Domestic Weekly Update August 17, 2010

The reasonable man adapts himself to the world; the unreasonable man persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.

— George Bernard Shaw

New and Urgent in This Week’s Update

Latest from Washington, DC

Organizational Updates


Let’s Make August Count — Pursue Those Commitments from Members of Congress (Take Action)

The House and Senate are now on the summer recess and will not return to Washington DC until September 13. As reported on Saturday’s national conference call, September is going to be a critical month in our work supporting working families. The Senate (and possibly the House too) is expected to be back for only three weeks before recessing again to prepare for the November elections. Therefore, our actions will be essential in ensuring that expiring low-income tax credit provisions are dealt with before the elections.

To review, what we want Congress to do this fall is to make the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) provisions from the American Recovery and Reinvestment Act of 2009 (ARRA) permanent. Specifically, the $3,000 income threshold for the CTC and the EITC expansion for married couples and larger families. If nothing is done, these improvements will expire at the end of this year, causing seven million low-income people to lose all or part of their EITC and/or CTC. Please note that despite being made temporary in ARRA, advocates (including RESULTS) were pushing for these and other changes long before a recovery bill was even needed. Making them permanent now is merely enacting improvements that should have been done a long time ago.

Right now, House and Senate tax committee leaders are preparing their colleagues for September’s tax policy agenda. While most members of Congress support the EITC and CTC in theory, many are less familiar with the ARRA provisions and their importance. That’s where we come in. Over the last few months, we have been educating our members of Congress about these issues, but it never hurts to do so again. We want to be that squeaky wheel. With a solid understanding of these provisions and what’s at stake if they expire, members will be fully equipped to weigh in with the tax committee leaders about the importance of including these expansions in the upcoming middle class tax cut bill. To bolster your argument, use the EITC and CTC data in the Appendix below to show how many children and workers will be affected in your state if these provisions expire.

Remember our advocacy goals for this summer:

HOUSE GOAL: At least ten confirmed direct conversations between representatives and House Ways and Means Chairman Sander Levin (D-MI-12) and/or Ranking Member Dave Camp (R-MI-4) and at least twenty letters sent to Reps. Levin and Camp or staff to staff contacts between your MoC’s tax staff and House Ways and Means Committee staff.

SENATE GOAL: At least six confirmed direct conversations between senators and Senate Finance Chairman Max Baucus (D-MT) and/or Ranking Members Charles Grassley (R-IA) and at last fifteen letters sent to Sens. Baucus and Grassley or staff to staff contacts between your MoC’s tax staff and Senate Finance Committee staff.

We need for members of Congress to be having these conversations and contacts. These above tax committee members are writing the legislation. If they hear from enough colleagues that the ARRA provisions for the EITC and CTC must be included, chances are they will be.

We at RESULTS know it can be difficult to get answers from congressional offices sometimes. We also know that making the same request over and over can seem tiresome and repetitive. But sometimes the only way we can show our elected officials that we truly care about the financial well-being of working families is by repeatedly pushing them to take action. Until they give us a definitive yes or no (and the reasons why) on our requests, our work goes unfinished. In their eyes, perhaps we are being unreasonable in our persistence, but as the George Bernard Shaw quote above shows, being unreasonable can go hand-in-hand with progress.

TAKE ACTION: Use the July Action for meetings with members of Congress back home and ask if they have spoken or written to key committee members about making the 2009 improvements to the EITC and CTC permanent. Request face-to-face meetings now so you can get on your representative’s and senators’ agenda before the recess ends. If you cannot get a meeting, contact their local offices about public appearances you can attend and ask a question. Also, if your member of Congress is part of the Congressional Progressive Caucus, Congressional Black Caucus, or Congressional Hispanic Caucus, urge him/her to ask caucus leadership to weigh in with the tax committee leaders in support of extending the 2009 EITC and CTC provisions.

If you cannot get a meeting or attend an event, please call their tax aides in Washington DC and politely push them until you get confirmation that your representative or senator has weighed in his or her support with the key committee members. You can find the names of aides on our Elected Officials page.

If you get a face-to-face scheduled or plan to attend a town hall, please contact Meredith Dodson ((202) 783-7100 x116, [email protected]) or Jos Linn ((515) 288-3622, [email protected]). We are here to help you prepare for meetings and town halls. Also, once you’ve had a meeting or conversation, please use our online lobby report form to let us know what happened.

See our Campaigns Summary page for information about all our 2010 campaign priorities.


Use Tips from Conference Call Guest Mike Owen in Your Media Actions (August Action)

We want to extend a gracious thank you to our guest speaker from last Saturday’s national conference call, Mike Owen, the assistant director of the Iowa Policy Project (IPP), a research organization that focuses on economic opportunity and quality-of-life issues in public policy. Mike shared messaging tips for how to talk about our priorities for the Earned Income Tax Credit and Child Tax Credit in the context of working families, using recent studies on how to voice support for government involvement in solving societal problems. He provided several examples of this new type of messaging, as well as tips on how to get your letters to the editor and op-eds published in local papers. We thank Mike for his time on our call. You can listen to Mike’s very informative presentation on our recording of the August 2010 RESULTS Domestic conference call on the RESULTS website.

