Flirting with Disaster: Shutdown Effects on Youth-Focused Programs

As governmental tensions escalated, millions tuned in to news specials, listened to political radio broadcasts, and read newspapers in an attempt to grasp an understanding of the uncertain future of the federal government. The House and the Senate could not agree on and pass a spending bill that would fund the government; the debate heavily related to the Patient Protection and Affordable Care Act, better known as Obamacare. The disagreement resulted in the government closing its doors at midnight on October 1.

With the shutdown coming to an end, looking back, much of the early publicized concern resulting from the government shutdown revolved around federal workers. However, many government programs that assist youth and their families were faced with issues that could have, and did, prevent them from providing a number of services. In fact, the United States Department of Agriculture (USDA) speculated that, without the help of the federal government, most state-operated programs that provide assistance, such as the Supplemental Nutrition Assistance Program (SNAP), would only be able to operate for about a week before they began to run out of resources.

SNAP distributes food stamps to eligible families and individuals. This program is especially important to youth because there are young people present in more than 50% of the households that receive these food stamps. Also, food stamps are often provided to young people towards the beginning of their careers, which is often the most financially unstable stage of their lives. Though SNAP benefits are managed by the state, they are awarded by the federal government. In the midst of this government shutdown, SNAP continued to operate, but the program would have suffered if the impasse lasted any longer, thus threatening its November funding.

TANF is a cash assistance program that aims to benefit families with dependent children and pregnant women by assisting them in obtaining the fundamental necessities for their children; additionally, roughly one-third of TANF beneficiaries are under the age of 24. The program’s funding expired on Tuesday, October 1, the same day as the government shutdown. October checks had already been allocated to qualified families prior to the shutdown. However, the distribution of November checks was not guaranteed if the government shutdown lasted past the end of this month.

The Special Supplemental Nutrition Program for Women, Infants and Children, better known as WIC, is in a predicament similar to that of TANF and SNAP. WIC is a federal assistance program that provides nutritional foods, health education, and recommendations to other essential services for women, from teenagers to adults, who are pregnant, breastfeeding, or postpartum, as well as their children under the age of five.

As a result of the government shutdown, many youth-centered programs established by the Workforce Investment Act, or WIA, were forced to limit their services and send employees home. Fortunately, WIA youth-focused programs were better equipped for the shutdown financially, as opposed to others. This is largely due to the fact that the WIA Youth funds for the Program Year (June 2013 – June 2014) were distributed back in April 2013. Furthermore, job training and education programs for youth and young adults often have diversified funding portfolios, thus enabling some continuance of services even when one source is terminated.

With the government shutdown officially over, it is both possible and plausible that the temporary closed doors of the government, coupled with the tensions of the legislative branch, reveal that the political road ahead is not going to be a smooth one. One day into the government shutdown, programs were already facing financial quandaries. The two-week shutdown of the government definitely proved to have an adverse effect on programs and efforts that aid youth and their families. An extended government shutdown would have definitely led to the temporary shutdown of these programs and many more.

This government shutdown serves as an indication of the nature of political debates to come. This is problematic due to the fact that the current political tensions could harm the progress of congressional discussions and decisions relating to aspects that directly impact younger populations, such as the Higher Education Act, WIA, and the Elementary and Secondary Education Act (No Child Left Behind Act). With many of these laws long overdue for updates, the well-being of the American youth and young adults should not have to wait any longer. To emphasize this point, NYEC helped craft and also signed on to a letter advocating for the Senate to discuss reauthorizing WIA on the floor. To sign on your organization, please click here.

A U.S. Role in Syria? – Domestic Implications of International Action

After a month of recess, Congress’s re-emergence in Washington on September 9th had a strange feel to it. In recent years, this annual return is often accompanied by great fanfare regarding an impending decision that must be made on the federal budget for the coming fiscal year which begins October 1st. This year, however, was much more tempered – it seemed like the focus was actually on the work that needed to be done rather than informing media outlets about the work that needed to be done. In this case, the work that required immediate attention referenced the ongoing conflict in Syria and whether or not the United States should become militarily involved.

Syria is a hot-button issue with a variety of opinions about how the United States should proceed. However, aside from that debate it is important to keep in mind what role the discussions surrounding Syria have on the larger-scale issue of the country’s current financial situation. Just last year, essentially all federally funded operations were dealt a significant financial blow via the funding cuts associated with sequestration. Investing resources in the Syria conflict could drastically alter the federal government’s fiscal dynamics.

