A Strong Middle Class Blog

  • Support for Caregivers in Health Care Reform

    As frequent readers of this blog know, the Middle Class Task Force developed a new Caregiver Initiative in the FY 2011 Budget to address the needs of the estimated 65 million Americans that provide unpaid care to seniors or people with disabilities. The historic health care legislation signed by the President  last Tuesday will complement and enhance the Task Force’s Initiative.  Let’s take a quick look at the ways in which health reform will help family caregivers and their loved ones.

    First, the health reform legislation includes a provision called the CLASS Act, which establishes a new, voluntary long-term care insurance program for workers aimed at allowing them in the event of a disability to assist them in accomplishing life’s daily activities. After a 5-year vesting period, participants who experience a functional limitation would receive a cash benefit that could be used to purchase services and supports needed to maintain their independence at home or in the community including things like home modifications, assistive technology, accessible transportation, homemaker services, personal assistance services, home care aides, and nursing support. CLASS Act benefits can be used to compensate family caregivers, who often make huge financial sacrifices. And receiving benefits from this program would not have any effect on eligibility for other government programs.
    Health reform will also provide much-needed support to Medicaid enrollees seeking home and community based services. Right now, there is a bias in the Medicaid program in favor of institutional rather than home and community-based care.  Under the Community First Choice Option in the health reform legislation, States can elect to provide with enhanced Federal funding self-directed, home and community-based attendant services and supports to Medicaid beneficiaries.  Additionally, the law provides additional funding for the Money Follows the Person program, which provides grants to states to help transition Medicaid-enrolled nursing home residents back into their communities.

    The health reform legislation also creates a new Medicare pilot program aimed at helping patients and caregivers successfully negotiate the transition from a hospital stay to their homes or other care settings. And it provides new funding for Aging and Disability Resource Centers, which provide information and assistance to caregivers and people with long-term care needs.

    Finally, the legislation establishes a nationwide system for States to run background check programs for employees of long-term care facilities and providers.  This proposal builds on a successful pilot program, which operated in seven states and kept thousands of individuals who had disqualifying records out of the long-term care workforce.  This new national system will give family members peace of mind by ensuring that all employees with direct access to patients have been screened.

    As we have said on this blog before, the Middle Class Task Force’s Caregiver Initiative is just one modest step towards addressing the needs of caregivers.  Health care reform marks another important step forward.

    Terrell McSweeny is Domestic Policy Advisor to the Vice President


  • So, You Want to Boost Exports? Have I Got a Program for You!

    Last week, President Obama gave an important economic speech about his goal for the US to double our exports over the next five years.  Get this right, and we’re talking about two million good jobs making stuff here and selling it to other countries.

    The President announced a set of initiatives that will help our firms sell into foreign markets, but I’d like to talk briefly about another policy the President and Vice-President have been touting of late: the (somewhat inauspiciously named) 48C Advanced Energy Manufacturing Tax Credit.

    This is a 30 percent tax credit that can be used to offset the costs of investment in building clean energy equipment right here in the good old USA.  You heard me: we build it here to expand our own domestic capacity in clean energy manufacturing.  This helps on the import side by meeting more domestic demand with domestic capacity.  But we also start selling more of these goods abroad, complementing the goal the President set out in yesterday’s speech to boost exports.

    The Recovery Act provided $2.3 billion for the tax credit, but the credit was so popular that we received many more qualified applications than we were able to accept.  As part of our jobs agenda to build off of Recovery Act successes, the President has called for a $5 billion expansion of 48C.  And note that because the tax credit offsets less than a third of the costs of an investment, it brings private-sector capital in from the sidelines – $5 billion in tax credits means $15 billion of total investment. 

    With 48C, we don’t merely create good jobs today.  We lay the foundation for a vibrant, clean energy industry tomorrow.  The credit can support investments in advanced energy technology throughout the economy, from technologies like wind turbines and solar panels that create energy from renewable resources, to technologies like batteries and smart grid systems that store and transmit that energy, to technologies like advanced lighting that help conserve energy.  Not to mention investments in plug-in electric vehicles and their components, or investments in equipment to capture and sequester carbon dioxide or otherwise reduce greenhouse gas emissions.

    Now, think about all of the above in the context of the President’s agenda, including job growth, clean energy, and exports.  We’ve got the world’s most productive manufacturers right here in America, and while we’ve historically used incentives to encourage the generation and the use of clean energy, we’ve never before taken that extra step to incentivize the actual manufacturing of the equipment used to generate clean energy here.

    And there’s every reason to believe that this new output would be competitive both here and around the globe.

    That’s what 48C does, and that’s why it’s so important that Congress enacts our proposed expansion of this program to help create the lasting opportunities working Americans need and deserve.