In addition, IPP is part of the State Fiscal Analysis Initiative, coordinated by the Center on Budget and Policy Priorities. They can be a tremendous resource for you your advocacy work. To find out which states have these affiliates, go to http://www.statefiscal.org/.

TAKE ACTION: Take the August Action. Draft and submit an op-ed or letter to the editor (LTE) to your local paper highlighting the importance of working families in our society. Use the messaging from the action to link the value we want to strengthen (supporting the family) to the public structures that help do that (tax credits for low-income workers). Also, use information and stories from your VITA outreach to paint a picture of these families for readers, as well as date from the Appendix below. In addition, call on members of Congress by name to take action to support families.

Once you get a letter published, be sure to send it to the offices of your members of Congress so they know that your group got it published. You can use our Media page on the RESULTS website to find media outlets in your city and state. See our August 2010 U.S. Poverty Laser Talk for an example of a letter to the editor.

For a summary of RESULTS’ 2010 U.S. poverty campaigns, see our Campaigns Summary page on the RESULTS website.


Urge House Members to Support a Strong Child Nutrition Bill

On August 5, the Senate passed its child nutrition bill, the Healthy Hunger-Free Kids Act of 2010, S.3307. While the bill invests $4.5 billion in new money to reduce childhood hunger and obesity, the Senate chose to use money from the Supplemental Nutrition Assistance Program (SNAP), a.k.a. food stamps, to pay for part of the bill. RESULTS is very disappointed in that decision.

Fortunately, the House child nutrition bill – the Improving Nutrition for America’s Children Act of 2010 (H.R.5504) – has yet to pass. In addition to investing more resources for these important programs than the Senate bill, the House bill has yet to determine its offsets. By pushing House members to keep their hands off SNAP when the House bill comes up for a vote this fall, we help them avoid the Senate’s mistake. If successful, we can then urge House and Senate negotiators to include the House’s larger investment and more appropriate offsets in the final bill.

But already, there is pressure building for the House to simply adopt the Senate bill. Last week, Reps. Jim McGovern (D-MA-3) and Keith Ellison (D-MN-5) along with 106 House progressives, sent a letter to House Speaker Nancy Pelosi (D-CA-8) supporting H.R.5504 and telling her to reject efforts to adopt the Senate bill. Let’s help amplify this effort.

TAKE ACTION: Tell members of Congress to get child nutrition right. If you are meeting with members of Congress during the recess or attending a town hall event, tell them to invest no less than $8 billion in new funding for these vital programs and to pay for it without taking precious resources from other anti-poverty programs. You can contact Congress using our online e-mail alert.


Understanding PAYGO and How It Plays into the Tax Debate

The PAYGO rule is likely to be a big factor in upcoming tax debate so we thought we’d provide a refresher on what it is and what it means for the EITC and CTC.

PAYGO stands for “pay-as-you-go.” It is a statutory rule that requires that any increase in spending for mandatory programs (like Medicaid, Medicare, Social Security, farm subsidies, etc.) or any cut in taxes must not add to the long-term deficit. Therefore, any such changes must be paid for with other spending cuts and/or tax increases. It applies only to mandatory programs and tax cuts mainly because changes in those laws are permanent unless otherwise stated, thus having a long-term effect on the budget. Discretionary programs (e.g. Head Start, NASA funding, national defense, to name a few) are not subject to PAYGO. The logic is that since these programs must have their funding renewed each year, they have no long-term budgetary impact because Congress is not required to renew their funding from one year to the next.

The PAYGO rule was created in 1990 and was in effect during the 1990s. However, it was waived in many instances (it can be waived with a majority of the House and 60 votes in the Senate). One of the biggest was in 2001, when Congress passed President Bush’s first major tax cut. The rule was also not renewed when it expired in 2002.

The rule was reinstated when the Democrats took over Congress in 2007, although changed; instead of requiring deficit reduction, it merely required that it could not make the deficit worse. Since then, it has been complied with for the most part but some large exceptions have been made (like the economic recovery bill (ARRA) and extending the Alternative Minimum Tax).

For our purposes, Congress has also made some key PAYGO exemptions with regard to the expiring tax cuts. For example, an extension of the tax cuts for people making less than $200,000 per year ($250,000 for couples) is not required to comply with the rule, nor is an extension of the estate tax at the 2009 levels. In other words, they need not be paid for. Congress has also exempted the $3,000 CTC threshold and the expansion of the EITC for married couples that were passed under ARRA.*

For our advocacy purposes, these distinctions will not change our requests. They are the same as outlined in the first section of this update. We only flag this issue because some members of Congress may not realize that most of ARRA’s EITC and CTC provisions are exempt from PAYGO. When they respond to your requests with concerns about how to find the money to pay for these extensions, you can simply remind them that the $3,000 CTC threshold and EITC expansion for married couples already comply with PAYGO.