More specifically, sequestration has pitted military and defense activities against domestic, non-defense programming (includes workforce development, education, and youth development activities), with a great argument over the cuts attributed to each. With sequestration existing as a zero-sum scenario (decreasing the cuts to defense would conversely cause an increase in cuts to non-defense programming), the current discussions regarding Syria could throw a wrench into an already polarized debate about the allocation of federal resources.

Whether or not the United States actually takes military action in Syria, the whole situation seems to provide more credence to the argument that defense programming needs more funding. On its own, that stance sounds fair, but within the contemporary fiscal climate surrounding the federal government, every decision inevitably has an impact on other activities. With federal  programming that focuses on education, development, and job training for youth and young adults in financial jeopardy, any sudden changes (without considering the ramifications or collateral damage) could be crippling.

Regardless of political leanings, the idea that everything is connected to everything else must be acknowledged by everyone. It is unfortunate that a particular issue can no longer be judged independently on its own merits, but this is the world that we now live in.

Just the Tip of the Iceberg: Federal Student Loan Reform

With the college academic year approaching, the July 1st doubling in student loan interest rates couldn’t have come at a worse time. Even with low rates on subsidized student loans, lending is big business for the Federal Government. In 2012, the government earned $51 billion from student loans, more than any corporation’s annual earnings. As such, with the jump in interest rates, it is projected that profits will increase an additional $21 billion if nothing is done.  That would mean further deficit reduction, but a heavier burden on student borrowers in the future.

While the student loan interest rates did double, not all hope is lost. To amend this situation, a bipartisan plan was crafted by Senate leadership to retroactively change interest rates and terms. The bipartisan language (H.R. 1911), which has now been approved by both the House and Senate, bears far more semblances to an earlier Senate bipartisan plan (S. 1334) than it does to the earlier House Republican plan (H.RES. 232). In fact, the final compromise language is the almost the exact same plan as the Senate bill, with the same interest rate ceilings and the provision to fix interest rate for the life of the loan. The only difference in this bill is that the interest rates for the loans are .2% higher than the rates proposed by Senators Joe Manchin, Angus King, and the Senate Republicans (S. 1334). This striking similarity between the compromise language and the earlier Senate proposal is probably because the Senate proposal already had bipartisan support, while the House proposal only had House Republican support.  The .2% rate increase from the Senate bill at face value looks like a measure inserted to satisfy members of the House seeking greater revenue from student loans to potentially pay for the deficit.

With all the attention focused on interest rates, other important measures like income based repayment have slipped through the cracks. Income-based repayment (IBR) programs index annual payments to the borrower’s income. The current Pay-as-you-Earn program calculates payments to a maximum 10% of the borrower’s salary. The idea enjoys widespread support, as it was originally proposed by famed economist Milton Freidman. The logic behind the policy is simple: college graduates make more money as their career progresses. As graduates make more, they have more disposable income to pay down their debts. Unfortunately, standard loan repayment options have constant monthly payments to pay down interest and debt. This conventional strategy makes sense for auto and home loans, where people have stable, predictable income. For college graduates, having constant monthly payments eat into their more modest entry-level income.  If there is high unemployment the situation becomes even worse because students have no savings to fall back on. Under IBR, students would no longer have to pay monthly payments even if they are making little to no income. As such, tying repayments to income alleviates the threat of bankruptcy from unexpected changes in employment or income.

Even though Congress expanded the program in 2010, private loan servicers (collectors) have been hesitant in offering this as a repayment option to borrowers. In this regard, none of the above proposals do enough to expand the usage of this program. Rather, the Excel Act (H.R. 1716), a proposal that isn’t endorsed by any party, does more to make IBR the standardized repayment system. The Excel Act proposes making repaying a student loan like a withholding tax. When the student graduates, a percentage of their income paid without any extra paper work, bypassing servicers who avoid giving students these flexible terms. While the Excel Act offers no student loan forgiveness, it goes a long way to making the debt easier for students to bear. Future proposals should make IBR the standard method of repayment to reduce the number of students defaulting on their student loans.

Dulling the Double-Edged Sword: Immigration Reform in the Senate

Much of the media’s spotlight in the past few weeks has been shining on the debate and passage of the immigration bill in the Senate. However, within a package of amendments is a nugget of good news for youth workforce development advocates as well.

