consider it and not reject it outright,” he said.

With a week to go before the cuts begin, President Obama reached out to Republican leaders to negotiate a replacement for the sequester. Obama has proposed raising revenue through the closure of tax loopholes, a position many Republicans support, but Democrats want to put new revenues toward deficit reduction. Republicans prefer to use revenue gained from loopholes to lower current tax rates.

Other Republicans, including Sens. John McCain (R-AZ) and Lindsey Graham (R-SC), have previously indicated that they would consider raising revenues to avoid defense cuts.

Econ 101: February 22, 2013

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • President Obama renewed talks with Republican leaders over looming budget cuts. [Reuters]
  • Business and labor groups have reached an agreement over immigration reform. [Associated Press]
  • Citigroup will begin tying executive pay and bonuses to performance and profitability. [Reuters]
  • The number of American homes behind on mortgage payments is at its lowest level in four years, according to one survey. [Wall Street Journal]
  • Schools are preparing for cuts in federal funding because of sequestration. [Washington Post]
  • In a sign that the industry is bouncing back, American auto manufacturers are all hiring. [New York Times]
  • Consumers are cutting back after the end of the payroll tax cut, a survey suggests. [CNN Money]

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