* Note that the ARRA expansion of the EITC for families with 3 or more children was not exempted from PAYGO, meaning that if extended, this provision will need to be paid for (or the rule waived). Extending the “high end” tax cuts for the wealthy must also comply with PAYGO. If extended, Congress would need to find roughly $700 billion in the budget to pay for these “high end” tax cuts (or waive the rule).


The Tax Debate: Who Benefits and by How Much

As discussed for several weeks, most of the attention of the tax debate this fall will focus on whether to allow the tax cuts for the wealthy or “high-end” tax cuts to expire or not. Let’s look at some figures about what this really means. First, in his August 12 Washington Post blog post, Ezra Klein has a very vivid and easily understood graph contrasting President Obama’s tax proposal with that of Republican lawmakers. The President and Democrats in Congress have proposed extending the 2001 and 2003 tax cuts for individuals making less then $200,000 per year and allowing the cuts for those above that level to expire. Republicans want to extend all of the 2001 and 2003 tax cuts. Under each plan, the size of the tax cut a person would receive is roughly the same for people making less than $500,000 per year (notice how small the cut for people making less than $20,000 per year). However, above that level the differences become stark; most notably, people making more than $1 million per year will receive a $103,835 tax cut under the Republican plan vs. a $6,349 cut under the President’s plan.

In a time of ever widening income and wealth inequality, an underfunded and overworked social safety net, and increasing federal deficits, should our priority be a $100,000 per person tax cut for the wealthiest 1 percent?

Klein’s chart also highlights another important fact; even when the high end cuts expire, wealthy taxpayers will still get a tax cut. As pointed out in the New York Times last week, people making over $1 million will still save about $6,300 per year in taxes even after the high end tax cuts expire (compared to what they paid before 2001). The reason is one of the most misunderstood aspects of our tax system.

The U.S. has a progressive tax system meaning that the more income you earn, the more you pay in taxes. However, many people assume that our tax system is like an elevator — as your income goes up, you move to a higher tax bracket and thus pay a higher tax rate on all of your income. This is false. Our tax system is more like a staircase — as you climb the staircase, everybody pays the same rate for each stair. For example, here are the tax rates for a single individual in 2010:

Stair of the Staircase (i.e. tax bracket)

Income from...

Income to...

Tax Rate

1

$0

$8.375

10 percent

2

$8,375

$34,000

15 percent

3

$34,000

$82,400

25 percent

4

$82,400

$171,850

28 percent

5

$171,850

$373,650

33 percent

6

$373,650

above

35 percent

Under this system, everyone pays a 10 percent tax rate on their first $8,375 of income, a 15 percent rate on income between $8,375 and $34,000, and the same for each subsequent stair. So a wealthy person with $400,000 in taxable income does not pay 35 percent of $400,000 in taxes. Instead, he pays 10 percent on his first $8,375, 15 percent on his next $25,625, and so on up the staircase. He only pays the 35 percent rate on his last $26,350 of income, i.e. his income between $373,650 and $400,000.

Therefore, contrary to some claims, allowing the high end Bush tax cuts to expire still gives a tax cut to everyone, including the wealthy. That’s because, through our staircase model tax system, wealthy taxpayers will still pay a lower tax rate on their first $200,000 of income.


Quick News

New Report Examines Child Poverty. A new report from the Urban Institute shows just how damaging poverty can be for children and for adults who lived in poverty as children. Here are some of the findings:

  • Being poor at birth is a strong predictor of future poverty status. 31 percent of white children and 69 percent of black children who are poor at birth go on to spend at least half their childhoods living in poverty.
  • Black children are roughly 2.5 times more likely than white children to ever experience poverty and 7 times more likely to be persistently poor.
  • Children who are born into poverty and spend multiple years living in poor families have worse adult outcomes than their counterparts in higher-income families.

You can use this information and other information from the study to highlight the importance of anti-poverty programs like low-income tax credits, health care for all, and adequate child nutrition.

Social Security Keep 20 million Out of Poverty. A new report from our friends at the Center in Budget and Policy Priorities shows that if Social Security were not in place, 20 million more Americans would live in poverty, including 1.1 million children. See the report for statistics on the number of people in each state who are kept out of poverty because of Social Security.


Announcements

Vote for Grassroots Board Positions. We have three persons running for the open seat on the RESULTS/RESULTS Educational Fund Board. All current RESULTS volunteers are eligible to vote. Cast your vote by using our online voting ballot on the RESULTS website. The voting period will end on September 1.