Senator Bernard Sanders of Vermont, along with six other Senators, authored a “Youth Jobs” amendment that appropriated $1.5 billion to youth employment programs. Some may consider this amendment irrelevant to the underlying purpose of the bill. Because the amendment affects all low-income youth, not just young undocumented-immigrants and “DREAMers,” critics could argue that it is outside the scope of the bill’s purpose. That assessment would be mistaken, however, as an influx of guest workers for low-wage and seasonal labor will hurt young workers the most. This amendment therefore stems the harm that may come from depressed wages and/or decreasing opportunities by providing training and employment tailored for youth.

The funds will be spent over two years with a minimum of $7.5 million going to each state. Amounts above that will be tied to the state’s unemployment rate. The program will be funded with a one-time $10 fee on each guest worker visa application that businesses use to bring in workers. Possible programs it could fund include job training during both the summer and the year for low-income students eligible for Workforce Investment Act (WIA) programming. These programs will be linked to educational opportunities in order to provide long-term value for these young workers. It is estimated that this amendment will create 400,000 jobs for the youth aged 16-24.

Fresh appropriations to youth workforce development are a small, but welcome infusion to decreased workforce investment spending. Youth unemployment remains high (over 16% for adolescents aged 16-24), and experiencing unemployment when young is very damaging to future career prospects. Thus, it is prudent to bolster funding to WIA programs. The best situation would be to actually reauthorize WIA, but this amendment is a step in the right direction.

First in Your Hearts, But Last Where It Counts: Further Analysis on Spending for Social Programs

As Congress moves forward to provide funding for all federal activities, the House and Senate Appropriations Committees have released their proposed allocations to the 12 subcommittees, who will then use those top-line numbers to delineate program-specific funding levels. Due to steps farther along in the budgeting process, these top-line subcommittee allocations almost never represent the reality, but they do provide insight into the political and advocacy landscape.

In the Senate and House, growth in U.S. Departments of Labor, Health & Human Services, and Education (Labor-H) funding from 2007-2013 has lagged behind the growth in the overall budget during the same period. This means that Labor-H’s overall share of funding has dropped relative to its level in 2007. Senate funding proposals have been fairly stable, but House funding has been particularly erratic. Proposals since fiscal year 2012 have begun a trend of steep, double-digit cuts in Labor-H allocations. Comparatively, the funding pattern for Defense in the House and Senate, outpaced the growth of the overall budget from 2007-2013. The net result is that Labor-H programs have been consistently receiving smaller pieces of the overall budgetary pie in both chambers of Congress. The House subcommittee allocations for 2014 only continue the downward trajectory with a 20% cut for Labor-H, even though the overall budget only decreases about 6% from the 2013 proposals.

The big picture highlights the low priority of Labor-H programming by suggesting that when the budget grows, Labor-H doesn’t grow as fast, and when the budget shrinks, Labor-H shrinks faster.  In fact, the only programs that gained ground and received a greater fraction of the allocations in both the House and Senate were Defense, Homeland Security, Military Construction, and Veterans’ Affairs. People may attribute the massive growth in Defense to the wars in Afghanistan and Iraq, but much of the money for those wars was earmarked as overseas contingencies. Combine that with the present political climate and it is virtually impossible that any reduced spending from troop withdrawals will be reallocated to Labor-H programming.

2010 and 2011 were the only years when growth in proposed Labor-H funding outpaced total budget growth. There are a few reasons for this anomaly. Much of the gain probably can be attributed to the American Recovery and Reinvestment Act, enacted in 2009, which provided additional funding to programs within the Labor-H umbrella. Another, more indirect, cause of the growth could be the increased organizational power and influence of young people and youth groups after their pivotal role in getting President Obama elected. Whatever the reason, the boost in funding was short-lived. During 2011, when the partisan spotlight was on the budget, Labor-H funding was dramatically cut by the House.

The fluctuations within House subcommittee allocations over the past few years may be explained by the changes in the party composition of the House after 2010, affecting all years after fiscal year 2011. In contrast, consistency of the Senate majority could contribute to the relative stability of the Senate appropriations for Labor-H.

The situation for future Labor-H funding does not look very optimistic. The House continues to propose enormous cuts to funding to reduce the deficit, and likely will not shift in party control in 2014 due to the economic recovery. The class of Senators running for reelection in 2014 was the same class that was elected before Labor-H allocation growth reached its zenith, so it isn’t likely they will be replaced by anyone friendlier to Labor-H funding.