    Jared Bernstein is Chief Economic Advisor to the Vice President

  • Our Annual Report and Growing Support for Our Middle Class Agenda

    Today, the Middle Class Task Force is proudly releasing our first annual report , which highlights the work we’ve done over the past year, and reaffirms the Administration’s commitment to fight for the middle class.  The Task Force has traveled across the country to hear about the challenges facing American families and to gather ideas about how to address those challenges.  We talked green jobs in Denver, manufacturing in Ohio, college affordability in St. Louis -- and that’s just the tip of the iceberg. We also received thousands of comments from ordinary Americans through this website, and met with leading experts on the issues facing the middle class.

    The report begins with a thorough examination of some of the economic challenges facing the middle class, but most importantly, it outlines several policy proposals that will ease the burden on middle class families.

    In support of our work, we’re also posting several letters from organizations backing our proposals to cap student loan payments, help families with soaring child care costs, enhance retirement security, and support families caring for seniors and people with disabilities.

    Jared Bernstein is Chief Economic Advisor to the Vice President, and Executive Director of the Middle Class Task Force

    Terrell McSweeny is Domestic Policy Advisor to the Vice President

  • Relief from Crushing Student Loan Payments

    On January 25th, the Middle Class Task Force unveiled several initiatives designed to relieve the strain on family budgets, including a cap on student loan payments.  A few days later, the President talked about this student loan proposal during his State of the Union address.  The President’s words generated a lot of interest and excitement, so we wanted to tell you a little more about our plan.

    Over the past three decades, college tuition has grown ten times faster than real median incomes for families with children. So it’s no surprise that about two-thirds of graduates take out loans to pay for college and their average debt is over $23,000.  But we didn’t need statistics to understand how challenging it can be to pay for college; the Vice President and other members of the Task Force heard about it directly from students, parents, faculty and administrators when we held meetings at Syracuse University and the University of Missouri-St. Louis.

    We are proposing to make federal student loans more affordable by limiting a borrower’s payments to 10 percent of the income he or she has left over after covering basic expenses. Here is an example:  The monthly payment for a single borrower earning $30,000 who owes $20,000 in loans would be $115 a month, compared to $228 a month under the standard 10-year repayment plan. 

    Our proposal has been praised by a number of student aid experts. According to Dr. Michael Lomax, the President and CEO of UNCF, this change “will decrease the loan payments of hundreds of thousands of low-income borrowers with significant student loan debt, lightening the load of many Americans and enabling them to get the education they need, and our nation needs them to have.”

    Debt can be especially difficult to manage for borrowers in low-paying public service careers, as well as those who have lost their jobs.  Lauren Asher, the President of the Institute for College Access and Success (TICAS) noted that “this is a well-targeted and well-timed change that would help people who are struggling to stay afloat financially.”

    In addition to lowering monthly payments, we are proposing to keep the total cost of loan repayment manageable by forgiving all remaining debt after 20 years of payments, or 10 years of payments for those in public service work.  As Mark Kantrowitz, the publisher of finaid.org said, the “acceleration of the loan forgiveness will ensure that borrowers are not still paying back their own federal student loans when their children enroll in college.”

    These changes build on the Income-Based Repayment (IBR) plan for student loans that was implemented last summer.   Lauren Asher of TICAS explained that IBR “was supported by a broad coalition of student, parent, loan industry, and higher education groups to make college more affordable and accessible,” and our proposal is “a way to make the program even more helpful to responsible borrowers.”

    This initiative complements other key pieces of the Administration’s agenda, like extending the American Opportunity Tax Credit for college expenses and passing legislation, which is currently before the Senate, to reform student lending to eliminate tens of billions of dollars in wasteful subsidies to banks. The savings will be used to expand Pell Grants and invest in community colleges.  Together, these proposals will make it easier for millions of Americans to pursue their college dreams. 

    Brian Levine is the Deputy Domestic Policy Advisor to the Vice President

  • Work-Family Juggling

    Today’s Washington Post has an interesting article on moms entering the workforce – or staying in the workforce – during the last two years. It notes the trends during the recent recession that many experts have been writing about:  women are either re-entering the workforce, moving from part to full time jobs or becoming their family’s breadwinner.  There are two things that are noteworthy about this: (1) the recession may have sped up changes in family structure that had been gradually happening over the last two decades; and (2) balancing work and caregiving are increasingly important to the economic well-being of middle class families, as more families become reliant on two incomes to get ahead.  Predictably, parents in the Post article had different reactions to returning to or staying at work – but all acknowledged they would continue the juggling act while it made financial sense for their families.  There is little evidence the trends exacerbated by the recession will significantly change as the economy continues its recovery.

    On this blog we’ve been writing a lot about the proposals the Middle Class Task Force has already put forward to help families pay for child care and to expand help for families caring for elders or a person with a disability.  These proposals are a step in the right direction for working parents, but more – such as more and better child care options, paid leave and greater flexibility – can be done to adapt our workplaces to the transformation that is occurring for families.  These policies are often lumped together under the misnomer "work family balance." As most parents (working or not) in our 24/7 economy will tell you, true balance is illusory amidst all the teetering and juggling that gets you through the day.  We can’t create more hours in the day, but we can create more options for parents.  And while that may not bring balance – it can help mitigate stress, uncertainty, and unpredictability.  As a first step we can learn strategies and practices from corporations that have already taken innovative steps and reaped rewards in efficiency and retention for doing so. The Task Force plans to continue to work on these issues in the coming months. 