New Faith in Action Insert Available. Visit our What’s New in Faith in Action page to download our latest action insert for outreach, bulletins and newsletters.

Campaigns Summary Page Available. For a summary of RESULTS’ 2010 U.S. poverty campaigns, see our Campaigns Summary page on the RESULTS website.


Upcoming Events

(Click to see a complete calendar)

August 2–September 10: House on summer recess.

August 16–September 10: Senate on summer recess.

September 1: End of voting period for open RESULTS grassroots Board member position.

September 6: Labor Day holiday. All RESULTS offices closed.

June 18-21, 2011: RESULTS International Conference at the Four Points Sheraton in Washington, DC (Note: start date subject to change)


RESULTS Contact Information

Main Office: (p) (202) 783-7100, (f) (202) 783-2818, 750 First Street NE, Suite 1040, Washington DC 20002. If mailing a donation to our DC office, please address the envelope to the attention of Cynthia Stancil.

Domestic Legislative and Grassroots Support Staff: Meredith Dodson, (202) 783-7100 x116 ([email protected]); Jos Linn, (515) 288-3622 ([email protected]). Note: Jos will be on vacation July 19–25, and Meredith will be on vacation July 22–August 2. We apologize for any delay in returning calls and e-mails.

The RESULTS Domestic Update is sent out every Tuesday over e-mail to RESULTS volunteers and allies all over the country. The purpose of these updates is to inform and activate RESULTS activists to take action on our domestic campaigns.


Appendix

(from the Center on Budget and Policy Priorities (www.cbpp.org))

Projected Numbers of Filers and Children Affected in 2011 If 2009 Credit Expansions Are Allowed to Expire

 

CHILDREN AFFECTED

FILERS AFFECTED

 

Child Tax Credit

EITC Marriage

Child Tax Credit

EITC Marriage

 

Expansion

Penalty Relief

Expansion

Penalty Relief

U.S. Total

18,100,000

8,712,000

10,700,000

4,600,000

Alabama

283,000

114,000

188,000

72,000

Alaska

41,000

21,000

22,000

10,000

Arizona

486,000

254,000

275,000

127,000

Arkansas

225,000

109,000

131,000

59,000

California

2,552,000

1,417,000

1,428,000

702,000

Colorado

257,000

152,000

151,000

81,000

Connecticut

136,000

51,000

89,000

31,000

Delaware

39,000

17,000

24,000

10,000

Dist of Columbia

33,000

7,000

18,000

4,000

Florida

1,090,000

527,000

622,000

288,000

Georgia

634,000

286,000

358,000

149,000

Hawaii

63,000

34,000

36,000

18,000

Idaho

107,000

69,000

59,000

34,000

Illinois

739,000

324,000

406,000

159,000

Indiana

355,000

168,000

207,000

84,000

Iowa

158,000

77,000

96,000

43,000

Kansas

163,000

78,000

93,000

40,000

Kentucky

286,000

121,000

185,000

71,000

Louisiana

336,000

135,000

213,000

74,000

Maine

55,000

30,000

38,000

17,000

Maryland

177,000

88,000

114,000

48,000

Massachusetts

236,000

105,000

154,000

65,000

Michigan

548,000

201,000

344,000

113,000

Minnesota

199,000

93,000

115,000

50,000

Mississippi

211,000

85,000

126,000

50,000

Missouri

352,000

146,000

214,000

81,000

Montana

60,000

31,000

36,000

18,000

Nebraska

89,000

50,000

52,000

27,000

Nevada

157,000

90,000

87,000

46,000

New Hampshire

40,000

18,000

27,000

11,000

New Jersey

320,000

179,000

190,000

99,000

New Mexico

177,000

78,000

97,000

38,000

New York

1,060,000

494,000

641,000

254,000

North Carolina

594,000

263,000

361,000

153,000

North Dakota

30,000

18,000

20,000

9,000

Ohio

593,000

266,000

374,000

149,000

Oklahoma

231,000

130,000

141,000

69,000

Oregon

225,000

120,000

139,000

66,000

Pennsylvania

578,000

285,000

345,000

149,000

Rhode Island

48,000

19,000

32,000

12,000

South Carolina

285,000

111,000

173,000

60,000

South Dakota

37,000

19,000

23,000

10,000

Tennessee

401,000

182,000

250,000

106,000

Texas

2,124,000

1,040,000

1,189,000

530,000

Utah

201,000

110,000

103,000

53,000

Vermont

26,000

13,000

18,000

7,000

Virginia

322,000

149,000

198,000

86,000

Washington

335,000

150,000

209,000

79,000

West Virginia

102,000

54,000

66,000

34,000

Wisconsin

279,000

114,000

164,000

59,000

Wyoming

27,000

15,000

18,000

9,000

Note: State numbers may not add to totals due to rounding