Basement Dwellers: Social Programs at Bottom of Federal Funding Hierarchy

With the process underway to determine the federal funding levels for the next fiscal year (FY 2014 starts October 1, 2013), it is unclear how things will unfold for youth employment and education programming (primarily operating within the U.S. Departments of Labor, Health & Human Services, Education). Based on the trend over the past several years, there should be no expectations that workforce development, education, and youth development will fare favorably overall.

Last year, the U.S House of Representatives Appropriations Committee voted on bills for all 12 clusters of federal government activity except for one.  Agencies within the U.S. Departments of Labor, Health & Human Services, and Education were the sole entities, for which the Committee did not even vote on a bill. Providing context to that peculiarity, a former member of that Committee later commented about how the bill was so bad that no one wanted to attach their name to it.

Fast forward to March 2013, when Congress is attempting to determine the final funding levels for FY 2013. The proposals produced by the House of Representatives and the Senate offered updated funding levels and prioritization based on 2013 circumstances instead of outdated 2011 circumstances. However, the Departments of Labor, Health & Human Services, Education again were denied favorable treatment in this regard.

Subsequently, Senator Tom Harkin (D-IA) offered an amendment to the Senate’s March 2013 proposal that provided updated information and funding levels for activities within the Departments of Labor, Health & Human Services, Education. Senator Harkin’s amendment included many increases in funding for programs, and would not have added any cost to the bill. Ultimately, however, Senator Harkin’s proposal failed to garner enough votes within the Senate.

Why do the Departments of Labor, Health & Human Services, Education continue to get the short end of the stick within Congressional discussions regarding funding? While definitive answers are hard to provide, social programming in general (overwhelmingly falls within the Departments of Labor, Health & Human Services, Education) is a major point of partisan debate, which contributes greatly to the overall inaction.

Despite the grim trends for youth employment and education programming funding in the past, future prospects will depend on the efforts of advocates across the country.

Never-Ending “Fiscal Cliff” Drama Set to Continue

After many weeks of negotiations over how to avoid going over the “fiscal cliff,” Congress approved a short-term solution after a last-ditch effort by Vice President Joe Biden and Senate Minority Leader Mitch McConnell (R-KY). Many people thought that a solution would not be agreed upon before the fiscal cliff deadlines, while others remained confident that policymakers would be able to work together. Ironically, both schools of thought were correct – Congress did not vote on the American Taxpayer Relief Act until January 1st, and President Obama did not sign it into law until January 2nd. Therefore, technically the country did roll over the “cliff” whilst still hanging on by a fingernail – the deadline for decisions on the tax cuts was December 31st, but the federal spending sequester was not scheduled for implementation until January 2nd. Essentially, the American Taxpayer Relief Act allowed the country to let go from that January cliff edge and drop relatively unscathed to a newly discovered ledge below only to teeter on the edge of another cliff.

The resulting solution to the “cliff” really was a compromise with legislators from both sides expressing concern and dissatisfaction over the deal, but the bottom line is that a perceived major economic meltdown was averted for the time being. The January 2013 “fiscal cliff” was comprised of potential increases in taxes, the automatic federal funding cuts associated with sequestration, and the need to address the nation’s debt ceiling again (the instigating factor that set the nation on a course towards the fiscal cliff). The “solution,” called the American Taxpayer Relief Act, is true to its name because it really only addressed the most pressing tax issue (expiring tax cuts) component of the January 2012 “fiscal cliff” – sequestration is still scheduled to occur (delayed two months) and the debt ceiling is still a topic of debate. Therefore, any relief from the “fiscal cliff” drama will be short-lived because many of the same problems persist without answers, only to be tackled in February and March of 2013.

With the implementation of sequestration cuts in federal funding pushed back until March 1st, Congress and the Obama Administration will have more time to hammer out a more permanent solution. Even though the sequestration cuts will be less than before (new revenues from the American Taxpayer Relief Act must be accounted for), they still involve larger systemic questions that have been recent sources of tremendous political posturing. While the end result could be characterized as bi-partisan, the preceding process was coupled with constant partisan rhetoric that played out via a consistent stream of press releases and announcements by those involved (as well as those who weren’t).

Brinkmanship has continued to get worse over the past few years. Will going over the “fiscal cliff” in January 2013 lead to tumbling off in a free fall in March? The next 49 days will surely be interesting…