    Terrell McSweeny is Domestic Policy Advisor to the Vice President

  • Helping Workers Save for a Secure Retirement

    The Middle Class Task Force recently announced a number of initiatives that are designed to strengthen the retirement system and help provide a more secure retirement to millions of American workers.  These initiatives are part of President Obama’s FY 2011 budget, and this Administration will be working hard with Congress to get these proposals passed into law this year.

    You don’t need us to tell you how important it is to strengthen the retirement system, but in the wake of the financial crisis and the market collapse, it’s become clearer than ever that we need to do more to help  American workers save for a secure retirement.  Many workers have seen their 401(k)s and IRAs decline by thirty or forty percent, and many more have seen the value of their home - the single most important asset for many middle-class families - fall just as far.  So families across the country are acutely feeling the need for us to do more to help provide a secure retirement for hardworking Americans.

    But there are also some longer-term problems with the retirement system, and we think it’s important to address those as well.  Far too many workers don’t have access to a retirement plan through their employer, and even among Americans who have been saving since they got their first job, too many are seeing the returns on their savings eaten away by high fees, leaving them with less than they’d hoped for when they retire.

    That’s why we’ve proposed this package of retirement initiatives – we want to make sure that Americans have access to good options to save for retirement.

    That means making sure more workers have workplace retirement plans by requiring employers who don’t offer a retirement plan at the workplace to automatically enroll their workers in a direct-deposit IRA, to give workers an easy and effective way to save.  Workers will be able to opt out if they choose, and the smallest employers will be exempt, but this proposal will provide an important new way to save for many of the seventy eight million Americans – about half the workforce – who currently do not have a retirement plan at work.

    It also means matching the savings of many families to help them save more.  We’re proposing to simplify and expand the Saver’s Credit to provide a fifty percent match on the first $1,000 of retirement savings for families making up to $65,000, and to provide a partial credit for families making up to $85,000.  So if you save $1,000, you get a tax credit for an additional $500 to help you build up your retirement savings.  And we’re proposing to make the credit fully refundable, helping families who are just starting to save a nest egg and helping lower-income families to rise into the middle class.

    Finally, it means updating and strengthening regulations to make sure there are good savings options available to American workers.  Too many workers are seeing high fees erode the returns on their retirement savings year after year, so we’re proposing new regulations that would make sure American workers have all the information they need to make the best choices with their retirement savings.

    We’re already getting good reactions on these proposals from retirement experts across the ideological spectrum.  For example, Nancy LeaMond, Executive Vice President of AARP, said in a statement,

    “Millions of hard-working Americans don’t have access to a traditional pension or a 401(k), making it difficult for them to save for retirement. Studies have shown that when workers have the ability to enroll in an automatic workplace retirement savings plan, they are more likely to save.  AARP firmly believes that the an automatic workplace savings account or “Auto IRA” is a low-cost, high-impact way to help millions of Americans save for their retirement – experts estimate such a proposal could help 50 million Americans. The Auto IRA proposal has earned bipartisan support among leaders in Congress as well as among employers. More importantly, according to a recent AARP survey, eighty percent of Americans support for the proposal as a way to improve individuals’ retirement security.”

    Robert Greenstein, Executive Director of the Center on Budget and Policy Priorities, said of our package of retirement initiatives,

    “Taken together, these proposals should induce significant increases in retirement saving.  Such an increase in saving would both help families in old age and strengthen U.S. long-term economic growth by increasing the pool of national savings that can be tapped for private investment in new plant and equipment.”

    The Corporation for Enterprise Development also praised our efforts to help American workers save more, writing in a statement,

    “We commend the Obama Administration for prioritizing asset building as part of their solution to financial distress for America’s middle class families.  The President and his team are right to seek solutions to rising levels of asset poverty.”

    Meanwhile, David John at the Heritage Foundation describes our Automatic IRA proposal as a “common-sense idea that could help to increase Americans’ retirement security.”  He writes:

    “This simple, easy-to-understand way for workers to save some of their own money each payday is important, because almost 78 million American workers--about half of all workers--are employed by companies that do not offer any sort of pension plan or 401(k)-type retirement saving plan. … The Automatic IRA has wide bipartisan support from the left and right and was endorsed in 2008 by both the McCain and Obama campaigns. It is a simple, cross-ideological, and practical solution to a serious problem.”

    Of course, we don’t think these proposals will solve the problem of retirement insecurity overnight; especially in the aftermath of the market crash, it will take time and hard work for Americans to build up their retirement savings.  But we believe these initiatives are an important step toward making sure that American workers have good choices to save for the secure retirement they deserve.

    Tobin Marcus is the Assistant to the Chief Economist for the Vice President